My marketing research project focuses on a new technology-embedded athletic sneaker from Nike, the leading brand for such products. The shoe will work in conjunction with Bluetooth technology to provide solutions for runners, walkers, and bicyclers by providing feedback on metrics such as time spent exercising, distance traveled, and calories burned. It will also connect to various mobile applications to provide additional value. For example, the technology could connect to navigation apps like Google Maps to create an interactive experience for the wearer via haptic feedback through the shoe, allowing the user to listen to music or podcasts while still receiving directions. Another potential use would be for health insurers to track its patients health efforts, much like the Progressive “Snapshot” that allows the insurance company to compile data about driver’s habits, both good and bad, to influence discounts on their car insurance. This blog will explore my preliminary findings and limitations for marketing this new product.
Nike’s corporate mission statement is “To be the world’s leading sports and fitness company,” so its organizational goals are lofty. One limitation of this mission statement is that it seems more like a vision statement, making it a weakness because it does not address specific products or services provided by Nike. Also, Nike has no published corporate objectives relating to the overall company from which to work from. Stakeholders should be informed of a company’s corporate goals in order to understand the nature of the company and its future direction. From a corporate responsibility standpoint, however, Nike does have published goals: to “lead in corporate citizenship through programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike.” This is neither measurable nor time-specific, making it a weak objective. In terms of strengths, Nike has mastered overall marketing strategies, leading the brand to the top spot in the athletic footwear market. The company’s competitive strategy has evolved from the 1990’s focus on teamwork to today’s preference for individuality. Nike is responding to this trend by developing new products that appeal to the younger generation’s sense of customization, personalization, and individualism.
Externally, Nike faces challenges in its core demographic, which is currently aging. This represents an opportunity for Nike to address a new generation of Nike customers via the previous generation’s children, though there is concern that the next generation will not be as likely to pay the prices that Nike products command, instead opting for less expensive products from competitors like Adidas and Reebok. Additionally, since Nike has had its fair share of bad publicity over the use of child labor and sweatshops, Nike must pay close attention to the efforts of consumer activist groups. The opportunity here lies in the brand being able to demonstrably prove that it is taking steps to ensure that such practices are no longer used in its overseas manufacturing plants. The threat, on the other hand, is that Nike’s ethical image is already lowered in the minds of the public.
Industry trends in athletic footwear
The global footwear market is expected to reach US$371.8 billion by 2020, with Europe holding the honor of the largest market, and the Asia-Pacific market being the fastest-growing. The product segment forecasted for highest growth is casual, followed by athletic footwear, and the top five brands in the market are Nike, Adidas, VF Corp., Asics, and New Balance. Some of the drivers for brands in the footwear market are: the quickly-moving pace of urbanization in developing countries, higher disposable incomes for an expanding middle class, the rising popularity of eco-friendly footwear, and the emergence of new designs, concepts, and themes. The challenges they face are strong competition, a high number of counterfeit products on the market, and changing consumer preferences (“The Global Footwear Market: Trends, Drivers, & Projections,” 2015).
Industry trends in wearable technology
After the initial excitement over wearable technology, the market has cooled a bit toward it, mainly due to the lack of certain features like LTE connectivity and device-specific applications (Beaver, 2016). Brands are rising to the challenge, though, and in the next few years the smartwatch market expects to see device shipments grow at a rate of 18% through 2021 to reach 70 million units sold. This suggests that, as functionality improves, the market will respond better to the devices and their companion apps, especially in the health segment.
I expect to focus a good deal of my marketing strategy for the new product online, where Nike’s direct-to-consumer business rose 22% in the second quarter of 2016, driven by 49% online growth, bringing its revenue to $9.1 billion (Gustafson, 2016). Nike’s manufacturing strategy is one of outsourcing, using contractors around the globe. Vast majorities of its manufacturing are done in the Asian region in China, Indonesia, Vietnam, Philippines, Taiwan, and South Korea. To ease pressure from consumers and legal cases against the company, Nike developed a code of conduct in 1992 specifically pertaining to manufacturing conditions in its overseas plants. The brand also employs teams of expatriates from each of the big three countries (China, Indonesia, and Vietnam) to focus on quality control for both products and working conditions. As a result of the brand’s previous troubles with child labor laws in overseas manufacturing, the company has not quite earned back the public’s trust.
Nike’s basic marketing strategy has been to focus on hero athletes, using names like Michael Jordan to sell its iconic footwear in the name of the Nike Swoosh logo and motto, “Just Do It.” An ethical concern about this marketing strategy is that the “hero athlete” has come under fire as a result of the behavior of some of these heroes, like Michael Vick, Tiger Woods, and Lance Armstrong. Though Nike has stood by some of these celebrity spokesmen (Woods, Kobe Bryant) and abandoned others (Armstrong, Oscar Pistorius), public perception of a brand can be badly damaged when the company is perceived to place trust in people who do not deserve it. Nike will not likely abandon altogether its tradition of using celebrity athletes to hawk its wares, but it may be increasingly difficult for the brand to explain itself given the instant-gratification nature of social media and other instant communications (Kalb, 2013).
Beaver, L. (2016, September 27). The Smartwatch Report: Forecasts, adoption trends, and why the market isn’t living up to the hype. Retrieved January 15, 2017 from http://www.businessinsider.com/smartwatch-and-wearables-research-forecasts-trends-market-use-cases-2016-9
“External/Internal Business Factors at Nike, Inc.” (n.d.). Retrieved February 4, 2017 from http://www.freeonlineresearchpapers.com/nike-inc
Gustafson, K. (2016, September 28). Nike’s future sales growth may not be as bad as it looks. Retrieved February 12, 2017 from http://www.cnbc.com/2016/09/28/nikes-future-sales-growth-may-not-be-as-bad-as-it-looks.html
Kalb, I. (2013, February 25). One of Nike’s Core Strategies Is In Danger. Retrieved February 12, 2017 from http://www.businessinsider.com/is-nikes-hero-athlete-strategy-in-jeopardy-2013-2
“The Global Footwear Market: Trends, Drivers, & Projections.” (2015, January). Retrieved January 15, 2017 from http://www.strategyr.com/MarketResearch/Footwear_Market_Trends.asp