Nike v/s Reebok Case study

INTRODUCTION TO NIKE

Est. in 1960 in Oregon.

Phil Knight and Bowerman - Founder
Nike has gone through many changes
Started small and now has covered the U.S.
and International market

INTRODUCTION contd
Nike = Winged Goddess of Victory.

Greeks say when we go to battle and

win, we say it is NIKE!

ANALYSIS OF CASE STUDY

Limited resources and unlimited
confidence.
Persuasion of top athletes.
Endorsement contracts effective.
Use of tactics such as guerilla warfare.

ANALYSIS contd.
Failure to recognise aerobics boom.
Women -A major customer.
Ignorance of market trends.
Timberland brown shoes.
Not satisfying customer needs.
Child labour.
Late in getting onboard with extreme sports.

Put Nike on the map

1964-Imported from Japan

1970-launched advertisement for
health and performance (while youth
turned to jogging)
1972-self made shoes with proven
researched that they provides better
traction & support to jogger

Put Nike on the map

1973-sales to reached to 3.2

millions
1983-sales were $870 million with
22 million inventories
1984earing dropped by 29 %
Lost no:1 place

Reasons behind that lost of no1 place

1982-reebok introduced
AEROBICS shoes ( for women )
Sales Increased slowly
Discount allowed and free samples
for instructor and teacher

Michael Jordan
Put Nike on the map

1984-1985 Nike saw a decrease in their earnings for

the first time ever
Influenced them to make their first specialty
basketball shoe
Since then, Michael and Nike together have
generated billions of dollars in revenue
World Sports Hero No. 1

Put Nike on the map

Since 1999, Nike has disclosed its contract factory base

producing Nike-branded products to the Fair Labor
Association.
In 2000, Nike became the first company to disclose
publicly online the names of its suppliers making
college and university licensed products.
Nike committed to reduce combined CO2 emissions
from owned facilities and business travel by 13 percent
by 2005 from a 1998 baseline

Put Nike on the map

2011-The company builds its brand awareness
through product sponsorship by the professional
and well known athletic teams, college sports
teams, and celebrity endorsements
Growth in revenue in 2012 was 15%
2013, the company has contract factories that
produce footwear in Vietnam at 42%, China at 30%,
and Indonesia at 26%.
Growth in revenue in 2013 was 11%

Put Nike on the map

o 2013-The company mainly categorizes customers
into 7 types based on sport activities which are 1)
Running, 2) Basketball, 3) Soccer, 4) Mens
training, 5) Womens training, 6) Nike sportswear,
and 7) Action Sports

Brand equity
Brand equity is defined as the positive
differential effect that knowing the brand
name has on customer response to the
product or service.
Philip Kotler

Nikes Market Expansion Strategies

Economies of Scale.
Shared distribution channels among varied
product lines lower costs.
Large size provides opportunity for more
leverage against competition.
Efficient use of production facilities lowers
costs.

Global sourcing: the Nike case

Nike has relocated production of its footwear and clothing

to 51 countries where its third party production units
employ more than 500,000 people (as against
approximately 14,000 people directly employed by the
multinational).

From its headquarters in Beaverton, Oregon, Nike manages

a worldwide virtual company combining internal R&D
functions with a low cost manufacturing strategy. They
control their activity from Oregon and Tennessee and
developed jointly by American and Asian technicians in the
USA, Taiwan and South Korea. Sneakers are then
assembled in South Korea and Indonesia from dozens of
components supplied by firms in Japan, South Korea,
Taiwan, Indonesia and the United States. Similarly, Nike
outsources distribution to firms that specialise in logistics
services.

Brand/Image
Ability to charge premium price by
establishing an image
Access to new/different markets
Premium product placement in retail leading
to higher sales
Image and celebrity endorsements create
hopes/dreams/emotional attachment to
product

Product Diversification
New products introduced by Nike will be
more readily accepted by customers due to
strong brand image

Other strategies adopted by Nike

Sponsorship for sporting events

Advertisements.
Rebates and Discounts.
Conducting fashion shows.

PRODUCT MIX
Product Mix
A product mix is the set of all products and items
that a particular seller offers for sale to buyers also
known as product assortment.
Product Width
It refers to how many product lines the company
carries.

PRODUCT Mix contd.

Product line
A product line is a group of products that are closely related
because they perform similar functions
Product length
It refers to the total number of items in its product mix
Product depth
It refers to how many products are offered of each product line.

PRODUCT Mix for Nike

Footwear
Studs for Striker
Mid fielders
Defenders
Apparel
Headwear
Tops/Polo
Jersey
Jackets
Shorts
Shocks
Equipment
Ball
Bags
Watches
National Team Gear
Jersey for Brazil, England, etc.
Club Gear
Club Jerseys like Man U, Real Madrid, etc

Competitive advantage against

regional brands.
Pricing- Bata charges around Rs 400 for a
pair of shoes whereas for nike it is Rs 1600.
Unaware of utility or use.
Shoes are not recommended by coaches in
India.
Sports culture In India sports like soccer,
basketball are not so recognised as cricket.

Future strategies
Nike EMBRACES communities by
promoting events online and traveling all
around the world.
Nike MOTIVATES athletes through social
media prizes and events.
Nike REVOLUTIONALIZES itself year
after year by using new concepts and ideas to
always keep itself at the top

 Nike will be Everywhere, Doing Everything, For

Every Athlete, During Every Season They Play.
10% of Nikes total marketing budget will go
into Social Media and Nikes Online Strategy to
cover the cost of online prizes and online media
specialists for each individual sport as well as
the LIVESTRONG foundation.
New Nike player contracts must include a social
media clause where they promote Nike products
a certain amount of times a month via twitter,
facebook, youtube etc.

JUST

DO
IT