A Case Study on Nike

Students Name: Student Number: Degree Programme: Module Code:

Goh Kim Hua Jian Chen 089150526 089106383 MSc E-business and Information Systems
NBS8053

Introduction Nike, a brand with the famous slogan, just do it was founded in 1980 and is a company of innovation that aims to bring its innovation to develop products that would help athletics achieve their potential, and at the same time, create business opportunities that will set themselves aside from all other competitors. (Nike, 2009a) By 2006, the running category of Nike owns a total of 48% of market share in the United States. (Mininni, 2008)So how then can Nike grow beyond 48% and gain a foothold over its rivals in this segment of market? With the availability of IT at their disposal, this case study about Nike aims to address the importance and the impact of IT, particularly the influence of social media has over Nikes branding and market share in the United States after its introduction in 2006. Business Challenges Nikes global brand promotion is a key factor for its success. Owing to its extensive advertising strategy and off-shore business model in industry, Nike is acknowledged widely by the public and becomes a major company for sportswear and equipment especially for its athletic shoes. It is definitely a nice switch on market strategy from domestic to international market, which can be seen from its annual reports in recent years (Nike AR, 2008). The percentage of Nikes revenue distribution from international market reaches 50% in 2008 from 42% in 2000, and for domestic market it shrink to 34% in 2009 from 52% in 2000. 5-Year CAGR of Nike between 2003 and 2008 achieves 12% and Nike gave an excellent performance on Fiscal Year 2008 Revenue of $18,627 million. . However, as the market becomes global, how to maintain attracting the eyeballs in advertising age should be one of the challenges for Nike. Due to the diversity of culture all over the world, it is really a challenge to satisfy the customers taste, and most consumers accepting sport brand are youngsters, who prefer novelties and uniqueness, how does Nike lead the sports fashion in their way? Trevor Edwards, who is Nike's VP for global brand and category management, commented on Nike's vision for advertising: We're not in the business of keeping the media companies alive, and he told many media executives, We're in the business of connecting with consumers. (Nike Budget, 2007a) Nike has ever spent 55 percent of its ad budget on TV networks 10 years before, and in 2007 it came to 33 percent (Nike Budget, 2007b). It is released in mid 2008 that Nike is the only apparel company in Advertising Ages 2007 list of 100 Largest National Advertisers (Nike advertisement, 2008). Facing the credit crunch today, lots of enterprises has to cut off the marketing budget. With paring down expenses budget for advertising, can Nike maintain its share of global market? Furthermore, as personal computer facilitates both our work and life greatly and ICT develops rapidly, the constituent of social media varies according to the blooming

of internet throughout the world; how Nike can adapt itself to deploy it to draw the mass attention?

Via all kinds of advertising, Nike, Inc has been working hard on delivering its product value to customers and enhancing public relationship with them as well. As a consequence, Nike, Inc does not only bring customers high quality products but also the internal feeling such as proud and belonging (Danny, 2009). As long as Nike becomes a focus among the worldwide sports brands, it turns out to be a target for both competitors and the masses. The case of Nike VS Kasky happened in 1998 not long after Nike initiated its global campaign (Ethicalcorp, 2003). Marc Kasky, an anti-globalisation activist from San Francisco, launched a legal action against Nike that its public statements were in breach of California statutes prohibiting false and it misled advertising by misrepresented factory working conditions. In 2001, it was exposed by the BBC that Nike did employed child labors in Third World countries and Nike admitted it as a mistake again, such as the situation in Pakistan and Cambodia (Steve, 2001). It was settled out of court in September 2003 by $1.5 million paying out to Washington-based Fair Labour from Nike. "Sweatshop labour", as it was known to us for Nikes practice, hundreds of criticism on Nike by media and stakeholders became a raging torrent throughout internet, TV or broadcasting. As the global enterprises in textile industry, which results in the new peaks of the amount of the industrial dust CO2 every year, negatively affects the environment, and therefore such companies like Nike should take environmental lead (Kirk, 2004) , as well as permanently strive to maintain its word-of-mouth reputation. After Nike released its first corporate responsibility report, in which it emphasizes on reducing climate impact and improving factory compliance (CSR Press Release, 2001), people brought another challenge to Nike, disclosing the list of Nike contract factories in public (Lisa, 2004), which can be not only responsibility for society but also confidential information for its competitors. How can Nike keep the balance between friendly PR relationship and the management risks in its supply chain? Moreover, Team Sweat demanded for disclosure of wage rates at all partner factories (Team Sweat, 2009). Along the path towards greater transparency, whats the next of Nike? Targeted competencies (participation and innovation) With various business propositions from Nike poses several business challenges, various techniques has been deployed to ensure that these challenges will be properly dealt with and at the same time, increasing the prospect of the companys competency in a global scale. The first is innovation. By 2006, Nike has 48% of the running shoe market in the United States, and everyone (Nike and their competitors) are doing roughly the same thing produce a running shoe that will hopefully looks better than their competitors and making their customer

feel better. Since 2006, Nike has been aggressive in promoting their running section of their business, and its innovation leads to Nike plus (Nike). Nike is a device placed in a Nike compatible shoe that is able to give a real time feed back to the runner.

In the past, running is just running, but with Nike, a runner is able to check their distance, pace, time and calories burned during a run. (Nikeplus, 2009a) after the run, that person can upload it at nikeplus.com and check their progress and all subsequent information about their run. Thus making a runner feels more enthusiastic and passionate about running. The second is participation, aiming at individual who probably have the love for running. Due to the fact that more and more people are going online to socialise, thus making social media a powerful business tool to connect with people with a common interest, in the case of Nike, the common interest is running. (Socialmediaclub, 2006) For this section, Nike has a treat for its Nike customers, which includes training, goals and runs that keep track of their progress of their runs. (insidenikeunning, 2009; nikeplus, 2009b) Apart from personal programmes, Nike also has a few events that give its Nike customers a chance to participate in the challenges that Nike organises. The best thing about these events is that their customers can participate in their own leisure time and then compare their times with other people in different parts of the world. There are over 10 types of challenges in Nike to participate in, and the challenges range from personal to competing globally to reach a certain distance first. But the most prominent of these challenges that is ongoing, never ending rivalry: battle of the sexes. The Woman vs. man challenge is the most famous among all the other challenges (insidenikeunning, 2009; nikeplus, 2009b; trading markets, 2009) in this challenge, thousands of runners participated, where each individual be it professional or beginner were involved and contribute to the overall distance covered. (NikePlus, 2009b) Vision The success of Nike is largely due to the capabilities of the internet and social media where the focus are to bring people from a diverse background together and interacting by challenging (friendly) one another. The Nike blog is designed to suite runners from all categories, from beginners to professionals, and Nike has taken the internet technology into a next level, where runners are able to select a variety of different training types and to customise the training to suite their level all this possible without a physical personal coach present. With this, a runner can now monitor their own progress Another factor in technology that makes it a success is that Nike has identified that for most people, running and music go hand-in-hand, by partnering with apple, Nike can transmit information to a runners IPod, thus making existing runner that listen to IPod extremely interested in this

piece of technology even though it means an extra purchase. (CyberCulture, 2009) istrategyLabs.com, an independent blog that measure a companys share of voice in a market, is able to measure and monitor the overall percentage of social media throughout the internet that talked about a certain brand. (istrategyLabs, 2009) this then, will enable Nike to trace the successfulness of social media marketing and the overall buzz around its competitors. Apart from knowing how many posts, Nike is also able to tell how many good (positive) posts are there and how many bad (negative) posts. This will help Nike identify their strengths and weaknesses and identify genuine concerns direct from their customers The change of strategy is most prominent in marketing where there is a transition from traditional to online marketing in various social media sites like YouTube. According to Nike CEO Parker, hed rather spend money to make a video online and get millions of hits than to do TV advertising. This is apparent when the investment drops significantly from 55% to 33% in 2007. (Nike Budget, 2007b) Success Metrics What metrics can be used to evaluate the business success through the emerging lens of sustainability? The ability of applying its innovation with ecological intelligence should be the first measure of all. Not only product innovation and performance remain priority, but also design excellence should combine ecological intelligence with fully understanding the impacts of our products in the natural world (William and Michael, 2002).In such a way, it can be a lasting drive to translate the parks of inspiration from our thought into innovative action in a new standard of performance, into new mission statements, long-term strategies and new novelty way of measuring success. Advertising and promotional effectiveness is vital as well. Create rational appeal, or stir up positive emotions on the products in aim to motivate purchase (Kotler et al., 2007). May as well try some unconventional ways through buzzing marketing; capture the eyeballs from popular social media, where it is entertaining, fascinating and newsworthy to talk about certain brand or company (Hughes, 2008), and via which deliver extra more value and experiences to the customers. Emphasizing its public relations (PR) should be counted in as a measure of success. It sometimes becomes a controversial topic via which easily arising a negative impact on the customers, referring to the reputation or management model. Once the negative news released, it is hard to control especially in the various important publics created by buzz marketing. It can result in the failure of building up a good image brand among customers.

Discussion Questions How does the enterprise make full use of social media to reach out its customers? Do social media play a significant role in determining its effectiveness in marketing? Is social media not only a culture shift, but also a new novelty way of measuring success for enterprise? Do social media become the barometer of public opinion so that it can truly and fully reflect the enterprise reputation?
If social media can determinate the development of the business in this case, what else will need to be done to build competitive advantage to adapt itself to the informational environment?

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