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Brief
What comes to your mind when you hear the name “Nike”? Nike is an emotion. It is positioned very meticulously in the minds of people. The brand is a unique combination of value and marketing masterpiece. Nike not only creates athleisure but it’s also known for creating stories. Stories around emotions, lifestyle, hustle, and of course, greatness, as it sponsors some of the greatest players across different sports. What is even more interesting is that being a product-based company, it didn’t suffer losses during the covid-19 pandemic. Valued at $219.48 Billion. This makes Nike the world’s 45th most valuable company by market cap according to our data.
Marketing strategy: The Heart of Nike’s Success
To understand the marketing strategy of Nike, a brand that was established in the 1960s, it makes more sense to refer to a marketing framework that was broadly used at that time. You guessed it right: The 4 P’s of marketing, founded by E. Jerome McCarthy in 1964. Product: Value Proposition Nike began with the concept of a powerful and comfortable pair of performance shoes. Shoes that were designed to cater to the performance level of world-class athletes. The first of its shoes was a track running shoe. But way before that, in 1962, the story began with importing high-quality shoes from Japan and selling them in the US. Nike’s first iconic shoe was the “Moon Shoe” worn by Mark Covert, in the Olympic trials of 1972. Nike was crystal clear about its vision of delivering high-performance shoes meant for athletes. In the year 1985, Nike decided to expand from just “running shoes” to Basketball shoes too. Soon, in 1990, Nike decided to break out of the US and venture into the realm of football in Europe. It wasn’t a piece of cake for Nike since the then European giant Adidas was already in a comfortable position in the market. And that is when Nike began its promotion tactics that have been acclaimed worldwide, to date.
In a Neuromarketing study, it was found that Nike ads did 42% better than the nearest competitor (Adidas)
Just Do it
The “Just Do It” campaign launched in 1988 was highly successful, with the company defining the meaning of “Just Do It” as being both “universal and intensely personal.” While Reebok was directing their campaign at aerobics during the fitness craze of the 1980s, Nike responded with “a tough, take no prisoners ad campaign.” One of the campaign’s objectives was to target all Americans—regardless of age, gender, or physical fitness level—and Nike’s fundamental objective was to represent sneakers as a fashion statement to consumers, which led to Nike apparel becoming worn as more than just fitness gear. The “Just Do It” campaign went out to a range of media outlets including merchandise, outdoor billboards, print media, and graffiti art.
From what I have gathered, Nike’s game is to stay atop the promotion creatives. First it was the sponsorship of tournaments, then it was the sponsorship of the star athletes, now the focus is also on influencers and Web 3.0 as Nike has recently acquired an NFT shoe creating company. Know More
Strategic Shift to E-commerce
The most important thing to notice is the shift in business strategy, towards e-commeThe most important thing to notice is the shift in business strategy, towards e-commerce. On a closer look at the employee count and retail stores count, we see a downward trend post covid, however, the opposite is the case with Nike’s sales data through E-commerce platforms including Nike’s website. Nike is shifting towards the e-commerce and Digital Marketing realm. It’s a piece of good news for the digital marketing and IT guys. I’ll talk more about it in the Final Thoughts of this article.rce. On a closer look at the employee count and retail stores count, we see a downward trend post covid, however, the opposite is the case with Nike’s sales data through E-commerce platforms including Nike’s website. Nike is shifting towards the e-commerce and Digital Marketing realm. It’s a piece of good news for the digital marketing and IT guys. I’ll talk more about it in the Final Thoughts of this article.
World-wide Employees at Nike, 2009-2020
Nike’s headcount has adjusted back to 73,300, a 4% decline 2019.
World-wide count of Nike Retail Stores, 2009-2020
Nike’s retail stores have decreased drastically by 11.36% to 1,048 stores in 2021.
Nike sales via online channels, 2009-2020
The sales through online channels have increased by nearly 300% since 2018.
Organizational Structure and HR focus
Nike follows a matrix organizational structure which is a combination of horizontal and vertical structures. In a matrix structure, there are multiple reporting lines and responsibilities for the employee. Even though this structure may seem complicated, Nike has been able to leverage it for its benefit. Employees often report to multiple supervisors, which can often get cumbersome in this type of organizational structure but for Nike, this has worked in favour of the company. The company follows a highly standardized operational process, which helps the leaders to make a quick-decisions and foster seamless communication. Even though there are multiple reporting authorities, the employees are well-aware of what is expected from them from their supervisors. The hierarchical structure of Nike can be broken down into three key segments, which are Global Headquarters, Regional Headquarters, and Subsidiaries. This hierarchical structure allows the company to maintain a globalized approach to managing its business while ensuring regional control. Nike has made a good amount of investments in HR systems over the past few decades and has a very standardized operating procedure. Their main focus is talent acquisition and retention rather than training, especially at the management level. For some reason, Nike hasn’t been doing much about the talent development part. However, the money is good. Nike ranks somewhere near the 75th percentile of the industry benchmarks internationally in compensation.
Financial Statement of Nike, 2016-2020
Final Thoughts
The field is ripe for change management at Nike. Nike is very likely trying to shift its focus towards e-commerce to save costs. The problem of users not being able to try the shoes and sizes persist though. This is not a major issue and can easily be dealt with at the time of delivery where they can try the different sizes and styles at their doorstep.
Nike’s marketing team also has a huge scope to showcase their world-renowned creativity in Video Game Titles like FIFA, NBA, and ATP tours. The Metaverse and Web 3.0 offer an amazing opportunity to create NFTs and digital concepts of the NIKE shoes.
Since gross profits have increased significantly from 2020 to 2021, so have the costs come down. Although the company is downsizing in the employee count, they’re still not going to depend heavily on online sales.
The sales through online channels have increased by nearly 300% since 2018 but still account for about 25-30% of the sales only. Therefore, Nike is not likely to introduce any drastic policy changes soon. But looking at the data it can be confirmed that the retail stores and employee count have been on a decline since 2018, accounting for a reduction of more than 10% to date in retail stores count and a 5% reduction in the headcount since 2019, some of which can be attributed to the pandemic induced layoff decisions.
On a concluding note, Nike has managed to have increasing gross profits despite the pandemic and a major portion of this feat can be explained by the growth in online sales and I can say this with 99% confidence-level statistically.
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One comment on “Nike: Inside Out”
Shivani
Engaging n informative article