Marketing strategies of NIKE1.doc

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MARKETING STRATEGY OF NIKE COMPANY

Chapter 1

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ABOUT THE NIKE INDUSTRY

HISTORY

Phil Knight

Nike was founded in the year of 1968 by Philip H. Knight, who is currentlythe Owner, Chairman, and CEO of the company. Phil Knight completed his educationfrom the University of Oregon and the Stanford Business School by 1962, (Moore, 128).As an aspiring young business man, he decided to travel to Japan and speak to the

president of "Tiger shoes." He presented himself as an American distributor of athleticequipment when he actually had nothing. He was pretty sneaky; however, he got whathe wanted and began selling running shoes under the name ofBlue Ribbon Sports(BRS). Once he became bored with selling shoes at sporting events from the back of histruck, he began producing his own athletic apparel. He renamed his so-called companyNike and hoped for the best to happen. Within the first year, he sold$8000.00 worth of

shoes and only received a $250.00 profit. After some time, Knight turned to his oldcoach from school, Bill Bowerman, for advice on what to do next.

Phil Knight wanted Nike to stand out above the rest. Once Bill Bowerman cameup with the idea for having traction on the bottom of shoes, Nike had finally made itsmark. The Nike Waffle Trainer stood out and made Nike the most unique shoe companyof the 1970s. By the year of 1979, Nike was the most well-known shoe company in theworld. They no longer just sold shoes but sporting equipment as well. However, the joy

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of being on top came crashing down when Reebok surpassed Nike with the aerobicphase in athletics. In order to maintain the reputation of Nike, the worlds best shoecorporation, Nike struck back by diversifying their shoes for different kinds of sportsactivities. Nike continued to rise in success throughout its prosperity by signing famoussports players (Michael Jordan) and using intelligent advertising tactics. Today, Nike is

a four billion dollar business that has had its ups and downs. As of now, Nike is havingdifficulties with the publicity it is receiving about its labor practices in China, SouthKorea, Indonesia, and Vietnam.

The Nike athletic machine began as a small distributing outfit located in the trunkof Phil Knight's car. From these rather inauspicious beginnings, Knight's brainchild grewto become the shoe and athletic company that would come to define many aspects ofpopular culture and myriad varieties of 'cool.'

Nike emanated from two sources: Bill Bowerman's quest for lighter, more durableracing shoes for his Oregon runners, and Knight's search for a way to make a living

without having to give up his love of athletics. Bowerman coached track at theUniversity of Oregon where Phil Knight ran in 1959. Bowerman's desire for betterquality running shoes clearly influenced Knight in his search for a marketing strategy.Between them, the seed of the most influential sporting company grew.

The story goes like this: while getting his MBA at Stanford in the early '60s,Knight took a class with Frank Shallenberger. The semester-long project was to devise asmall business, including a marketing plan. Synthesizing Bowerman's attention to qualityrunning shoes and the burgeoning opinion that high-quality/low cost products could beproduced in Japan and shipped to the U.S. for distribution, Knight found his marketniche. Shallenberger thought the idea interesting, but certainly no business jackpot.

Nothing more became of Knight's project.

By the late '70s, Blue Ribbon Sports officially became Nike and went from $10 millionto $270 million in sales. Katz (1994) describes the success via Nike's placement withinthe matrix of the fitness revolution: 'the idea of exercise and game-playing ceased to besomething the average American did for fun,' instead Americans turned to working outas a cultural signifier of status. Clearly, the circumstances surrounding the shift are notthis simple; it is one of the aims of this project to discover other generators of popularattention to health.

If Nike didn't start the fitness revolution, Knight says, "We were at least right there. And

we sure rode it for one hell of a ride" (Katz, 66). The 80s and 90s would yield greaterand greater profits as Nike began to assume the appearance of athletic juggernaut, ratherthan the underdog of old. "Advertising Age" named Nike the 1996 Marketer of the Year,citing the "ubiquitous swoosh...was more recognized and coveted by consumers than anyother sports brand--arguably any brand" (Jensen, 12/96). That same year Nike's revenueswere a staggering $6.74 billion. Expecting $8 billion sales in fiscal 1997, Nike hastargeted $12 billion in sales by the year 2000.

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INDUSTRY OVERVIEW

Bill Bowerman said this couple of decades ago. The guy was right. It defines howhe viewed the world, and it defines how Nike pursues its destiny. Ours is a language of

sports, a universally understood lexicon of passion and competition. A lot has happenedat Nike in the 30 years since we entered the industry, most of it good, some of itdownright embarrassing. But through it all, we remain totally focused on creatingperformance opportunities for everyone who would benefit, and offering empoweringmessages for everyone who would listen.

We feel lucky to have a genuine, altruistic reason to be: the service of humanpotential. That's the great benefit of sports, and we're glad to be in the middle of it.

What started with a handshake between two running geeks in sleepy Eugene,Oregon, are now the world's most competitive sports and Fitness Company. The World

Headquarters is in Beaverton, Oregon. The Pacific Northwest is Nike's hometown, butlike so many ambitious souls, we have expanded our horizons to every corner of theworld. Nike employs around 23,000 people, and every one of them is significant to ourmission of bringing inspiration and innovation to every athlete in the world.

Along the way Nike joined up with some great partner companies that help extendour reach within and beyond sports.

Nike partnered with Hurley International, a premium teen lifestyle brand foundedby 20-year industry veteran Bob Hurley based in Costa Mesa, California.

In 2003, Nike completed the acquisition of Converse, the globally recognizedfootwear brand with nearly a century of sports heritage, and home of the perenniallypopular Chuck Taylor All-Star and Jack Purcell footwear.

Separate business units within the Nike brand include The Jordan/Jumpman 23brand and Nike Golf.

As small as we feel, the Nike family is a fairly vast enterprise. We operate on sixcontinents. Our suppliers, shippers, retailers and service providers employ close to 1million people. The diversity inherent in such size is helping Nike evolve its role as aglobal company. We see a bigger picture today than when we started, one that includes

building sustainable business with sound labor practices. We retain the zeal of youth yetact on our responsibilities as a global corporate citizen.

If you have a body, you are an athlete. And as long as there are athletes, there will beNike.

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PRODUCT TREND

Bovine skin was by far the most preferred leather material, followed bygoat/kid/lamb/sheep skin and crocodile skin.

Respondents overwhelmingly preferred the color black and, to a lesser extent, dark

brown. For handbags/briefcases, popular colors included light brown, white and red.Consumer Segments with the Biggest Spending Power Male professionals, managers andexecutives are the segment with the biggest spending power for now and in the comingthree years. Other major consumer segments include male office workers; soleproprietors/business owners; female office workers; and female professionals, managersand executives.

The Competitiveness of Hong Kong Brands/Suppliers of Leather ConsumerGoods. Most retailers consider Hong Kong brands to be either very competitive or quite

competitive in both high-end and mid-range segments, but less competitive in the low-end segment. The competitiveness of Hong Kong brands mainly rests on their productstyle/design and quality, with most respondents picking those as the major reasonsbehind the attractiveness of Hong Kong brands in the high-end and mid-range segmentsrespectively.

PRODUCT PROFILE

Apart from delivering a pair of comfortable sports shoes Nike also provides anumber of value-added features with its products. The features that are a part of every

Nike sports shoe are as follows.

High Performance Sports Shoes:

Nike has patented the Air system and has made it into a regular feature in mostof its models. Many models feature an air pocket in the shoe that reduces the weight ofthe shoe and reduces pressure on the heels. Besides the overall design and compactnessof the shoes have made it a favorite of many professional athletes around the world.

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NIKE sports gear is preferred by professional sports persons.

Comfort

Nike shoes are renowned all over the world for the comfort they provide. Well paddedand cushioned, they provide a tremendous level of comfort to the wearer and reduce thestrain to his feet while playing.

Lightweight:

This attribute is in line with the two described above. A lightweight shoe providesgreater mobility and eases the pressure on the feet of the wearer.

Durability

People purchasing a pair of shoes at such a high price often feel that they have made aninvestment. They would obviously want to see their shoes last a long time. To prove thispoint we draw the example of the authors of this marketing plan. All of us own a pair ofNikes and have been wearing them for well over two years a symbol of the durabilityof Nike shoes.

Style

Nikes designs are considered to be the most stylish in the industry and beat all others asfar as looks are concerned. Attractively packaged, it is a delight to bring a pair home.Add to this the Swoosh the most recognizable symbol in sports and you have aproduct that would give the user a definite sense of pride.

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NIKE 6.0 NIKE SB

Nike shoes also come with a guarantee card that enables the owner to return it in case ofmanufacturing defects. However, owing to the fact that the company implements strictquality control measures, coming across a defective pair in a store are a rarity. The mostrecent additions to their line are the Nike 6.0 and Nike SB shoes, designed forskateboarding. Nike has recently introduced cricket shoes, called Air Zoom Yorker,designed to be 30% lighter than their competitors'.[ Nike positions its products in such away as to try to appeal to a "youthful....materialistic crowd".[5] It is positioned as apremium performance brand.

Sports personalities who endorse NIKE

Roger Fedrer (Tennis)

Tiger woods (Golf)

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Chapter 2

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NIKE INDUSTRIES LTD. A COMPANY PROFILE

Nike India Ltd (BIL) is Indias largest footwear company. Nike first established

itself in India in 1931 and commenced manufacturing shoes in Batanagar in 1936. Thecompany has its Headquarters in Kolkata and manufactures over 33 million pairs peryear in five plants located in Batanagar (West Bengal), Faridabad (Haryana), Bangalore(Karnataka), Patna (Bihar), Hosur (Tamil Nadu). It secures its leather supply from twotanneries in Mokamehghat (Bihar) and Batanagar (West Bengal). It has a distributionnetwork of over 1,500 retail stores and 27 wholesale depots provide excellent access toconsumers and wholesale customers throughout India.

As on December 31, 2006, the Canadian parent had a 51 per cent stake whileinstitutional holding was about 13 per cent.

RECENT DEVELOPMENTS

Nike India has said that its Faridabad and Mokamehghat units are being taken over byFashion Shoe Private Ltd and BDCL Enterprises Pvt Ltd, respectively. The company isalso enabling the buy back provision in its Articles of association to enable buy back ofshares.

The assets and liabilities of both the units will be transferred to these companies andshares will be offered in the agreed ratio to the existing shareholders of Nike India Ltdon a record date, which will be fixed by the Calcutta High Court.

In Simonsons words, The benefits and costs of fitting individual customer preferenceare more complex and less deterministic than has been assumed. Thats becausecustomer preferences are often ill-defined and susceptible to various influences, and inmany cases, customers have poor insight into their preferences. In one of his recentpapers, Simonson tackles the issue of one-to-one marketing and mass customization.Supporters of these marketing approaches have suggested that learning what customerswant and giving them exactly what they want will create customer loyalty and aninsurmountable barrier to competition.

But Simonson has this to say: The fact that consumer preferences are often fuzzy,

unstable, and manipulatable is unlikely to change. So, the effectiveness of methods togive customers exactly what they (say they) want has been grossly exaggerated. Histake on the long-held assumption that individual marketing will supplant targetedmarketing is not so fast. In studies, he has learned that even when customers havewell-defined preferences and receive offers that fit those preferences, it is far fromcertain that the response to such offers will consistently be more favorable than thosedirected at larger market segments.

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.

FUTURE PLAN

The management says that it is not averse to outsourcing if it worked out cheaper.

It is also open to the idea of importing shoes - mostly from China - if it works outcheaper.

Nike and Reebok India Company have announced an agreement to foray intoretailing partnership for sale of Reebok and Rockport footwear in Nike outlets. Thepartnership entails retailing a range of sports shoes for walking, running, tennis andtraining for personal fitness and sports ranging between Rs 900-2,500.

An attractive valuation compared to its peers is the main trigger for the scrip.Besides, the companys aggressive focus on retailing and revamping of business (adivision into shoes and apparels) is also helping sentiment for the scrip. Plans are afoot

to start selling apparel in India made by the joint venture North Star. Theres talk that thecompany is planning on a voluntary retirement scheme (VRS) to cut costs.

For the third quarter ended 30 September 2007, Nike India reduced its losses to Rs5.68 crore (Rs 8.51 crore) on a 9.2% increase in net profit to Rs 154.27 crore (Rs 141.26crore). Despite reducing its losses for the quarter, Nike India has, over the last fewquarters, been continuously recording weak performances as a result of an overallslowdown in the industry due to lower consumer spending.Increasing domestic competition, particularly from the unorganized sector, has also beeneroding into the companys market share.

The company is finding it difficult to maintain its market share in a highly price-sensitive Indian market, despite having strong brand recall 97% of the companysrevenues are from the domestic market while the remainder is from exports. Nike Indiais the biggest player in the Indian shoe market.

Nike Indias major problems include its high cost of production and low emphasison marketing. The company may be able to address the first problem throughoutsourcing products. Batas brand image has been restricted to that of a company thatemphasizes on utilitarian products more than trendy ones. Customers feel the company islacking in innovation. Hence, their preference has shifted to other local brands.

Nike India has a large marketing network with over 1,500 showrooms, 27wholesale depots and eight retail distribution centers across the country.

Besides, there is a network of 300 exclusive wholesalers servicing 25,000 dealers allover the country. However, in spite of this and the license to sell other brands like Nike,Hush Puppies and Lotto, Nike has not been able to improve sales consistently. Therecent rise in sales during the third quarter ended September 2006 can be attributed to thefestive season. Recently, it also entered into a retailing tie-up for Lee Cooper shoes.

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Nike India has also been trying to focus on aggressive marketing of its product. Thecompany has been going through a period of transition for the past one year. With theexpansion of the retail industry in New Delhi and Mumbai, the company has recentlydecided to shift its marketing operations to Delhi in order to provide value shopping for

its customers. However, the manufacturing activity and the registered office willcontinue at Kolkata.

Nike India has plans to invest in sophisticated machinery to retain its niche place inmanufacturing. The company has put a fresh focus to its retail business. The companyhas decided to cleanse its wholesale operation by building relationships with credit-worthy buyers. .

Nike India has decided to appoint brand managers for each product group in a newfoundaggression to tackle dwindling sales. Each of these managers assisted by a dedicatedteam would be like a brand champion responsible for procurement, production,

advertisement, promotion and re-supply.Nike India has roped in Ogilvy & Mother for devising its festive season advertising,side-stepping JWT, its incumbent agency. The job involves developing specialcommunication directed towards the festival season shoppers.

Nike India Ltd (BIL) is Indias largest footwear company selling over 60 Mn pairs peryear in India, USA, UK, Europe, Middle East and Far East. BIL has a market share of60% in leather products and 70% in canvas shoes.The footwear industry in India is highly fragmented and dominated by the unorganized

sector. The industry size is around Rs 75 Bn and is growing at around 10% annually. Itcompetes with Indian players such as Liberty Shoes, Phoenix International, MirzaTanners, Tatas, Action Shoes and Lakhani Shoes and global players like Adidas, Reebokand Nike. Accessories and garments contribute footwear sales account for more than96% of sales while the balance. The turnover break up is as follows

Products Volume (%) Value (%)

Rubber and Canvas 50: 30

Leather 29:57

Plastic 21: 9

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GROWTH DRIVERS

The Company has a very comprehensive distribution network which comprises itsown and franchise stores. It has 1500 showrooms, 25 wholesale depots and 8 distribution

centers.

POPULAR BRANDS

Nike owns brands like Hush Puppies, Signor, Marie Claire Power, Sandak, Hawai,Naughty boy and Ambassador. It also distributes other brands such as Nike and Lotto.

Focus on middle-class and upper class Nike will continue to focus on middle and upperclass customers. It is introducing budget stores which will help customers to identifywith the brand. It is also increasing focus on rural thrust for volume growth in the low-

priced footwear segment.

RISK AND CONCERN

Lifting of quantitative restriction on import of footwear will lead to the market beingflooded by imports. Labor issues have always bothered BIL and this resulted indisruption of manufacturing activities on numerous occasions. Competition is hotting upin the domestic market due to popular brands such as Gaitonde, Red Tape, Lotus Bawaand Tatas. These brands are gaining market share especially in the premium segment andin this segment BIL has no significant presence.

Latest Results Sales for Q3 FY2000 increased by 5.5% yoy to Rs1.7bn. profits droppedby 90% yoy to Rs3.8 Mn due to lower operating margins and higher depreciation andinterest. Depreciation increased by 6.3% yoy to Rs 37 Mn while interest cost increasedby 9.3% yoy to Rs 23.4 Mn.

Operating margins dropped by 3.3% due to increase in input cost. The Peenya plant hasnot commenced operations despite lifting up of the lock out since July 3, 2007.

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VALUATION

BILs long-term success is dependent on the how labour issue is tackled and the

flexibility, which it can adopt to meet threat of imports and competition from localfootwear companies. Long term investors with a two-year investment horizon canaccumulate the stock at current levels. It is also increasing focus on rural thrust forvolume growth in the low-priced footwear segment.

Lifting of quantitative restriction on import of footwear will lead to the market beingflooded by imports.

Labor issues have always bothered BIL and this resulted in disruption of manufacturingactivities on numerous occasions.

Competition is hotting up in the domestic market due to popular brands such asGaitonde, Red Tape, Lotus Bawa and Tatas. These brands are gaining market shareespecially in the premium segment and in this segment BIL has no significant presence.

Sales for Q1 CY2001 decreased marginally by 0.6% yoy to Rs 1590.7 mn. There was anet loss of Rs 30.2 mn as against a profit of Rs 39.6 mn in the corresponding period ofthe previous year. The loss is due to lower operating margins and higher interest.BILs long-term success is dependent on the labor issue and the flexibility, which it canadopt to meet threat of imports and competition from local footwear companies. Longterm investors with a two-year investment horizon can accumulate the stock at currentlevels.

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LITERATURE REVIEW

The study of consumer behavior has evolved since the Information ProcessingModel (Bettman, 1979) assumed that the individual is logical in his/her buying process.This model was criticized because it failed to treat different consumption phenomenamotivated by symbolic meanings (Holbrook and Hirschman, 1982). Individuals are notalways looking for efficiency and economy, but also for distraction, aesthetic,expression, etc. (Boyd and Levy, 1963). Calling for a broadening of theoreticalframeworks of consumer behavior, many authors pleaded in favor of the study of allconsumption forms (Holbrook, 1986), being inspired by European semi logy andAmerican semiotic (Levy, 1959, 1963, 1981; Hirschman, 1980; Kehret-Ward, Johnsonand Louie, 1985; Mick, 1986; Holbrook, 1986; OShaughnessy and Holbrook, 1988;Nth, 1988; Stern, 1988; Grafton-Small and Linstead, 1989). These are the study of

signs, meanings and production of symbols. Fantasy, emotion and pleasant aspects ofconsumption were then tackled from an experiential point of view.

The Experiential View is a phenomenological perspective that perceivesconsumption as a primary state of consciousness having a variety of symbolic meanings,responses and hedonist criteria (Holbrook and Hirschman, 1982; Olshavsky andGranbois, 1979). The basis of the traditional Information Processing Model is theoptimization of the utility of a product under the basis of a utilitarian evaluation of itstangible characteristics. Nevertheless, it neglects emotional aspects. On the other hand,the Experiential View leaves out different factors such as economic conditions,expectations, some elements of the marketing mix (price, distribution), perceived risk

and conflicts, but mostly the social influence of the consumers reference groups(Holbrook and Hirschman, 1982; Business Central Europe, 1994) which is the aim of theSymbolic Interactionism Perspective. Acquisition, possession and consumption areactivities taking place in a process of impressions creation or identity management whichis, according to Belk (1978), an interactive process concerning both the image of goodsconsumed and that of the individuals consuming them.She created a website where people could customize products to their individualpreferences and needs. Crow selected three generic products: pizza, shoes, and aPersonal Digital Assistant (PDA). Thirty-one college students took part in the study.

"Students could customize the three products, and I provided a drop-down box on thesite with attributes to choose from," she explained. Consumers could click on a drop-down box to customize a product they would want to purchase, she said. She found thatmore people relied on the default choices rather than selecting other choices that wereoffered. She said, some research suggests that many people do not want to put a lot ofeffort into purchase decisions. "A lot of times, people may not have preferences alreadyin mind," she said. When consumers have the chance to create preferences, the questionis whether they rely on previous preferences or if they develop new ones, she said. In the

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future, Crow says she will be studying strategies that consumers go through duringpurchase decisions. "I will be studying decision processes to develop computer aids thatcould help the consumer reach their purchase decision," she said.

Although her current project involves analyzing the consumer behavior of college

students in an online environment, in future projects she plans to analyze otherdemographic groups. Customization will be a key business opportunity in the future forbusinesses online or in more typical shopping environments," Crow said.

She hopes her research will help consumers in making purchase decisions and helpbusinesses determine products to offer and how to offer them.

Hong Kong companies, including leather consumer goods suppliers, have shown agrowing interest in tapping the mainland consumer market after China's accession to theWorld Trade Organization and gradual opening of its domestic market. For Hong Kongcompanies targeting this vast market, a good understanding of the behavior of mainland

consumers is necessary in order to formulate an effective and suitable market strategy.

In view of this, the HKTDC conducted a survey study in four major mainland cities inFebruary 2007. The study was composed of two interlocking surveys. The first survey(survey on shoppers) successfully interviewed a total of 1,000 shoppers of leatherconsumer goods in four major cities, namely Beijing (BJ), Chengdu (CD), Guangzhou(GZ) and Shanghai (SH). The second survey (survey on retailers) interviewedmanagers/officers-in-charge of major department stores in these four cities.

The survey study analyses leather consumer goods in terms of consumer behavior, thecompetitiveness of Hong Kong brands and the consumer segments with the greatest

biggest spending power. The main survey findings are as follows:

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CONSUMER BEHAVIOR

Shopping locations, Department stores were the most preferred type of retailers,followed by outlets in shopping malls and chain stores. Product variety, guaranteed

quality, brand choice, price, services and store environment were cited as the majorreasons for visiting a leather consumer goods store.SHOPPING TIME

Thirty-eight percent of respondents visited leather consumer goods shops at least once amonth.Shopping during weekends is common. Other popular shopping occasions includeNational Day (1st October), Chinese New Year (January/February), New Year's Day(January) and Labour Day (1st May).

MARKETINGCHANNELS

Promotional activities in shopping malls and department stores are the most popularpromotional and sales activities, followed by discount/price reduction, TV commercials,discount coupons, promotional stands, exhibitions, buy-one- (or more) gets-one-free.

PURCHASING POWER

On average, respondents owned 4.2 pairs of shoes, 1.2 pieces of wallets, 1.3 pieces ofbelts and 1.3 pieces of handbags/briefcases. Over the past 12 months, an average

respondent's spending on leather consumer goods was as follows:

-Shoes: RMB 597 (total) RMB 328 (per pair)-Wallet: RMB 226 (total) and RMB 193 (per piece)-Belt: RMB 220 (total) and RMB 194 (per piece)- Handbag/briefcase: RMB 476 (total) and RMB 359 (per piece)

SELECTION CRITERIA

When choosing leather consumer goods, product quality stood out as the principal

consideration for respondents, followed by product material, craftsmanship, style/design,price and brand.

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CHAPTER 4

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4PS OF NIKE

Nikes 4Ps comprised of the following approaches to pricing, distribution,

advertising and promotion, and customer service:

Pricing:

Nikes pricing is designed to be competitive to the other fashion shoe retailers. Thepricing is based on the basis of premium segment as target customers. Nike as a brandcommands high premium.

Place:

Nike shoes are distributed to Multi Brand store front and the exclusive Nike stores

across countries. While this necessitates a second trip for the customer to come and pickup the shoes, it allows Nike to offer a much wider selection than any of the competition.

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Promotion:

Location, targeted advertising in the newspaper and strategic alliances serves as

the foundation of Nike advertising and promotion effort. The athletes and other famoussports personalities are always taken as brand ambassadors. They form the primebuilding blocks of their portion strategy.

Product:

The product range of Nike comprise of shoes, sports wear, watches etc. Its producthistory began with long distance running shoes in 1963. (Past 17 years: Air Jordanbasketball shoes). Wide range of shoes, apparel and equipment. For example:

Nike Oregon Digital Super Watch Nike Presto Cee Digital Medium Watch

Nike Presto Cee Digital Small Watch

Nike Ron Analog Watch

Nike Triax 10 Regular Watch

Nike Triax Armored II Analog Super Watch

Nike Women's Imara Fit Digital Watch

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CHAPTER 5

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S.W.O.T ANALYSIS

STRENGTHS

Nike is a very competitive organization. Phil Knight (Founder and CEO) is oftenquoted as saying that 'Business is war without bullets.' Nike has a healthy dislike of iscompetitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring thegames. Nike did not. However Nike sponsored the top athletes and gained valuablecoverage.

Nike has no factories. It does not tie up cash in buildings and manufacturing workers.This makes a very lean organization. Nike is strong at research and development, as is

evidenced by its evolving and innovative product range. They then manufacturewherever they can produce high quality product at the lowest possible price. If pricerises, and products can be made more cheaply elsewhere (to the same or betterspecification), Nike will move production.

Nike is a global brand. It is the number one sports brand in the world. Its famous'Swoosh' is instantly recognizable, and Phil Knight even has it tattooed on his ankle.

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WEAKNESSES

The organization does have a diversified range of sports products. However, theincome of the business is still heavily dependent upon its share of the footwear market.

This may leave it vulnerable if for any reason its market share erodes.The retail sector is very price sensitive. Nike does have its own retailer in Nike Town.

However, most of its income is derived from selling into retailers. Retailers tend to offera very similar experience to the consumer. Can you tell one sports retailer from another?So margins tend to get squeezed as retailers try to pass some of the low pricecompetition pressure onto Nike.

OPPORTUNITIES

Product development offers Nike many opportunities. The brand is fiercely defended by

its owners whom truly believe that Nike is not a fashion brand. However, like it or not,consumers that wear Nike product do not always buy it to participate in sport. Somewould argue that in youth culture especially, Nike is a fashion brand. This creates itsown opportunities, since product could become unfashionable before it wears out i.e.consumers need to replace shoes.There is also the opportunity to develop products such as sport wear, sunglasses and

jewellery. Such high value items do tend to have associated with them, high profits.

The business could also be developed internationally, building upon its strong globalbrand recognition. There are many markets that have the disposable income to spend onhigh value sports goods. For example, emerging markets such as China and India have a

new richer generation of consumers. There are also global marketing events that can beutilized to support the brand such as the World Cup (soccer) and The Olympics.THREATS

Nike is exposed to the international nature of trade. It buys and sells in different

currencies and so costs and margins are not stable over long periods of time. Such anexposure could mean that Nike may be manufacturing and/or selling at a loss. This is anissue that faces all global brands.

The market for sports shoes and garments is very competitive. The model developed byPhil Knight in his Stamford Business School days (high value branded product

manufactured at a low cost) is now commonly used and to an extent is no longer a basisfor sustainable competitive advantage. Competitors are developing alternative brands totake away Nike's market share.As discussed above in weaknesses, the retail sector is becoming price competitive. This

ultimately means that consumers are shopping around for a better deal. So if one storecharges a price for a pair of sports shoes, the consumer could go to the store along thestreet to compare prices for the exactly the same item, and buy the cheaper of the two.Such consumer price sensitivity is a potential external threat to Nike.

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CHAPTER 6

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DATA ANALYSIS

A). DEMOGRAPHY OF RESPONDANTS

ANALYSIS:

It was observed that the majority of the respondents consist of professional from variousfields like engineers, software professionals, working executive etc. who effective form38% of our database. While 36% were students from various fields. Others constitutedesigners and athletes etc. the further study is carried on the buying behavior of theabove mentioned categories of consumer, which shows that our consumer is welleducated and is very well informed about the product.

2). CONSUMERS INCOME LEVEL AND SPENDING CAPACITYON SHOES

ANALYSIS:

In the survey conducted a direct relation between the income level and the spendingcapacity was observed. Also it was found that students were spending in the range of Rs1000 Rs 3000 as compared to the working class professionals who were ready to spendbetween Rs 3000 Rs 6000, since they have higher spending power because of higherincome levels.

3). SHOPPING SEASON

ANALYSIS:

Amongst the student and the professional it was found the consumer buyingBEHAVIOR does not change with respect to the seasons and occasion as most of theconsumer would like to buy their shoes as and when need arises, whereas thebusinessman generally do their shoes shopping during traveling or on special occasions.

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4). BRAND RECOLLECTION:

ANALYSIS:

When asked about reconciling a sports shoes brand about 70% of the respondent wereable to recall REEBOK or ADDIDAS were as rest were able to remember NIKE andFILA brands. This was due to the fact that REEBOK has brand ambassador likeRAHUL DRAVID and YUVRAJ SINGH.

5). FACTOR INFLUENCING THE BUYING PROCESS:

ANALYSIS:

Among the various factors like social, psychological, personal and cultural factors it wasobserved that the consumer give more preference to his personal choice andpsychological factors like 50% of the people consider comfort and they generally do notconsider durability as an important aspect because they believe that it comes along withthe brand. Also the social factor like style was second most important factor behind the

consumer buying motives.

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(B) COMPARISON WITH OTHER BRANDS

ANALYSIS:

In response to the question about giving, out of 100 point to the various factors affectingtheir buying BEHAVIOR between NIKE and OTHERS following was observed:

OTHERS NIKEa. Style 20 30

b. Price 10 10

c. Comfort 30 30

d. Brand 10 20

e. Durability 30 10

This further shows that the consumer look for style in the NIKE more in comparison tothe other brand hence, gave their 30 points to it whereas 20 in case of other brands it wasseen that the comfort remains at equal place even while choosing a competitive brand.

BUYING FORCES

ANALYSIS:

It was observed that consumer is forced by no factors like peer pressure, family and

friends and some time people would like to buy a product because it is being endorsedby their favorite celebrity. It was observed that the beside that personal choice of therespondent, the pressure from the friends plays an important buying force for thestudents, while the peer and college in case of the professional and the least pursuingfactor is family which was seen in case of the respondents belonging to age group 35years and above.

NO OF PEOPLE BUYING NIKESHOES & REEBOK SHOES:

ANALYSIS:

This question was asked to know the market capture by the REEBOKand the timeperiod of association of the customers with REEBOK. It was deduced that more than75% of the respondents were using the REEBOKshoes and were mainly associatedwith it for a period of 1 year or more. While the remaining respondents were using eitherthe NIKE orADDIDAS brand shoes.

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CUSTOMER SATISFACTION:

ANALYSIS:

Because of the quality product offered by the REEBOK about 60% of the respondents

were either very satisfied or satisfied, while 10% did not gave any response as they werenot using the REEBOK shoes.

1. Do you ask for a specific brand by name?

90% people say yes to this and the remaining 10% say no.

2. Which brand do you generally use?

People in India prefer Nike the most as we can see that 24% people prefer Nike sportswear. Then comes Adidas and Reebok.

3. Has any sports shoes ad (seen on TV/in a magazine) made an impact on you? YES NONIKE 43 57

ADIDAS 63 37

REEBOK 45 55

ACTION 30 70

Most of the people are influenced with Adidass ad, then with Reebok and then Nike.

The most un-influential is that of action.

4. What according to you is the relative importance of the following?

V. Imp Imp. Not so Imp. DoesntPRICE 50 28 12 10

DURABILITY 55 45 0 0

BRAND IMAGE 40 20 15 15

COMFORTABLE 54 36 10 0

LOOKS 40 40 15 5

By this we infer that the consumer wants the shoe to be durable that is of primaryimportance for them. Then the price is also very important for them. The shoe should becomfortable. Along with that looks and the brand image is also important.

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5. What features of Nike do you like the most?

The most liked feature of Nike is the light weight shoe. Then it is the enhanced toe

support. From here we can infer that most important aspect for the consumers is thecomfort they get from the shoes.

6. What range you prefer?

Larger number of people goes in for shoes that come under the range of Rs. 1500-3500.A s we know that Nike is a premium brand 27% of the buy shoes that falls under therange of Rs. 3500-7500 and lesser no. of people buy shoes ranging in between 3500 and5500.

7. How often you buy Nike?

62% of the consumers buy Nike only once a year. Here we notice one thing that somedont buy Nike.

8. Are you satisfied buying Nike?

The people who buy Nike are fully satisfied buying it, their percentage is 64%. Only 15% are not satisfied buying it.

9. Do you think Nike serves the purpose of being a good brand, for Sports wear?

56% of the people agree that Nike serves its purpose for being a sport brand. Only 27%people dont agree with it.

10. Will you prefer Nike launching a new range which can serve the purpose of serviceclass?

67% say yes to the idea of launching a new range for the service class. 36 dont have any

idea of this.

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CHAPTER 7

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RECOMMENDATIONS & FINDINGS

The specific brand objective of Nike India would be to build up its brand reputation,

image and equity. A brand is not simply a collection of products and benefits, but also astorehouse of value stemming from awareness, loyalty, and association of quality andbrand personality. A brand is a name, term, sign, symbol or design or a combination ofthem intended to identify the goods or services of one seller or group of sellers and todifferentiate from those of competitors. In essence, a brand identifies the seller or maker.It can convey up to six levels of meaning: Attributes, Benefits, Values, Culture,Personality and User. If a company treats a brand only as a name it misses the point. Thebranding challenge is to develop a deep set of positive associations for the brand.Although these six meanings are noticeable in the Nike brand in the west and other partsof the world, they are yet to be cultivated in India. Nike has to ensure that their brand is

built up on these pillars in India.

The secondary brand objective of Nike India would be to ensure that they match themarket share and sales volumes of its competitors. After all, a company is in business tomake profits and stay ahead of its competitors. A company, product or brand may have avery good reputation and image, but if it is not profitable, it does serve its purpose. Atthe same time sales figures and data can be misleading. Hence market share has also tobe paid attention to.

Nike despite being one of the most popular brands in the world has not really caught onin India. Yet, there is reason to believe that Batas Power and Liberty would be ahead of

Nike in terms of popularity. We also notice that Nike is at par with Reebok. This againdoes not reflect too well on the brand, considering that Nike outsells Reebok everywhereelse in the world.Hence it is reasonable to state that Nikes popularity level in India could do with a boost.The best way to achieve this would be some serious brand building.The image of the brand has to be improved and people must be made aware of itspresence. Thus, the rationale behind choosing improvement of brand image andreputation as the companys primary objective is quite clear.

Nikes distinctive competency lies in the area of marketing, particularity in the area of

consumer brand awareness and brand power. On the global scale this key distinctivecompetency towers over the competitors. As a result, Nikes market share is number-onein the athletic footwear industry in most places around the world. Catch phrases like,"Just Do It," and symbols like the Nike "Swoosh," couple with sports icons to serve asinstant reminders of the Nike Empire. It is about time that this competency is leveragedon to India.

Two key attributes of a distinctive competency are its inability to be easily replicated and

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the value or benefit it offers to consumers. Few companies have such a recognizableimage and the resources to promote it. This ultimately translates into added value forconsumers. The public benefits from the strength of Nikes image at the point ofpurchase. For decades, consumers have come to associate the Nike image with qualityproducts. By associating star athletes and motivational slogans like, "Just Do It," with

marketing campaigns that emphasize fitness, competition, and sportsmanship, consumersidentify their purchases with the prospect of achieving greatness. Younger consumersespecially benefit from this positive influence. This image is something that competingcompanies can not easily duplicate by simply enhancing the physical characteristics oftheir products.

Nikes vision is to remain the leader in the industry. The company will continue toproduce the quality products that have been provided in the past. Most importantly, Nikewill continue to meet the ever-changing needs of the customers, through productinnovation. In the past, the company has utilized product differentiation as the maincompetitive strategy. As Nikes reputation dictates, it will continue to place emphasis in

this area. Nike has built its business on providing products that rise above all others andthis has made it the worldwide success that it is today.

Nike is known for its technologically advanced products and is the leader in this area.This allows Nikes products to stand out from the rest. The companys focus also allowsit to maintain a somewhat narrow niche that enables it to effectively capture the needsand wants of the consumers. An example of Nikes superior and innovative technologyis its new range of shoes called Air Presto. Termed as the first T-shirt for the feet,these shoes can take the shape and size of the wearers feet. Unlike regular shoes itcomes are sizes like XL, L, M, S and XS. Each of these sizes can accommodate three

conventional foot sizes. Nike will continue to produce such path-breaking products in thefuture and stay a step ahead of its competitors.

Nike will also focus on making a strong effort in price leadership. Nikes products in thepast have been concentrated in the higher end of the pricing category. An entrance willnow be made into lower price categories with these quality products. This will enableNike to capture an even greater hold on market share.Presently, the only form of customer relationship management activity that Nike hasadopted in India is product warranty. Nike shoes come with a six-month warranty. If theshoe is found to be defective or wears out within six months due to no fault of the

wearer, Nike replaces the product. This is only the first step and more needs to be domein this area.

Being a company that always strives towards excellence, Nike needs to know exactlywhat its customers think about their products. A good way of assessing this would be tohave the customer fill in a form at the point of purchase. The form will ask the customerhis / her opinion on the product as well as the showroom. Suggestions and commentswould be welcome. However, care must be taken to ensure that these forms are not too

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cumbersome and do not take up too much of the customers time. Surveys have indicatedthat normally people dont mind filling in forms as long as they are not too long.

Another good method would be to introduce a system of customer points. Every time acustomer makes a purchase, he would earn himself a certain number of points,

depending on the price of the product. After he crosses a certain point level, he would beentitled to a gift from the company or choose a product of a certain value from the range.This would be helpful in building customer loyalty and give them an incentive to makerepeat purchases. A most valued customer database could be created from her e andvarious forms of direct marketing could be directed at them. This would help thecompany to retain its existing customers.

A third way to improve customer relationship would be to issue gift coupons andvouchers. People would have the facility to buy these vouchers and present them to theirdear ones. This would be a good way to reach out towards newer customers throughexisting ones.

To explore the mainland market, Hong Kong companies should position themselves inareas in which they are strong. From the viewpoint of mainland consumers, Hong Kong'sleather consumer goods are considered competitive in the high-end and mid-range.Mainland consumers are brand conscious, and it is vital to promote own brands whichhave clear image.This survey also shows that Hong Kong products are preferred for their design/style andquality. Bearing these in mind, Hong Kong companies should never compromise onquality, and they should allocate more resources to product design, selection of materialand craftsmanship.

CHAPTER 8

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CONCLUSION

Department stores are the prime sales and marketing channel for leather consumergoods. In addition, store decorations and product displays should be designed to create astrong first impression. Seasonal promotion campaigns, like special discounts and

advertisements, could be employed. New lines of collections should be introduced forfestivals.In addition to promotional activities in shopping malls and department stores, discountsand TV commercials are considered effective channels for promotion. It is advisable topay attention to the affordability of customers in different cities, while setting pricepoints for different product categories. Meanwhile, leather shoes offer better growthpotential.Due to their growing spending power, the rising middle class should be the target ofHong Kong's sellers of leather consumer goods. Hong Kong companies should put more

emphasis on products for business use. In addition, it is useful to introduce appropriatedesigns that cater for the tastes of the middles class.

Double Click 2006 Consumer Email Study October 2006, the fourth of Double-Clickannual consumer email studies points to an increasing sophistication in consumer usageof email functionality and a corresponding complexity of purchasing behavior. TheSpam crisis continues to affect consumer behavior online but does not necessarily cloudconsumer receptiveness to legitimate marketers: an overwhelming majority of onlineconsumers receive offers by email and have made a purchase online or offline as a result.Consumers are using available tools to limit spam and are employing operate emailaccounts for purchasing, all in attempts to increase control and improve their email

experience. Working with Beyond Interactive and the NFO//net source panel of 900,000US consumers, polled 1,000consumers via email from July 30 - August5, 2007.

Key Findings The majority of consumers receive some kind of marketing email withspecial offers from retailers most common Sender recognition most impacts operates,while content relevance increases likeliness to purchase Frequency ascertain category,are very specific to the category of email but vary greatly from one consumer to the next;frequency of permission based email is clearly a great concern to consumers and has animpact on what they consider to be Spam. Email drives multi-channel purchases and hasan immediate as well as a latent Nearly 64% of consumers cite the line as the most

important factor in opening an email.2006 Consumer Email Study impact. It drivesconsumers most often to the online channel but also results in retail and catalog sales.Consumers have become sophisticated in their use of ISP-supplied tools to limits Pamand in their usage of various email addresses to manage their varied email activitiesHome and free email addresses are most often used for purchasing, within email addressspecifically designated for that usage. Men and women have radically different ideas ofwhat spam is and different purchasing behavior related to Spam. Women are morereceptive to promotions and discounts and correspondingly more interested in and

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tolerant of marketing emails than men. Receptiveness to Marketer Emails. The vastmajority (91%) of consumers receive some form of permission-based email with 57.2%receiving special offers from online merchants, 55.4% receiving them from traditionalretailers, and 48.5%receiving them from catalogers. Other popular types of marketingemails included account statements/online bill payment information (received by 49.8%

of respondents), travel emails (43.3%), coupons for groceries (40.0%), health (41.1%)and household tips/recipes/crafts (42.1%). Of categories in which consumers do notcurrently receive e-mails, respondents are most interested in receiving grocery coupons(cited by 22.1%) and household tips/recipes/crafts (13.6%).

Women remain the primary household purchasers, 2007 Consumer Email StudyRespondents with multiple accounts likely to use a free one for online purchases Womenmore likely to be active purchasers, multi-channel purchasers.

The fourth of Double-Click annual consumer email studies points to an increasing

sophistication in consumer usage of email functionality and a corresponding complexityof purchasing behavior. The Spam crisis continues to affect consumer behavior onlinebut does not necessarily cloud consumer receptiveness to legitimate marketers: anoverwhelming majority of online consumers receive offers by email and have made apurchase online or offline as a result. Consumers are using available tools to limit spamand are employing separate email accounts for purchasing, all in attempts to increasecontrol and improve their email experience. Objectives/Methodology Double-Click,working with Beyond Interactive and the NFO//net source panel of 900,000 USconsumers, polled 1,000consumers via email from July 30 - August5, 2007. Allrespondents recruited use email/internet 1+ times per week, which reflects the usage ofthe larger online population (94% of the 18+ online population according to Nielsen,

2007).There was an equal segmentation of men and women and the average age was42.7.This is the fourth of an annual series of consumer research studies and trendinginformation was derived using the data from previous years. The sample mirroredprevious studies and is reflective of the online population as a whole. Key Findings Themajority of consumers receive some kind of marketing email with special offers fromretailers, online merchants and catalogers most common Two to one consumers prefer tobe contacted by their favorite retailer regarding new products, services or promotions viaemail rather than direct mail. Sender recognition most impacts operates, while contentrelevance increases likeliness to purchase Frequency preferences, or how oftenrespondents prefer to receive emails of ascertain category, are very specific to thecategory of email but vary greatly from one Consumers prefer to be contacted by their

favorite retailer via email.

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CHAPTER 10

BIBLIOGRAPHY & WEBLIOGRAPHY

BOOKS & NEWSPAPER

Marketing Management -Philip Kotler

Consumer Behavior, 6th Edition, byHawkins, Best ad Coney.

Economic Times

WEBSITES

www.Nikebiz.com

www.Business.com

www.Indiainfoline.com

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http://www.nikebiz.com/http://www.business.com/http://www.indiainfoline.com/http://www.nikebiz.com/http://www.business.com/http://www.indiainfoline.com/


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CHAPTER 9

QUESTIONNAIRE

1) I buy my own shoes

Very frequently

frequently sometimes

never

2) I find buying shoes a pleasurable event.

Very frequently

frequently

sometimes

never

3). I buy costly shoes

Very frequently

frequently

sometimes

never

4) For purchasing shoes, I can travel long distance

Very frequently

frequently

sometimes

never

5) I buy shoes which are liked by my family

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Strongly agree

Agree

Indifferent

Disagree

Strongly disagree

6) I buy shoes which are advertised attractitively

Strongly agree

Agree

Indifferent

Disagree

Strongly disagree

7) I buy shoes which are advertised and endorsed by celebrity.

Strongly agree

Agree

Indifferent

Disagree

Strongly disagree

8) I like to buy shoes which are imported from Paris or Italy.

Strongly agree

Agree

Indifferent

Disagree

Strongly disagree

9). I like to buy shoes which are designed in Paris or Italy.

Strongly agree

Agree Indifferent

Disagree

Strongly disagree

10). I like to buy shoes which are very stylish & of latest design.

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Strongly agree

Agree

Indifferent

Disagree

Strongly disagree

11). I like to buy shoes which are less expensive but very stylish & of latest design.

Strongly agree

Agree

Indifferent

Disagree

Strongly disagree

12). I Like to buy shoes which are not very stylish but comfortable (%.of Respondents)

Strongly agree

Agree

Indifferent

Disagree

Strongly disagree

13). I Like to buy shoes which are not stylish but comfortable and long lasting

Strongly agree

Agree

Indifferent

Disagree

Strongly disagree

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