Nikew
Nike- A Case Study
Just Do It.
Muskaan Nagori
TYBBAD D032
Executive Summary
i
Nike has gone 35% digital and is planning to reach 50% by 2025. It has shown immense
growth and is expected to close year 2022 with over 50-billion-dollar revenue. Strategically
Nike is also prioritising its DTC (directly to consumer) sales. Covid 19 has just showed an
increase in its sales across all segments and brands. Nike also recently hit its first 5-billiondollar quarter. All these took place with recession in a lot of sectors and segments all across
the world which makes us think about Nike with a fresh perspective. "Our goal isn't merely to
take market share. Our goal is also to grow the entire market," CEO John Donahoe saidii. To
stay current, Nike continuously works on its trends, marketing and communications. It has
always been extremely competitive and up to date with the latest trends in the distribution
network, growing its DTC channels, setting trends on digital media like Tik-Tok or Instagram
reels. It also plans to take its brand, Jordan, to retail in pursuit of growth. So, will Nike be
able to stay current? Will start-ups disrupt the market? Is Nike going to be relevant going
forward? Is Covid 19 really a bane? Or just a boon is disguise for Nike? Finally, why exactly
Nike is going digital?
1
Nike’s Story
Nike was created in 1964 by Bill Bowerman, a nationally known University of Oregon track
coach, and Phil Knight, a former track athlete. Originally known as Blue Ribbon Sports, the
two began by distributing Netsuke Tiger sneakers to players around Oregon. After track and
sporting events, Phil Knight would frequently sell sneakers from the trunk of his car. Their
primary motivation for entering the athletic shoe industry was to equip athletes with higherquality footwear. In 1978, Blue Ribbon Sports officially became Nike, Inc., after immediately
terminating its affiliation with Onitsuka Tiger. The company was named after Nike, the
Greek goddess of triumph, and it created the world-famous "swoosh" emblem as well as a
new creative athletic shoe design. Nike went public in 1980 after only two years, with a 50%
market share of the US athletic shoe market. Nike is now the world's largest provider of
athletic footwear and apparel. Globally, the company employs around 30,000 employees.
More than 6,000 people work at the Nike World Headquarters, which is located near
Beaverton, Oregon. Nike's continued success can be attributed to the company's unique
designs, development, and marketing tactics for high-quality footwear, apparel, accessories,
and equipment. Nike reported record revenues of $18.6 billion for the fiscal year ended May
31, 2008.iii
World’s Shoe Market
In 2020, the global footwear market was estimated to be worth 365.5 billion USD and was
forecasted to reach about 530.3 billion USD by 2027. Exhibit 1 shows the size of the
footwear market worldwide from 2020 to 2027. The other key players in the industry are
Reebok, Adidas, Puma, and Under Armour. Living healthy and fitness are the new mantra of
life across consumer segments which is true across geographies. Most of the shoe
manufacturers are now tying up with fashion designers to produce new clothing lines to
widen their product portfolio in pursuit of growth and profitability. As a result, consumption
will continue to be driven by fitness trends, fashion trends, demand originating from specific
demographics such as teenagers and baby boomers. Though India and China have the largest
population and have caught up with fitness trends are considered to be large shoe markets of
the world, however Nike’s Sales are yet largest from North America and European Nations.
This is largely due to the fact that India and China are still growing economies and have large
unorganised markets catering to the needs of the nation. India and China are the focus
markets of most of the global brands, but they do not have a market for high ranging shoes or
highly athletics shoes causing this phenomenon.
Nike’s Presence in the World Market
Nike, Inc. is a sportswear and equipment company based in the United States and is the
world's largest producer of athletic shoes and gear. It also manufactures and sells significant
sports equipment. Nike is the global leader in athletic footwear and gear. Cole Haan, Bauer
Hockey, Converse, Hurley International, Starter, and Umbro are just a few of the footwear
and apparel firms that have been bought by the company, which is quoted on the New York
Stock Exchange (NYSE) as NKE.
The Nike swoosh is one of the most recognisable trademarks in the world, as well as one of
the most well-known athletic sponsors. Nike employed about 73,000 employees and has over
1,000 retail stores worldwide in 2021. Much of Nike's success may be due to the company's
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global marketing campaign, which involves signing sponsorship agreements with celebrities,
professional sports teams, and collegiate athletic programmes to promote their technology
and design through their goods. Nike and Adidas are driving development in the global
sportswear and athletic clothing industry, thanks to their instantly identifiable emblems. A
variety of indications can be used to determine who is winning the battle of the retail
behemoths. A basic brand comparison of Nike and Adidas reveals that Nike is currently the
market leader, with a brand worth of more than 34 billion dollars. Adidas, on the other hand,
was valued at slightly over $12 billion. Nike has a market share of more than three times that
of Adidas in the United States.
Nike complemented its organic growth by acquiring sport apparel companies such as
Converse in 2003 and Umbro in 2007. As a major global brand, Nike has continuously paid
attention to emerging digital technologies and innovations such as mobility, social media,
analytics, and smart products since the late 1990s. The Athletic goods Industry over the years
has also seen many mergers and acquisitions. Sports and fitness gear industry has generally
been fragmented over the years, with a wide range of brands competing, from low-cost
discounters to high-end fashion labels. Even the most well-known firms must work hard to
keep their market share. Customers are expecting more versatile clothing with greater
usefulness; therefore, retailers are continuing to develop new sportswear styles for men and
women.
Nike closed Year 2021 with a revenue of USD 44.5. In United States Nike leads the Footwear
sales with a huge margin. Nike is 5 times its next competitor (Refer Exhibit 2) It clearly
shows Nike is the biggest player in the market and by a big margin. Nike is also increasing its
world revenue share each year and more specifically it has been increasing its DTC market.
The DTC channel grey from 35% in Year 2016 to 63% Year 2021 (Refer Exhibit 4). Since
Nike has continuously innovated and evolved its product portfolios and distribution channels
it has been able to grow its revenue from USD 13 Billion in Year 2005 to USD 44.5 in Year
2021 and remain relevant in the market (Refer Exhibit 5). In 2021. The company has over 73
thousand people working for it worldwide. The company sponsors many high-profile
professional athletes such as Cristiano Ronaldo, Rafael Nadal, Lebron James, and Rory
Mcllroy to use their products and promote and advertise their technology and design. On top
of that, Nike also manufactures and provides kits (uniforms) for a wide range of sports teams
like Barcelona, Chelsea, and Paris Saint-Germain and many U.S. colleges as well.
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Is Covid19 a Boon or a Bane?
COVID-19 lockdown had a significant impact on Nike in line with others in the consumer
and fashion industry. Nike, a global brand with 1,100 shops, closed more than half of its
stores in China as early as February to safeguard its staff, and by mid-March, it had decided
to close all of its stores in the United States as the virus swept across the country. Even those
establishments that had remained open, foot traffic had decreased dramatically. In the
aftermath of the coronavirus outbreak, Nike Inc. is doubling down on efforts to expand its
online operations, with plans to bolster its own e-commerce platforms while expanding
collaborations with key retailers like Foot Locker Inc. and Nordstrom Inc. to increase digital
sales.
Experts believe the measures will help Nike to become more agile and digitally focused in
the wake of a pandemic and forced store closures across North America, Europe, and China,
which resulted in a reduction in revenue and a net loss in the company's most recent quarter.
Even before the pandemic, the global athletic apparel behemoth profited from a burgeoning
internet company, which grew as customers switched online during the months that stores
were closed.
Nike's aim of having 50% of its sales come from digital channels is a tall one, but analysts
say it's achievable because the company anticipates digital sales will account for 30% of
revenue in fiscal 2021, two years earlier than expected. Nike's internet sales rose 75 percent
despite a 38 percent dip in total sales in the fourth quarter. Meanwhile, the Nike E-Commerce
app has been downloaded over 8 million times since February, and income from the SNKRS
app surpassed $1 billion for the first time in fiscal 2020. In the fourth quarter, Nike added 25
million new members, half of whom came via exercise apps. According to Nike, women
made up half of the new recruits.iv
Even though all this information makes us believe Nike did well and thrived in the face of
COVID, its untrue. Exhibit 7 here shows its sales growth rates. They declined for most of the
entire second half of the year. The silver lining was their digital sales increased but total sales
took a hit along with its share prices.
Even after two years in such tense situations while reopening its stores with either full
capacity or reduced hours, Nike says it will have a material problem. It will take a hit just like
its peers. Mainly this hit is due to a lot of Nike store closures have caused stalled shipments
to their wholesalers which indeed end up causing losses which are only set off by the strong
online demand that has yet not dwindled. The stalled shipments caused significantly lower
wholesale revenue and higher inventory stagnation.v
Covid19 helped Nike by fast forwarding its digital strategy and focusing on their long-term
goals of going digital instead of digital being just another revenue channel. At the same time
it did take a huge hit towards its traditional revenue channels and thus one cannot conclude
yet that whether it was a Boon or a Bane. However, one thing that has remained constant is
that Nike has been able to keep its leadership position as the market leader with over USD
145 Billion as its valuation.
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Why is Nike going Digital?
“Digital is fuelling how we create the future of retail,” CEO John Donahoe said. He also said
“Digital is now woven into everything we do as a company”
Nike's growth has typically been based on a foundation of strong new products, extensive
brand marketing across numerous media channels and effective and efficient operational
processes. Nike was extremely fast to adopt the possibilities of new digital media as they
became available. Nike has always developed its own digital initiatives to satisfy unique
requirements with Marketing of Nike embracing social media. The company began using
technology into its products. Product Development adopted digital design techniques and
facilitated cross-supply chain collaboration.
Nike+ is a classic example of how Nike has set trends for the industry in Digital strategies to
connect with customers. In the similar pursuit and to enable continuous improvement and
connecting to the athletes Nike’s Global Digital Brand and Innovation Director Jesse Stollak
says vi “The goal hasn’t changed since the beginning of Nike”. Nike wants to connect with
athletes to inspire and enable them to be better. The rise of social media provides new ways
to do this.” Nike has also created very innovative social offers for the running community in
addition to joining public social forums. A shoe, an Internet platform and a gadget (such as an
iPod, iPhone, GPS watch, or FUEL band) that can geo-track a runner is all part of the Nike+
concept. Runners can post their results online and even get personalized advice from trainers.
Nike+ is also an opportunity for the company to have a better understanding of its customers'
wants and preferences.
Large amount of data is available on Nike+ platform and hence Nike says, "With such a large
group, Nike is discovering stuff we've never known before" People in the United States run
more frequently in the winter than those in Europe and Africa, but for shorter distances. The
average length of a run in the world is 35 minutes and the most well-known Nike+ Runners
can create a powerful song to give them a boost of motivation The Black-Eyed Peas' 'Pump
It'. All this information was previously not available and since going digital
"Internal procedures, as well as consumer-facing processes, have been altered by digital
technologies. The transition from paper-based to totally digital product design was a
significant internal upheaval. Nike began using 3D design in the early 2000s. It also backed
environmental policies and drew in younger designers who expected digital design talents.
"Materials, componentry, construction procedures, manufacturing methods, the entire digital
revolution," said CEO Mark Parker. Knitting technique that eliminates the need for cutting
and stitching, as well as obsolete production procedures, to create totally sustainable design
and footwear. All of that thought is being included into the product."
By implementing a digital-first strategy, the forward-thinking company was able to increase
its share price and re-establish the exclusivity and covetability of its brand. Covid caused
most of Nike’s stores to close but even as most of its stores were reopened, Nike’s digital
sales soared 82% during the fiscal first quarter. Covid therefore has further pushed the digital
strategy at Nike. This leads us to believe Nike’s digital strategy is long term and here to stay.
The company states that it is on track to have its digital sales represent 50% of total revenue
in coming years. Nike said its online sales are more profitable than sales in wholesale
channels, like department storesvii.
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Nike went digital by firstly creating an online presence for all to relate and interact. Secondly,
they closed most of their shops, but they didn’t underestimate the importance of brick-andmortar shops. They innovated a lot in their shops integrated them with their digital presence.
They opened a scan it yourself code that allows you to directly pay and leave and skip
checkout completely. These are innovations that they have used in their Nike app which
finally makes you pick options like curbside pickups for your purchases or simply walk into
the store to make your own Nike.
They also extended beyond the core ecommerce apps to go digital in their motive. Creating
an eco-system helps with this objective a lot like Apple does this best. Nike has a lot of points
for entry into its eco system that are not core footwears like Nike running club or Nike
training club which allow home workouts and strength trainings too. Nike commercialized on
such apps early in the pandemic. As you can see it’s not just about the shoes it’s about
keeping your customers engaged and know what they want, make them the center of your
business which Nike not only says but does by various ways. One such way is by newer
product launches to keep them interested. Even in the pandemic Nike continued to make new
products and launch them. It recently launched maternity activewear.viii
Nike’s continuous pursuit of innovation, excellence and hunger to be connected to the
customers has always led it to keep itself ahead of the curve in Marketing and
Communication trends. Digital is one such strategy where it has continuously innovated and
Covid has only pushed this further. With connectivity infrastructure getting cheaper than
ever, 5G technology already in execution and every customer now interacting more than ever
on a screen Digital is the way forward and Nike has been only a leader in this space and
hence not a surprise to see that Nike has gone Digital and is large part of its strategy.
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Will Nike stay current, or will start-ups disrupt the market?
Nike is the largest sneaker manufacturer in the United States, surpassing Adidas and Under
Armour. Its dominance in the sporting goods industry is unquestionable. It's also a well-liked
brand among teenagers, adults, and everyone in between.ix Unique designs, great product
quality, product and process innovation, and marketing have helped it achieve a strong
competitive edge. Its financial performance has kept growing over the years which is evident
in how Nike’s revenue has grown over the past five years.x
Nike's stated goal is to sell more directly to consumers on digital platforms. As a result, it's
been investing into e-commerce, developing technology like a foot-scanning software that
tells consumers their exact sizes, expanding its storefronts, and attempting to clean up thirdparty marketplaces like Amazon.
Nike is also focusing on female consumers because the entire market for women's shoes and
clothing in the United States is significantly larger than that for males. Female buyers still
account for less than a quarter of Nike's total revenue.
Nike continues to grow at more than 10% annually even with sales of USD 44.5 Billion in
Year 2021. Three ways I feel they have stayed current and continue to do so is:
1. Mission: “Bring inspiration and innovation to every athlete* in the world (*if you
have a body, you’re an athlete).” Nike understands the fact that they are not just
catering to athletes but anyone who wants to achieve their personal best. Their
inspiring mission goes beyond anything that they could have imagined while writing
it and they inspire every person and will do so for the coming future so that people
can achieve their aspirational goals.
2. Strategy: Nike's "category offence" is also an important aspect of the company's
strategy. Nike realigned its operations around individual sports in 2008, and sales
have increased by 70% since then, according to the firm. They dominate the athletic
shoe market in a variety of sports, with a market share of 62 percent compared to
Skechers' 5 percent.
3. Customer Focus: CEO of Nike, Mark Palmer, believes the reason why they are
successful is only because they focus on what every athlete needs in every sport. Nike
integrates researchers into sports teams at various levels. The researcher studies what
athletes are seeking to achieve and determine where different items may fall short in
assisting them in achieving their goals. Existing items aren't always enough, and
occasionally a void remains unfilled owing to a lack of a product. This understanding
of their target consumers' unmet demands allows Nike to apply their whole suite of
technologies and skills to the market's most promising prospects, allowing them to
fulfil their objective of "bringing inspiration and innovation" to athletes while
dominating their markets.xi
One other way Nike stays current and on everyone’s mind is by its dynamic marketing
strategy. It has evolved its strategy with time, but its core stays the same. Nike made sure to
stay current by changing with time. Its not just a strategy it’s a story and a story that sells.
Let’s now discuss what Nike did in its marketing that works so well that they stand at leaders.
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1. Customer Interests First
Customers appreciate high-quality products with significant benefits. Things that help
them personally are simple to justify for them. Nike Moon shoes is a classic example
of this. The shoe had great market only because the buyers began to realize the
benefits of jogging for their health. The hidden purpose wasn't to sell shoes; it was
just a cause that Nike’s Co-founder cared about. This may not appear to be a
marketing technique, but it most definitely is. Bill, Co-Founder of Nike accomplished
this by advocating for Jogging and making America realize that they need to jog. He
just started explaining the need and benefits of jogging but sales for his shoes started
increasing immensely.
2. Base Your Strategy on A Felt Need
The perceived demand for Nike's audience wasn't for better running shoes at first, but
for a better means to get in shape. Running was certainly popular among children and
athletes in the 1970s, but it was not the ubiquitous social activity that it is now. The
rising white-collar employment paved the door for social activities such as
cardiovascular health promotion. The demand transformed after the pattern was
established, and the "jogging shoes" themselves became the felt need.
3. Believe In the Product You Are Selling
Nike’s Co-Founder did not start writing books and pamphlets on jogging to sell shoes
and neither did he do so to become a millionaire. His sole purpose was to promote a
sport and an idea that he was passionate about. It made marketing a lot easier for him.
He was unknowingly "promoting" without even recognizing it.
4. Sell Easily Identifiable Benefits Instead of The Product
While jogging is easy to understand, many products or causes are not. His mission
was to create the world's lightest running shoe. He claimed that this component alone
may significantly improve a distance runner's speed. His product worked, and it
quickly received the reputation it deserved in the business.
5. Embrace New Technologies
Nike has used technology to develop some excellent products across consumer
segments like the Nike Air Jordans 11Adapt which are self-tying shoes. The next best
example of technology integrated shoes are the Go FlyEase shoes which are hands
free shoes. Nike has been embracing technology in its supply chain and customer
communications since the very beginning. It was first only targeting print media in
70’s but later dominated TV commercials and now it’s creating its eco-systema and
going digital completely through social media and other platforms.
6. Adapt To the Needs of Your Audience
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Nike hasn't always embraced new communication mediums for marketing purposes
only to chase new, bright items. Not at all. Instead, they've been fast to embrace new
platforms since that's where their customers are.
7. Stay True to Your Sense of Purpose
They say the more things change the more they stay the same. That has certainly been
the case for Nike. Nike ensures that their brand message is not lost over time or across
media in their current content marketing operations. Instead of emphasizing on the
qualities of their products, they concentrate on developing material that emphasizes
the benefits. The focus of their branding and message remains on assisting their
consumers in becoming better at what they enjoy doing. By bringing their content
marketing to where their customers are, businesses demonstrate that they are thinking
about their audience's demands while remaining loyal to themselves. While many of
its competitors have come and gone from the spotlight, Nike's marketing strategy has
succeeded in maintaining a global brand.xii
It has a very strong brand equity with being consumer centric and innovations are in
its very fabric. They have created their brand presence and their marketing strategies
keep them at the top. It has the biggest customer base and highest customer loyalty.
Their supply chain management and manufacturing are top notch. Their innovations
allow them to bring out the biggest product range in their market segment. All of this
allows Nike to stay current.xiii
Coming to why Nike can stay current and what are its core competencies we can see;
Nike’s marketing strategy is an important component of the company’s success. Nike
promotes its products by support agreements with celebrity athletes, professional
teams and college athletic teams, original advertisements, and expert athlete
endorsements. Nike's inventive and imaginative product design is what genuinely
distinguishes the company from its competitors. Nike has pioneered four shoecushioning systems that decrease shock, distribute pressure, protect from impact, and
provide comfort, with technology and innovation as one of its business principles.
Nike Air, Nike Air Max, Nike Air Zoom, and Nike Shox are some of the
technological advancements. These improvements help Nike customers perform
better and feel more comfortable. Nike has also launched a website that allows users
to customize their items. Users may personalize and purchase footwear and athletic
accessories on the NIKE ID website in a fun and easy way. The site turns the user into
a designer, allowing them to customize a wide range of shoes, bags, and equipment
with their own designs, colors, and materials. When it was released in 2000, Nike ID
was the first of its type, and it altered the way the world looked at sneakers and how
people bought them.xiv
There is no way any start up can come up today and just throw Nike over. Nike has
made itself a brand and using its core competencies and marketing strategy it has
made a place for itself not only in our hearts but also on the top of the score board.
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Thus, Nike is successful and is planning to grow further and due to its decision of
going digital, embracing the future technology and being a consumer centric brand, I
personally don’t see it going anywhere. Hence, Nike is the present and future and no
startup will be able to disrupt the market so easily.
10
Exhibit 1: Footwear market size worldwide from 2020 to
2027 (in billion U.S. dollars)
Source: https://www.statista.com/statistics/976367/footwear-market-size-worldwide/
Exhibit 2: Leading footwear companies in the United States in 2020, by turnover (in million
U.S. dollars)
Source: https://www.statista.com/statistics/939609/leading-footwear-companies-us-byturnover/
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Exhibit 3: Forecast of Nike's global market share in athletic footwear from 2011 to 2025
Source: https://www.statista.com/statistics/216821/forecast-for-nikes-global-market-share-inathletic-footwear-until-2017/
Exhibit 4: Nike's revenue worldwide from 2016 to 2021, by sales channel
Source: https://www.statista.com/statistics/888725/nikes-revenue-by-sales-channelworldwide/
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Exhibit 5: Nike's revenue worldwide from 2005 to 2021
Source: https://www.statista.com/statistics/241683/nikes-sales-worldwide-since-2004/
Exhibit 6: Nike's revenue worldwide from 2017 to 2021, by region
Source: https://www.statista.com/statistics/241692/nikes-sales-by-region-since-2007/
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Exhibit 7: Nike’s Sales growth for its full fiscal year 2019-20
Source: https://qz.com/1874014/sales-at-normally-resilient-nike-plunged-due-to-covid-19/
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Endnotes
i
https://www.retaildive.com/news/nike-plans-for-50b-in-revenue-nextyear/602456/#:~:text=The%20sports%20giant%20is%20now,(from%2035%25%20now).
ii
https://www.retaildive.com/news/nike-plans-for-50b-in-revenue-nextyear/602456/#:~:text=The%20sports%20giant%20is%20now,(from%2035%25%20now).
iii
https://www.ukessays.com/essays/marketing/core-competencies-are-capabilities-marketing-essay.php
iv
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/nike-levels-updigital-game-in-wake-of-coronavirus-hit-59265634
v
https://www.cnbc.com/2020/05/14/nike-sees-coronavirus-pandemic-having-material-impact-on-itsbusiness-as-stores-in-the-us-start-to-reopen.html
vi
https://mashable.com/archive/nike-social-media
vii
https://www.cnbc.com/2020/09/23/nikes-ceo-says-digital-is-here-to-stay-e-com-business-fuels-sales.html
viii
https://www.indigo9digital.com/blog/nikedigitalstrategy
ix
https://quillbot.com/?utm_source=Google&utm_medium=Search&utm_campaign=Paraphrase_Developing&
gclid=Cj0KCQiAmKiQBhClARIsAKtSj-nj7mViWlBLs2SA7QwXOq3_CX2rOk7OHBQxc36W2b74d3X6l8_NOwaAjcgEALw_wcB
x
https://notesmatic.com/nike-sources-of-competitiveadvantage/#:~:text=However%2C%20Nike%20has%20got%20an,achieve%20a%20strong%20competitive%20e
dge.
xi
https://www.bizjournals.com/bizjournals/how-to/growth-strategies/2016/06/3-reasons-nike-is-effective-indriving-growth.html
xii
https://coschedule.com/blog/nike-marketing-strategy
xiii
https://notesmatic.com/nike-sources-of-competitiveadvantage/#:~:text=However%2C%20Nike%20has%20got%20an,achieve%20a%20strong%20competitive%20e
dge.
xiv
https://www.ukessays.com/essays/marketing/core-competencies-are-capabilities-marketing-essay.php
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