Introduction

Marketing research refers to the course of analysing the viability of an afresh product by a research
run directly with the consumers that authorizes a business-company to realize the target market and
record thoughts and other inputs from the consumers concerning their interests in the product(Nair,
2009). It may be run by the company itself or a 3rd party. The objective of it is to assess the market
linked to a certain product to determine how the consumers will accept it. This can contain info
accumulating for the objective of the market segmentation and product differentiation that can be
applied to modify publicizing efforts or determine that aspects are observed as a prior to the
consumers. Here, our group will run a market research based on Nike related to its operations,
products, marketing strategies and other factors that influence the company.

Company Overview of Nike, Inc.

It is recognized as an American Multinational Corporation. It is involved in the design, improvement,

manufacturing, global marketing and auctions of sports products (Hays, 2000). It is one of the
leading merchants of athletic shoes with apparel and a prime producer of sports gears. It has total
revenue of US$24.1 billion in 2012. A total of 44000 individuals work for the company globally. The
brand value of the company was $19 billion in 2014. It was built in 1964 by Bill Bowerman and Phil
Knight (Hays, 2000). It was official become Nike in 1971.The company functions retail stores under
the name of Nike town. It has sponsored many high profile athletes and teams such as Cristiano
Ronaldo as an athlete and FC Barcelona as football club. Vision Statement “To Bring Inspiration and
innovation to every athlete in the world” Nike Inc If you have a body, you are an Athlete - add by the
Bill Bowerman Co-Founder of Nike, Mission Statement To lead in corporate citizenship through
proactive program that reflects for the world family of Nike, our teammates, our consumers and
those who provide service to Nike. Main Goal of theses vision and mission is Nike want to deliver a
quality produce, which is dependable, and fulfil all the purpose of their consumer as in every athlete.
5 The trademark of it is “Just Do It”. The most famous products of the company’s are Air Max 1, Air
Force 1, Air Jordan III, Air Max 95, Foamposite One, Air Max 2017, Free RN 2017 and others.

Nike produces a wide range of sports equipment. Their first products were track
running shoes, tennis, soccer, and wrestling & basketball shoes. They currently also
make jerseys for a wide range of sports including track & field, football, baseball,
tennis, soccer, lacrosse, basketball and cricket. The most recent additions to their line
are the Nike 6.0 and Nike SB shoes, designed for skateboarding. Nike has recently
introduced cricket shoes, called Air Zoom Yorker, designed to be 30% lighter than
their competitors’. Nike positions its products in such a way as to try to appeal to a
“youthful….materialistic crowd”. It is positioned as a premium performance brand.
However, it also engineers shoes for discount stores like Wal-Mart under the Starter
brand.

Manufacturing

Nike has more than 500 locations around the world and offices located in 45
countries outside the United States. Most of the factories are located in Asia,
including China, Taiwan, India, Turkey, Thailand, Vietnam, Pakistan, Philippines,
Malaysia, and Korea. Nike is hesitant to disclose information about the contract
companies it works with. However, due to harsh criticism from some organizations
like Barbie.com, Nike has disclosed information about its contract factories in its
Corporate Governance Report. Nike plans to be carbon neutral by 2011.

Rivalry and competition

Because Nike creates goods for a wide range of sports, they have competition from
every sports and sports fashion brand. After surpassing adidas in the 1970s, Nike had
no direct competitors because there was no single brand which could compete
directly with Nike’s range of sports and non-sports oriented gear until Reebok came
along in the 1980s. Reebok now has merchandising contracts with the National
Football League and the National Hockey League in the United States, and was
purchased in 2006 by adidas. Nike’s other competitor is Puma, the third largest shoe
and sports clothing supplier.

Key Business Issues

Increase market share in all the markets to counter the threat from the recent
Adidas/Reebok merger

Expand further into international markets such as Emerging markets and spur growth
in the European and Japanese markets

Improve gross margins & operating margins through supply chain initiatives – lean
manufacturing, better sourcing, product costs, etc..

Improve its inventory management, days sales outstanding, days payables

outstanding and working capital management further

Provide innovative and technical products that cater to the consumer expectations at
all price points – Connect to the consumer

Counter the increased marketing strength of Adidas/Reebok by spending more on

marketing spend and creating demand while maintaining margins

Improve relations with all retailers & innovatively use multi channels to market and
sell its multiple brands to different customer segments

Focus on design, development and marketing of products and reducing time to

market

Expand its own retail chain as a viable and profitable option to contend with retail
consolidation, as retailers may substitute Nike’s products with private labels products
or decrease Nike’s shelf space

Stabilize the leadership team and have a common strategy and plan for the future
Identifying and analysing the market for Air Max 1

In 1987 Nike was introduced their 1st product. Nike’s eventual success bought by the Nike Air Max
and stands as one of the maximum prosperous in such case of verbalizing operations in history of
sneaker (Russ Bengtson et al., 2017). As this augmented bigger, the designer of it, Tinker Hatfield
was met with an obstacle related to the superior to fit Air into the traditional foam midsole? A trip to
Paris and an observation at the Centre Georges Pmpidou, provided him a concept. Why not cut the
foam away to uncover the air? The Centre Georges Pmpidou uncovered all of what was typically
concealed, so would the Air Max Runner. The signature technology of the company occurred
noticeable as well as nothing in the sneaker history would ever be the similar again. Back in 1987,
the Air Max 1 was dissimilar to anything else on the existing market. At the period, the mainstream
of shoes were tame in their designs. Sneakers from the mid 1980’ and previous 7 were practiced in
integrating dull shades of suede and mesh and serving grownup white guys, something that would
not destroy their feet during a work (Welty, 2017). However, the Air max 1 with its colours were
obvious from afar, whether the shoe had an obvious, observe through segment of its midsole.
However, what creates the Air Max 1 the show, it is nowadays and something that stands the
examination of time is not just that it broke by a dull, dry market but it was the beginning of running
sneakers as a lifestyle culture. Following the instance, the Air Max 1 occurred one of the company’s
maximum significant canvases for collaboration and a driving force in the ever-developing sneaker
history (Welty, 2017). The product has encouraged some truthfully clever associations with stores
and artists globally.

Explaining and justifying how Nike was developed and for what market

Very few brands have accomplished to occur synonymous with pop culture in the 2000 century.
However, Nike has developed a giant of the sporting globe and a part of the daily lives of millions of
individuals globally. Adidas and Puma lead the international market on each level and in each sport.
Phil Knight was persuaded that the pathway to compete with Adidas and Puma was to initiate
cheaper but high-superior shoes from Japan. Still he possessed a better concept but he did not own
the capital to get his purposes covered. Phil Knight managed to create an appointment with
Onitsuka in Japan. Tiger Shoes was interested in vending sneakers in to American runners and
offered Phil Knight samples, which he sent to Bill Bowerman. However, when producers did not take
his advices, he went to his garage and modified the current models to make the lightest and
furthermost comfortable shoe for his runner (II, T. 2017). Bill Bowerman was overwhelmed by the
samples and they act together to market those in the US. After deciding a deal with Onitsuka, they
trembled on the particulars of an association in 19645, making Blue Ribbon Sports with the capital of
$500 each. The titan (Nike) was started as a dwarf back then. In 1970, Phil Knight discontinued
partnership with Onitsuka to make the financial expansion (Businesstoday.in, 2017). Besides, their
acting association between BRS and Onitsuka was failing. In 1971, Blue Ribbon Sports initiated its
own line of footwear. They called the line “Nike”. They uses swoosh logo and the “Just Do It” slogan
are among the globe’s utmost and furthermost identifiable trademarks. It dominates the
international sports footwear market by 38% with the sales of $21 billion in a financial year. The
brand born just a comparatively short while ago with a total of $1000 capital and a handclasp is
today valued more than 17 billion and become the richest sports company in the world.
Analysing the significance of creativity and initiative undertaken to develop Nike a competitive
company
The significance of creativity and innovation

Innovation refers to the course of generating and executing an afresh concept where it takes useful
ideas and turns those into convenient methods of activities (Randall, 2005). Those convenient ideas
are the outcome of creativity that is the precondition for innovation. Creativity in the aptitudes to
conglomerate ideas in an exclusive path or to create convenient link among the ideas. Creativity
offers fresh ideas for superior development in Nike and innovation puts those ideas into actions.
Nike understands that both innovation and change are needed to content the stakeholders.

The initiatives that Nike takes

There is a saying that, “Innovation at the heart of Nike” (Eoi.es, 2017). The company is always one
step ahead. It attempts at pushing the envelope concerning sustainability by innovation. Significance
of these two pillars is entrenched by the maintainable company and innovation team handling the
lifecycle of the products and its compliance along with environmental accountabilities. Over 160000
materials are utilized in the manufacturing step in Nike. A pair of shoes can practice more than 30
ingredients (Eoi.es, 2017). Following track of the merchandises from their resources till their
fabrication step creates the effect appraisal a manageable duty. Innovative mechanism are being
generated to handle sustainability. The products formation team practice the Nike ingredients index
to choose eco-friendly ingredients by the innovation project placement tracking 04 steps such as
exploration, development, piloting and scaling, the level of receptiveness of a project to these key
pillars must be a pointer of its sustainability potentials. Each material’s effects are evaluated in the
zones of water, energy and others to follow each step autonomously and how it collaborates with
the ecosystem displaying the value chain of Nike. Involving the complete corporate from the
contractors, factories to farmers augmenting the organic cotton, the prime is to offer products and
services that conglomerate a higher level of performance, apparel and footwear. The sustainability
trip for Nike and its triumph is powerfully reliant on the innovation dynamic that Nike feels
powerfully about creating its culture and prime driver of its corporate by forming Nike apart from its
rivals. The company trusts that innovation comes in varied colours and forms. Correspondingly
significant they offer as a feedback and prime mechanisms to variety challenges by augmenting the
likelihood of the impossible occurring conceivable by innovative ideas.

History
1962: Phillip Knight, a Stanford University business graduate and former member of
the track team, arranges to import athletic shoes from Japan and sell them in the
U.S.. Knight created Blue Ribbon Sports as a cover name for his small-scale shoe-
selling operations

1964: William Bowerman becomes a partner by matching Knight’s investment of

$500.

1966: Blue Ribbon Sports, also known as BRS, rents its first retail space; employees
can now stop selling shoes from their cars.
1971: Nike, capitalizing on the Greek goddess of victory. The first Nike product sold
with the new symbol is a soccer shoe.

1970 – 1975: Steve Prefontaine was turned to the University of Oregon by Bill
Bowerman and wore Nike products.

1976: The popularity of jogging increases revenue to $14 million.

1978: The Company changes its name to Nike.

1980: Nike goes public, offering 2 million shares of stock.

1990: Nike files suit against competitors for copying the patented designs of its
shoes, and also engaged in a dispute with the U.S. Customs Service over import
duties on its Air Jordan basketball shoes.

2000: The National Football League declines to renew its exclusive apparel licensing
arrangement with Nike.

2001: Nike opens its first Nike Goddess store, a unit targeting women, in Newport
Beach, CA.

2003: Nike purchases Converse Inc. for $ 305 million

Vision:
“To bring inspiration and innovation to every athlete in the world”

(* “If you have a body, you are an athlete” Bill Bowerman, co-founder)

Nike sponsors many high profile athletes and sports

teams around the world, with the highly recognized
trademarks of “Just do it” and the Swoosh logo.
Nike is the “largest seller of athletic footwear and athletic apparel in the world.
Performance and reliability of shoes, apparel, and equipment, new product
development, price, product identity through marketing and promotion, and
customer support and service are important aspects of competition in the athletic
footwear, apparel, and equipment industry.  We believe we are competitive in all of
these areas.” The company aims to “lead in corporate citizenship through proactive
programs that reflect caring for the world family of Nike, our teammates, our
consumers, and those who provide services to Nike.”
Mission: “Innovate for better world”

Unleashing potential through sport. In the last two years, Nike has invested $100
million worldwide in community-based sports initiatives. By 2011, NIKE is expected to
invest another $315 million. These investments will be used to give excluded youth
around the world the chance to play because as access to sport can enhance their
lives. Nike will provide products, resurface playing fields, support community-based
programs, and help young people create their own communities. This is all will be
the NIKE “Let Me Play commitment.”

Three core values of the company are honesty, competitiveness, and teamwork.
Despite its size, Nike operates with a minimum of hierarchy. As a result, there is a lot
of collaboration and consensus decision-making. Commonly held values are
imperative in such a matrix organization.

Industry Analysis

Barriers to entry have become very competitive in the

athletic industry and the companies that will fare best
are those with strong brands, huge scale, multi-
products, multi-channels & marketing strength.

Global Brand power is the equation

Brands have emerged as the most powerful (and least imitable) assets in the industry.

While retail consolidation and the end of quotas have created some uncertainty,
powerful global brands will more than held their own in the changing environment,
as they have done in the past.

Marketing is Critical
Apparel and footwear companies rely on marketing to drive demand for their
products. Industry has transitioned from capital-intensive manufacturing and
distribution activities (which are outsourced) to a more capital-efficient design and
marketing business model.

Each company spends on an average about 10% of their sales on advertising and
promotions, while Nike spends around 13% of sales.
Consumers are growing more sophisticated –
Performance products driven by technology
Industry is highly focused on developing technology for its footwear & apparel
products. Consumers are well informed and are demanding more value for their
products at all price points. Requires stronger brand profiling and more investment
in product characteristics by companies.

Margins drive stocks

Footwear and apparel industries are relatively mature and investors perceive few
pure growth plays, and expectations for margins tend to drive stock valuations more
than sales growth

Acquisitions to diversify
Large apparel companies, because of their size find it difficult to grow at high digit
rates. Also they seem to have neither the proclivity nor creativity to develop new
brands. Hence, most companies look at acquisitions to diversify as well as grow their
addressable market and improve sales.

Offshore Sourcing
To cut expenses & improve margins there is a trend towards moving production
facilities to lower-cost regions outside the U.S. The elimination of quotas/safeguards
over the next couple of years is expected to drive input costs lower, and the powerful
apparel brands sourcing from the Far East will capture a significant share of these
savings.

Manage Own Retail

Branded vendors have traditionally operated factory outlets as a means to manage
excess inventory. However, given retail consolidation and retailers’ stated desire to
increase private label penetration, companies are looking at expanding their own-
retail networks.

Global Market Share for Athletic Footwear, 2008

“2008: footwear data from Sporting Goods Intelligence”.
U.S. is the largest market for athletic footwear, but is also the most mature market
along with Western Europe, and future growth is going to be led by the under-
penetrated emerging markets, Central & Eastern Europe. Sales by Geography for
Athletic footwear, 2008

Opportunities
Growth in Emerging markets

Industry barriers to entry exist in footwear

With the lifting of apparel quotas in the United States, companies should see
improved margins in the United States as they move manufacturing offshore

Outsourced production creates lean corporate structures

Industry growing more quickly than GDP rates in most regions

Challenges
Retail Consolidation – will affect the apparel industry (more fragmented) more than
the footwear industry (very concentrated and powerful brands (less imitable)

Competition has intensified – Adidas acquisition of Reebok forms a strong

competitor, many smaller companies growing rapidly

The activewear market is getting crowded – Nike, Adidas, Reebok, and Puma are all
trying to branch out from the primary athletic wear consumer to an activewear or
lifestyle consumer creating intense competition

Possible slowdown of consumer spending in the U.S. and Europe

Higher energy prices, weakening consumer sentiment, and rising interest rates

Currency impacts

One such merger – the Adidas- Reebok merger between two transatlantic companies
has not only doubled Adidas’s market share in the U.S. but has also made it a close
competitor to Nike. Theory behind the merger-to utilize Reebok’s marketing power
and understanding of the U.S. consumer to build Adidas’s presence in the United
States and, conversely, to draw on Adidas’s heritage in Europe to develop the
Reebok brand overseas. The company gained top spot in the global athletic apparel
market & European footwear market with the merger, which was formerly held by
Nike. Adidas and Reebok will now have a larger arsenal of athlete endorsers, more
influence on the supply chain, and a chance to secure more shelf space

Nike’s Strengths – Internal Strategic Factors

1. Strong Brand Awareness – Nike is one of the most recognizable brands in the
world as its name alone is memorable, easy to pronounce, and very unique. Its
swoosh symbol is easily recognized by everyone. Nike has captured
approx. 31% of the global athletic footwear market.
2. Huge Customer base – Nike has millions of customer from around the world
who loyally follow Nike’s trends, participate in Nike events, and even provide
customer feedback. Due to its huge customer base, Nike’s market cap has grown
to $198 billion as of Oct 2020.
3. Aimed For Sustainability – Nike’s CEO Mark Parker has addressed that they
will continue to acknowledge the environmental issues in the communities. The
CEO ensures that Nike will help to contribute in finding a solution against these
environmental issues.
4. Iconic Relationships – Nike’s long-term partnership with Michael Jordan has
proved to be beneficial in terms of sales for the company. Their collaboration
resulted in “Air Jordan 1 Shoes”. Additionally, Nike teamed up with the famous
basketball player to help design the “Air Jordan 1 Shoes”.
5. Side Brands – Nike’s ability to maintain and enhance its side brands such as
converse and hurley have enabled it to enjoy unparalleled success for decades.
6. Low Manufacturing Cost – Most of Nike’s footwear is manufactured in foreign
countries. In the fiscal year 2020, Vietnam produced 50%, China produced 22%,
and Indonesia produced 24% of total Nike’s footwear. Other operations are in
Argentina, Brazil, India, Italy, and Mexico.
7. In-house Professionals – Nike has a team of professionals that design its shoes
and other athletic accessories. Nike believes that their business has flourished
due to the thorough research that is conducted for each product.
8. Superior Marketing Capabilities – Nike has excellent marketing campaigns.
The brand heavily relies on demand generation expense. In the fiscal year 2019
and 2020, Nike spent $3.7 billion and $3.5 billion respectively. The brand has
successfully utilized social media and marketing campaigns to target more
customers.
9. Black Community Support – The brand has excellent marketing campaigns
and recently released “Don’t Do It” ad campaign in support of Black
communities against racism.

Nike’s Weaknesses – Internal Strategic Factors

1. Poor Labor Conditions in Foreign Countries – In the last 20 years, Nike has
been consistently targeted regarding their poor labor conditions. These issues
include forced labor, child labor, low wages, and horrific working conditions that
were deemed “unsafe”.
2. Retailers Have a Stronger Hold – Nike’s retail sector makes Nike weak due to
its sensitivity against pricing. 65% of Nike products are sold directly to
wholesalers or retailers. With retailers serving as their core customers, Nike does
not put up a fight against their pricing structures whatsoever.
 3. Pending Debts – Although Nike’s income statements prove to be prosperous, a
quick glance at their balance sheet could paint a different picture. Nike is still
facing financial threats. As of Aug 2020,

Nike’s total long term debt was $9.54 billion

4. Dependency on US Market – Even after having established itself globally, Nike

still relies on the U.S Market in terms of sales and revenue. In the fiscal year
2020, about 41% of Nike’s sales came from the U.S, while the rest of 59% came
globally. Despite its fame, Nike depends on the U.S for substantial sales and
growth.
5. Lawsuits: 
o Recently, a former employee accused Nike of discrimination based on his
Croatian origin.
o Four former female Nike employees filed a class-action lawsuit against the
company in August 2018. According to these women, Nike has a toxic
company culture for women. The women filed their case against the
sportswear company claiming that the company violated the Equal Pay
Act. The women said the company engaged in systematic gender pay
bias where men were paid more than women for the same amount of
work.
6. Lack of Diversification: Nike’s over-dependence on sporting apparel or lack of
diversification is a major weakness. The pandemic has discouraged physical
interaction and gathering with sporting events canceled or postponed. Several
sporting teams are on the brink of collapse. If the crisis discourages sporting
events for longer, Nike’s losses can be catastrophic.
7. Contradicting Strategies: Nike pledged to shift all its facilities to 100%
renewable energy with net-zero carbon emissions under the “Move to Zero”
scheme. While the strategy is great and welcomed, it contradicts Nike’s
strategy that favors innovation over sustainability. This creates the perception
that Nike is not committed to addressing climate change and its pledge is just a
marketing stunt.
8. Sexual Harassment: Former female employees also pointed out that sexual
harassment and misconduct was very common in the company. The New York
Times conducted interviews with 50 former and present Nike employees to
investigate the company culture. Through the interviews, it was established that
Nike did have a toxic working environment, where sexual misconduct was
rampant.

Multiple female employees reported that they had complained to the HR but saw no
action being taken from their part. The women were left devastated and felt unsafe while
working at Nike. Some even left their jobs. The entire controversy has significantly
affected the company’s image.

Nike’s Opportunities – External Strategic Factors

1. Emerging Markets – Although Nike already has a presence in many foreign
countries, there is still plenty of opportunities for Nike. This is because emerging
markets like India, China, and Brazil are gradually flourishing.  
2. Innovative Products – Although Nike has produced many products, there is still
a lot to innovate. Nike has extended its reach in technology in association with
fitness and health. Products like wearable technology that monitors physical
activities, is the first step in building innovative technology products. Combining
technology with athletic wear can prove to be beneficial as it is an aspect of the
fashion industry that still hasn’t been explored much.
3. Efficient Integration – The supply and production of Nike’s products depend on
independent manufacturers. The brand can either acquire a few of these or make
some of its own for a more efficient and streamlined supply chain.
4. Cutting ties with big retailers: Nike has decided to cut ties with some of the
biggest multi-brand retailers and wholesale partners. According to
the report, Nike will no longer work with wholesale retailers such
as Zapoo’s, Dillard’s, Fred Meyer, Bob’s Stores, etc. The step is taken for
better product positioning and greater customer experience.
5. Acquired Artificial Intelligence Start-up – With its vast financial resources,
Nike can acquire small or medium companies or startups. It recently
acquired predictive analytics platform – Celect to expand its online sales
capabilities and predict customer’s shopping behavior.
6. Consumer Direct Strategy –  Nike has accelerated the consumer-direct
strategy, which means shifting its focus to digital business and subsequently
closing physical stores. In fiscal year 2020, 35% of its Nike brand revenue comes
from online sales. Clearly, the pandemic is shaping up how Nike interacts with its
customers. 
 Image
source: Statista

Nike’s Threats – External Strategic Factors

1. Counterfeit Products – Counterfeit products can significantly affect the revenue
and reputation of Nike. The company deals globally and the risk of counterfeit
products has become higher. A number of merchandisers and retailers offer
counterfeit Nike products at lower prices. The low-priced products are made from
low-quality materials but still have the Nike label. This can tarnish the image of
the brand as the customers might feel that Nike has started producing low
quality products.
2. Increased competitive pressure – Although, Nike is a dominating the athletic
industry, competition, and new emerging brands are still potential threats to the
company. With higher competition ratio, Nike has to spend more money on
marketing and advertising. Nike spent $3.5 Billion specifically on marketing and
demand generation in fiscal year 2020. To overpower competition, Nike’s safest
bet is to design innovative products that are tailored according to the needs of
athletes.
3. Marketing Budget Pressure – Companies like Under Armour and Adidas are
spending more on marketing and advertising campaigns, increasing the pressure
on Nike.
 4. Currency Foreign Exchange Risks – Since the brand operates globally, it is
affected by fluctuating foreign exchange rates. Nike reports its financial earnings
in U.S dollars. This affects its revenue as the U.S dollar is exposed to volatility
against other financial currencies.
5. Patent Disputes – Regardless of whether a company is wrong or right, patent
disputes are hotly and fiercely contested in the public domain and expose some
dirty secrets about sides in the dispute. Nike and Adidas have been engaged in
a fierce patent disputes over Primeknit and Flyknit shoes in U.S. and German
courts.
6. Economic Uncertainty – Regardless of the industry, all companies are
susceptible to the negative effects of a global recession. Already, Nike has
registered a 38% decline in sales in Q2 of 2020 and can drop further in the future
if the recession strikes as hard as predicted by experts.
7. Trade Tensions – Nike depends on different markets across the world
evidenced by the recent increase in its stocks rallied by an increase in sales in
China. With China and the US as its biggest markets, a large chunk of Nike’s
sales will be threatened if the trade tensions between the two giants escalate.

BUSINESS COMPETITION
Nike’s main competitor is Adidas which, after the
acquisition of Reebok, has become the closest
competitor in terms of revenues and market share
Adidas AG – The Group’s principal activities are producing and marketing of sports
goods. The Group markets its products under the brand names: Adidas, Salomon
TaylorMade-Adidas, Mavic and Bonfire. Products sold under the brand name Adidas
include footwear, apparel, and sport accessories such as bags and balls. The Group
has operations in Europe, North America, Asia and Latin America. At 31-Jan-2006 the
Group acquired Reebok International Ltd & remaining interest of Taylor Made Golf
Company. During the year the Group disposed Salomon business segment. Revenues
for the company in 2005 were $7.8 billion and net income of $503 million

Puma, another German based company, whose revenues

though small, has shown tremendous growth in the past
few years and is a big player in the Europe market is
expected to provide competition
Puma – The Group’s principal activity is to design, manufacture and market sporting
goods. The Group’s activities are carried out through three divisions: Footwear,
Apparel and Accessories. Footwear division design, manufacture and market sports
shoes. Apparel division includes track suits, football strips and similar sportswear.
Accessories include sports luggage, footballs and gloves. The Group has operations
in Europe, Asia, America and Africa. The Group sold Tretorn Sports Sales Ltd on 1
July, 2005. Puma had sales of $2.1 billion in 2005 and net income of $337 million

In athletic apparel and footwear, there are two truly global players – Nike,
Adidas/Reebok – with a host of ‘second tier’ competitors including
Puma.Competitive Landscape – Nike is the best positioned athletic company in the
marketplace (Ratings – 3 being the highest and 0 being the lowest)

PESTLE ANALYSIS OF NIKE

Nike, Inc even being one of the top most rated organization among sports, apparels and accessories
execute PESTLE analysis to remain in the market. PESTLE analysis includes political, environmental,
social, technological, legal and environmental factors which has impact on the working of
organization.

P {POLITICAL}
Political factors form the backbone of the company. It determines the path of survival of the
organization. Such factors which induce the working of organization are as follows: The native
country of NIKE, UNITED STATES has provided the tremendous platform to the success of company
by low-interest rates accompanied with well-organized international market. Being a manufacturing
concern, taxation and manufacturing plays a vital role in the working of company. Political factors
include taxation and manufacturing laws. Political sound country facilitates exports and imports.

E {Economic}

Economic variables do not exert much pressure on the company due to reputated products dealt by
NIKE. However, some of them are enlisted below; Haphazard in the economy can bring forth many
negative repercussions for the well-known companies even for Nike. In the off period, consumers
can divert towards quite cheap products as they can become less expensive due to depression in
economy. Thus, economy is also significant part for the firm. Nike’s mostly earn through low cost of
labour from eastern countries. Consequently, less economically developed countries channelize
towards the growth of Nike revenue.

S {Social}

Social status is eminent for the long term success of the organization. It mostly confers towards
public relations. Variables determining about the sociability are as follows: “HEALTH
CONSCIOUSNESS” is attracting the attention of modern generation. This has made public more
anxious about their lifestyle. They have started splurging more on sports apparel which ultimately,
increase the gain of company like NIKE. Contrary to this, dubious manufacturing has also brought
negative feedback for NIKE.’ The issue of Nike sweatshops is prominent among them.

T {Technological}

Technology forms the basis of innovation. Technology is in the veins of the company.
Communicating with customers, forming the product, packaging and many more all are part of
technology. Technological proponents are as follows; Social media today, plays progressive role in
increasing prosperity of the company. Nike online publicity and official website is remarkable and
eye catching. Technology acts as a boon in completing the targets and production according to
customer demand, eventually increasing revenue.

L {Legal}

In PESTEL, politics and legal components are sometimes correlated. Rather, they are separate.
Political and legal are separate terms. There are not plethoras of legal terms affecting NIKE, which
are as follows: Paying taxes is a legal requirement. But, as compared to other corporations, NIKE also
adhere to tax evasion. IT is a significant point in the PESTLE analysis. Nike also adheres towards false
discounting techniques to cover up legal requirements. Counterfeit commodities. Legal collision with
ADIDAS and other companies.

E {Environmental}

As the name suggests, Environmental is related to nature. Environmental problems are skyrocketing
day-by-day which also needs to be taken care of: Production on the mass scale skeptically destroys
the environment. Nike production activities mostly pollute rivers along with creating aerial pollution.
Apart of it, Nike policies always enlighten towards safe environment by minimizing the pollution
level.
COMMERCIAL AWARENESS OF PRODUCTS

Several marketing strategies are utilized by Nike to help it to become a global brand. In 1973, Nike
was recognized as Greek goddess of victory. At that time, a logo worth of 35$ was created by a
student known as Swoosh logo. Afterwards, BRS signed a professional athlete and ATP tennis star.
Today the total worth of Nike Company is 410.7 billion dollars due to excessive marketing
techniques, which amplify the customer level. In 2008, Face book account of Nike was created
where excessive promotion of products and its features was carried on rampant basis. It also
generates information on latest athletes, which act as a bait for sports freak.

Afterwards Nike paired with Apple Inc, company profound for innovative designs. It helps a lot to
increase the brand value of the company. Recently; Nike celebrated 25thanniverversary of its
successful campaigns which truly marked a remarkable change in the awareness of products. There
are total 25 ads ‘TITLE’ which increases the consumer awareness which are as follows:

1} JUST DO IT and {1988}

2} Michael Jordan teams up with Spike lee’s Mars Blackmon {1988}

3} Bo knows {1989}

4} Rock and roll Tennis {1991}

5} Charles Barkley ad

6} Dennis Hopper Sees Barry Sanders in his sleep {1994}

7} Guerrilla Tennis {195}

8} if you let me play {1995}

9} LilPenny {1995}

10} Junior for president {1996}

11} Hello world {1996}

12} Failure {1997}

13} Chicks dig the long ball {1998}

14} Tiger woods shows off {1999}

15} Hip-Hop Hits Main stream in Nike freestyle {2001}

Marketing purposes

Nike’s marketing purposes are determined over two segments that are short and long term
purposes. Long term encompasses improvement of market-share among the growing economics 21
with a special concentration to Asia in the span of five years with yearly share grow between 25 to
30%. The short term concentrates on up to 275 of growing in market-share for the current year.
Overall purpose The prime aims that Nike aims is to be the foremost producer of the sports products
by dissemination the Japanese produced brand in USA globally.

Strategic objectives
Creating the products accessibility in all markets

To concentrate all categories of consumers’ encompassing grownups, young and children

Provision of bets superiority and balanced priced shoes range to the consumers around the globe
with a singular concentration on USA Main strategies Market penetration: it is designed by the
international development and creating the accessibility of its inventive products globally. Market
development: Nike was supplier for the Japanese entrepreneur. Key shares were achieved in 1980’.
It has now $27 billion capita in the markets (MBA Tutorials, 2017).

Diversification strategy:

the products line that is possessed by the company is a factual representation of measured
diversification strategy.

Control

The control of Nike is driven in to the hand of Ngo’s that demand to handle the control of the
company. They make reports at the end of the years to measure their operations.

Budget

The societies stores have been one of the sink of Nike’s budget and obtained up $1 billion They
outlined to invest at $315 million by 2011 Another budget sink might be trading with 700 factories to
expand the manufacturing abilities

Market Trend and Implementation

Nike’s main Market trend is creating a market demand for athletic shoe advertise by the professional
athlete or Sports Person. They have changed their targeted market to young and women consumers.
They also introduce the e-commerce and digital sports to their consumers with a change of new
technology in trend. They have alliance with Apple Inc. for introducing the Running sensor in the
Nike+. There are continuously upgrading their technology for capturing the more market as new
trend can be introduced.

SEGMENTATION, TARGETING AND POSITIONING STRATEGY OF NIKE & BYING DECISION ANALYSIS

The perception of mass marketing and behave all customers the same way, has led to the
comprehension of the unique needs of consumer groups, that has to be segmented for greatest
sales opportunities. In particular, all sports fans differentiate. For instance, a sports company, such
Nike, could not market the extreme sports equipment to elder people. As Michael Porter (1998)
mentions, “You can’t be all things to all people”, explaining that firms, which specialize in meeting
needs of consumers, tends to be more effective. However, if the first marketing choice is market
segmentation, how does Nike group consumers based on common needs?

Segmentation

In the customary way, there are six interactive bases for market segmentation, which are
demographic variables, psychographic profile, behavioral style, geographic variables, socioeconomic
variables and benefits sought. While Nike has a general targeted segment “all athletes”,
nevertheless precisely defines various market segments (Shank and Lyberger, 2014).
Demographic Geographic

 Age  World region

 Gender  Country

 Ethnic Background  Country region

Family life cycle  City

Psychographic  Physical Climate

Lifestyle Socioeconomic

 Personality  Income

 Activities  Education

 Interests  Occupation

 Opinions Benefits

Behavioral  Consumer needs

 Frequency of purchase  Product features desired

 Loyalty of consumers

Demographic

Demographic segmentation is the most widely used technique from Nike because the characteristics
are easy to identify and measured, are available from many sources, such as the government
population count and are associated to sport attitudes such as attending a game or watching sports.
Based on the demographic segmentation, Nike targets individuals according to their gender, age and
life cycle stage. First and most important to be told is that Nike targets customers between 11-45
years old, with greater weight to teens in order to build long-term loyal consumers. For instance, in
2014 before the world Cup, Nike created a promotional campaign that glorified great football
athletes playing football with teenagers inspiring them to become like their idols. Furthermore,
gender is another significant factor that Nike uses to attract its audience. Despite the fact that its
male purchasing audience is higher, recently Nike has invested heavily in females. Specifically, Nike
has developed a strategic approach to targeting Women by launching a variety of female sports lines
where revenues are expected to grow significantly in the next years.

Age Children 1-5y

Tweens 5-10y

Teens 11-18y

Adults 18-45
Male; 55%

Female; 45%

GENDER

It must be stressed that Nike does not segment the marketplace based on ethnic background
including nationality, race and religion in order to group the consumers. Respectively, does not take
into account the life cycle to segment the market (Statista, 2017). Psychographic Nike utilizes
psychographic segmentation to target customers based on lifestyle, personality, activities and
interests. Specifically, Nike aims to active individuals who take pleasure in sports, gym regularly, are
athletes and passionate with sports, which tend to be part of their life. Nike does something
exceptional. Associates individuals’ lifestyle with their activities, interests and behavior creating the
unique “feeling” and as a result they buy similar products. Nike applies sports-centric strategy
motivating, inspiring and connecting emotionally all athletes with its products. Nike’s statement “To
bring inspiration and innovation to every athlete in the world” not to mention “Run with me”
encourages all kind of athletes to follow with loyalty the firm with the sense that they belong to the
same family. Apart from the sports consumers, Nike approaches a crowd that loves fashion. There
are categories of people who are passionate about the brands and buy company’s products just to
follow fashion trends. These individuals are convinced that Nike’s products are not ordinary athletic
shoes but a fashion lifestyle (Deng, 2009).

Behavioral

On the one hand, Nike focuses on the way its products make consumers feel. Clearly, the company
follows the direction “If you have a body you are an athlete” and “If you are an athlete, Nike’s
products make you feel athletic”. On the other hand, Nike builds customers’ engagement by
providing them unique quality as well as various and innovative products to choose in order them to
purchase more frequently company’s products. Furthermore, Nike gives its consumers the
opportunity to share their experiences with their friends and family including the review products on
the internet, which spread to social networks having a huge effect to purchasing behavior of the
customers (Bilotti, 2011).

Geographic

Geographic is simple, yet powerful segmentation basis. Nike segments market based on world and
country region, city and popularity density in different way. In particular, Nike promotes different
campaigns in the United States of America, in Europe, in Asia, in Australia as well as in Africa because
sports differentiate by region, even cities. For instance, all the commercials in the United States are
around football and baseball, while in Europe, advertisements refer to soccer. Concerning cities
segmentation and their fans in New Delhi, the capital of India, Nike promotes equipment for cricket
while in England and Sidney for rugby. Based on Nike’s statistics, largest market places are North
America as well as Western Europe and China where the company segments more the market
focusing on urban areas with purchase densities. Finally yet importantly, Nike does not segment the
market based on climatic conditions even though the company is ecologically conscious (Shank and
Lyberger, 2014). Socioeconomic Commonly, income, education and occupation are interrelated due
to the fact that people with higher educational level enjoy higher income as well as most respective
status. Thus, Nike segments market in lower, upper middle and upper class, where in the last group,
the company provides sports equipment in limited editions, which could be bought only from
individuals with high income (Bilotti, 2011). Benefits Benefits segmentation is considered the
underlying factor where every purchase satisfies a need. Nike focuses on “benefits sought” to
segment market place. Company’s products strive to meet elite athletes’ as well as professional and
casual performers’ needs. These needs that consumers looking forward to fulfill through Nike’s
products purchases are the quality, the duration, the comfort, the style, the innovation, the price
and the brand awareness. Thus, Nike segments the market in three core bases concerning benefits,
which are the Utility in order consumers to accomplish high performance, the Style where
individuals follow the fashion brand statement and the Technology bases, which gives customers the
opportunity to own innovative shoes such as Air Max. Although each type of segment defines groups
of customers with similar needs, it is ordinary implementation in marketing to combine
segmentation variables, such as geodemographic segmentation, for more effective approach in
certain circumstances (Ali Mahdi et al, 2015).

Targeting

Target marketing is the next step of segmentation process where the company systematically
chooses the segments that will allow to most effective and efficiently achieve its goals. Nike
evaluates its target market based on size, reachability, measurability and behavioral variables. In
particular, Nike has niche market to serve. The company targets professional athletes and sporty
individuals providing them specialized and innovative products. Furthermore, all products are
reachable, even online, with the unique opportunity Nike’s consumers to create their own custom
designed shoes, which makes the brand more identifiable and remarkable in differentiation to other
footwear companies. It should be noted that Nike also targets the marketplace through
psychological tactics by sponsoring great athletes with tremendous achievements and victories. This
tactic intimately links company’s products with triumph (Shank and Lyberger, 2014). It is for granted
that sustainable innovation is the trigger for revolutionizing the way the company does business and
manufactures its sports equipment. For that reason, Nike applies aggressive marketing strategies in
parallel with the marketing mix the company develops in order to make further known its consumers
company’s products, enchasing its uniqueness and exclusivity (About Nike, 2018). Positioning The
final step of STP concerning the market decisions is the positioning. Nike has positioned its brand as
the market leader of sports equipment widely, providing high quality and innovative technology.
Furthermore, Nike has convinced its consumers that is an ambitious and victorious company through
the swoosh together with the slogan "Just Do It" as well as through the promotional activities that
connect Nike’s brand with magnificent achievements of prominent athletes. It must be stressed that
Nike over the years has shifted from product focus to attitude. Nike “speaks” in athletes hearts
through unique & momentous feelings, which makes the company exceptional compared to others.
Above all, Nike has established its place in fashion, where company's products define certain groups'
lifestyle (Chang, 2014). As it seems, positioning is based on the perception or image that Nike
expands and maintains concerning its sports equipment. With this in mind, the company develops
perceptual maps through marketing research techniques in order to interpret its products position in
relation to competition. B. Main factors that can affect the buying decisions of the target customers
for Nike’s products Consumer’s buying behavior goes through various stages before the individual
takes the final decision to purchase the product. Several factors can affect the buying decisions of
the target customers for Nike’s products, which are classified in the following categories such as
psychological, social, cultural and personal factors and will be elaborated below. Psychological
factors Nike gives its consumers the belief that when they wear its sports equipment, they can
achieve everything without limitations; they can be unbeatable. The company's advertising
campaigns and headlines give a sense of freedom and victory not to mention that the brand itself
gives the motivation, “Just do it”. Nike affects not only beliefs but also attitudes. It could be said with
certainty that Nike invests on customers perception by the incentive “If anybody can do it, you can
do it”. Consumers are persuaded to purchase company’s products and take the change to become
healthy and good looking like Nike’s top athletes (Vainikka, 2015). Social factors It is for granted that
all Nike’s commercials promote exceptional athletes like Michael Jordan, Cristiano Ronaldo, Carl
Lewis and more using company’s products. In terms of sociology, all consumers tend to choose
products that their idols use and are highly influenced by their status and lifestyle. Therefore, Nike’s
customers are influenced by reference groups, opinion leaders and family concerning their buying
decisions due to their need to fit in based either on the role they represent or through the social
status. For instance, an who wears Nike’s limited edition indicated that he/she belongs to the upper
class (Otnes & Zayer 2012).

Cultural factors

Culture is an important factor in consumers’ buying decision but at the same time, it is also a very
delicate issue for companies that use it with the aim of influence. Nike segments the marketplace by
location, and then, having researched consumer interests based on cultural attributes, affects the
buying audience through commercials. An illustration of the above written is India’s official sport.
Due to India’s culture, there are more cricket fans than any other sport. Therefore, Nike through
cricket idols affects fans to buy the sports equipment that provides. Personal factors Many personal
factors affect the buying decision of the consumers, which are the age, the economic condition, the
occupation, the lifestyle, the personality, the quality of the product, the availability, even the price.
Nike influences its consumers through the one of a kind fashion styles and trendy sports equipment
that address to different ages, the comfort that athletes feel wearing company’s products, the
innovation and quality that is proved by product duration as well as the price escalation where every
athlete could buy, wear and feel unique. Finally yet importantly, Nike’s products are available almost
everywhere, even online, where consumers’ could purchase company’s products instantly (Vainikka,
2015). Conclusion In conclusion, it would be wise for business world to consider these factors when
addressing this issue. In my opinion, Nike is the leader in sports equipment creating a fortress in the
sports market that is difficult to conquer. The company excels because is the first that brought
innovation to sports shoes through the R & D department. At the same time, Nike constantly attracts
the best athletes from all sports and signs contracts that bring enormous profitability to the business
by associating the products with triumph and victory, creating the consumers’ the need to acquire
the product. Clearly, the company has applied the STP strategy correctly, as well as having
understood the needs of consumers affects their buying decisions with a tremendous success.

Manufacturing
Majority of Nike’s footwear and apparel products are manufactured by independent
contractors outside the U.S., while equipment products are produced both in the U.S.
and abroad. Fully 98% of Nike’s footwear is manufactured outside the U.S. Nike has
42 factories in Asia (China 36%, Vietnam 26%, Indonesia 22%, and Thailand 15%) that
manufacture its footwear products; however, they are not all exclusive Nike product
factories. In the non-exclusive factories, the company’s more basic sneakers are
manufactured, while the more technologically advanced product is generally
manufactured in the exclusive factories. Nike also has about 400 factories around the
world that manufacture apparel, with the largest percentage of apparel
manufacturing coming out of Asia, the Middle East, Turkey, Israel, and Mexico.

Financially, Nike’s overall results have improved over the years through both organic
(core brands) and inorganic growth (acquisitions), supply chain initiatives and
increased penetration in Europe and Asia. Nike has shown a 3 year CAGR of 11.8%
since 2003. In 2006, revenues grew by 9% led by strong growth in Americas and U.S.,
while Europe and Japan have shown flattish growth. Currency had a negative effect
of 1% on the total growth. Nike’s performance in 2006 was fueled by solid revenue
growth across the different dimensions of the business – each of the geographic
regions and each of the product business units posted higher sales for the year. Nike
struggled in Europe but improved sales in the fourth quarter as a result of the world
cup. Exchange rates too affected the International sales growth negatively. Net
Income margin has also been improving over the years

While the core brands have shown good growth, the subsidiaries, through various
acquisitions, have been responsible for a quarter of the total growth in the past three
years and are expected to be the future drivers of growth. Nike branded footwear is
the largest component of overall Nike sales. However, this business is becoming a
smaller portion of the company’s portfolio. In fiscal 2001, Nike footwear comprised
around 59% of sales compared to 53% at the end of fiscal 2006. Nike could further
enhance its “other business/subsidiaries” through various small acquisitions

Sales by business Unit, 2001

Sales by Business Unit, ($ Billions) 2003-2006

*The segment labeled “Subsidiaries” or “Others” represents revenues from NIKE Golf,
Cole Haan Holdings, Inc. and Bauer NIKE Hockey, Inc. for fiscal year 2001, and also
includes Hurley International LLC, Converse Inc. and Exeter Brands Group LLC for
fiscal year 2005. The subsidiaries sales are not reported geographically and hence are
included under a separate segment (1) All growth rates include currency impacts

The Grand Strategy Matrix

According to the Grand Strategy Matrix Nike fall into the Quadrant I. The main strategies for these
are Market development, market penetration, product development, backward integration and
forward integration and diversification. It also indicates the rapid market growth in a strong
competitive market position. (Businesstoday.in. (2017)

NIKE Marketing Strategy

Nike’s strength of its product pipeline, brand portfolio

and global reach has made it the clear leader in sports
performance, making it #1 or #2 in 89% of the top
markets.
Nike’s principal business activity is the design, development and worldwide
marketing of high quality footwear, apparel, equipment, and accessory products. It is
distributed in over 160 countries around the world. Sells under the NIKE brand,
wholly owned subsidiaries Converse, Cole Haan, Hurley International , BAUER NIKE
Hockey, and Exeter brands

Nike’s Marketing Mix

Nike’s marketing strategy is an important component of the company’s success. Nike
is positioned as a premium-brand, selling well-designed and expensive products.
Nike lures customers with a marketing strategy centering on a brand image which is
attained by distinctive logo and the advertising slogan: “Just do it”. Nike promotes its
products by sponsorship agreements with celebrity athletes, professional teams and
college athletic teams. Nike has been developing its marketing mix consisting of the
four P’s i.e. product, price, place and promotion. Thus Nike has soughed out the mix
that will best help it achieve its goals of maximum profitability.

Product:
Nike takes into consideration various aspects of its products as it is in a product or
consumer market. Thus it needs to have extensive range of products to withstand its
competition. Nike provides features, designs, various brands, packaging along with
some extra features like warranties and after sales service. This all aspects can be
included in the product analysis. Nike has various products as well as brands that
cater to different market segments which varies according to requirement of
particular segments as well as individuals. Also they offer customized designs of their
products wherein customer designs their product as per their requirements. Nike
provides customization of their shoe range on their site Nike.com.Nike also offers a
one year warranty for their products. Also they provide an option for replacement in
all their products if any defects or problems occur after purchase which is a part of
after sales service. Nike has been designing world class shoes for over 5 decades. Yet
it has a tendency of changing the designs and patterns after a particular period or
quantity. It also has a range of classic Nike shoes which are available all the time.
Nike also provides packaging with collaboration with other brands.

Eg. Selling i-pods with their jogging shoes range

Price:
Nike has a high-end consumer market with high disposable income asking for better
service and satisfaction as their target market. Thus their pricing strategy is to
provide value at high cost with maximum profitability. Thus they have high margins
but this can be justifiable due to its advertising and research costs. Nike also provides
with discounts during various festive seasons on its products like Diwali in India. This
is also a part of its pricing decisions.

Place:
Nike is a multi-national organization. Thus it needs to develop a wide range of
distribution channel which can support its retail business. Thus Nike has some of the
following distribution outlets .Retail: Nike sells through its retail stores, brand outlets,
exclusive showrooms as well as hyper markets in metropolitan areas. Online
shopping: Nike also provides with online shopping facility for its various products
and services. Distributors: Nike has a wide coverage of its distributors across the
globe to support its retail outlets. Factory outlets: Nike also sells its merchandise
through factory outlets that sell some of its products at a discounted rate.

Promotion:
Nike is extensively involved in Promotion and advertising. Nike uses advertising, sales
promotion, advertisement campaigns, public relations and publicity and sales offers
to build awareness and brand image and loyalty. Nike endorses various celebrities
such as athletes, football players, cricketers, tennis etc .It places its products in
various movies and shows using product placement. Nike also sponsors various
events such as tour de France, FIFA World Cup, Delhi Marathon and various others.
Nike promotes its products also utilizing other products brand equity such as
promoting its range of shoes along with I-pod. The “Just-do-it” campaign of Nike has
been since nearly 3 decades and has got them worldwide fame. Nike also advertises
by using various celebs in their advertisements to increase brand loyalty while
utilizing the brand image of such celebs.Nike has also gone to the extent of
sponsoring a stadium called “the Alliance Arena”, which is by far the biggest football
ground in the whole world. Eg. Roger Federer, Tiger Woods, Ronaldinho, Ronaldo.
Nike also endorses various teams as well as clubs such as Barcelona Football Club.
Designed to make a connection to the consumer

Advertisement Strategies
Seldom pitch the product directly or talk about product attributes

Sometimes don’t even mention the company’s name, featuring instead only the
swoosh logo

Seek to portray the core values of sport

Collaboration ads with another strong branded product, such as Apple iPod
Branding: powerful marketing mechanism used by Nike
• Leads to higher and more consistent product quality.

• Increases innovation by giving producers an incentive to look for more new
features that can be safeguarded by the patent.

• Branding results in more product variety and choice for consumers.

• Branding provides consumer information about products and where to find
them.

Michael Jordan
Put Nike on the map

1984-1985 Nike saw a decrease in their earnings for the first time ever

Influenced them to make their first specialty basketball shoe

Since then, Michael and Nike together have generated billions of dollars in revenue

“World Sports Hero No. 1”

Jump man logo is one of the most easily recognized symbols throughout the world

Tiger Woods
The newest Nike sensation

Estimated that Nike paid him $40 million

More attention than Michael Jordan and Bo Jackson

3 pg. ad in Wall Street Journal

30- and 60- second TV spots

Sales & Distribution

In the U.S., Nike operates 3 distribution centers for footwear. Internationally, Nike
operates 21 distribution centers in Europe, Asia, Australia, Latin America, Africa and
Canada. Nike’s sales force is divided into footwear and apparel and the teams are
assigned specifically to accounts. Nike’s sales force is the most professional and has
the greatest knowledge of the products compared to its competitors. Globally, if
Nike is in an emerging market, or a new market, it distributes its product through a
third party. However, as the company gains critical mass in that particular area of the
world, Nike works to go in directly and eliminate the distributor level.

Nike’s strategy for building a profitable portfolio is

focused in the following key areas:
Continuing to invest in the core business through innovation and demand creation.

Broadening its brand portfolio – Leverage multiple brands to pursue opportunities in

all markets, distribution channels and at broader price points

Focusing on financial discipline – Making supply chain a competitive advantage,

through operational discipline and excellence

Improve performance in Europe & Japan

Europe – UK and France need further work in the difficult athletic footwear and
apparel industry. Football (soccer) is at the core of sports in Europe and is the key to
success in that market. Even broader opportunities exist globally. Nike has made
steady gains in football, in Europe through steady product innovation and effective
demand creation initiatives and is now the leader

Japan – Reorganized management, increased demand creation, redesigned products

to add value at select price points

Accelerate growth in developing markets

Nike will focus on growing its brands in underdeveloped countries such as China,
India, Thailand, Indonesia, Mexico, and Brazil. While the company may be
underdeveloped in countries, the opportunity has not been preempted.

Nike is focused on keeping its talent growth in line with its revenue growth

Women’s Fitness
Estimated market – $14.5 billion, growing at 5%-8% per year

% of Women’s products in Nike sales – 18% of the total branded business

Nike is developing product specifically for women, around four core sport categories:
running/walking, yoga, cardio and fitness dance – major competitive advantage.
Results have been strong – 19% revenue growth in FY05

China – Biggest growth market – population of 1.3

billion people, over 400 million youths (5x the number of
youths in the U.S. )
Revenue doubled in 2006, second largest market in Asia, behind Japan

Nike faces intense competition from Adidas, and Li-Ning

Nike’s retail presence – over 2,000 point of sale locations currently and will continue
to grow

Other under penetrated emerging markets like India, Thailand, Indonesia, Mexico
and Brazil

Other Brands To Become Increasing Mix Of Revenues

Nike has built a diverse portfolio of other brands including Converse, Starter and
Cole Hann among others to address market opportunities not appropriate for the
Nike brand

Potential to become 25% of total revenues, up from 13% currently

By executing these strategies, Nike aims to deliver the

following long-term financial goals
High single digit revenue growth;

Mid-teens earnings per share growth;

Increased return on invested capital and accelerated cash flows; and

Consistent results through effective management of diversified portfolio of

businesses

Profitability gains, through gross margins expansion irrespective of FX movements,

augmented by a new focus on SG&A leverage.