Nike Runs the Innovation Race Every Day

Joe Smith

Marketing 5000

Nike Runs the Innovation Race Every Day

Strategic Case 5

Pp. 415-416 of Marketing 2018

Executive Summary

        Nike is the world’s largest marketer and retailer of athletic footwear, apparel and accessories.  The company was founded in 1964 by a University of Oregon track and field athlete, Phillip Knight, and his coach, Bill Bowerman.  It is based near Beaverton, Oregon and has a 400-acre site with more than 40 buildings.  Nike is a consumer products company that designs, develops, and markets footwear, apparel, equipment, and accessory products worldwide.  The company's footwear products include running, training, basketball, soccer, sport-inspired urban shoes, and children's shoes.  Bowerman had long been experimenting with modified running shoes for his team, and he worked with runners to improve designs of prototype shoes.  This idea of innovation in its shoe design eventually would become the foundation for the company's future expansion and success.  In 1972, Nike with its brand-new swoosh trademark promoted its products heavily at the U.S. Track and Field Olympic Trials.  This idea of creating marketing campaigns centered on attaching Nike’s name to ascending careers of young popular athletes has been the cornerstone of Nike’s strategy for success.  Nike operates in six geographic segments: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and other emerging markets.  Nike sells to thousands of U.S. retail accounts, which include a mix of footwear and sporting goods stores; athletic specialty stores; department stores; skate, tennis, and golf shops; and other retail accounts.  The company markets its footwear and other products globally through diverse advertising and promotional programs and campaigns, including print, social media, online advertising, and endorsement contracts with celebrity athletes.  Nike’s top three competitors are Adidas (Germany), Reebok (Germany) and Puma (Germany) (Bhasin, 2019).  The company posted 2017 revenue of $34.4 billion, an increase of 8 percent from the previous year.  It was driven by growth in every geographical sector as well as key categories including sportswear, running and Jordan Brand (“Nike Reports Fiscal 2017 Results,” 2017).  Nike’s closest competitor, Adidas, was founded in 1920 by Adolf Dassler and is headquartered in Herzogenaurach, Germany.  Adidas engages in design, distribution, and marketing of athletic and sporting lifestyle products. It operates through the following segments: Western Europe, North America, USA Reebok, Russia, Latin America, Asia/Pacific and other emerging markets.  The company operates under Adidas and Reebok brands.  Adidas posted 2017 revenue of $24.1 billion, an increase of 16 percent from previous year.  It was driven by strong double-digit growth at Adidas brand and a mid-single-digit sales increase at Reebok (“Adidas 2017 Annual Report,” 2018).  In today’s competitive environment, Nike has been able to differentiate itself and become the global leader in the athletic footwear/apparel industry.  The key to Nike’s success has been its excellent marketing strategies that allow the company to sell a massive quantity of  highly innovative products.  Nike has become a transcendent super-brand, because it understands that products are made in factories, but brands are built “in the mind and bought by the consumer” (Kazi, 2011).  As new, state-of-the-art products are released, Nike has been able to track its core customers and learned that they spend an increasing amount of time on the Internet.  This resulted in Nike launching on-line, digital ad campaigns on various social online communities/outlets.  The Nike+ series of new innovative products records customers’ behaviors and patterns, as well as creating a platform for customers to really connect with Nike.  By going digital, Nike is now able to directly communicate with its past and future customers, which allows it to understand what its target market wants out of a product.  Nike can reach a much larger quantity of people at a much lower cost.  Instead of spending $100 million on advertising during major sporting events, to reach at most 200 million people (Superbowl), Nike can reach this many people every single day for a fraction of the cost over its various websites and social media platforms.