Consumer Perception About Nike Inc

BABEȘ-BOLYAI UNIVERSITY

FACULTY OF BUSINESS

BUSINESS ADMINISTRATION

Bachelor degree thesis

Consumer perception about Nike Inc.

Scientific coordinator,

asist.univ.dr Cristina Fleșeriu

Student,

Sebastian-Matei Palaghiță

Cluj-Napoca

2016

Facultatea de Business

Str. Horea nr. 7 Cluj‐Napoca, RO‐400174 Fax: 0264‐59.01.10 Tel.: 0264‐59.91.70 [anonimizat] www.tbs.ubbcluj.ro

DECLARAȚIE

de asumare a con ținutului lucrării de LICENȚĂ / DISERTAȚIE

Subsemnatul / Subsemnata ___________________________________________________, student(ă) la Facultatea de Business,

Declar pe propria răspundere, conștient fiind de efectele legii nr. 8 din 1996 privind drepturile de autor și drepturile conexe, cu modificările ulterioare, sub sancțiunea anulării Diplomei de Licență/Masterat, că lucrarea de licență/disertație cu titlul___________________________________________________________________

_______________________________________________________________________

realizată sub îndrumarea _____________________________________________________

este realizată în totalitate de mine. Toate sursele utilizate au fost citate corespunzător în textul lucrării și sunt trecute în bibliografia finală a acesteia. Nicio parte a lucrării nu a fost copiată din surse tipărite sau electronice. Lucrarea nu a mai fost susținută public la nicio instituție de învățământ superior din țară sau străinătate.

Data, Semnătura

Abstract

The goals of this study are to determine the customer perception of Nike as a brand and to look into the consumer’s behavior, thus in order to deliver a flawless research on this topic, it is indispensable to analyze the company itself

The paper hereby aims to analyze, compare and offer valuable insight into the marketing tactics Nike, Inc. has used over the past 30 years which helped the conglomerate reach #18 most profitable brand in the world and made the ‘Swoosh’ a globally recognized logo. Aside from their constantly innovative designs and technologies, a key to Nike’s greatness is the effort and financial resources allocated for marketing campaigns, advertisement strategies and competitiveness, which is one of the company’s laitmotifs.

After almost half a decade of improving, shaping and emphasizing their core values such as community impact, sustainability and motivating the inner-self, the giant sports company is showcasing new strategies with every financial quarter that passes by. The marketing department is responsible for endorsements, pricing, consolidating the customer relationship segment and last but not least, making sure Nike is a perpetuum mobile, innovation-wise.

Nowadays Nike’s promotion mix encompasses advertising, personal selling, direct promoting, sales promotions, and public relations with the intention of getting hold of significant populations of target customers with the utmost possible influence.

The last remaining detail regarding the company analysis is directly linked to the customer's perception on the outcome of the aforementioned promotion tools, relying on the influence of brand experience.

Thus this research will track the journey of Nike builing their brand into a cultural phenomenon.

The success of Nike cannot be explained in complicated terminology because it relies on the importance of relationship and what the customer percieves to be the company’s value.

Introduction

The bachelor thesis with the title “Consumer perception regarding Nike Inc.” represents a detailed analysis of Nike Inc., one of the biggest players on the sports apparel market, with over $3 billions in revenue and undisputed in terms of market share. Nike company’s origins go back to an enterprise called Blue Ribbon Sports, which Knight, a former runner at the University of Oregon, and Bill Bowerman, Knight’s former track coach, created in 1962. Blue Ribbon Sports started out delivering running shoes for a Japanese firm, then moved on to creating and designing its own shoes and outsourcing them from Asia. Blue Ribbon Sports’s performance-oriented product improvements and mastery of low-cost fabrication translated into shoes athletes wanted to put on and could manage to pay for. Knight and Bowerman’s track networks got the shoes onto the feet of professional runners. And then jogging emerged as a new national interest.

. The company has become today, the undisputed leader of the athletic wear market worldwide. The thesis aims to explain and thorough analyze Nike’s story from the beginning until today’s date. This document contains three chapters, each one focusing on a different business aspect.

Firstly, the thesis will present relevant historical facts regarding the introduction of the sports apparel fashion that led to the creation of this highly competitive market from 1900’s until today. Along with historical development of the market, the document presents an extensive analysis of the brand named Nike, emphasizing various aspects of the business from financials and early social media experiments to to the way management is organized and the appropriate hierarchy.

Secondly, the paper will assess the performance of the company in terms of marketing and will correlate it to the existing background for this segment. Also, the research paper contains current information regarding the specific market conditions, valuable insight on the company’s marketing strategy and brand strengthening efforts that connect the business with the latest opportunities and sustain it with good returns and innovative techniques that focus on maintaining the leadership position for Nike.

Last, but not least a questionnaire tailored to gather specific data in order to analyze the performance of company’s projects and strategies. Moreover, the survey contains a sequence of questions that have the purpose of determining an average customer profile.

The research methodology used for this scientific paper consists of both quantitative and qualitative methods. The main method of research for gathering topic-related data it is represented by the questionnaire, falling into the quantitative category. The questionnaire was formed of 20 queries related to sports apparel and marketing tactics and has the aim of formulating different suppositions between the consumer perception and the analyzed brand, Nike. This research method brought back 100 responses containing precious data used to interpret the general ideas described over the first two chapters. The usage of quantitative method makes the information highly inflexible, being accurate only for the displayed question that has been used for.

A part of the research would be represented by two popular frameworks such as SWOT analysis and Kapferer’s brand identity prism and will serve as qualitative research in order to create genuine patterns between the frameworks and different aspects of Nike, such as strengths,opportunities or self-image.

This thesis paper aims to research the following aspects and find rational answers for questions regarding Nike’s success, their longevity of supremacy on different segment markets, the insatiable hunger of customers to buy large quantities of products manufactured by Nike. Moreover, the hereby paper will assess Nike’s methods of continuous innovation as well as the factor that is driving their success. The company features incredible growth strategies and that help the company to sustain itself and allow her to spend massively on innovation, research and development and branding efforts. Also the document analyses their ethical issues and formulates hypothesis around their success, which will be explained with the help of the survey. Among the research questions, there is the corporate social responsibility in terms of manufacturing and children labor and also ethical issues such as negative character endorsements or encouraging inappropriate behaviors.

Chapter 1 Background and Nike Inc., an overview

Sports apparel market in the 20th century and history of Nike

The Fashion segment has always been the subject of continuous development and extended interest shown by producers, designers and customers alike. Before the 1900’s the fashion market was focused on creating and innovating attires suitable for social events or daily activities rather than developing a niche for functional fashion or simply active-lifestyle apparel. In the 19th Century seeing a woman being part of a sport was a question of her very femininity. By the end of 1900’s women have had started to seek to increase their physical fitness through exercise and started being competitive, participating in sporting events. (http://visforvintage.net/2012/08/03/olympics-sportswear-a-complete-history/, last accessed June 2016).

The sports industry was mainly designed for men, which led to an earlier development of masculine athletic gear and thus forcing women to wear inappropriate clothes which often caused injuries and lowered overall competitiveness. Even though after the creation of modern Olympic Games, sports was registering a noticeable interest among various social categories because of the general evolution of the society, the technology behind the athletic gear was almost inexistent and there were little to none specially designed sportswear brands. Men were already benefitting from basic types of clothing for each sport, mainly the ones which qualify as “Olympic Sports” and so the need for more appropriate sportswear rose from the emancipation of women who started adopting a more active lifestyle and were finding the pretentious gowns uncomfortable for activities such as tennis or riding bikes. Throughout the modern Olympics which were at first designed for upper-middle class Caucasian people, an evolution in sporting garments and gender-equality competitions can be observed. Along with the increasing popularity of these events, allowing women to compete as well facilitated the development of brands made exclusively for sports and led to the creation of a really competitive market. (https://stillmed.olympic.org/Documents/Reports/EN/en_report_668.pdf, last accessed June 2016).

The suppliers were mainly the general stores and the market share consisted of a couple of newly founded sports brands such as Reebok (1895), Converse (1908), Puma and Umbro (both 1924) which, nowadays, are considered pioneers of athletic gear. The strong connection between sports and athletic apparel which has drawn focus on the niche has encouraged newly founded brands to consider their main target existing athletes or people who were doing sports as a profession rather than as a leisure activity, hence the limited number of options available.

After the World War II and significant changes in modern society rules and mentalities, a new industry had emerged focused on being “ready-to-wear”. The home of this new, yet appealing, industry was United States of America. While European designers were trying to emphasize beauty and class, this new industry, which featured mostly women designers such as Claire McCardell and Claire Potter, was focused on practicality, availability and encouraging self-expression (Hills, 2002:144).

The emerged context was favorable for this newly-created niche and soon the handful of brands that are now key players of this market began to rise. Adidas and Asics were both founded in 1949 and twelve years after a devoted track and field coach starts Blue Ribbon Sports, in order to improve college athletes’ shoes, which will later be world-wide known as Nike Inc. from 1971. BRS’s first sales were initially just distributing for the Japanese producer of Asics. The following years were productive in terms of revenue which facilitated the opening of their first retail store in Santa Monica, California and later on in 1967 Blue Ribbon Sports created a presence on the East Coast as well through the store located in Wellesley, Massachusetts. After 4 years the collaboration between the Japanese company and BRS ended as the aforementioned crafted their first collection with the addition of the brand new logo “The Swoosh” first used on June 18 and registered with the U.S Patent and Trademark Office 3 years later in 1974. (http://www.fundinguniverse.com/company-histories/nike-inc-history/, last accessed June 2016).

Throughout the last quarter of the 20th century, Nike started gaining notoriety by working with different advertising agencies such as John Brown and Partners or Wieden+Kennedy who helped create probably one of the internationally known slogans “Just do it”, inspired by the last words of Gary Gilmore. (http://www.clarkprosecutor.org/html/death/US/gilmore001.htm, last accessed June 2016).

Along with focusing on marketing, Nike registered tremendous market share in 1980 when the company obtained 50% in the footwear market. The company was starting to extend their product lines in order to include various sports, cultures and religions.

In the 1980s, Nike, supported by successful product launches and convincing marketing campaigns, experienced quick growth. Soon, the company moved into other sports, including baseball, tennis, basketball, football, and cross-training. By the 1990s, Nike had become recognized for its ground-breaking and captivating marketing, including its slogan, “Just Do It.” During the 1990s, Nike made further investments in new sports and athletes, including soccer and the Brazilian National Team, golf and Tiger Woods, and cycling and Lance Armstrong. Long connected with iconic sportspersons, Nike prided itself on working closely with leading professionals to develop high-performance footwear and equipment Nike’s mission was: “To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete.” The firm had revenues of $20.8 billion, over 35,000 employees on six continents, and sales in 160 countries worldwide. The firm continued to design and sell footwear, uniforms, apparel, and equipment for a wide variety of sports. Additionally, Nike managed several wholly owned subsidiaries, including Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd. Nike operated 690 retail stores worldwide, managed 23.000 retail accounts in the U.S., and worked with multiple distributors and licensees around the world. (http://news. Ni ke .com/new s/nike- inc-introd u ces-2015-global-growth-strategy, last accessed June 2016).

Social media presence

After launching its Nike.com website in 1998 and its first sport-specific website, NikeFootball.com, in 2000, the company started to try out diverse techniques to use the emerging medium to bond with consumers. Initial efforts were constrained to working with the up-and-coming media group Gawker and evolving Internet video site YouTube in order to better identify with consumer’s interactions with brands on the Internet and through social media (https://services.hbsp.harvard.edu/services/proxy/content/37688559/ 37688602/f8bf1f67da56da888d1ab7007bae23f8, last accessed June 2016).

“Art of Speed”- In 2004, before social networking had attracted the society’s full attention, Nike tried its first social-based marketing movement. Nike teamed up with the media company and website, Gawker, to initiate a blog, Art of Speed. The blog featured 15 filmmakers Nike had dared to interpret the concept of speed. For 20 days, the blog featured content about the directors, the short films, and the digital technology used to create the films. At the time, Gawker had between 400,000 and 700,000 unique visitors each month. (https://services.hbsp.harvard.edu/services/proxy/content/37688559/3768860 2/f8bf1f67da56da888d1ab7007bae23f8, last accessed June 2016).

“Touch of Gold”- Nike Football, which engaged to the global football (soccer) market, continued to guide the charge into digital. In 2005, as part of the grounding for the 2006 World Cup, Nike Football collaborated with social network MySpace, gaining 50,000 friends, to become one of the largest brand communities at the time.

The Nike Football marketing team also searched for ways to influence social media to somehow create a buzz around its products and athletes. In September 2005, the group decided to produce a homemade-looking video featuring global celebrity and Brazilian player Ronaldinho. The video featured Ronaldinho receiving a new pair of Nike cleats on a playing field and then kicking a ball back and forth off the goal’s crossbar, over and over again. While the video had captivating content, the team members were not sure how best to release it. They thought about a traditional commercial or a link back to the Nike website on their MySpace page. At the time, Stollak, a digital manager working on Nike Football, had been building a relationship with the budding video site, YouTube. Stollak suggested uploading the commercial to YouTube and creating a Nike Football channel on that site. The video, entitled “Touch of Gold,” received nearly 20 million views in just a few weeks and it became Nike’s first “viral” video. (https://services.hbsp.harvard.edu/services/proxy/content/37688559/37688602/f8bf1f67da56da888d1ab7007bae23f8, last accessed June 2016).

. “Joga.com”- Around the same time, Nike collaborated with Google to create a social network, Joga.com. The site was launched in February 2006 and tried to use social networks to emphasize a fun, creative approach to soccer and correlate it with the Nike brand. Stollak explained, “Joga.com was a custom social network built on the Orkut platform before social networks were the norm. Focused on football [soccer] and targeted at the football-obsessed teen.” Nike trusted that visitors would talk about football and the approaching World Cup online. In five months, the site signed up 1 million members and Joga.com was rolled out in 140 countries and 14 languages. The site hosted an online TV channel, JogaTV, held by well-known French footballer Eric Cantona. JogaTV starred well-known football stars performing tricks and other highlights. Along with the stars, users provided content and were able to generate football analysis. Discussion groups formed that focused on teams and players, and a variety of video content was created. However, as the site caught the attention of more and more users, some complained about the site’s design and usability. Furthermore, the marketing team acknowledged that most of the content was watched by only a small number of active participants. Immediately following the World Cup, Nike stopped contributing to and managing Joga.com.

Trevor Edwards, Nike’s vice president of global brand and category management, concluded, “It was ahead of its time, but we learned some interesting things. We had a great ramp-up, we attracted a lot of people to the site which affirmed our effort, we had real conversations and user-generated content through which we created a community and learned about our consumers, but after the World Cup we didn’t stay focused on it. We built this community of a million people and then we just kind of disappeared and let it drift away”.

(https://learningcommunication.files.wordpress.com/2012/02/nikecasestudy2010.pdf, last accessed June 2016).

“Nike+”- Almost immediately following the World Cup, in July 2006, Nike revealed a new partnership with Apple to create Nike+. Nike engineers, remarking the emerging esteem and recognition of the Apple iPod, came up with a plan to sync an iPod with a user’s running data. When Nike pitched the idea, Apple CEO Steve Jobs was enthusiastic. Nike brought people from across the company, counting managers from the apparel, technology, research, footwear design, and digital marketing departments, and the unit worked closely with Apple to develop and perfect the technology. Nike+ was made up of a device placed inside running shoes that monitored the runner’s speed, distance, and calories burned and conveyed that information to the iPod, which received and stowed the data. The iPod program, which could be downloaded from iTunes, included a voice prompt that offered distance remaining if a distance had been set, an average speed, and the ability to queue up a “power song” when an extra motivation was needed. The data the iPod collected could be uploaded and viewed on the NikePlus.com website, which could store the data. The platform also offered working out instructions and the ability to share training advices with friends, both through the website and on the surface of social networking sites Twitter and Facebook. The sensor was put up on the market for approximately $30, while the running shoes were close to $80.42. After its setting up, Nikeplus.com continued to build a strong following. By 2007, the website became the leading online running destination. In 2008, Nike added further functionality to the online platform, offering users more precise data, such as a desired day of the week to run, number of steps per year, and a list of other runners who jogged at a similar pace. As Nike added features, outside software designers initiated open source projects to help users manage data. These programs were capable of exporting the data from the iPod. Nike largely sustained these developments and ideas.

In 2010, Nike increased functionality by adding the Nike+ GPS application, which permitted runners to map their runs as well as track pace, distance, time and calories burned. (http://www.nike.com/us/en_us/c/running/nikeplus/gps-app, last accessed June 2016)

“The Grid”- Nike+ and Nike Running also started to embrace location-based social interface. In 2010, the company gave rise to a game called “The Grid,” a citywide running game that used the streets of London as its gaming platform. Stollak described the effort: It turned the city of London into a gigantic game board with the aim of re-energizing running in the U.K. and inspiring people to view running from a whole new perspective. Contenders were challenged to run to different checkpoints around the capital to receive points. We amplified the common running experience, creating an immersive layer on top of the run. The campaign ran on Facebook in May and October of 2010. The Grid is a matchless example of amalgamating real-world sport performance with digital and social platform to create a community that is group oriented. Unlike a standard running one-day event, with a set distance and a goal time, Grid’s runners participated for 15 full days, logging a total 30.177 runs, which compares to a distance halfway round the Earth: 12.500 miles. (http://www.fastcompany.com/1698729/nike-turns-london-game-board-get-people-running, last accessed June 2016).

”Run For China”- In 2011, Nike Running turned to social media to help influence public opinion and local awareness about running in China as well. Nike understood, upon entering the Chinese market that most Chinese young adults saw running as unexciting or as a punishment. Determined to change the perception and to present the constructive sides of running, Nike, along with advertising group AKQA, introduced a call-to-action video known as the “Run For” campaign on social networks and video sharing online platforms. The video featured Chinese runners chatting about why they jog in order to stimulate users to generate their own motives for running. An executive from the advertising company stated, “We wanted to make sure it wasn’t necessarily Nike telling [consumers] why running is good, so the whole entry point with the communication is really leveraging stories of the few runners who are out there.” (http://adage.com/article/behind-the-work/nike-popularize-running-china/230754/, last accessed June 2016). Nike was aware of the fact that this video had to encourage young Chinese, who were often too image-conscious to get out and run. Jeanne Huang, Nike’s communications director in China, explained, “In China I think people generally understand the benefit of sports, but we need to give them an inspiration. How can we drive them to really go out of their house, to get off the couch and do something physical?” (http://adage.com/article/behind-the-work/nike-popularize -ru ning-china/2 30754/, last accessed June 2016).

Nike built a campaign that presented running as a social movement. The company came up with the idea of hosting “Lunar Runs” in four of China’s major metropolitan zones. The events, which carried the name of Nike’s running shoe, the Lunar Glide, were held at night and featured music, celebrities, and fitness instructors. Between its Lunar Runs and a four-day Festival of Sports in Shanghai, Nike connected with over 35,000 possible Chinese runners. (http://mashable .com/20 11/09/ 22/nike-s ocial-media/#C 1xaSFL ciGq8, last accessed June 2016).

Management and financials of the company

Nike management structure is represented by a matrix organizational structure commonly known as a flat organizational structure. In a flat or matrix organization, the personnel states to project or product groups led by a product manager as well as to the department manager. Thus, in Nike’s case each brand has a department, and each department can make decisions without requesting the consent of the CEO. Each department also has subdivisions or project teams in charge of the mini tasks within each division. (http://panmore.com/nike-inc-organizational-structure-characteristics- analysis, last accessed June 2016).

Nike is one of the few companies that has been capable of applying this model effectively.

At Nike and in other flat or matrix organizations, the product team and product managers are the ones responsible for decisions regarding product requirements and fabrication processes while department managers concentrate primarily on policy-related matters. (http://panmore.com/nike-inc-organizational- structure- characteristics-analysis, last accessed June 2016).

The Compensation Committee is in charge of supervising the performance assessment of the CEO. The Compensation Committee studies the approved financial performance measures and targets (such as revenue, net income, and earnings per share), and other features such as leadership, success of strategic objectives, market position, and brand strength, which are indicators showing the company’s realizations and weaknesses. The Compensation Committee is responsible for reflecting the CEO’s performance in the CEO’s rewards.

The Board plans the sequence of the CEO and certain other senior management positions with the intention of assuring the well-ordered functioning and evolution of the management of the company, in case of emergency or retirement of the CEO. As part of this activity, the Chairs of the Nominating and Corporate Governance Committee and the Compensation Committee, consulting with the CEO, measure management necessities and aptitudes in the event a transition becomes compulsory. (http://www.inves topedia.com/articles/basics/03/022803.asp, last accessed June 2016).

Global competition commands companies like Nike and its competitors to respond rapidly to marketplace dynamics. In flat organizations, production teams led by product managers can take measures regarding decisions and react much more quickly than the traditional department leader, who is often left out of the production line.( http://2012books.lardbucket.org/books/management-principles-v1.0/s11-organizational-structure-and-c.html, last accessed June 2016).

During the 1990s, Nike considerably extended its share advantage over its time-honored rival, Reebok. In 1995, Reebok had announced its intention to grow into a sports and performance company rather than focusing on fashion and fitness goods. Nevertheless, conflicting advertising and repeated management revenue blocked Reebok’s sales and stock price. For the time being, Fila acquired share by positioning itself mainly as a fashion rather than performance product.

At the end of 1997, Adidas, not Nike or Reebok, was the promising firm in the industry, both on Wall Street and Main Street. Adidas transactions for 1997, reported in February 1998, were $3.5 billion, up to 42%, and pretax profits were $372 million, up to 52%. (http://uk.reuters.com/article/uk-adidas-nike-rivalry-idUKKBN0G81MR20140808, last accessed June 2016).

On February 24, 1998, Nike stated that the company continues to have sales flaws in Asia and additional inventories in the Japan and the United States. Financial analysts predicted Nike to lay off 1.500–2.000 of its 9.200 employees and some of them did not expect financial evolution until the end of 1999. (http://mo ney.cn n.com/1998/0 3/18/companies/nike/, last accessed June 2016).

Nowadays Nike Inc. is one of the major players on the sportswear market with a net worth of $100.1 billion, currently battling over market share with Adidas, Asics and Under Armour for footwear and sports apparel segment, while still monopolizing North America, China and South America and by leading in revenue, leaving their first competitor far behind in terms of figures. (http://www.investopedia.com/art icles/markets/012616/adidas-vs-nike-v s-under- armour-which-2016-nkeua.asp, last accessed June 2016).

Figure 1 Adidas vs. Nike market share

(Source: http://blog.thomsonreuters.com/index.php/adidas-vs-nike-graphic-day/, last accessed June 2016 )

In terms of acquisitions, Nike conglomerate owned a handful of firms such as Converse, Hurley International or Umbro during its activity which boosted the market presence, revenues and operations developed by the company. Today, Nike only owns the two most profitable subsidiaries Converse and Hurley, a renowned surf company founded by Bob Hurley. (http://news.nike.com/news/nike-inc-introduces-2015-global-growth-strategy, last accessed June 2016).

The company’s financial activity such as the balance sheet and the income statement serve as another evidence for strict management, innovative marketing and global presence. The resources of Nike INC., allow the management to finance strong R&D endeavors or innovative marketing campaigns which allows the firm to gain competitive advantage on the market by being able to cover the expenses of every bold project they are developing .Also the positive ratio between the assets and liabilities ensure economic and financial stability throughout fierce market conditions and unlimited potential of product & service development. (https://finance.yahoo.com/q/bs?s=NKE, last accessed June 2016).

Figure 2 Nike company statistics

(Source: http://www.statisticbrain.com/nike-company-statistics/, last accessed June 2016)

Since 2013 Nike amassed over $25 billion in revenue, having reached the $30 billion mark two years later. After the cost of revenue and operating expenses is subtracted, the company earns an astounding $2.5 billion in net income, increasing to over $3 billion in 2015. A more detailed report is presented below.

Figure 3 Nike Income Statement

(Source: https://finance.yahoo.com/q/is?s=NKE+Income+Statement&annual, last accessed June 2016)

Financially-wise, Nike is currently in a comfortable, leading position in the footwear and apparel market, maintaining the gap in market share, revenue and sales between the Oregon-based company and their competitors. Being a player in such a competitive and saturated market constantly requires assessing your strong points and the weaker aspects of your business while acknowledging incoming opportunities or possible threats.

SWOT Analysis of Nike INC.

This global enterprise has unique strengths in terms of competitive advantage by holding the leadership in the global market of athletic wear and sports-designed shoes. Moreover, along with the associated logo and motto, Nike is one of the most recognized brands worldwide and was included in a table of 50 popular companies among the millenials. Another strong suit of this firm would be represented by their inclination towards sustainability and corporate social responsibility. This ethical viewpoint labeled Nike as a climate-focused company which contributes to the brand identity. The availability of products in a great range of countries and regions represents another strength, allowing customers to contribute to the large number of sales by supplying according to the demand in important places and maintaining hype after product launching. Furthermore, the brand constantly associates itself with celebrities and famous athletes who have their own product lines or act as brand ambassadors for the company.

In terms of weaknesses, the company has faced some inappropriate labor conditions allegations due to outsourcing to contractors from different parts of the world such as Vietnam or Cambodia that are not always in Nike’s decisional reach. These sensitive issues that involve child labor or low wages have a great impact on how the brand is being perceived by important customers and could represent a valid reason for a loyal client to switch to the competition, which is crucial in this saturated market. Also, another ethical allegation would be an endorsement contract with Justin Gatlin, whose doping-related bans portray him as a controversial athlete.

Nike’s greatness relies on effective identification and usage of facts that provide substantial revenue, allowing it to innovate constantly from production to the consumer-producer relationship. One of the most important opportunities available for the Oregon-based company would be the Asian segment of the sports goods provider market due to personal marketing and direct selling to customers, a very valuable approach for clients who expect and treasure loyalty. Another important factor would be developing products for market segments which are not saturated yet such as accessories and or technological gadgets that aim to deliver the complete athletic experience.

Finally, threats are potential weaknesses of a company which are not relevant yet but can be proactively identified and covered by a thorough SWOT analysis. Nike’s major threat is represented by globalization and their international brand status. Operating in a great spectrum of regions leads to sales in various currencies which can be unstable and affect business-related forecasting.

The competitiveness behind this market could also represent a potential dangerous threat, as every wrong decision could register a shift in perception and sales, given the available alternatives in a model-saturated environment. The genuine factor and the existence of replicas on the market could also represent a liability in the company’s strategy because it lowers the expectation of customers and could act as failed quality test for a non-conscious brand consumer. (Source:http://blog.cayenneapps.com/2015/10/26/nike-swot-analysis/,accessed June 2016).

Chapter 2 Marketing & Brand identity of Nike

Marketing plays a key factor in the development of a company as it can increase market share, offer a competitive advantage by enforcing the image of the brand, create a product identity or help secure loyal customers. The major players of this market have stopped competing over pricing and focused instead on intensive marketing strategies which are also very expensive. For example, Nike is annually investing between 10%-15% of its revenue to fund marketing campaigns which leads, according to Reuters.com, to Nike having a ROI (Return on investment) ratio of 24.41%. Nike has created a customer focused sportswear brand by providing people the complete athletic experience as a result of the varied collections of products. Nike is constantly entering and innovating every possible niche in order to claim customer loyalty and maximize the usage of marketing strategies. Intensive marketing techniques by developed companies have increased brand awareness in the global market; therefore, creating market growth. (http://www.reuters.com/finance/stocks/chart?symbol=NKE.N, last accessed June 2016).

Subchapter 2.1 Market segmentation

Sports outfits were designed of supporting professional athletes or simply active people in daily physical activities such as running or going to the gym. They are designed for increased comfort and agility which are critical in sports. The market has increased its demand over the last years due to concerns regarding health and physical fitness through awareness campaigns. This has encouraged individuals to lead a more active lifestyle by playing different sports therefore expanding demand. Another reason would be the increased number of women who participate in sports which supplemented the need for variety and development in this niche. U.S., specifically the northern part, was the leader of revenue generating geographical regions in 2014 for the global athletic-wear market. The latest researches indicate that by 2020 the highest revenue will be registered in Asia Pacific, generating almost $62.7 billion due to an increase in disposable income and health-awareness programs. (https://www.alliedmarketresearch.com/sports-apparel-market, last accessed June 2016).

Figure 4 Different aspects of market segmentation

(Source: https://www.alliedmarketresearch.com/sports-apparel-market, last accessed June 2016)

The growth strategies adopted by players in the market to increase their market share and expand their customer base were mainly consisting of partnerships and tendency of expansion. Prominent companies, such as Nike, Inc., Puma and Adidas have adopted various growth strategies to mark their signature in the sports apparels market while the smaller players focus on nurturing efficient partnerships that would increase overall market share.

The sportswear market is segmented by three categories: geographical region, mode of sale and end users. Furthermore, each category is split into different types. Firstly, geographically the market is divided into 4 regions : Northern America, Europe, Asia-Pacific and LAMEA which includes the rest of the world. Secondly, the athletic apparel market segmentation by mode of sale consists of retail stores such as outlets or supermarkets and online stores, which feature an increase in popularity among users, especially young ones. Last but not least the market is also segmented by end user types such as women, kids and men. (https://www.alliedmarketresearch.com/sports-apparel-market, last accessed June 2016)

Every target market suitable for a business’ activity, even the saturated ones, will offer attractive opportunities that can be identified throughout strategic marketing planning. Depending on the vision of the top tier management or the boldness of the marketing department this opportunity could turn into a breakthrough strategy or simply add up to the competitive advantage that company has. A breakthrough opportunity will then allow the relevant department to develop innovative strategies which will benefit the company and will stop being useful when the competition deciphers said opportunity. In order for a company to be sensitive to competitive advantage or breakthrough occasions, it has to be quick in identifying the customer’s unsatisfied needs and developing a strategy around that unsatisfied need. A basic scheme aids the marketing department in spotting and maximizing the importance of opportunities. (McCarthy and Perreault, 1993:79).

Figure 5 Four basic types of opportunities

(Source: http://blog.demandmetric.com/2008/08/06/target-market-selection-segmentation-and-positioning, last accessed June 2016)

Nike focuses on utilizing this framework to its advantage and does not miss any opportunity that would help consolidate their leadership status through innovation and research. Market penetration consists of identifying the target group who has been actively buying the company’s manufactured products and trying to be appealing to more customers who fit in the described target group by tailoring your marketing mix to be more aggressive or understanding the reasoning behind the customer’s purchase. ( McCarthy / Perreault, Basic Marketing, 1993, page 79).

Nike is using market penetration by endorsing sports celebrities to feature the company’s products while maintaining the customer’s interest for the current products and best-case scenario, encouraging some new, potential customers to buy. (https://hbr.org/1992/07/high-performance-marketing-an-interview-with-nikes-phil-knight, last accessed June 2016).

Even though today Nike means more than footwear, having created for themselves a whole universe branded with the “swoosh” logo, the company had started by reselling running shoes out the back of a trunk therefore the importance for this segment is self-explanatory. The company creates new designs for footwear and apparel and launches them onto the market in which Nike is already the leader. At the recent event organized in New York City called “Innovation 2016” the CEO & President Mark Parker briefly described the new technologies featured by their latest products such as “Nike Hyperadapt 1.0” and the “Flyknit” line. Along with the fabric improvements, the company still tweaks the “Nike+” application which now includes services, sportswear, music and workout tutorials. The application has the purpose of creating a community around athletes, whether they are professionals or just amateurs. (http://news.nike.com/news/innovation-2016, last accessed June 2016)

In terms of market development, as of 2014, Nike operates in approximately 120 countries all over the globe and owned 858 retail stores throughout the world. (http://www.statista.com/statistics/250287/total-number-of-nike-retail-stores-worldwide/, accessed June 2016)

From the four basic opportunities presented above, diversification is the least effective one in Nike’s case as the enterprise had already expanded the spectrum of products along the years as the company originally started as a footwear producer and later on manufactured apparel and accessories.

.Also, their products are currently sold worldwide, eliminating the need of accessing new markets. A recommended approach would be decreasing the risk by operating in the existing markets. (McCarthy and Perreault, 1993:79)

2.2 Marketing mix

Nike is a company that stands by the words of famous Peter Drucker, a renowned management consultant, who stated that “the only valid definition of a business purpose is to create a customer.”. Everything that is part of Nike’s success and leadership is related to customer satisfaction and brand loyalty. Along with marketing strategies, even the vision statement :

"To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete." – Bill Bowerman, founder of Nike. (Waite, 2015:248)

expresses customer-centricity. Albeit at a first glance it would sound like a logical goal for a sportswear producer, the power of this phrase is given by the factit traces back to the original founder Bill Bowerman. Mr. Bowerman and his student, a track athlete, Philip Knight started developing shoes to improve athletes‟ performance. He was researching by asking for help from university runners to test his creations and collect their feedback. (http://www.fundinguniverse.com/company-histories/nike-inc-history/, last accessed June 2016).

The statement is especially powerful since the mentality has not changed and the aftermath of Bowerman’s good intentions to inspire and constantly push limits are the key factors of Nike’s greatness today. Although healthy and sturdy goals can ensure tremendous growth to a company it would be unfair not to acknowledge the brilliance behind this company’s flawless marketing techniques. The aspects that differentiate Nike’s story from their competitors is the hard-times the company has faced from 1975 until late 1980’s when the company has registered a revenue decrease particularly because the management didn’t notice the aerobics sales growth. Nike’s competitors had by then developed their business segment. The usage of marketing techniques and the competitive edge brought in by globalization helped the giant conglomerate regain and basically establish a top-tier leadership sportswear-wise. (http://www.fundingunive rse .com/ company-histories/nike-inc-history/, last accessed June 2016).

The marketing mix is a core marketing process which refers to the 4 P’s: Product, place, promotion and price and is used to encompass the main attributes of the business activity. The marketing mix of Nike which features continuous improvement and aggressive branding led to an increase in profits and significant market share. Also they express the idea of a whole sports experience brought to you by Nike, which actually boosts your confidence, knowing that they provide equipment for your favorite athlete as well. Wearing this brand doesn’t necessarily mean good quality apparel, it also means that you are part of an active lifestyle, a way of life. (http://ca.complex.com/pop-culture/2014/01/nike-instagram-social-media-strategy, last accessed June 2016)

Products

Nike INC. started off as a footwear retailer which led to footwear producer and for almost half a decade they have been developing and delivering the utmost and complete experience of a sporting activity. Their products range from footwear to auxiliary gadgets which combined with Nike gear can tech-up your athletic experience .The most famous categories of Nike products are: Running, Air, Football, Basketball and aquatic activities. The most popular sports have a celebrity athlete endorsing a special line of products such as “Nike Kobe” who are made in collaboration with Kobe Bryant, all-around player for L.A Lakers. (http://news.nike.com/news/5-game-changing-nike-innovations-of-2014, last accessed June 2016).

In addition to footwear and sportswear the company also produces different models of athletic gear such as watches, baseball bats, football knee-pads or biking helmets and goggles. According to the CEO of Nike, “there is no value in making things anymore. The value is added by careful research, innovation and marketing.” In the past, Nike was a product-oriented company which invested more money in the R&D department in order to appeal to the customers having a broader offer than the competitors. Since 1992, when Nike started subcontracting different factories for manufacture throughout the Asian region, the product orientation strategy was shifted towards marketing and branding supremacy while the production was being outsourced. The main production of Nike is currently established in Asia and South America, in over 40 countries that amass 663 factories and over 1 million workers. (http://manufacturingmap.nikeinc.com/, last accessed in June 2016).

Cheap manufacturing permitted the product element of Nike’s marketing mix to develop thus allowing a higher and versatile market presence by being able to address different needs on different segments. Furthermore, Nike has a competitive advantage in terms of owned patents. One of their strengths relies in innovative cushioning which have made Nike, the preferred brand of professional athletes. Currently, the giant conglomerate owns four technologies, each one featuring its own production line.

Nike Air is the oldest one, launched first in 1987 designed by an ex-architect who originally was working with infrastructure. (http://help-en-us.nike.com/app/answers /detail/article/product-technology-air/a_id/34717/country/us, last accessed June 2016).

The second one, Nike Zoom features a really thin sole which allows for better movement and increased stability, regardless of the surface, being used extensively by tennis players. (http://help-en-us.nike.com/app/answers/detail/article/product-technology-zoom/a_id/56817/country/us, last accessed June 2016).

Basketball players were not neglected in terms of technology by Nike as they created the Air Max sneaker having a sole made of a mixture between fabric and large bags of air, alleviating the impact resulted from jumping. (http://help-en-us.nike.com/app/answers/detail/article/product-technology-max-air/a_id/35453/country/us, last accessed June 2016).

The last patent owned by the firm is called Nike Shox and was originally applied on the Nike football cleats as a result of the tough foam that would reduce the risk of injures caused by physical contact. (http://help-en-us.nike.com/app/answers/detail/article/product-technology-shox/a_id/34778/country/us, last accessed June 2016).

Price

One of the four major components of the “4P’s” of marketing is price. Fixing a rate is one of the biggest choices a business has to make because, in the long run, customers respond to this variable more than to any other. Due to the fact that pricing has to comply to various laws that regulate different aspects from fixing to anti-monopoly and discrimination, managers consider it a sensitive issue and minimize it as a marketing variable. The strategy of product pricing breaks down in two basic paths: demand-oriented and cost-oriented. (McCarthy and Perreault, 1993:542).

Companies must be aware of their target market, cost of goods, competitor’s pricing, as well as many other things when deciding on a price point. Nowadays customers have their fair share of knowledge of how pricing is established and due to increased savviness they realize a product’s worth. Competitive markets will always require a player to understand the demands of the clients and not just quantity-wise or availability related issues. The customers would be more willing to invest a bigger amount of money in a product or a service, even if there is a cheaper alternative available, if the assessed product’s qualities justify the price. (McCarthy and Perreault, 1993:512)

Previous to 2014, Nike, one of the world leading manufacturers of sneakers, was using a cost-related pricing stategy which implies assessing the production cost of an item from your inventory and then adding a markup to determine said product’s price. The markup can be expressed as an fixed amount or as a percentage. (McCarthy and Perreault, 1993:512)

In July 2014 the company started to raise its prices while the rest of the market was lowering them. Their competitors were offering heavy promotional discounts to try to stay afloat and convince customers to keep purchasing their “inventions”. Nike has taken a new approach to their pricing strategy, using a consumer value model grounded on the analysis of how much a consumer would be willing to spend on each product. (http://www.just-style.com/analysis/new-pricing-strategy-pays-off-for-nike_id122400.aspx, last accessed June 2016).

Their CFO Don Blair said Nike has “done quite a bit of work around its consumer value equation.” Furthermore he added, “the strength of our brand and the innovation that’s in our products means that there is a great consumer value proposition at higher price points.” (Annex 1)

The CFO also stated that upgrading their sneaker prices strengthened the consumer’s perception of the product. This price policy is an efficient one since Nike was able to add $168 million to total industry dollars by raising their average selling. This model is straightforward as one can approximate the cost of the products and then increase the product’s selling price in order to achieve the desired profit. With a company like Nike, it is clear that the client is more than willing to pay a higher fee for the products since they are viewed as an innovative and technologically focused enterprise.

Place and channel systems

Figure 6 Strategy decision areas in Place

(Source: McCarthy and Perreault, 1993:79)

The common-sense marketing mix relies heavily on delivering a quality product with an affordable price and the importance of this combination is undisputed. However, focusing on the placement of a company’s products is often neglected. The availability of the produced goods at the right time in high importance places can benefit the consumer perception about the brand and also lead to a boost in sales. This strategy is then applied on directly to the customer or via indirect channels such as middlemen, retailers, or facilitators. (McCarthy and Perreault, 1993:316-319).

Nike products are carried by multi-brand stores and the exclusive Nike stores across the globe. Nike sells its goods to about 20,000 retail stores in the U.S. and in nearly 200 countries around the world. When entering the international markets, Nike decided to sell its products through independent distributors, licensees, and subsidiaries. Thus, Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States. A good number of the factories are situated in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. Nike is reluctant to reveal information about the contract firms it works with.

However, due to harsh disapproval from some organizations like CorpWatch, Nike has disclosed some facts and figures about its contract factories in its Corporate Governance Report. (http://www.corpwatch.org/article.php?id=12965, last accessed June 2016).

Promotion in the marketing mix

Nike’s promotion mix involves advertising, personal selling, direct marketing, sales promotions, and public relations.

In terms of advertising, Nike’s aim is to reach significant populations of target customers with the greatest possible influence. Efficacious advertisements publicize the brand to customers and improve their perception of the business. Advertising is typically pricy but when successfully applied, could lead to Nike earning the rewards of having a strong brand image and high demand for the produced goods. The advertising plan includes campaigns illustrated by tv-ads such as “Endless Possibilities” which are designed to embody the idea your performance in the preferred athletic activity is greatly increased when wearing the brand’s products.Moreover, Nike focuses on every customer who has an active lifestyle and immerses him in the complete professional experience, endorsed by his favorite athletes. (http://ca.complex.com/pop-culture/2014/01/nike-instagram-social-media-strategy, last accessed June 2016).

Nike uses celebrities to embody the ideal customer or user of the company’s products. In most of the cases the advertisements present extremely popular personalities, such as professional athletes. The target customers can see that their beloved celebrities use the company’s goods. As a result, the customers are highly driven to imitate the behavior of these public figures. (http://www.forbes.com/sites/rob ertpassikoff/2013/12/12 /if-the-nike-brand-dont-fit-lebron-cannot-commit-2/#1548b36967fa, last accessed June 201 6).

Figure 7 Advertising expenses vs. Revenue

(Source: http://fortune.com/2012/02/13/nikes-new-marketing-mojo/, last accessed June 2016)

Nike’s personal selling efforts take place in their stores. Store personnel are coached to deliver assistance to customers in understanding more about the firm’s products, and to convince them to buy these. In some cases, sales personnel support the company through personalized service that helps customers find the right Nike product.

Customer experience is enriched because of this educated assistance and power of persuasion from the sales personnel. Customers get excited about the products they buy from Nike, they also feel empowered in making knowledgeable decisions in buying these good. Thus, Nike’s marketing mix uses personal selling to create superior customer experience and customer relations, while promoting the firm’s products. (Percy, 2014).

Nike uses direct marketing to promote the latest products to the target market. These new products are typically promoted powerfully. However, to make a greater impact, the firm reaches out to salespeople in order to approach certain organizations or individuals in target market segments.

Nike’s sales promotions usually exist under the form of coupons and special offers given to target customers. The company uses sales promotions to influence new customers by presenting them added values and advantages, such as the features of the products and the savings they can make by exploiting discount coupons or special offers. Sales promotions in Nike marketing mix urge demand from new customers because their decisions regarding the purchase of the firm’s goods are based on these perceived benefits.

Nike rarely uses public relations in marketing communications. The company uses public relations to state social issues linked to the company, such as the use of eco-friendly technology. In some cases, the firm uses public relations by funding charity events and similar activities. (https://www .sec.gov/Archives/edgar/data/320187/0000 3201871400 0097/n ke-5312014x 10k.htm, last accessed June 2016).

2.3 Brand identity development strategies and legal issues

One of the elements behind a company’s strategic plan is represented by the development of the brand. This process creates a concept in the customers’ minds that is instantly recognizable and contains their perception about the products and their loyalty towards the company.

Figure 8 Kapferer’s brand identity prism

(Source: https://tuesdaydigital.wordpress.com/2013/01/06/applying-kapferers-brand-identity-model-to-digital-marketing/, last accessed June 2016)

The general approach for branding is made through brand values, which are usually reflected by the company’s vision and mission statement. Furthermore, ethical aspects of the business and the overall customer experience also represent an important factor. The identity of a certain brand can amass great benefits for the business and can be as useful as the marketing mix. The emotional and practical value of a brand will contribute with an easier persuasion for consumers to purchase and will reinforce a quality perception of the products.

Also, it will help build a loyal customer database allowing to connect loyal clients with the same hobbies together by developing a community around the brand. (Kotler and Armstrong, 2013).

Nike has extensively invested in this strategy thus allowing the “Swoosh” logo to be one of the most recognized symbols worldwide, and along with the color paterns and packaging represents the physical characteristic of the aforementioned brand. The emblem of Nike appears, at the first glance, as a rudimentary drawing made of two arched lines while it was actually designed to suggest dynamism and speed. Furthermore, the brand’s logo features are associated to a deity from the Greek mythology whose main attributes were victory, speed and the ability to fly. Today, the meaning of Nike’s logo represents more than high velocity and the spirit of victory. Firstly, it encompasses a multi-billion dollar athletic apparel company with innovative strategies and intensive branding efforts from a financial point of view. Secondly, from a customer standpoint it represents an entire history of sports evolution and athletic involved community revolving around the company’s products. This can be achieved by outsourcing production and intensifying the focus on customer loyalty. (http://www.magneticstate.com/blogdept/what-does-the-nike-logo-mean/, last accessed June 2016).

As part of their efforts in developing the business’ identity, Nike’s Brand Ambassador title represents a strategy meant to create a deeper connection between customer and company, emphasizing the idea of a community brought together by a common goal, performance and professionalism in sports. This position can be filled by both worldwide known athletes and regular morning joggers as the criteria are not sports related but more popularity related. Nike chooses people with social media reach and impact over desired target groups, which the firm endorses with sportswear and gear, involuntarily transforming them into free advertisement channels. These ambassadors create the impression of a smaller gap between the customer and Nike, inducing a feeling of belonging and thus remarkably increasing loyalty in relationships. The list of famous people who have occupied this position features renowned athletes such as Michael Jordan, Kobe Bryant, Maria Sharapova or Tiger Woods. (http://ca.complex.com/pop-culture/2014/01/nike-instagram-social-media-strategy, last acessed June 2016).

Another aspect of Nike’s brand strategy is to be perceived as powerful and to build customer loyalty by resorting to feelings and heroic behavior. Their campaigns are tailored to trigger self-contempt and also, equally, determination to evolve into a better self. The customer is part of an experience where the external factors are not as relevant as the internal ones. The whole athletic experience is manufactured by Nike, therefore the only aspect that will determine the performance will be customer-related. Nike commercial campaigns are stories crafted around a humble hero who will overcome all the obstacles, triumphantly. Heroism will motivate the consumer to identify the internal negative factors and to achieve the success as the underdog, with the aid of Nike products. Also, this technique is highly effective since popular professional athletes are always depicting the characters in the company’s commercials. Using emotions and heroism increases the number of loyal customers and marketshare by innovative brand development. (http://602communications.com/2013/02/nike-brand-strategy-emotional-branding-using-the-story-of-heroism/, last accessed June 2016).

Despite of various positive factors that can greatly increase a brand’s value, a company’s image can be shattered by different events such as unresponsive customer service, quality issues or legal and ethical battles. Often, the outcome of these events is greater than expected and could result in diminished loyalty from secured customers or a negative overall opinion about the brand from potential customers. Nike is currently engaged in three lawsuits regarding infringements of the copyright law and the other two are allegedly disputed over intellectual property. (http://qz.com/365948/nike-is-fighting-three-legal-battles-to-protect-the-brands-design-soul/, last accessed June 2016).

Furthermore, the giant sports apparel producer was involved repeatedly in sweatshop-related problems, being accused of unethical behavior towards the employees in charge of manufacturing. After 1990, when Nike outsourced the production in Asia the problems regarding corporate social responsibility were decreasing the aggressive efforts of the company to appear as a sustainable, eco-friendly, people-oriented company. However, after 2005 and various lawsuits and public comments, the company addressed this issue by enforcing a different set of rules, while being sensitive at the wage and working conditions which smoothened the perception in the consumer’s perception. (http://w ww.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5, last accessed June 2016).

Chapter 3 Marketing impact and consumer perception of Nike Inc. survey

For the research methodology the survey below has been used as tool for research and facilitation of the usage of raw data into formulating strategies and ideas about a direction the company will have to steer to. Also it can provide insight about how people of different ages or from different social contexts perceive a brand while defining an average customer profile. Nike INC. has been prolific in terms of marketing strategies and have used all their channels to keep building their brand identity while reaching to almost all the market segments all around the world. In 2014, Nike has spent over $3 billions of dollars on a expense called “demand creation” which translates into anything from a Instagram endorsed page to a collaboration with a skater (http://news.nike.com/news/nike-inc-reports-fiscal-2014-fourth-quarter-and-full-year-results-fiscal-2014-fourth-quarter-and-full-year-results, last accessed June.2016). The data that has been brought back by the survey clearly demonstrates their objectives encompassed in the broader marketing strategy which includes being globally recognized and securing loyal customers through creating an experience rather than selling a product. Moreover, the feedback can serve as a quality check of efficiency for their marketing efforts and branding strategies.

The questionnaire featuring a total of 28 queries is divided into two categories. The first division contains 21 questions which are topic-related and were designed to cover different aspects of sportswear shopping and perception about Nike brand such as rating various features of the products, reasons to lose loyalty or identifying the brand’s competition. The other group is built around 7 inquiries and serves the purpose of shaping up an average consumer profile thus allowing the researcher to find links between certain answers related to the brand and the background of the respondent. Those questions analyze information such as age group, occupation, education level or monthly income. Also, by collecting data about customers and filtering the most common answers for each question could lead to decryption of the target market or simply draw attention to a specific group of people. The brand-related questions approach a variety of aspects that a customer may encounter while being part of the sportswear market and analyze potential shifts in values of the same activity while being part of Nike’s customer base. The first question of the form establishes the relevancy of the remaining queries by determining the respondent’s knowledge about brands.

This survey was conducted among 100 people on the internet between 23rd of May to 10th of June 2016. The participants are mostly adults aged between 21 and 45 years old ( 82% ) and young adults ranging from 15 years old to 20 years old ( 17% ). The survey aims to identify patterns between brand identity, loyal and potential customers.

3.1 Question analysis and response interpretation

The first question aims to assess if the subject is a brand connoisseur in order to create a differentiation method based on the relevancy of the response form. The responses gathered reflect that out of 100 people, 75% of them consider themselves brand-conscious, being able to identify a certain manufacturer by logo or a color scheme while the remainders acknowledged that they have little information regarding fashion brands.

Figure 9 Brand consciousness

(Source: made by the author)

The second question has the purpose of determining whether the respondents have had previous interactions with the Nike in order to measure the reach of the aforementioned brand (Figure 2). 97% of the participants have answered positive, while the rest of 3% have stated they never heard about Nike before. The group of people who answered negative consists of men, having completed a PhD level of education, belonging to the 21-45 years old age group.

Figure 10 Knowledge about Nike (made by the author)

The third query assesses the notoriety of Nike’s “Swoosh” logo as the respondents were asked if they would be able to identify the brand’s logo. Only 2% of the subjects have chosen a negative answer to this question, reinforcing the idea that Nike is a world-wide known athletic producer. The subjects who responded negative are a male and a female, both within the 21 to 45 years old age group from the urban area.

Figure 11 Identification of Nike’s logo

(Source: made by the author)

The inquiry displayed below (Figure 4) shows that 91% of the subjects were owners or still own a Nike product. Most of the respondents (42%) who chose a negative answer consider themselves loyal to Adidas.

Figure 12 Owner of a Nike product

(Source: made by the author)

The graph shown below is the representation of a 1 (disappointing) to 5 (excellent) scale rating of the satisfaction created by the usage of Nike products. Over 90% of the people who completed the survey rated their experience with values ranging from 3 to 5, emphasizing some major competitive advantages of Nike regarding customer satisfaction.

Figure 13 Satisfaction created by Nike Products

(Source: made by the author)

Question number 6 required subjects to chose the relevant channel which helped them discover Nike. The present segmentation of the chart below represents a consequence of the company’s extensive marketing efforts. The responses show that every major channel had at least 10 people associated with. However, the 38% share owned by advertisements in malls comes as a surprise since Nike invested $3 billion on the internet and social media marketing.

Figure 14 Channel that informed the customer about Nike

(Source: made by the author)

The seventh question of the survey was an open question and asked the participants to fill in their preferred brand which they consider themselves loyal to. According to Figure 9 in a market monopolized by Nike, as discussed in the previous chapters, Adidas remains the most potent competitor amassing 23% of the total answers in terms of customer loyalty. The remaining 25% is unequally split between Asics (4%), Under Armor (8%) and Vans (13%). Out of 52% of respondents who perceive Nike as their loyal brand, 31% are women younger than 45 years old.

Figure 15 Loyal brand of choice

(Source: made by the author)

The following inquiry aims to provide insight into what motivates the customers to choose Nike over a different brand of sports manufacturers. The subjects were asked to tick the most three relevant aspects that encourage them to keep buying previously mentioned brand’s products. The answers portrayed the most important aspects of a sports product such as design, price or longevity. The most popular reason for buying a Nike product was related to design with more than 68% while the second and the third most popular featured longevity (51.7%) and practicality (38.3%). Gender-wise, 28 respondents out of 31 who appreciate the products for longevity were men, mostly in college (90%).

Figure 16 Reasons for loyalty towards Nike

(Source: made by the author)

The chart below represented by Figure 17 is linked to the ninth question of the survey, which asked respondents to fill in the biggest competitor of the preferred brand. All of the subjects (52%) who chose Nike as their favorite brand at question 7 consider Adidas to be a real threat to Nike’s leadership, while loyal Adidas users consider Vans as a viable threat as well (2%). The other category of 24% represents brands like Under Armor (7%), Asics (2%) or Puma and Reebok, both at 1%.

Figure 17 Biggest competitor of loyal brand

(Source: made by the author)

Figure 18 represents the answers of 100 subjects regarding how frequently they have returned a product manufactured by their favorite brand. The percentages show that 81 people who engaged in the questionnaire have never needed to, 18 subjects having the student occupation resorted to returning items and the remaining person who described the frequency as often, belongs to the 21 to 45 years old age group and has an income of over 500euros/ month.

Figure 18 Frequency of returning a product

(Source: made by the author)

The query number 11 of the questionnaire had the purpose of discovering a connection between the loyal brand of choice and the reason of returning a product. Also it had the scope of emphasizing the low rate of returns in relation to the preferred brand of choice. As this was not a mandatory question the total number of responses were 22. Out of that total number, 9 of them returned their product because of the inappropriate size, 6 customers complained about the damage of the product at the arrival and the rest about the design problems.

The figure below illustrates the answers regarding whether a customer should be tempted or not to purchase a product manufacture by Nike solely because of the social status conferred by the Oregon-based company. As shown in the chart only 37% of the respondents would agree to wear the aforementioned brand for social reasons. Out of the percentage of people who responded positively, 12% have picked a different loyal brand than Nike which stresses the undisputed leadership and also the perception of it in social groups. All 37 subjects who picked a positive answer belong to the student category and were in college at the time the questionnaire was filled.

Figure 19 Social-status encouraged buying

(Source: made by the author)

The subjects were asked to rate on a 1 to 5 scale, from never to always, how often they encounter Nike’s logo in their daily routine in order determine how visible is the brand in potential customers activities and if it could influence his athletic brand of choice. The results displayed genuinely reflect one of the company’s biggest competitive strength, advertising. The importance assigned to aggressive marketing strategies and constantly increasing reach is the reason why 16% of the respondents see the brand’s logo everyday and more than 80% of the respondents see it at least 1 once a week. 5% of the remaining number claim that they have never seen Nike’s logo during their routine.

Figure 20 Frequency of seeing Nike’s logo on a daily basis

(Source: made by the author)

The question linked to the answer chart below relates to commercials produced by Nike which feature famous athletes as main characters. As discussed in chapter 2, endorsing celebrity athletes is a key point in the firm’s marketing strategy and acts like a supplementary motivation for the customer to engage in the same physical activity as depicted in the advertisement and therefore leading to buying the appropriate gear. Almost half of the responses contained positive answers, from which 32% coming from males and the rest of 17% from females. This strategy can be applied for different types of market segmentation such as gender-wise or income-wise. This could also prove to be an effective way of converting potential customers into regular ones because 15% of the affirmative respondents didn’t chose Nike as their favorite brand.

Figure 21 Preference towards Nike sports commercials

(Source: made by the author)

Figure 22 illustrates the answers of 100 subjects about how their assess their relationship with the footwear and sports apparel producer, whether or not they consider themselves secured or they are simply devoted to a specific line of products, related to their hobbies. From the number of people who have responded negatively, a fair 23% have previously chosen Nike as their favorite brand and the rest of 25% were Adidas users. The consequence of the fact presented above could translate into potential customers for the competition but also could serve as a new focus objective for Nike in terms of securing customers who are purchasing your goods. The category of people who denied being a secured customer consists of students aged between 21 and 45 years.

Figure 22 Secured customers of Nike

(Source: made by the author)

The answers portrayed in the graph below are linked to question 16 and refer to the most purchased product by each customer. The participants had to choose between the most popular categories Nike produces such as footwear, equipment or sportswear. This question was an optional one and gathered 76 unique responses. The most popular category was footwear with a percentage of 75.7, followed up by sports apparel with 41.9% and equipment with 17%. All 5 respondents who picked accessories category were female students with an income between 150-250 eur/month.

Figure 23 Most purchased category of products

(Source: made by the author)

In the following question, participants were required to rate using values from very disappointing to very good, various experiences they have had with Nike’s brand services or products. According to Figure 24, almost 40% of the total number of subjects classified every aspect of the brand’s experience as good while an average of 20% of the participants described it as very good. The rest of 40% is split between the two negative values and average. Customer satisfaction has always been important for Nike and along with the creation of a sports community and deeper relationships between the firm and the customers, it forms the company’s greater strategy of creating a unique experience while utilizing Nike that will have you come back rather than just selling thousands of products;

Figure 24 Rating of different aspects regarding Nike

(Source: made by the author)

For the following question, the participants were asked to determine if they have purchased products or services due to effect of the marketing campaigns. This question has the purpose of analyzing the effectiveness of marketing in the decision-making process of a customer. The positive answer has been chosen by 61 respondents while the rest of 39% suggested that were unbiased by branding. The considerable difference between the percents emphasizes once again the benefits that Nike and companies who extensively use marketing have. Out of the number of people who have chosen a positive answer 27% were females and the remainder males, all within the 21-45 years old age group.

Figure 25 Branding influenced purchases

(Source: made by the author)

Question 19 had the scope to assess potential reasons for losing loyalty in the athletic brand of choice of the customers. Issues involving price amassed the most responses with 41% followed by mass-media scandals with 24% and unsatisfactory customer service amounting 17%. Hence the fact the query required to fill in an answer, the media scandals category can be segmented into the most used aspects such as : child labor, unethical manufacturing or endorsing unworthy athletes. A relevant connection is created here between the subjects who consider media scandals as a worthy reason to lose loyalty and the perceived loyal brand. All the 24 respondents have chosen Nike as their favorite brand in the previous questions.

Figure 26 Reasons for losing loyalty

(Source: made by the author)

The last question of the brand-related part of the questionnaire attempts to estimate the influence of public figures who are endorsed by Nike and are seen embracing every product from each category while describing their utmost experience provided by Nike. The responses range between values from 1 (not at all) to 5 (very much). 37% of the subjects do not consider celebrities, even sports ones, to act as a strong influence while 37% , answered with 3 and 5, admitting that a personality was probably one of the reasons for a purchase. The majority of subjects who chose the first value is represented by men, having different occupations, with an income ranging from 250 to 400 euro/month. The responses are illustrated below in figure 27.

Figure 27 Public figures as influences

(Source: made by the author)

In order for the research to be valid and productive the quantitative data presented above has to be linked to the relevant category of people. The remaining questions of the survey were designed firstly to determine the profile of the respondents and secondly, to analyze how each category of customers perceive the brand by rating different previous experiences they’ve had and by gathering information about the decision making process when choosing a sports brand. An average customer profile is useful when assessing the entrance on a new market, especially a heavily segmented one and helps to find focus on the relevant category, reducing costs and increases profitability.

The participants were then asked to state different details about themselves while mentioning their occupation and were inquired if they consider themselves shopping enthusiasts. Of a total of 100 response sheets, 75% of them are students while the remaining percentage is split between freelancers (6%), corporate employees(15%) and unemployed persons (4%). 60% of the participants admit they are enthusiastic shoppers which could have an impact on the decision making process as the irrational downside of this feature may appear when shopping. The next question, customer-wise, was related to income. Participants had to choose between categories from < 150 euro/month to over 500 euro/month. The most popular choice was the interval between 150-250 euro/month (22% ) followed by 250-400 euro/month (15 %). As far as the gender is concerned, this survey features an equal 50% for both males and females. The respondents were required to state their current level of education.

The majority of 57% had a bachelor degree, while 26% were in high-school or college, leaving the difference to be split between master programmes and PhD students. The last question that built the consumer profile was related to residence location whether its was the urban type ( 94%) or the rural one ( 6%).

3.2 Average Customer profile

The average customer profile for Nike Inc. would be represented by a shopping enthusiast student, male or female, over 21 years old, with an average income of 250 euro/month from the urban area currently enrolled in college or engaged into a Bachelor programme.

The survey aided in the creation of a possible customer profile while emphasizing on the existing traits of Nike, which were backed up by hard-data and also could be useful in deciding future trajectories in terms of marketing or advertising made by this company. The retrieved customer profile could represent the first recommended target market if Nike would decide to actively invest in Romania. The questionnaire also illustrates potential competitors, sensitive issues of Nike customers and feedback regarding experiences with the company’s products.

Conclusions

The value of this document lies in the in-depth analysis of Nike Inc. that featured the creation of the sportswear market and the historical factors that led to its appearance. It contains information researched throughout the paper which help to answer the questions formulated in the introduction part such as reasons for Nike’s success, explanations of sales volume despite environmental factors or how can a brand be sustained by innovation. The answer of these questions was obtained through qualitative and quantitative research and the hypothesis formulations are backed-up by scientific data.

The factors that facilitated the ascension of Nike range from the end of World War II to the sudden interest of people in leading an active lifestyle have created the perfect opportunity for Nike to emerge.

The creation of the official name-bearing company in 1971 had the perfect occasion to arise. The environment conditions were favorable, and it allowed the company to be part of a young, unsegmented market that awaited a heavy competitor. This was the first opportunity for Nike, as they opened in a favorable moment, helped encourage health-awareness and basically promoted the running boom from 1960 throughout 1975. The prowess and economical success of the company does not rely solely on to lucky timings.

Furthermore, Nike embraced the customer-centric approach early enough to make a difference and integrated it as part of their growth strategy. Nike’s continuous success and flawless trajectory, business-wise, relies on the effort they have and always will put in the marketing strategy and the cost-intensive but highly-effective brand identity management. The demand creation department expense of Nike for a single financial quarter from 2016 exceeds $800 million. The demand creation would translate into brand marketing, organizing events sponsored by the giant firm or simply advertising on different channels made Nike spend almost $1 billion in a couple of months. Also by embracing a marketing oriented strategy, this allows you to extend your reach and deepen your customer relationships leading to loyal customers and strong, united communities around your products or services. This benefits both the company and the customers as they start to feel interconnected thus allowing them to communicate differently.

Nike secures clients with the same, bulletproof technique it’s been using since 1990. Once you are involved into buying a Nike product, the company tries to create an experience and then extend by designing complementary products that have the purpose of easing your life and creating the utmost sports experience. Another tactic of securing clients is through endorsements. Nike collaborates with famous people, including professional athletes that will be engaged in same physical activities you are and would probably wear the same gear, produced by the Oregon brand. The customer will then feel more motivated to succeed at that sport and moreover, will be interested in purchasing additional products for that sports or even unrelated ones.

The sales volumes and sales-related statistics mentioned in the first chapter despite economical conditions can be explained by their extensive and expensive strategy which focuses on accessing every available channel in order to increase sales and customers reach. Tailoring the marketing mix to fit the target market has always been a key principle for Nike. Even though, their price variable remains fixed, the innovations brought in terms of places, promotions and products are assuring a steady income every quarter for this company.

Innovation can be sustainable if there is implemented at a suitable time and if the general direction of the company is shifted towards it, the outcome can be greatly increased. Innovation is not only useful for sales and revenues, it also can be used as customer-related process where the relationship is constantly updating with new benefits, products or gear features to support your loyalty towards the company. Having understood this core principle, Nike applies it with every occasion, exploiting every opportunity and maintains the leadership position on sports-related markets for apparel and footwear.

After researching various aspects of Nike Inc. business and linking it with general marketing and management knowledge, the first proposition for the company would be extensive care about ethical and legal issues which can tear up brand identity much more faster that it’s required to build. Manufacturing and labor irregularities are usual for Nike and the appearance of these lawsuits in public shatter the positive perception of customers who would be quick to change to the competitors if their loyal brand allegedly hires children to manufacture their shoes.

Another suggestion would be more access to features and privileges for the Eastern-European market of sportswear. Nike has intensively focused on Western-European countries leaving the rest of Europe with product leftovers from the West and also stopped developing the communities and technologies equally for all the citizens of Europe. Furthermore, I strongly suggest more attention to this geographical region because of the fact that the salaries have probably increased and the market is not yet saturated as the competitors have the same status so far. The demand for sneakers would worth increasing the investments on this part of the market and will expand the loyal customer base because of the untapped potential.

The research about Nike Inc. company and consumer perception regarding this firm was limited in terms of volume of information and versatility of the questionnaire participants. The survey has featured only 100 responses, which were mainly completed by students. Another limitation would be the geographical region of the participants which only feature Eastern-Europe, transforming the data to a one-sided point of view. The experiences and perceptions of Western Europeans could have greatly improved the qualitative aspect of the survey. The age group showed little to none diversity regarding age groups of the participants. More than 90% were belonging to the same age group, between 21 and 45 years old. The data returned from older participants could have helped us understand a more mature perspective of the company.

As a future research path, the questionnaire will be conducted among a smaller, yet more versatile group of participants in order to collect data about Nike perception from different categories of people. Another improvement of the next research phase will consist of interviewing crucial people that have occupied high-maintenance positions in the company. Their insight will represent valuable and scarce information thus allowing a deeper research into the mission and sustainability of this exceptional company.

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Annexes

Excerpt from Nike’s 2014 FY 2014 Q4 Earnings Release Conference Call Transcript

Questionnaire – Consumer perception regarding Nike Inc.

Would you consider yourself as brand-conscious?

Yes

No

Have you ever heard of the brand Nike?

Yes

No

Would you be able to recognize their logo?

Yes

No

Have you ever owned a Nike product?

Yes

No

Rate the satisfaction of the experience you have had with Nike products so far?

How did you hear about Nike?

Social groups

Internet

Sales advertisements in shopping centres

Magazines

Other :

Which of the following brand would you consider yourself loyal to?

Adidas

Nike

Under Armour

Reebok

Asics

Other:

If your answer was Nike, select from the list above which of the product features made you loyal.( Choose the most relevant 3 choices )

Design

Availability

Innovation

Price

Practicality

Longevity

Who you perceive to be your favorite brand's biggest competitor? (insert brand name)

Insert answer here :

Have you ever returned an item from your favorite brand after you have bought it?

Never

Rarely

Often

Always

What was the reason for returning aforementioned product?

Would you ever choose to buy Nike over another brand just for the social status?

Yes

No

How often do you see Nike's logo in your daily activities?

Are you a fan of commercials produced by Nike that feature famous athletes?

Yes

No

Would you describe yourself as a 'secured customer' in relation to Nike?

Yes

No

What categories of Nike products you buy the most?

Sportswear

Footwear

Accessories

Fragrances

Sports Equipment

Rate the following aspects regarding Nike products or experiences.

Very Dissapointing

Disappointing

Average

Good

Very Good

Have you bought any sports products influenced by branding or marketing strategies?

Yes

No

What would make you lose loyalty in Nike brand? ( ie. media scandals, bad customer service, pricing etc.)

Insert answer here :

Do public figures or famous athletes you follow influence your athletic brand of choice?

What is your age ?

< 20 years old

21 – 45 years old

46- 90 years old

Please select your gender.

Male

Female

Which area do you live in?

Rural

Urban

Please select your education level.

– Highschool/ College

– Bachelor

– Master

– PhD

Please select the appropriate income for your case.

< 150 euro / month

150- 250 euro/ month

250 – 400 euro/ month

400- 500 euro/ month

Over 500 euro/ month

Would you describe yourself as a shopping enthusiast?

Yes

No

State your current occupation.

Insert answer here: