Many large U.S. companies, such as Nike (NYSE:NKE) are catching on. So, they moved on from being distributors of athletic footwear to designers and manufacturers of athletic footwear and took full control over their value chain. So, to create a platform where a group of people can compare their energy spent, Nike created a new index called Nike Fuel. It had less to do with shoes and more to do with athletes. He used to take help from university runners to test his creations and collect their feedback. Practice Leads to High Performance as Nike Executes Global Strategy. Global marketing helps create a strategy for a similar product in a different market. Its swoosh symbol is easily recognized by everyone. Nike Inc. is a leading global manufacturer and seller of sports shoes, apparel and equipment. Users can compare the Nike Fuel accumulated and comment on the challenge, motivate each other, share their difficulties and get suggestions on how to improve the general level of fitness. Instead it uses the social media site to motivate its users to get fit. The marketing campaign for this product was supported by a memorable TV ad in which the Beatles' Revolution was the soundtrack. Nike was also quick to seize the opportunity offered by social media to engage with a wider customer base so much so that it is now able to link its new hi-tech gadgets to social media platforms. In many ways, Nike is hard to beat, too. Nike produces a […] Jennifer grew up in New York and parlayed her finance and public administration degrees into helping good causes with non-profit work. All the rest (calculation, storage, integration) was done by the iPod. Its image as a technological front-runner and high status symbol gives it an edge in sales, and no other athletic shoe company can quite match it in terms of revenue and innovation. Nike has a strategy of growing in a way that is responsible and ensures long term financial growth. Nike's tech growth was also accompanied by social media initiatives. Compared to other specialised players like Jawbone's UP and Fitbit Flex, FuelBand is rather primitive. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. The series had three ads featuring young sportsman Bo Jackson who campaigned on the benefits of a new cross-training pair of Nike shoes. A design student Carolyn Davidson created the famous 'swoosh' logo for $35. A lifestyle that everyone feels they need to have. Fast forward to May 20, 2006. Nike also customised the product to suit individual needs by inserting bags of different size depending on the height and pressure exerted by users. The Nike marketing strategy, in summary, is, invest heavily in marketing, use emotional advertising that every human being can identify with, offer premium products at premium prices and sell their products primarily through 3rd party retails stores. The combined cost leadership and differentiation generic strategies boost Nike’s performance in the global industry. With this, iPhone/iPod users can map out their running route and later share it with their Facebook friends. An effective distribution strategy would be key for Nike. In those days, Bowerman would often rip apart the Tiger brand shoes to see how he could make them lighter and better. By focusing on a wider global audience, these companies stand to benefit from new opportunities and strengthened revenue streams in the decade ahead. In order to maintain this mission statement, Nike has ensured that it has maintained socially … Adapting from their origins of supplying trainers to athletes, they’ve evolved to focus on everyone, all across the globe. 13 3.3.1 - Product Nike is a global company with a portfolio based on Nike Inc. (2017) that includes a vast variety of products of footwear, apparel, equipment, and accessories for men, women, boys and girls. So now iPhones and iPods come pre-installed with Nike+ app. A very large infrastructure is essential to manage its global presence well. And it is here that Nike Fuel comes into play. Starbucks and Nike are ahead of the pack, which goes a long way toward ensuring long-term growth. It seems like everyone knows that here, you'll get a quality cup of coffee in a relaxed environment and a table for your laptop. Taking the initiative With the rise of digital sales, having an international presence and strategy has become all the more important. A strategic objective based on the cost leadership generic strategy is to grow the company’s competitive advantage through new technologies to reduce production costs. And this is not a mistake–it’s an intentional goal of the Nike branding strategy. Somewhere in its evolution, Nike also realised the importance of hi-tech gadgets in day-today lives. A Nike + Sportwatch was also introduced in combination with the chip. Nike Global Expansion is down to 8 specific things. This helped in absorbing shocks during running and jumping. The inception of the company strategy of Nike was born when was Phil Knight was still a university student. The fact that the company has a global supply chain means that it is subject to the vicissitudes of international trade practices including labor strikes in its overseas locations, currency fluctuations that decrease its margins, as well as lack of control over the geopolitical events happening around the world which have the potential to disrupt its global supply chain. The main driver of Starbucks revenue is domestic sales, which accounted for 69% of the total revenue in the 2019 fourth quarter. It’s the number one sports manufacturer in the world. Nike plans to achieve greater worldwide dominance through its premium and exclusive products that appeal to a mass audience of fans internationally. The shoes had two interdependent bags with compressed air inside. She has now turned her focus to helping investors lead happier and richer lives at The Motley Fool. To ensure success, Nikes managers must continually examine and improve strategies and approaches used in the 10 strategic decision areas of operations management. A positive impact of Nike’s offshoring strategy was that it allowed Nike to meet the growing market demand of its customers that resulted from global economic growth. This case study analyses the ever-evolving marketing strategies adopted by Nike to become a global brand. The company was actually selling just a small electronic chip that had to be inserted in the shoe (preferably a special one, but even a regular shoe would do) and a wireless connection device that had to be plugged to an iPod. Europe, Asia, North and Latin America are the main markets in which Nike sells its products, which makes it a truly global organisation. The tie-up with Apple was Nike's realisation that most runners will use iPods or iPhones to listen to music while jogging. The company has done a thorough analysis of the issues involved in international operations, including higher development costs and risks related to varying cultural norms. This made it easy for a person involved in a particular sport to choose his/her shoes. Outsourced Manufacturing Units: Nike receives footwear from more than 140 factories located in 13 countries across the globe. By doing so, they minimise the scope of their corporate responsibilities, concentrating on activities that add the highest value. It also gives endless chances for customer segmentation and product differentiation, the pillars of any marketing strategy. In due course, even the hi-tech Air Max technology was found to be inadequate to entice customers. Thanks to its technology leap, Nike, it is said, was able to cut down on advertising expenses by 40 per cent without compromising on efficiency and results. Known for bringing the best innovations to athletes at every level, it is no surprise that Nike continuously strives for excellence. But it helps that most of us drink coffee, which makes for a more seamless international transition. Constant innovation has been the byword for Nike's success. Almost every year after Nike launched its air cushioning technology, it released new versions of Air Max. In 1973, they called their brand Nike after the Greek goddess of victory. Market data powered by FactSet and Web Financial Group. But its biggest selling point is the Nike + Fuelband Community on Facebook. But it was Nike's product. In September 2010, Nike introduced a running app to be used in the latest iPhones. Nike was cashing in on the most technologically advanced portable device that could do all the tech work brilliantly. The company released the Nike app in China this past quarter, and it was downloaded 1 million times on the day of the launch, making it the top shopping app in all of China. The whole evolution process has managed to change the concept of what a regular apparel seller is. See you at the top! This market position is partly a result of effective and efficient operations management (OM). 1. Nike’s mission statement is to inspire and innovate on a global scale. But in mid 1980s the revenue started dipping mainly because the management did not take note of the aerobics boom. Starbucks is now in over 80 global markets, and the fourth quarter of 2019 saw a 3% increase in international comps, up from a 1% increase in 2018. The second quarter of 2020 saw $10.3 billion in revenue and 10% growth, crushing numbers for its closest rival, Adidas (OTC:ADDYY), which saw $7.1 billion and 6% growth in its most recent quarterly report. You can read more about them on the official Nike file here. The same reasons it's seen so much success in the U.S.: a commitment to the customer experience, which matters everywhere, and strong technological innovation, which gives it the power to manage international growth. Currently, Nike has nearly 40 models under this brand name. Nike's sales philosophy - if you have a body, you are an athlete - had enticed everybody who wanted to think of himself/herself as an athlete or wanted to get more athletic. In 2008, Nike created a Facebook account. Both of these companies have seen rising share price, with Starbucks up 46% and Nike up 32% over one year, and there's good reason to believe that they will continue in that direction. Although sales to wholesalers accounted for about 68% of Nike’s global revenues in fiscal 2019, … The power of such customer contact is phenomenal as it gives greater visibility in a single click, generates interactions among customers and gives the company an opportunity to collect info about customers' choices and preferences. I'm writing this as I sit in a Starbucks (NASDAQ:SBUX) cafe at Charles De Gaulle Airport in Paris, and while the language is different, the experience is very much the same. Nike's competitors had by then developed their business in this segment. Nike owns 31% of the global footwear market with an average of shoes sales that reach 120,000,000 pairs (Statistic Brain, 2017). Overall, revenue was up 6% year-over-year. Riding on the success of this campaign, Nike, a year later, launched an even more empowering series of ads with the tag line "Just do it". It requires stability and a core business back at home before any company can grow beyond its borders, and enough brand recognition that it can have the confidence that it will take hold outside of its home country. The shoes featured gas-filled plastic membranes that could be inserted into the sole for comfort during running. Nike delivers innovative products, experiences and services to inspire athletes. Also, the … Nike’s Strengths – Internal Strategic Factors. Stock Advisor launched in February of 2002. Nike monitors that region thoroughly to find opportunities for community engagement, and the result has been explosive growth. We do that by building creative and diverse global teams, making a positive impact in the communities where we live and work and by … He already thought that it would be beneficial to the company if it used manufacturing plants in other countries outside the United States, because the labor costs would be much lower. 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