Introduction - Nike
Nike is the company with one of the most recognised logos in the world – the “swoosh” logo. They are the worlds’ largest sports and fitness company and are a leader in sports equipment research and development earning an estimated US$14 billion in revenue. Nike anticipates the needs of the consumer and this innovation is what sets them apart from its competition. They have a desire to design products which will give definite technological benefits whilst enhancing an athletes’ performance. Nike have a sports research laboratory in Oregon in the United States and this research and development centre identifies the physiological needs of athletes. This laboratory takes and idea and researches and prepares a design brief. The brief is then passed over to Nikes design kitchen who talk to coaches regarding training methods etc and also discusses athletes’ wants and desires. Ultimately a design is born. Nike Free
Nike Free was designed to imitate barefoot running as during Nike’s research they discovered that coaches were training their athletes on grass with no shoes. These coaches believed that the athletes were stronger, less prone to injury and were healthier. Sports shoes were somewhat restrictive and Nike recognised a need to change this in order for athletes to become faster. Nike developed a comprehensive picture of the biomechanics of barefoot running and developed prototypes using materials which would closely mimic barefoot running. The goal was to use Nike Free in conjunction with more traditional, supportive running shoes acting as a training technique. During studies athletes’ were found to have become stronger and more flexible.
Product Details – Footwear designed to imitate barefoot running and used as a training tool. Nike Free has shown to give significant improvement in speed, lateral movement and co-ordination in the range of 10-20 percent. These results were based on wearing the shoe for only two hours per week over a 6 month period. Product Strategy – Nike and the use of the Nike logo indicates to the consumer that the company is savvy, current with the times and innovative. They aimed this product at the consumer maintaining the company’s position as a product innovator. In 2011 they started packaging in boxes that use 30% less cardboard indicating that they are protecting the environment. Pricing Strategy – Nike spends a great deal of money to promote their image and therefore this is passed on to the consumer. The price is set based on the value the consumer places on the product. Nike positions itself in terms of technology, quality and design so commands premium pricing. Nike use a “Price Skimming” technique by setting the price high to help establish a high-quality image for the new product. The price will decline gradually as the shoe has been on the market for a while and the next new product is close to being released. When the product goes on sale Nike uses a psychological strategy of pricing because consumers tend to think that a price ending in “.99” is cheaper than “00”. Distribution Channels – Nike is located in Oregon USA and does not own any factories. Their product lines being equipment, footwear and apparel are produced by over 600 contract factories around the world and employ more than 800,000 workers. Nike has over 500 Nike stores and 20,000 retailers and has 15 contract manufacturers in India. By having shared distribution channels among the varied product lines it lowers cost. Nike manages a worldwide virtual company and control their activity from Oregon and Tennessee and developed jointly by technicians in USA, South Korea and Taiwan. Many components are supplied by firms in Vietnam, Indonesia, Japan, Malaysia and Nike outsources distribution to firms that specialise in Logistics services. Nike uses a Vertical Marketing System or VMS. This involves the key members of the distribution process being the producers, wholesalers...
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