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Table of Contents:
Executive Summary……2
Introduction…….3
Organizational Vision/ Mission/ Culture…..
Organizational Culture….
Market Assessment…
Market Selection Decisions….
Issue Opportunity Statement….
Smart Objective…
Marketing Mix…
Service Decisions…..
Technology Enhancements….
Sales….
Legal Issues/ Risk Management/ Ethical Issues….
Areas for Incremental Revenue…
Financial Analysis…..
Evaluation and Control….
Appendix…
References….
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Executive Summary:
Cofounders Bill Bowerman and Phil Knight started Nike. Their mission was to create
inspiration and innovation to every athlete in the world. As Bill Bowerman said, “If you have a
body you are an athlete” (Nike BIZ). Nike is the world’s most popular athletic wear company in
the world. Nike Co. all started from a company called Blue Ribbon Sports. Cofounder Bill
Bowerman believed that there is a direct correlation between an athlete’s performance and an
athlete’s equipment. Nike today is a multi-billion dollar corporation, which has expanded its
market to include clothes, shoes, and sporting equipment, which expands all across the board
from golf to baseball, football to basketball and more. Nike has had unbelievable success and it
has shown. Now it is time for Nike to expand its product line into the sports drink world. Nike
Fire is going to prove to everyone that Nike, as a company can be more than just a clothing and
equipment company. Nike is going to be a competitive force in the sports drink business. Nike
as a whole is going to be able to compete right off the bat because of the strong brand name that
Nike carries. Nike Fire is going to be a one of a kind product, with its top of the line taste, and
its top of the line formula for rehydration, Nike is very excited to introduce the drink to
customers. Down the road Nike is looking to be a well-established sport drink company, and
will be nationwide. With past experiences and sales teams that have succeeded over the many
years, it brings Nike great pleasure to create and introduce Nike Fire to the world.
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Introduction:
Nike is a multi-billion dollar industry that has made its name in the sport world. “Nike is
the world’s leading innovator in athletic footwear, apparel, equipment, and accessories” (Nike
Inc.). Nike was founded in January of 1964 by Bill Bowerman and Phil Knight. Bowerman was
the track and field coach at the University of Oregon known for consistently seeking ways to
give his athletes a competitive advantage. He tried different track surfaces, re-hydration drinks,
and running shoes to help his athletes. Throughout the 1950s, Bowerman tried to give ideas for
better running shoes to the established footwear manufacturers but no one would listen to him.
Phil Knight a talented middle-distance runner from Portland who enrolled at the University of
Oregon who ran for Bill Bowerman. Upon graduation from the University of Oregon, armed
with a finance degree, Knight made a cold call to Onitsuka Co. in Kobe Japan to talk about
making himself a distributor of Tiger running shoes in the United States. In hopes of making a
sale of shoes to Bowerman, Knight actually was stunned by Bowerman’s offer to become
partners.
With a handshake, $500 each, mutual trust, and an order of 300 Tiger running shoes the
essence of Nike was created. Phil Knight sold the shoes out of the trunk of his green Plymouth
Valiant. While Bowerman began ripping apart the Tiger shoes to see how he could make them
lighter and better. They had formed Blue Ribbon Sports in 1965 with Tiger shoes. Jeff Johnson
became the first full-time employee of Blue Ribbon Sports, designing several early Nike shoes
and he came up with the name Nike in 1971. Nike separated from the Onitsuka Co. and went
from being a distributor to creating its own footwear. The Nike “Swoosh” was created by
Carolyn Davidson, who was a graphic design student at Portland State University. Nike made its
debut at the 1972 U.S. Track and Field Trials in Eugene, Oregon.
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Nike’s new waffle-type outsole made a huge impression on the runners who tried them,
the new innovation made the shoes have better traction while being lighter than the traditional
training shoes. With its new line of shoes Nike now needed an athlete to endorse its new
product, enter Steve Prefontaine an exciting runner that did not lose a home track over a mile
distance. He finished in fourth place in Munich in the 5,000 meter.
Today Nike is one of the leading sport companies in the world with total revenue of
$25.3 billion. Phil Knight and Bill Bowerman turned a handshake and a dream into one of the
world’s best known brands.
Product Information:
Nike as a company currently emerged in the world of sports. The amount of products
range across the board. Nike as a whole owns Converse Inc., Hurley International, and the
Jordan Brand. These owned affiliates play a significant role in our future growth plans. Jordan
shoes are a division of Nike Inc. It is a premium brand of footwear apparel inspired by Michael
Jordan himself. It made its debut in 1997 and has not stopped growing. Hurley International is
based in California. Here Nike is starting to target sports apparel for surfing and skateboarding.
Under the Hurley icon and brand name they are also working towards a new youth lifestyle.
Converse Inc. is owned by Nike for more of the name. It is currently being sold in over 160
countries and 79 company owned retailers in the U.S.
In the 80’s Nike completed its IPO, and had become a publicly traded company. In 1985
the signing of a NBA rookie by the name of Michael Jordan helped bolster Nike’s sales. In 1987
Air Max was created this was the first Nike footwear to feature Nike Air bags. A year later the
company built on its recent success by adding to its taglines the famous “Just do it” (Nike. Inc.).
They called this rise of momentum Revolution and signed the next big sports star in 1989 in Bo
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Jackson, regaining the lead as the industry leader by 1990. Throughout the 90’s Nike built more
of an empire, “While Nike had designed footwear, and apparel for golf and soccer for a number
of years, the mid 1990s signaled a deepening commitment to truly excel in these sports.” (Nike,
Inc.). Furthering the image of the product Nike signed a young Tiger Woods in 1995.
Continuing to try and show everyone they are the best in the world.
In 2000 Nike was well on its way establishing a new footwear cushioning system called
Nike Shox to join in the Nike Air as the gold standard for the industry. Nike designers stuck
with the idea until the technology caught up. In 2002 Nike created the “Secret Tournament”
Nike strayed from the basic formula for marketing and went after a global super power. They
went after the World Cup. This “incorporated advertising, the Internet, public relations, retail
and consumer events to create excitement for Nike’s soccer products.” (Nike, Inc.). Nike today
continues to innovate ways to develop new and creative athletic products to communicate with
consumers. They looked into growth overseas and made a deal to become the official sponsor of
the NFL. Today you can find Nike products in any sport, Including football, soccer, lacrosse,
basketball, etc. At a recent investor meeting Nike announced in increase in its fiscal 2015
revenue target to a 28-30 billion goal. President and CEO Mark Parker said: “At Nike we run a
complete offense, and it’s based on a core commitment to innovation that’s how we stay
opportunistic, serve the athlete, and continue to lead our industry.”
Brand Equity Analysis:
Nike has a certain brand image in the U.S. has a lot of meaning. Its image is that the
company is building a pure American icon, high performance brand, which is associated with
high notch athletes and winners. Being perceived as a high performance brand has caused Nike
to create what they think is high performance athletic wear. The use material that is durable and
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lightweight. From the early days Nike has stated they are out to listen to the consumer’s needs.
In doing so Nike has created a reputation as a provider of high quality gear designed especially
for athletes. In doing so Nike has established themselves as the leader of the sports industry.
This is why today more and more people align themselves with Nike and why they continue to
buy Nike more than any other product. Even people who are not athletes are spending the
money to wear the brand logo. Making the brand equity for Nike the best one in the market.
Nike Mission Statement
“Our Mission: To Bring Inspiration And Innovation To Every Athlete In The World” * If
You Have A Body, You Are An Athlete (Nike,Inc).
This mission statement helps in showing how extensive Nike wants its market to be, reaching
every athlete it can reach. Nike wants to make its products essential to ever consumer it can
reach, making them feel like they need their products to live their everyday life. When
consumers start to use Nike products daily, it tends to become normal, making them select Nike
over its competitors. With this in mind our mission is to have our consumers choose Nike, when
buying products in the sporting goods field.
Nike Vision Statement
“Our vision is clear: to help NIKE, Inc. and our consumers thrive in a sustainable
economy where people, profit, and planet are in balance. To get there, we’re integrating
sustainability principles and practices into everything we do: design; developing sustainable
materials; rethinking processes; advocating for change in industry. To measure our progress, we
set ambitious long-term targets and report on our performance” (NikeBiz). This vision is
important to make sure that the quality of Nike is always to quality, along with making sure that
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the company helps the environment to make a better planet. Nike also implements a variety of
programs to enhance diversity. “Share the fundamentals of diversity and inclusion to build
awareness and understanding. Uses diversity and inclusion to inspire new ideas. Encourages
connection between unlikely players”(Nike,Inc). Diversity is an important aspect to a company
to make sure that all workers are working in an efficient and effective manner. The result will be
beneficial for Nike, which will help benefiting creativity and performance in the work force.
Organizational Culture:
Nike has been known for having a strong organizational culture. Their employees are a
big part of their culture within the company. Nike’s culture wants to engage and inspire creative
innovation. Nike had a program called “Culture as Offense”, which allowed young employees to
share their experiences with senior executives. They also look to inspire ideas by providing the
tools necessary to create an open and innovative environment. Diversity is another big part of
Nike’s culture. Within the organization, there’s a “Women of Nike” made up of numerous
councils promoting cultural understanding, awareness and employee growth.
Even with 30,000 employees working for Nike, they are all highly capable of working at
the top of their game and making sure that the company reaches its highest potential. Developing
the best employees is the most beneficial asset to the company since these are the people who are
most likely to help the company succeed, whether it’s in development, sales, or any other aspect.
Nike also wants to make sure that their employees are learning and developing skills for their
lives beyond Nike. Diversity among employees is stressed tremendously within the organization
to make sure that innovation is at its best. Diversity improves the creativity and innovation that
shapes the brand. It increases Nike’s competitive advantage as well as increases our consumer’s
beliefs in the company.
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A few tactics they use to maintain this culture include, knowing who you are, commit to
being you, be control freaks, and feed your tribe-lore. Big name brands have consumers who like
a sense of belonging with their brand. The organizational culture inside Nike is associated with
how the consumers view the company. That’s what they mean by know who you are. Nike
commits to being themselves by saying no more than they say yes to ideas thrown in their
direction. If the company doesn’t think that the idea will reflect well on the company, then it’s
better to turn it down instead of taking the risk. Being control freaks means to be able to control
the process and know how it works. At Nike, the control is run by the people who have the
instinct of knowing what will work in the market.
Consumers in general, not even just sports fans, look at brands when they are purchasing
something. If they see a logo that they have seen in the past and have liked it, they’re going to
buy not just that one time, but many more times after that. They become comfortable with that
brand. Athletes are like that with Nike. They see all the commercials and the famous athletes
who are sponsored by Nike and they think “Wow, if I buy this brand, I can be like this player.”
Consumers like that sense of identity.
Nike’s philosophy is to have mutual trust and respect among everyone in the company.
This in turn will attract people to work for the company. And with that, the employees have the
opportunity to develop. With the community and environment that they work in, the employees
will feel a sense of empowerment. When they reach that level of empowerment, the products
being produced will be high quality, low cost, and on time.
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Organizational Goals:
The organizational goals for Nike are to believe in the partnerships they have formed
with companies around the world. Sustainability is another goal for Nike, Inc., for all of their
facilities around the globe to help the environment. Due to recent notoriety of Nike’s business
practices around the globe Nike came up with new corporate responsibility goals. The corporate
responsibility business targets set by Nike include (Nike, Inc.):

Improve labor conditions by eliminating excessive overtime in Nike brand contract
factories by 2011. Excessive overtime is one of the most serious ongoing labor
compliance issues the company and the industry face. Nike’s priority continues to be
improving conditions for the almost 800,000 contract factory workers who make the
company’s products.

Make all Nike brand facilities, retail and business travel climate neutral by 2011. Nike
has exceeded its reduction targets for CO2 emissions over the last two years through the
World Wildlife Fund’s Climate Savers program. The company also eliminated
fluorinated gases (F-gases) across all Nike brand products following 14 years of research
and development in the company’s Nike Air cushioning system.

Design all Nike brand footwear (more than 225 million pairs per year) to meet baseline
targets by 2011 for waste reduction in product design and packaging, elimination of
volatile organic compounds and increased use of environmentally preferred materials.
All Nike brand apparel is targeted to meet baseline standards by 2015, and equipment by
2020. Nike is designing sustainable innovation solutions into its products that the
company anticipates will create benefits throughout its supply chain and support
achievement of its targets.
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
Invest in community-based initiatives that use the power of sport to unleash potential and
improve the lives of youth. Over the past two years, Nike has invested $100 million in
community-based sport initiatives. The company is targeting a minimum investment of
$315 million through 2011.

In addition to setting business targets, Nike continues its commitment to supply chain
transparency by updating public disclosure of the more than 700 contract factories
worldwide producing Nike product.
Market Assessment:
Primary: The two main sports drinks that currently control the market are Gatorade and
Powerade. “Gatorade was the first of the sports drinks designed to replenish electrolytes lost
through sweat during heavy exercise.” Based on this quote from a short comparison write up on
yahoo, it is shown that Gatorade was the first type of drink like this to come out. So they are
number one and have held that spot for quite a few years. Comparing Gatorade to Powerade and
which one is actually a better drink for you is simple, given standards for a “sports drink”. Using
a survey created to ask what people thought was the best sports drink in the market. This survey
was randomly given to 5000 people over the span of a day in supermarkets. “See Appendix”.
The results were pretty mixed but the survey shows more people voted Gatorade the primary
holder of sports drinks and that they would willing to try a sports drink from Nike. Because
Powerade uses HFCS or high fructose corn syrup for more flavors and that is not healthy,
Gatorade is the better sports drink technically. Gatorade since its creation has gone on to capture
sponsorships from many athletes and has become a staple in the sports world. It is very hard to
watch any type of game either football, racing, basketball, and not see the Gatorade trademarked
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lightning bolt. Some of Gatorade’s highest profile partners include Michael Jordan, Landon
Donovan, Arsenal Football Club, and Serena Williams.
Secondary: The secondary market has recently emerged and has lowered profits for Gatorade
and other high end primary market sports drinks. Vitamin Water being more recent has come
into the market and is trying to sell themselves as basically flavored water that is the best thing to
drink while you’re working out or doing anything physical of any kind. This has been one thing
in the market that has taken away from true sports drinks. Aside from the growing field of
competitors for a sports drink a new and totally different problem has arisen with energy drinks.
According to comprehensive reviews from online library “The targeted demographic group is
teenagers, young adults, 18 to 34 years old; although expansion into nontraditional markets is
also occurring. It is claimed that energy drinks can offer an increased energy boost related to
their ingredient profile of caffeine, turbine, herbal extracts, and vitamins.” Energy drinks
technically fall under a category of their own but it is broad enough that it includes in some
instances sports drinks, yet they serve more as of a functional beverage. The growth of energy
drinks over the past few years can be seen in Table 1&2 below in the appendix. Online library
also shows the behavioral impact of energy drinks. They say that the results are conflicting,
some studies there is no positive or negative effect after consuming energy drink, and others
show positive and negative results. One study did show that “The results of a recent study
concluded that increased energy drink consumption was associated with increased risk-taking
behaviors” (Heckman, 1). So based on this we are going to stay away from aligning our new
sports drink product with an energy drink and any of the companies holding major percentage of
the market.
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Complete market overview:
The market we are going to go after with our Nike sports drink is going to be 18-35 year
old athletes. Since the 1960’s Nike has worked to be one of the leaders in making things about
the customers. Targeting a sports drink here is good because the market is so big for Nike. Nike
has gotten so popular that some people don’t even wear it to play sports they just know the brand
and associate it with being the best. Because of this broad range the market can stretch from
inner city to more rural areas. Being a big name we can even reach across the world with this
new product as long as it is made correctly. The goal of any new product would be to get it a lot
of shelve space in stores first, to get the name out. Once the goals are accomplished of
establishing itself as a good product equal to or better than Gatorade we then can start supplying
less and try to maximize profit. Picking up some local professional athletes or partners to try and
get the new Nike drink out there is a good idea. If target audiences ranging from teens to midthirties see the pro’s using the drink when they play we are only creating a better image for
ourselves.
SWOT:
Here were going to look at a SWOT analysis for a sports drink done by Nike.
Strengths:
It is a new product for Nike, and would
increase revenue and variation. Sport drinks
are a large market, and also they are growing.
Small number of competitors in primary the
market of sport drinks. Has a large market of
consumers.
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Weaknesses:
Sport drinks are slow growers; it will be
difficult to break into the primary market. It
will be expensive to start up and will require
professional endorsement, costing us more
money. Has to sell large amount to be
profitable.
Opportunities:
New Market to expand into, we also will
create new opportunities to establish new
partners. Additional thing we can use for
social medial to create awareness for our
products. Something else we can use to
establish deals for the public. New product to
create commercials on to interest public.
Threats:
Small market of few primary powers,
Gatorade has this market locked, Will have to
start somewhere with a lot of people to gain
popularity. Could ruin the reputation of our
image when it comes to sports drinks. If it
ruins reputation on failed product stocks
could drop on other Nike products.
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What we see in the SWOT test is that there is a lot that creating a whole product can do
for a company. It starts with the strengths; the first most obvious strength is it’s a whole new
product. This is helpful because that expands our company into a new market we previously
were not in. Next we have that the new product is in a large market, Sports drinks are a large
market and there is room for us to expand as we please, this also opens up the large market of
consumers. Not only is the market big but the number of consumers who consume primary
market companies sports drinks, ex: Gatorade, PowerAde is favorable. Next we have the
weaknesses, although the market is big sports drinks are a slow grower. It will take time to
establish and will cost a good amount of money. To compete with Gatorade it is going to cost us
money both in advertisement but will also require professional endorsements. Because of this
we are going to spend more money in the start of the product trying to get our name out against
Gatorade. Lastly even with breaking into the market to become really profitable it would require
a lot of selling and intensive marketing, stocking the shelves with quantity. After that we have
the opportunities, because it’s a new product there are a lot of new ideas and things to do that can
increase revenue. We can create a whole new ad team creating jobs, but also will create more
media both social and print to help gain awareness of our product. We will also create some
deals for the public to get the excited about Nike, for example, but a certain number of products
or spend a certain amount on Nike and get a free case of our new sports drink. This creates
incentive for people to buy our merchandise and also creates exposure to our new product.
Lastly we have the threats, sports drinks have threats such as a small primary market. Meaning
in the primary powers of sports drinks its Gatorade PowerAde, and you could say Vitamin Water
is getting into this range other than that it’s mostly second market. Also you have to worry about
energy drinks; Red bull has this market growing crazy fast as illustrated in the earlier tables.
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Also if we don’t do this correctly and make a bad product that fails it can hurt our reputation as a
company meaning we could lose money, endorsements, partnerships, stock value.
Competitive Analysis:
Here we are going to look at our direct and indirect competitors. As stated previously in
the paper our direct competition is with Gatorade, Powerade, and possibly Vitamin Water.
These companies are in direct competition with us when it comes to sports drinks, it’s their main
product. They try to get involved with sports as much as Nike does and they all compete for the
exact same customers and athlete sponsorships that we would be looking at for our new Nike
sports drink. When it comes to indirect competition there are a few companies that offer similar
products but are also without trying taking some of the sports drink market. Energy drink
Companies such as Redbull and Monster created their products with the intention to help people
get energy back for various activities. Whether it is some type of sport or staying awake
throughout the long day. Based off the amount of sugar used in these products they don’t really
work well for people playing a sport yet that hasn’t stopped the companies from taking some
market from the sports drinks. The biggest example being extreme sport field, Motocross, BMX,
Skateboarding, Racing. Also of these are using energy drinks as the main image for beverage of
choice. Countless cars are sponsored by these companies including some in NASCAR and the
racers in the X-Games. To be successful in creating this new product we will have to be aware
of both of these kinds of competition.
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Market Selection:
“Psychographic segmentation - Grouping consumers on the basis of a common lifestyle
preference and personality.” (179, Shank) This is a big deal in the market for sports drinks,
when creating a sports drink you are looking for people who would enjoy the drink. Based on
the lifestyle preference of being an athlete or someone who likes to be active in anyway. Yet this
doesn’t exclude people who may just associate with Nike and like the company no matter the
product. Age is a factor when doing segmentation of this market but it will depend on the way
we present our product. Giving the larger market of athletes in the age range of kids to adults of
the mid-thirties that would be the safest bet to target for a new product. However you cannot
underestimate the mature market, People are living longer and starting to be more active longer
in their life. So when creating product where the target is anyone who is active we have the
benefit of not having an age barrier. Because getting as much of the product as possible is a
good things for a new product at first carriers with large shelve space should be targeted and to
start socioeconomic segmentation should be implemented to customize a price acceptable for
each release location. Based on a piece on csmonitor.com about the price of shelve space “the
amount of products is growing ever year and costs fifteen to forty thousand to launch a new
product on their shelves in most stores, costing around two or three million to launch
nationwide.” Because of this we do not want to assume the largest market is the best market.
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Target Market:
To evaluate the target market were looking for large numbers so the product gets as much
exposure as possible. Yet we don’t want it to become too large and become an “undifferentiated
market” (187, shank). To see what market would fit best we’re going to look at the standards of
what make a desired market the target market you should choose. Is it reachable, based on
today’s standard of things that are considered normal in a home a target of teens in larger cities
can be reach through television or the internet rather easily. Next up, we have if it is
measureable. Typically it would be hard to collect data on a psychographic segment because it is
on a life style not how much they make or where they live but because Nike is so big and so
accessible everywhere it wouldn’t be unbelievable that most athletes in the city would be
exposed to our product and can afford it if they are buying other Nike products. The market is
sizeable also because the city will be well populated with at least 100 thousand people. Looking
at San Diego this fits all the requirements. Median age is 33 probably have kids, average income
is 45-60 thousand and population is above 1 million. (city-data.com). If targeting here you get
everything you want for a good target market, with the added bonus that people here like to think
they are trend setters and up to trying new things so product introduction should be easy.
Positioning:
With positioning it comes down to where you target, since a well-known sports
community like San Diego, it has fit all the criteria for launching a new product. This is an
example analysis of what it would be like to release it there. It would be smart to immediately
try to align the product with one of the professional teams in the area or a professional player
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from them: examples are the Chargers, or the Padres. Establishing the product as the official
product of one of these teams will give credibility. When people see their favorite team
sponsored or using the product they are likely to possibly try it themselves. This can also be
made possible if the product is accessible and affordable. Getting the product into local food
stores and using push strategy to get as much of it on the shelves as possible and make it cheaper
than primary market competitors. Sports drinks like Gatorade have positioned themselves with
athletes all over the world, using similar tactics to this. It would be wise to follow their blueprint
in how to establish this product.
Opportunity Statement:
In this market assessment it was learned that in the primary market Gatorade and
Powerade are the current powers in sports drinks. Also the secondary market is a changing
market; energy drinks are emerging and growing faster than sports drinks. Looking at the
competition both in direct and indirect which again was Gatorade and Powerade for direct, and
Vitamin Water and energy drinks for our indirect. After we ran a SWOT test to see what would
happen if Nike launched a sports drink, and analyzed the results. Lastly the market, choosing
what kind of segmentation and target market that would be beneficial for Nike to choose. Next
we looked at San Diego as a good choice to position this product and how we would do that to
try and reach the level of competition needed to reach to become a primary market power and
run against Gatorade.
Smart Objective:
To establish the Nike sports drink to over 2 million dollars in profit in the first two years
of manufacturing.
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Marketing Mix
Nike will release a new sports drink powder to its already incredible line of sports
products. The new sports drink powder will be titled Nike Fire. It will be sold in powder
packets that are enough to fill from a water bottle to a 20oz bottle; just add water to the powder
and mix together to get a hold of the superior sport drink. At first it will be introduced with four
flavors: fruit punch, blueberry, lemon, and grape. The intention is to break through the market
with the first four flavors and then expand as necessary with new flavors. Nike Fire has
everything an athlete could ask for in it; great taste, energy, and replenishment of electrolytes
lost in sweat. What more could an athlete ask for when competing? Nike Fire will be the next
generation of sport drinks in powdered form. Having all of the great ingredients of a sport drink
on the market already with an added bonus of an energy boost, and the hydration equivalent
triple to just water, Nike Fire will take over the sport drink market.
With Gatorade and Powerade being criticized about their health and hydration benefit,
Nike Fire can swoop in and take over the sport drink market even with it only being offered in
the powdered form. Most importantly Nike Fire will contain electrolytes, potassium,
magnesium, sodium, and glucose. Both Gatorade and Powerade have an abundance of sugars,
salt, and electrolytes in them. But Nike Fire would only have fifty calories and five grams of
protein in every 20oz bottle equivalent. As well as, 20% of the daily intake of vitamins B-3, B-5,
B-6, and B-12 to help energy and hydration in every bottle. Nike Fire will also have only ninety
grams of sodium and ten grams of sugars. Nike Fire, having less sodium and sugars than
Gatorade and Powerade, will make it a better solution for all types of activity not just for
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exercise that lasts longer than ninety minutes like studies suggest is the only reason to use
Gatorade or Powerade.
Nike Fire will feature the skimming price strategy to account for the superior sport drink
that is Nike Fire. Also, because of the Nike brand equity, consumers will not be turned away if
the product is a little bit more expensive. For a powder pack of three sticks Nike Fire will be
introduced at $1.99. With this price point Nike can cover the cost of making the product as well
as promotions and distribution. From that price point there will be variations in the amount of
powder that can be bought from the 20oz amount all the way to the 51oz to fill a sports water
cooler.
Nike’s new sport drink will be introduced with limited distribution. Which means Nike
Fire will be distributed to sporting goods stores and Nike outlet stores. This is the best way for
Nike to break into the sport drink market. With this limited distribution strategy, Nike Fire will
be able to put on the shelves as soon as possible with the lowest amount of money spent. Nike
already has a relationship with these companies form their other sport products so getting them
to supply Nike Fire should not be a problem.
In order to promote Nike Fire, our target market will consist of males and females from
teenagers to mid-thirties with a sport mind set. Using promotional methods that will target this
market is the biggest feat for Nike Fire.
To introduce Nike Fire, there will be several promotions that will take place to get the
word of the new sport drink powder out to the target market. The biggest promotion expense
would be to create several commercials for television and magazines to start. In today’s world
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one of the best ways to get your message out is to create a commercial for a company’s new
product. So Nike will count on that trend and create a couple different versions of commercials
to promote the new Nike Fire. Nike Fire will also advertise in sport magazines such as; Sports
Illustrated, ESPN the Magazine, SLAM, Runners World, and Eastbay. All of these will be half
to full page advertisements that explain the new Nike product Nike Fire, show comparisons to
Gatorade and Powerade, and explain why Nike Fire is the superior sport drink.
Nike will also be making a website extension for Nike Fire. On this website consumers
will be able to put in a promo-code found on the inside of the packet. The prizes for these
promo-codes could range from a free three pack of Nike Fire, a $50 gift card for the Nike.com or
Nike outlet stores, or a chance to meet one of our new Nike Fire athletes. To go along with
advertising the new product through the new website extension and several media, Nike Fire will
also have a promotional partnership with Nike’s apparel department. With every piece of Nike
sport clothing there will be a half off coupon with the tag of the clothing. Once they see the
coupon, they will also read about the product on the accompanying piece of the tag. When
seeing the tag it will hopefully remind the consumer of the commercials that he or she saw to
reinforce the want to try the new sport drink powder.
Moreover, at Nike outlet stores for the first couple of weeks after introducing Nike Fire
customers will be able to taste a sample of Nike Fire and its different flavors. Every customer
that walks into the Nike outlet stores all over the country will be asked if they want to try a half
of a cup of Nike Fire in which ever flavor they choose. In doing this, the hope is for the
customer to instantly love Nike Fire and buy some that day while they are in the store.
With the world’s new technologies and advances advertising has taken a whole new spin
on how to promote a new product. Social media is now the rout that Nike takes to advertise to
22
the public. Twitter, Instagram, Facebook, and just the Internet in general produce a large
percentage of advertising. Currently on Twitter Nike have 2.4 million followers, over 4.2
million followers on Instagram, and 17.5 million likes on Facebook. The great thing about Nike
and promoting a product is the ability to use professional and collegiate athletes in pictures.
And what I mean by this is the sole fact that Nike is able to advertise through these
athletes. And this is another tactic that will be used to sell Nike Fire. First step will be to have
Nike Fire used by the University of Oregon players, and then use the app Instagram to show the
athlete using the product. This will in turn show people that the product is good enough for a
program of that caliber, and will make believe that it is good enough for them. With the huge
following on Twitter, updates on the product, insides, who’s using the product, what the latest
updates are on the product, and so on and so forth will be told through twitter. Followers will be
able to know release dates of new flavors and improvements. Taking full advantage of the Nike
Facebook page is going allow a bigger demographic range of our product. Nike Fire will be sold
in sporting goods stores like Dicks Sporting Goods, Sports Authority, and will be sold to local
sporting goods stores.
Nike Fire will take a strong stand in terms of public relations. First, Nike will use
athletes to promote their new sports drink Felix Hernandez, Floyd Mayweather, Jr., Calvin
Johnson Jr., and Prince Fielder are names of high profile sport stars that have yet to sign
endorsement deals with any sport drink company. All of them are known around their respective
circles as “good guys” that can give Nike Fire big name athletes that rarely get into trouble.
With the exception of Mayweather but he is not a bad guy just extremely mouthy. With these
great athletes starting out as endorsers of the new Nike sport drink all sport fans and enthusiasts
should flock to Nike Fire. With these athletes as sponsors Nike Fire will get the publicity needed
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to get its name out there and let people know that there is a superior alternative to Gatorade or
Powerade.
In addition, Nike Fire will sponsor a multisport camp in Oregon and California with its
primary focus to get the young athletes to become familiar with the product and hopefully get
them to choose Nike Fire as their sport drink of choice. A community promotion like a camp is a
great way to not only make the public aware of the new product, but also makes the public feel
cared for by the organization. In return when the public perceives the organization as a helping
and good organization then they will buy the products of that organization over competitors.
All of our promotions work together to better shape our new Nike product. Our Nike
athletes that will be shown with the product in commercials and on the field; mixed with our instadium promotions will be a good way for Nike Fire to be seen together. In addition Nike Fire
multisport camps on the west coast will not only give young athletes the chance to try Nike Fire
but also coupled with the signage for the camps will get the message around the surrounding
communities. The Nike athlete’s that are sponsors for Nike Fire will be asked to be available for
signings, as well as, for other appearances that are made to promote Nike Fire. These different
ways to reach the consumers will all work together to create an atmosphere where Nike Fire will
be able to be seen as the superior sport drink.
Service Decisions:
Here at Nike we have a very strong history of quality when it comes to our service for our
products. Ever since Nike started in 1960 it has been all about the customer, and making strides
to improve products for the customer. With the new product that we are producing, we want to
see how we stand against the best. When I say the best I am talking about: Powerade, Gatorade,
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and Propel. The new product is going to be tested with athletes at the University of Oregon. The
reason for using this university is because that is originally where Nike was started. Because of
the quality that Nike creates for equipment for the University of Oregon, the mindset is to use
their top-notch athletes to test our product. The biggest thing with Nike is having credibility
behind our product. A product is not as good unless there is some truth behind the product. The
test would consist of having athletes train in a lab and having the athletes consume the new
product and giving opinions. The key is to also see if the drink is doing its job of replenishing
the athlete, and if so then there will be the satisfaction of being able to tell the buyer that the
product is worth the buy. To receive the best feedback, and to make our product better, Nike
will implement a survey with the newly packaged Nike Fire. Consumers of the new product will
be able to rate the product and give their opinions. If the survey is completed and sent in the
buyer will receive a discount on their next purchase of Nike Fire. This will help Nike Fire with
what could be done better, whether it is flavor or how the consistency is.
Technology Enhancements / Database Marketing:
The marketing that will be used for this new product is going to be done via social media,
and through sponsorship. Currently Nike is well known product around the world. Being able to
spread word of a new Nike product has become an art for the company. With the new
technology of the social media, people across the globe will be able to see the new product when
it is released.
What separates Nike from the other competitors is the taste, and how Nike Fire is good
for the consumer. The tricky part about making a drink product is combining the sweetness of
the drink and making the drink healthy for the consumer. That’s the goal that Nike Fire is going
to accomplish which will accommodate the taste for the consumer. Nike Fire is going to start out
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with using a survey as a way to communicate with the consumer. The product cannot reach its
full potential without the input of the consumer. Using Nike’s website there will be a place for
customers to express their likes and dislikes for Nike Fire. In the starting stages of Nike Fire,
feedback used from the website is going to help the company achieve its goal in making the
product a success. Eventually when there is a big enough fan base for Nike Fire reaching out to
the users through mass email, and tell the consumer about different promotions.
Risk Management:
This area is important to our company, especially when having to deal with issues that
involve lawsuits against Nike Fire. With consumers using our Nike Fire powder, Lawsuits and
liabilities are an area we can’t afford to have, especially with a new product. These harmful
financial effects are a major concern, especially because a bad reputation in the sports drink
market will hurt Nike’s chance to enter the market. As well as brand equity decreasing, Nike
financial income will decrease hurting the company as a whole. To make sure that Nike Fire
stays strong in the powdered sports drink field, implementations involving risk management will
have to be in place. To make sure that Nike keeps a good reputation to consumers, Nike Fire
will make the initiative to resolve problems before/ while they occur. This will include making a
public announcement, whether a press conference or formal address to the problem to inform the
public on what had occurred. We will publicly announce these issues before media outlets,
along with the public (Consumers). By having an executive manager present a formal apology
along with allowing the public to ask questions about the issue that has occurred, Nike would
better there image in the public’s eyes. This will be an important factor to make sure that our
26
brand equity it’s in harm, so consumers aren’t worried about making future purchases. Even
with negative publicity being harmful at first, facing the problem head on, instead of try to cover
it up, will make Nike perceive better in the public’s eyes. In order to make sure that this problem
doesn’t occur, there will be health and safety labels on all of Nike Fire products, to warn
consumers of any possible allergies that might be cause from Nike Fire. This will decrease the
potential risk of receiving lawsuits from individuals that had a problem with our product.
These safety and health labels will be very important to show the nutrition facts of Nike
Fire. By showing this, consumers will be aware of the ingredients in our powder, presenting
individuals with allergies to drink our product. This is the best way to inform the target market
of our products health benefits, considering our main objective is to have a sports drink that is
less calories than our competitors. These labels are an important factor in the risk management
process, because without these labels any individual would consume our product, without
realizing the potential harm.
Ethical Issues:
When it comes to Nike there is a big advantage as to marketing new products. When
Nike Fire comes out a lot of speculation may be, “Nike is just making this because they know
people will buy their brand.” This is not the case when it comes to Nike Fire. Nike Fire is going
to be a top shelf sports drink. The quality and time that is going to go into making this happen
will prove that Nike is trying to make a difference in the sports drink industry, and caring about
the product being served is Nike’s number one objective. These days there is a big rave about
going green. With Nike’s new product, Nike packaging is going to start by “Going Green.” This
27
will give the customer the satisfaction that the steps being taken are with care and careful
decision.
Currently Nike products are made overseas, and that is not going to change with the new
product, Nike Fire. In the past Nike had received a bad reputation for the working wages and
conditions for their workshops in foreign countries. After receiving a bad reputation and a
decrease in other product line sales, Nike eventually had to make changes to how to go about
their production. Nike now takes pride in making a more ethical attempt toward accommodating
the workers that are creating the top line products for Nike. As shown by Nike’s responsibility
and organizational goals there has been questions answered about the unethical practices
overseas.
Sales
Nike Fire is going to have a team of sales people that are going to produce a
nationwide stir of a new product to come. The team will consist of Nike’s top sales that together
have many years of experience and knowledge. As one can see from Nike’s recent history of
introducing new products, and the success of sales ranging from clothes, shoes exedra that the
introduction of the Nike Fire will have the best team to get the products name out.
To get Nike Fire on the shelves our sales management team will employ both push and
pull strategies. Because Nike Fire will use the channels of distribution already popular with the
Nike brand, it will be easy to convince them to also distribute Nike Fire. With promotions
already mentioned directed toward the ultimate consumer in order to fuel the selling of Nike
Fire, with the hopes of making other retailers want to sell Nike Fire in their stores later on. But
as of now the existing channel relationships with Nike will be more of a test market. Once Nike
28
Fire becomes more of a household name and has more demand then there can be an expansion in
the channels of distribution of Nike Fire.
Nike will offer push strategies to the channel members so that they have an incentive to
sell the product personally in the stores. For example, there will be goals given to the
wholesalers and retailers if the goals are meant in the promotion time period they will receive
signed memorabilia from our Nike Fire athletes. In addition, to monetary bonuses that can be
given once the retail goals are met for the sampling employees. During the time that there is
sampling at the Nike outlet stores, each tabled Nike employee will have a goal to sell Nike Fire.
The employee at the retail store with the most sales of Nike Fire will receive a monetary bonus.
The sales methods that will be employed for Nike Fire is limited distribution with a
combination of push and pull strategies. To sell Nike Fire there will be P-O-P displays in the
stores to gain consumer attention to the product. This will go along with the sales promotions for
the consumers to enhance their view of the new product and want to try it as an alternative to
Gatorade or Powerade. Also, with the push strategies for the wholesalers and retailers, they will
be attempting to personally sell our product so they can attain the most sales to earn the
monetary bonus that is going to be offered.
Our intentions are to build on the phenomenal relationship that Nike already has with all
of its customers and consumers. With the focus for our relationship with our customers being
the money they will receive from the marginal revenue from being a channel member for the
new product. As well as the monetary bonuses and memorabilia that can be achieved by the
wholesalers and retailers. On the other hand, our focus for keeping our relationship with our
29
consumer up to Nike’s par will be from the immense variety of sales promotions offered to them
for the new product. These promotions will not only keep our product in the consumer’s minds
but also give them more of an incentive to buy Nike Fire.
Areas for Incremental Revenue:
With Nike already having a phenomenal grasp on the sporting goods market, Nike Fire
will be able to sell other products with Nike Fire image on them. There will be a refillable bottle
that can be bought with Nike Fire for only a little bit more money. This new bottle will have the
Nike swoosh and Nike Fire name on it, with the ability for it to be collapsible to save space in a
bag or in the cabinet. Also, there will be five gallon coolers available to purchase with three
packs of Nike Fire inside it to fill the cooler with. Items such as 3 packs, 12 packs, 2.5 gallon,
and 5 gallon will be sold as discounted prices. In addition to coolers, Nike Fire gusher chews
will be sold. With the anticipated high sales of Nike Fire, these supplementary products will be
able to supply Nike Fire with additional revenue.
Nike Fire will have a piece of the home page on Nike.com as well as their extension tab
on Nike.com to be able to sell Nike Fire. This website will also have an interactive aspect, for
children and athletes to compare Nike Fire to competing sports drinks, so they can visually see
the reasons why Nike Fire is a healthier and more effective option to replenish lost electrolytes.
Increasing product awareness by selling and showing aspects about Nike Fire will help people
become more aware and willing to buy this product. This will lead to a vast amount of
opportunity for incremental revenue to increase, as Nike Fire gets more familiar in the sports
drink market.
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FINANCIAL ANALYSIS:
Fiscal Year
Sales Projections
Expense Projections
Income Projections
2016 (1)
$10,300,000
$6,500,000
$3,800,000
2017 (2)
$12,820,000
$5,200,000
$7,620,000
2018 (3)
$15,240,000
$5,000,000
$10,240,000
2019 (4)
$20,690,000
$4,500,000
$16,190,000
2020 (5)
$24,370,000
$4,500,000
$19,870,000
2026 (6)
$55,100,000
$4,500,000
$50,600,000
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Financial Analysis
$60,000,000
$50,000,000
$40,000,000
Sales Projection
$30,000,000
Expense Projection
Income Projection
$20,000,000
$10,000,000
$0
2016 (1) 2017 (2) 2018 (3) 2019 (4) 2020 (5) 2026 (6)
The Financial figures for Nike Fire will be relatively higher than other company’s when
starting off, due to the fact of Nike’s recognition in the Sports industry. Nike’s brand awareness
will be beneficial to Nike Fire because people will be more willing to try this product do to
Nike’s high quality of products. Sales projections will be the smallest during its first year
because people will be hesitant to try our product when there are other sports drinks such as
Gatorade, and Powerade, which are already known. As more brand equity is created Nike Fire
will be able to sell more of their products. Expense Projections will be the highest in the first
year because we will be trying to market our product by advertising, such as making
commercials to enlarge our target market. Income projection for Nike Fire’s first year will be
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the lowest because of a smaller sales projection and high expense projections due to high
advertising cost to try and gain awareness. After the first year, Nike Fire will be more
recognizable in the sports drink market, which will help increase income projections. This is
because when our product creates enough brand equity, more people will start to buy our
product, leading to an increase in sales projection. Also with more brand awareness, less money
will be spent on promotions, such as advertising, decreasing Expense projections. This forecast,
which displays projections over the next 5 years, and 10 years, is an estimate of our profits. This
may change as more people become aware of Nike Fire, because of Nike’s high recognition rate,
which could speed up the process, and increase income projections. With the NFL- Nike
sponsorship, Nike Fire may be present at all football sidelines, gaining market awareness. As a
result of the projections, Nike Fire should have a major increase in income projections in the first
5 years; from 3.8 million to 19.9 million; and 10 years, from 3.8 million to 50.6 million, after
subtracting expenses. With competing drink companies making both liquid and powder sports
drinks, having just the powder form will be more cost efficient when shipping our products to
suppliers. This process will be beneficial for Nike Fire, because it will be another way to
increase income projections each year.
Evaluation and Control:
It is vital to our organizations success that we monitor our marketing mix. Setting a clear
direction for the organization is a major goal and will help guide Nike Fire Company and its
employees to reach its ultimate goal. Using the Marketing Mix as a layout to make sure that
everyone in the Organizations knows the steps to achieve success with is a major benefit for
Nike. With employees being a major part of Nike Fire’s Organization have a positive work
environment; that will also offer incentives for their hard work? This will help in reinforcing a
33
strong work environment, which leads to higher quality of production in an effective and
efficient manner. An effective marketing control system has four major components, which
include, mission statements and objectives, organizational structures to meet objectives,
employee performance standards, and adjusting methods. Defining a clear mission statement
with objectives will make sure that everyone in the organization stays focused on a common
goal, as well as making sure that they plan to accomplish that goal in an effective way. Having
an organized structure will keep the company balanced, making sure that work would be divided
up, and responsibilities are spread among workers. Using performance standards are a great way
to help motivate employees, making them reach a certain number or goal, and get rewarded for
it. Methods to adjust strategies, structure, and/or personnel are important because our company
will always be ready to face difficult challenges; and would be ready to change the company’s
needs to be able to react quickly and efficiently.
Plans for Adjustment:
All marketing plans need to have a contingency plan to fall back on incase a problem is
created, hurting our chances to attain our organizational goals. Our goal to create a new powder
sports drink, which could compete with both Gatorade and Powerade will be difficult at first, but
should level out because of Nike’s recognition. With Nike Fire being priced at $1.99 for a 3
pack and its size increasing to a 5-gallon container of powder, which will be priced at $9.99.
This price will be similar to our competitors, but one adjustment that could be made is lowering
of its prices. This will decrease annual income initially, but with more recognition, and Nike
Fire being a healthier and more effective sport drinks; this change would be beneficial if
necessary.
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Contingency plan are essential when dealing with larger competitors, because your
organizations needs to always be prepared to adjust to possible changes in the market, without
falling behind. Areas that should be addressed when dealing with these issues include
researching or changing of market segmentation, reviewing the marketing mix, product
positioning, and sponsorships. After reviewing all of these options, if Nike Fire is still failing,
Nike should enter the re-engineer process, which would include starting over with a clean slate,
and create a new goal for their product, so they would be able to try to enter the sports drink
market, which they previously tried to obtain.
Anticipated Responses from Competition:
As a product becomes successful in a market, competing competition will try and take
away your market power by changing their product. As well has new companies trying to enter
the market, and copy what your company has done. If Nike Fire enters the sports drink market,
selling its product in powder form at major sporting goods stores such as Dick’s Sporting Goods,
other sport drink companies will try and do the same. Our goal as a sports drink company is to
make the best tasting, healthiest, and most effective drink to replenish lost electrolytes. With this
goal others company’s like Gatorade and Powerade, which are the two main sports drinks
manufactures, will try and copy our goal; making a similar product taking away our competitive
advantage. Also, because both these companies have a product similar to Nike Fire, they might
35
try to eliminate our company by decreasing there prices of their powder sports drink. This will
hurt our company, by decreasing our profit margin, and also by having to respond to them, by
decreasing Nike Fire as well. If competing/ new company’s enter the powdered sports drink
market, Nike Fire will have to be as effective and efficient as possible to make sure that they will
stay relevant, in this market.
Appendix:
“Survey”
Please circle option that fits you best
1: What is your age?
A: 14-18
B: 19-22
C: 23-27
D: 28-32
E: 33+
2: Are you currently playing any sports?
A: Yes
B: No
3: Would you be open to trying a sports drink made by Nike?
A: Yes
B: No
4: How much would you be willing to pay for a sports drink by Nike?
A: $1.00
B: $2.00
C: $3.00
D: $4.00
36
Figure 1—. The market share breakdown of the functional beverage category in the U.S. (Datamonitor 2008a).
Category
1.
2006/07 volume growth (%)
2002–2007 CAGR
2002/07 total
2007–2012 CAGR
2007/12 total
CAGR = compound annual growth rate.
Sport drinks
1.5
11.3
70.7
0.2
0.8
Energy drinks
32.0
45.8
558.7
9.9
60.2
Nutraceutical drinks
5.1
13.6
89.1
1.9
9.8
Table 1—. U.S. functional beverage market volume growth (%) and growth forecast, 2007–2012.
Brand
Company
Market share (%)
Amp
PepsiCo
3.6
Full Throttle
Coca-Cola Co.
6.9
Rockstar
Rockstar Inc.
11.4
Monster
Monster Beverage Co.
14.4
Red Bull
Red Bull Inc.
42.6
Table 2—. Market share of mainstream energy drinks in the U.S. market.
37
Come to Nobel Fields and Recreation Center in San Diego to compete with other people in a
multitude of sports. Some of the sports include: basketball, ultimate Frisbee,
baseball/softball, swimming, soccer.
Ages: 7-16 years old
Date: August 13, 2016 10am until dark
Try Nike’s new sport drink FIRE while having a blast playing sports
38
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