Nike: Maintaining a Promotional Edge
Nike’s initial product advertising strategy of using professional athletes for raising demand through word-of-mouth provided good publicity. However, its selective-demand advertising was mainly focused on high-priced shoes for traditional sports, and ignored newly developed market segments such as aerobics and extreme sports, and new trends such as brown shoes and casual footwear (Etzel, Walker, and Stanton). Nike launched a successful advertising campaign around its “Just Do It” catch phrase and “swoosh” logo. Nike increased its visibility through vertical cooperative advertising; expanding its product line to include apparel, equipment, and accessories, which led retailers to use the Nike brand to attract customers to their stores. Nike gained a high level of publicity and increased its appeal to both men and women when it signed famous athletes like Michael Jordan and Venus Williams (Etzel, Walker, and Stanton). Further exposure was gained when Nike promoted its brand near major events, giving the impression that it partly sponsored the events. It also increased its sales promotion through the sponsorship of sporting events and collegiate teams. It gained exposure in extreme sports through cooperative advertising when it partnered with a skateboard manufacturer for the purpose of developing skate shoes (Etzel, Walker, and Stanton).
Public relations were negatively affected by allegations of child labor in third- 1
world factories. However, the subsequent negative publicity increased the exposure for its online NIKEiD shoe personalization service. Nike is generating more selectivedemand advertising towards women to increase the revenue share for that market segment.
The market for high-priced performance shoes has been flat, while the market for casual and fashionable shoes has increased. Women and teenage consumers have not been targeted by Nike, but the focus has been on active males. The competition has been quicker to react to these changing trends, and have increased their market share in many segments that Nike is not involved in. The competition’s market share increased in size with the different market segments. Nike continued to release high-performance and high-priced shoes in a market that was more willing to purchase low-priced casual shoes (Etzel, Walker, and Stanton).
The allegations that most of Nike’s shoes were manufactured in third world sweatshops were a public relations crisis. Nike’s image and supply chain faced many challenges, and it was in the company’s best interest to quickly correct the matter. The Internet has added a new element to the supply chain by allowing consumers to customize their shoe purchases online. Furthermore, the product line expanded to include apparel, equipment, and accessories. This allowed Nike to serve different markets and the changing tastes of consumers while limiting the costs of liquidating their old inventories for new ones. It also allows it to compete with faster-moving companies that serve niche markets.
Nike situated itself with traditional sports and athletes that appeal to an older demographic. By not signing athletes from the booming extreme sports industry and other celebrities that appeal to a younger demographic, Nike lost more market share to niche competitors.
Nike needs to recognize emerging trends more quickly so that it can take advantage of them before its competitors. Most of, or at least part of, its supply chain needs to be reconfigured to allow for a faster reaction to market changes, which is usually reserved for smaller competitors. It needs to better understand its customers and listen to its retailers so that new products can have the most impact in the market by giving consumers what they want.
With the expansion of its product line, Nike should continue to find creative, lowcost guerilla marketing methods; these can often appeal to a younger demographic, who Nike...