Creation and Development of the Nike Brand

Nike’s mission statement is a simple one but one that can relate to everyone as well. Its mission statement is, “Bring inspiration and innovation to every athlete in the world. [1]” The founder Bill Bowerman’s statement of, “If you have a body, you are an athlete. [2]” This could be used as a global and local mission statement that represents the company strategic goal of reaching out to the global leisure and sports footwear and apparel and equipment markets. Nike decided it would be best to focus on inspiration, innovation, and every athlete in the world because this way it was not limiting itself to a specific market or even a specific demographic.

The reason why it was important to have such a global mission statement is because Nike is a leading manufacturer in all sporting equipment and wear so it wants individuals, or athletes as they say to adopt its winner mindset and push harder than every before to be the best version of yourself. Nike believed in making things simple and having a message resonate with a lot of people at once and their “Just Do It” campaign is the perfect example. This campaign has been highly successful for 30 years and is a quick inspirational goal that both Nike and its customers can stand behind. Basing the Nike business plan behind what they are currently doing makes things a whole lot easier to dissect and understand as a whole. With innovation, inspiration and every athlete in the world being its major focus, Nike has a global vision to use its cutting-edge technology to help every person achieve a winner mindset and their products are designed to attract and satisfy a wide variety of market segments globally. This also makes Nike range unlimited and gives them a chance to operate any and everywhere.

Nike also has a great corporate vision statement that goes hand and hand with the mission statement that everyone knows. Nike’s corporate vision is, “to remain the most authentic, connected, and distinctive brand. [1]” The reason that this was a good vision statement was because in 2015 and it was in a phase of emphasizing its corporation’s global growth. These three words that stand out to me in this was authentic, connected and distinctive. Nike already used the word remain in its vision statement so it goes to show that they already consider themselves the most authentic, connected and distinctive in the global market for sporting goods and any equipment. Nike wants to remain authentic because consumers have a certain standard that they hold Nike equipment to now and want to be ensured that they will be getting the highest quality of product in return. They also want to be connected too because the personal connection to the brand might ensure a lifetime customer if all demands are met appropriately. This connection will be a major driving pattern in Nike’s marketing mix or its 4Ps.

Nike has the same objectives as any nonprofit business does and that is to make profits for its shareholders but internally, they just released their 2020 to 2025 plans for the future and they want to focus on 5 main points. These main points would be, “Reduce carbon emissions during a period of continued growth, delivered substantial water reductions, working with fewer but better contract factories, improve product sustainability and drive down waste. [3]” If I was to summarize what they were looking to do by 2020 in layman’s terms it would be minimize environmental footprint and transform manufacturing. Nike wants to enter a closed loop and reuse thing to withdraw its impact on the environment as much as possible. An example of this is that Nike knew that 60% of the environmental impact in a pair of Nike shoes is from its materials used. Learning about this Nike went through and did a lot of research to see exactly how it can create a much more sustainable material into 71% of its footwear and apparel to help reduce this footprint. Also, since Nike wants to be better at changing how manufacturing is done, they are now running new pilot research programs dedicated to engaging the workers and connecting them to healthcare and education to help them better educate themselves and be the change they want within the company and the world as a whole.

One thing I have noticed throughout my research is that Nike is one of the most effective and efficient operations management teams and system in place. These individuals specialize in making sure Nike is having success this is regularly examined and improved to help ensure that things are optimized to the highest of potentials. Most the decisions these individuals have to make are main decisions in managing streamlined operations and productivity to follows along with its mission and vision that is in place. Nike uses 10 decision areas to make its operations management decisions. They are as follow; “Design of goods and service, quality management, process and capacity design, location strategy, layout design and strategy, job design and human resources, supply chain management, inventory management, scheduling and maintenance. [5]” Personally, I think they could have broadened up their categories a little bit and reduced it down some. Nike believes that having these ten decision areas in place keeps these individuals constantly looking for ways to improve the standards and become even more efficient. The reason being so efficient is important is because depending on how big your facility is, a certain standard has to be held. Nike uses four specific measures of productivity and they are, “1. Revenue per square foot for retail store productivity. 2. Pair of shoes per hour for Nike supplier productivity. 3. Items per day for inventory personnel productivity. 4. Documents per day for Nike corporate offices productivity. [5]” I personally loved this idea because it holds everyone accountable on all levels of this company. If your average numbers are not met in a week or a day, there was something happening to cause that so it would be easier to pinpoint exactly what they are missing and what is needed to be done in order to get the productivity up even more.

Looking into the 4Ps of Nike which would be product, place, promotion, and price we are able to determine the full profitability and the growth for athletic footwear and apparel. Taking a look at its product mix there is three broad categories being shoes, apparel and equipment and accessories. Shoes are easily its most popular product and was the cornerstone of the company so it makes sense that it gets its own category. They diversified it heavy too so now it also includes things like running shoes or any other sports shoes. Once the shoe market was cornered, they moved on to the apparel where they sell jerseys, even have contracts with NFL and NBA to make jerseys for the teams as well, shorts and other products related to clothing. The last group would be its equipment and accessories such as golf clubs or baseball bats. The best part about such a diverse product line is that even if you purchase something like Air Jordan, Hurley or Converse, Nike would still get paid because they own of them!

Next on this list would be the places you can go to purchase this gear. Once again there is three major categories for this and they are retail stores, Nike online store, or Niketown retail outlets which as company owned stores. This list is also in order from which ones are the most significant as well. Retail stores are the most significant because they are strategically located and easily accessible in the whole world. The best part is that it ranges from big stores like Walmart carrying their product to small local stores as well. If you cannot find a certain product in the store, their online store has everything at your fingertips and its user interface is extremely reactive and simple to use. Lastly, the Niketown retail stores make the least because these are used more as a way to create marking strategies for current or new and emerging products that are about to hit the stands. It is kind of like a soft open for certain products so they can get a small sample of how the end users will react to something of this sort.

Nike’s promotion is the next P on the list but more people refer to this as the marketing mix that they use. Having a strong brand image is something Nike prides itself on so in order to get this they have to make sure that its target customers purchase these products with certain promotional tactics. So, keeping that in mind Nike ranked its most to least significant marketing schemes, “Advertising, Personal selling, direct marketing, sales promotions, and public relations. [6]” Nike relies heavily on advertisements and especially using its high-profile celebrity endorsers. Any time these professional athletes wear these products and are seeing being out in public with them, it makes individuals ask what they are wearing and where they can get their own of that kind of clothing or even shoes. It turning into its own marketing scheme with having certain athletes synonymous with what Nike is such as LeBron James and Michael Jordan who are both lifetime deal owners.

The very last P is pricing so taking a quick look at Nike’s pricing strategy. Nike essentially has two trains of thought with this company, value-based pricing strategy and premium pricing strategy. With its value-based strategy Nike considers consumers perception about the value of its products. This value is then used to determine the maximum price that consumers are willing to pay for the company’s shoes or equipment. On the other hand, the premium branding strategy involves high prices which are based on a premium branding strategy that established Nike products as higher in quality, innovation, and sustainability than its competing products. The company will use its biggest endorsers for these events and make it a marketing campaign as well. For example, they did this with the Kobe 4s and a lot of his other shoes as well. Of course, the pricing is adjusted if there is a recession or if there is a certain political issue causing a problem on how things should be priced and the budgets of its consumers end up changing as well.

Nike has clear competition in the global marketplace but strictly within the USA, Nike is the most dominate sporting brand. Some of Nike’s other competitors in ranking would be, “Adidas first, then Puma, Reebok, Lululemon Athletica, rounded out by New Balance, and Under Armour. [7]” Nike is also bringing in $37.3 billion annually according to the latest SEC filings and has roughly 73,100 employees. Nike also has borrowed $1 billion in order to get more leverage and holding a certain amount of financing with this debt it has. Nike has not grown or fallen to drastically recently but will continue to rise gradually as always and will always be a dominate force in the market share of athletic equipment and supplies.

Nike uses a generic strategy for its competitive advantage and that would be cost leadership strategy and differentiation strategy. “Nike’s cost leadership generic strategy sustains competitive advantage based on costs. In this generic strategy, the company minimizes production costs to maximize profitability or reduce selling prices. [8]” The reason why this strategy is so good for Nike is because of its larger product line and highly diversified products too it gives them a wide range of options for consumers to use. Also, when they are cutting productions costs you are going to receive these shoes at the best value in order for them to get sales and continue to be the dominate brand in the US. The reason why you want to spend that extra few dollars to get the Nike shoe is because you know when you are spending it you are getting all the cutting-edge technology too that goes into a shoe in order to make it the best possible fit.

When Nike is going to intense growth it will begin with a 4-tier system of intense growth. They go as follows, “Product development to market penetration to market development to diversification. [8]” Product development is the primary growth strategy and this involves the introduction of new products to grow sales revenue. These new technologies enhance the products they already have and set them apart from the competition. Next is market penetration and in this the company is looking to increase sales revenue in existing markets. But this step would not be possible without the cost leadership that empowers Nike to be affordable on all fronts. Market development is the next one and this is a strategy to help Nike target new market segments and new markets as a whole too. This could mean moving into a country or even changing the product line in order to be acceptable in a certain environment. Nike’s least significant strategy in growth in diversification. Nike shouldn’t be concerned too much about this one since its product line is already highly diverse but beforehand when it was exclusively a shoe designer and retailor this was very important to promote the growth of the company.

Nike has a very precise delivery system in place for its supply chain to be so successful. Delivery in a multi-product company is very critical. This improves profit margins, reduces inventory, minimizes price markdowns, and ensures that the customer receives the right product assortment on time. “NIKE moved ~900 million units through its supply chain last year. Its manufacturing network consists of over 700 factories in 42 countries. Each product moves from 57 distribution centers across a network of 18,500 accounts and 140,000 retail doors. [10]” The crazy thing about reading all these numbers is that Nike does not own a single factory for manufacturing its footwear and apparel which makes almost 90% of its total revenues. What Nike does is that it will outsource its manufacturing to third parties which is a cost-effective way for them to continue being the pricing leader that it is. Most of the raw materials in Nike supply chain are actually sourced in the manufacturing host country which means getting them regularly is not something difficult for Nike to do. Plus, in doing this Nike can support the economy that they are producing its goods in by letting the locals work there rather than having its own factories making everything. Nike was and still is one of the pioneers of an industry-defining manufacturing outsourcing strategy and they are now looking to make perfect factories to excel this product line and production as a whole too.

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