Table of Contents
R and D
Long Term Objectives
. Page 17
I have chosen Nike to produce an analysis on. It is important for a company as large as Nike to keep abreast of their strategies and to remain competitive. Here is some background information on one of the most successful apparel/shoe companies in the world. The Nike story begins with its founder, running buff Phil Knight. In 1962, Knight started Blue Ribbon Sports, the precursor to Nike. At the time, the athletic shoe industry was conquered by two German companies, Adidas and Puma. Knight recognized a neglected segment of serious athletes whose specialized needs were not being addressed. The concept was simple: Provide high-quality running shoes designed especially for athletes by athletes. Knight believed that "high-tech" shoes for runners could be manufactured at competitive prices if imported from abroad. Knight decided to speak to athletes in their language and on their level; sharing their true passion for running; and listening to their feedback about his products and the sport. Every single weekend Knight would travel from track meet to track meet both high school and collegiate competitions--talking with athletes and selling Tiger shoes from the trunk of his green Plymouth Valiant.
By 1980, after just under two decades in the business, Nike had become the number one athletic shoe company in the United States. Unfortunately for the company, this wave of success was soon to crest as rival companies positioned themselves to take advantage of the aerobics craze, which Nike largely ignored. Companies like Reebok and L.A. Gear developed innovative and comfortable products aimed at women fitness enthusiasts that sold extremely well.
Nike refused to join a market it saw as low in quality and heavy on cosmetic properties and continued making durable, performance-oriented products. The company lost millions in sales and allowed Reebok to gain basically uncontested market share points. By 1987, Reebok had nearly doubled Nike's market share, with 30 percentage points compared to Nike's 18. Fortunately for Nike, the company chose to fight back with product innovations and persuasive marketing. The company's "Air" technology revitalized the company with the additional aid of successful advertising campaigns such as the 1987 "Revolution in Motion" spot for the new Air Max shoes and the "Air Jordan" commercials. When Nike unveiled its now-famous "Just Do It" campaign in 1988, just as Reebok developed the "Reeboks Let U.B.U" slogan, the company was on its way to a full recovery. By 1989, Nike had regained the market leader position in America as market share rose three points above Reebok to 25 percent that year. In the 1990s, Nike continued its consumer focus. Nike's "Brand Strength Monitor" formally tracked consumer perceptions three times a year to identify marketplace trends. In areas where it felt less knowledgeable, e.g., outside of track and basketball, Nike was more likely to commission customized research studies. Nike's inventory control system, called "Futures," also helped it better gauge consumer response and plan production accordingly.
Innovative product development had always been a cornerstone of the company. By 1998, Nike was unveiling a new shoe style, on average, every day. Though the company had become a household name throughout the world and, more important, achieved the position of global sportswear leader, Nike was still $3 billion shy of...
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