Nike Case Study MRKT 1001 Professor Fidgeon 26 January 2017 2 A. Situational Analysis: Mike Parker, the CEO of Nike, promised to boost their revenue from 20 billion dollars to 50 billion by 2020 (Lashinsky, 2016). Parker, being one of Nike’s earliest out of college recruits, has had eyes on him for almost forty years. Phil Knight, a co-founder and chairman of Nike, and Parker work back and forth to continue the success of the athletic wear empire. Since Parker’s time as CEO, he has surpassed sales against competitors such as Adidas and Lululemon. From the years 2006-2015, Nike’s stock price has increased by 505% (Lashinsky,2016). Being the worldwide leader in athletic shoes including basketball, running and soccer styles; plus, maintaining 62% of the united states shoe industry sales, Nike is #1 (Lashinsky, 2016). The brand is successful not only because of Parker, but because of the work ethics he has inflicted behind the scenes. The inventory management dealing with retailers, the ability to sell the product, and commitment to technology all contribute to the global success. Parker is also a massive design influencer for the brand. He is constantly observing his surroundings and art work, whether it be in his office or the world, for design inspirations. He is involved in the brand and not an extroverted spokesperson. Parker, although introverted, has proven to be a strong leader for the brand. Being familiar with the company and the way it works, Parker can approach those who lead with questions that will intrigue them to find the answers on their own, therefore intercepting different creative and inspiring opinions. Instead of a one path mind that controls the outcome of products, this technique allows for collaboration and creative freedom. A marketing approach that has improved Nike’s sales by 70% is the grouping by sport instead of region (Lashinsky, 2016). Instead of appealing to an entire geographic location, Nike will focus of the sport apparel at hand. Meaning that they take the need of a specific loved sports apparel over the appeasement of an entire location. Also, Nike’s dedication to promotion is top 3 dollar. They spend more money than any competitor to have their logo on display. Sponsoring numerous globally known outlets has proven to increase their sale rates. Nikes take on technology is also a huge part of their success. Rather than sitting in the shadows waiting for another brand to make technological advances, they are on the forefront of this movement. Spending years of time and millions of dollars to have their brand as advanced as possible, Nike is ahead of the game in apparel technology, digital marketing and branding. Between studying the movement of professionally endorsed athletes, investing in 3-d printing, and working with advanced digital companies, Nike advances their product at a constant rate. Although competitors do exist, Nike is the leading company in global sportswear. B. SWOT Analysis a. Strengths ▪ Mark Parker has been a successful asset to Nike since he joined in 1979 1. He was recruited out of college and joined the design outpost 2. Soft-spoken shoes designer, who is now CEO and making strides in expanding Nike 3. Will be promoted to chairman after Phil Knight’s official retirement ▪ Parker has more than doubled Nike’s sales ▪ Nike is the world leader across athletic shoe categories 1. Running, basketball, and soccer are the major categories lead exceptionally in ▪ Has 62% of share in the U.S. athletic shoe market 1. Skechers who has the second highest percentage of share, has 5% 4 ▪ Has exceptionally fast growth 1. Annual sales growth of 8.5%, with a target of 10% growth 2. 11% of sales in 2015 ($3 billion) was printed profit 3. Technological growth in design, marketing, manufacturing, and retailing ▪ Has fought off competition and has entered a new level within the industry 1. Lululemon has assumed Nike’s former challenger mantle(competition) ▪ Has a strong product line that has cash cow divisions 1. Jordan shoe line and Converse and Hurley sportswear labels b. Weaknesses ▪ Phil Knight, co-founder and chairman is 77 years old 1. Did not show up to Nike’s biannual meeting for investors this past October 2. Goes long periods of time without being in contact with someone in the company, particularly his CEO Parker ▪ William Perez, who was hired when Knight retired, lasted less than one year 1. When he was hired he was Parker’s superior, who has since taken over this position ▪ Women’s shoes and apparel account for 20% of revenue ▪ Nike’s FuelBand fitness tracker was discontinued last year 5 1. Was not a core product, but is willing to keep integrating trackers into products ▪ Introverts are typically not in executive roles like CEO 1. Though Parker is doing extremely well, Apple’s CEO Tim Cook is also showing the industry how well introverts work within this position c. Opportunity ▪ Expanding online sales by marketing through social media 1. Multiple social media platforms can provide opportunity to promote online sales by directing consumers to their websites ▪ Offer customized items including apparel and accessories 1. Many companies, including Nike, offer customized sneakers ▪ Athletic companies can expand into dress clothes, dress shoes and accessories d. Threats ▪ Under Armor is a rival with athletic sponsorship 1. Stephen Curry of Golden State Warriors and golfer Jordan Spieth ▪ The athletic industry is highly competitive 1. If one company gets a hold of new technology before another, they are already at a disadvantage ▪ Retailers sell products at a lower price than directly through company websites 1. Allows for consumers to shop until they find a better deal 6 2. Companies can not control if a retailer lowers their prices, even for a day, and makes the sale D. Problem Statement While Parker has doubled revenue for Nike, his promise to raise revenue to $50 billion by 2020 seems very challenging and uncertain, therefore, they must adapt. D. Development of Alternatives 1. “Web sales increased 55.1% to $1.19 billion from an Internet Retailer estimated $767.0 million in fiscal 2014.” (Mark Brohan) Internet sales growth will be an indicator if an increase to $50 billion is feasible. The 250% growth expected by 2020 will need to be helped by improved online sales first and foremost. In 2017, sales are increasingly being made by online retailers. The ease of purchasing online is magnificent and simple tricks can help increase online sales including coupons for return purchases and a “products you may also like” section before checking out and paying for goods. This will increase the total of each order. That extra profits will add up. 2. A great alternative to spike current sales would include introducing specialty clothing which could include a line of dress clothes including suits and tuxedos. A name like Nike would break into this market remarkably easy. Comfortable suits tailored to “athletes” or “anyone with a body” as Nike suggests (Lashinsky, 2016), would be an incredibly successful line. This line could include more items such as slacks, shirts, underclothes, ties, cufflinks, and other accessories that would both make the customer look and feel great, but also expand further in the clothing and accessories industry. Also, Nike’s sales of women’s clothing, accessories and equipment only made up 20% of their business (Lashinsky, 2016). Having more women purchase products can be a massive 7 help to Nike, but they must market more to women than they have in past years. They could start a marketing campaign to drive sales for female’s merchandise. Nike could cater to certain styles of shoes to empower women’s causes such as breast cancer awareness, women’s marches, and other athletic events. Sponsorships for causes would also drive business. 3. If Nike expanded its role in having corporate social responsibility to do more for the communities they are currently in, more people will identify with the brand. Using observation, people know that many who identify with Nike, most likely do not identify with other brands as strong. CSR can cost a lot of money to Nike, so we would suggest making very modest investments to get the most out of every dollar. This investment could have large returns if it reaches the right people. Nike should start backing causes that are hot in the media, because they could capitalize off the free publicity. 4. Nike should be taking advantage of all the stores who want to buy a lot of merchandise in different areas. Nike previously was very picky with what types of products were sold to different stores. An example was when the article spoke about a skate shop near a mall in England that Nike would send skating equipment, but would not send basketball gear. This helped Nike sales at the mall, but the skate shop missed possible revenues. (Lashinsky, 2016) This may help other stores that are focused on certain sports, but it could be affecting sales negatively because maybe a customer would have bought more Nike gear at the skating store. Their “category offense” approach (Lashinsky, 2016) has boosted sales for individual stores, but having more Nike products in more places will affect sales positively. E. Recommendations 8 Nike is in a great position to continue their trend of sales and operations excellence, however, reaching their goal of $50 Billion by the year 2020 is a very ambitious target. They have many avenues to improve sales and meet their goals, but need to work quickly because time is of the essence. Nike must make modest and smart investments in capital to ensure gains and should focus on low, or “no cost” marketing such as publicity and public relations. Nike must grow internet sales exponentially to reach their goals, they should be reaching out to more online retailers and work on increasing amount of money per order by taking advantage of tricks that will increase order size. By creating lines of specialty clothes such as dress clothes and boosting sales of women’s apparel and accessories, Nike will gain an advantage by selling more items that they historically have sold none of or, or less of. Improving current CSR will also drive sales by increasing the amount of customers who identify with the brand. Finally, Nike should stop being picky with who they sell to. An individual Nike store in England received a 20% sales boost by not having some products in a skate shop near it (Lashinsky, 2016), however the skate shop lost out on sales and Nike lost sales for those folks who would have purchased a product had it been in the skate shop. By amending current actions and following the above ideas, Nike will see the incredible growth it is now seeking. 9 Works Cited Lashinsky, Adam. "Nike’s Master Craftsman." Fortune.com. N.p., 12 Nov. 2016. Web. Mark Brohan Research Director. "Nike Annual Web Sales Top $1 Billion for the First Time." Nike Annual Web Sales Top $1 Billion for the First Time. Internet Retailer, n.d. Web. 24 Jan. 2017.
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