Nike: Running Under The New Rules

There is an interesting phenomenon in the commercial society: because of the lack of rivals, or because of the strong and powerful opponent.

Nike belongs to the latter.

The merger of Adidas and Reebok not only failed to make it look shy, but aroused its more vigorous fighting spirit.

At the beginning of the year, it proposed to increase its revenue to $23 billion by 2011, and open 100 new stores in the world in 3 years.

Less than two years after taking office, Nike CEO Mark Parker said without any disguised: "leading is what we are best at."

Nike's first quarter report released in September 20th also reflects the strength of the sportswear giant from another angle.

According to the report, Nike's net income increased by 51% to $569 million during the quarter.

Even if we did not consider the power pition that Nike just ended last year, and the foreign invasion from Adidas, our performance was excellent.

If we innovate, we will be able to lead strong. It does not mean that there are no rivals and challenges.

Since 1980s, the charm of the flying man Jordan has made Nike the king of basketball shoes.

However, Jordan is old now.

Whether in the city or in the countryside, the attractiveness of Jordan's sneakers is weakening. Although the launch of the Air Jordan Retro at the beginning of the year is not overwhelming, some of the Jordan shoes that Nike launched later must be sold at a very high discount.

Nike hopes that its new star, such as NBA LeBron (LeBron James), can help itself out of the Jordan era smoothly.

In 2003, Nike announced that it would pay $90 million to promote basketball shoes in the next 10 years to the Cleveland Cavaliers.

However, although its latest sales of Zoom LeBron IV basketball shoes are good, the celebrity of James, the endorsement star, is still hard to see Jordan's back.

Of course, part of the reason is that, with the diversification of entertainment forms, today's NBA is far less attractive than Jordan's popularity.

In addition, Nike's rivals are aggressive with a low price strategy.

For example, a basketball shoe sold by a discount clothing chain called Steve Barry sells only 14.98 dollars for each pair.

It is said that after the launch in August last year, its sales volume reached 3 million pairs in only 4 months.

The measures of competitors may be put aside for a while. But when a new trend has come into being, enterprises who are against the trend will suffer even if they do not get swallowed by the trend. Nike knows this very well.

According to an American market research company, the market for low priced sneakers (US $50) has increased by nearly 9% in the past two years.

Low priced sports shoes now account for more than half of the sales of sports shoes in the United States.

In addition, in recent years, the United States basketball shoes industry has also seen a total decline - last year the decline rate reached 16%.

Nike has about 30% to 40% of its revenue in the US market, which is created by basketball shoe business.

At present, about 95% of basketball shoes sold for more than 100 dollars in the United States are Nike shoes.

Obviously, these trends can not be ignored by Nike.

Without effective measures, Nike will lose its hegemony.

In this regard, Nike's thinking has been very clear.

It hopes to reduce China's dependence on the US market by vigorously developing markets such as China with overseas potentials. On the other hand, through product line adjustment, we should increase product innovation and cautiously expand the middle and low market, adapt to the new trend and explore new opportunities.

In the first quarter of 08 fiscal year ended in late August, Nike's revenue in the US market increased by only 2%, while its growth in the European market reached 16%, and the Asian market grew faster, reaching 22%.

This speed has benefited from the active attack of Nike in China and India.

It is reported that Nike's revenue in the Chinese market increased by 50% during the quarter.

At present, the international market has accounted for 60% of Nike's total revenue and 51% of its profits.

It is expected that its annual sales volume in China is expected to reach the level of 1 billion US dollars.

China will become Nike's second largest market after the US market.

In addition, Russia, India and Brazil are also Nike's high hopes for overseas markets.

Although Nike is ambitious, some analysts are skeptical.

They believe that Nike has dominated the US market and it is very difficult to continue to achieve rapid growth.

The spirit of sports is to challenge the limits, and Nike knows it naturally.

Mark Parker said that one of Nike's competitive advantages is the universality and diversity of its business.

However, in order to achieve the goal of growth, Mark Parker also had to adjust Nike's brand and product line after taking office.

Mark Parker said in September 21st that Nike was considering selling its Nike Bauer hockey products subsidiary.

The subsidiary's main business is the production and sale of hockey, clothing and equipment, as well as roller skating sports equipment.

Several other brands such as Nike golf, Converse, Cole Haan, Exeter and Hurley also need to be re examined.

Nike executives said that although it is difficult to make such a decision, but because some brands have not coincided with Nike's long-term development plan, they must "build up their strength".

In the face of the saturation of the basketball shoe Market (mainly the US market), Nike has expanded its product line to include soccer clothes, running sportswear, women training and fitness apparel.

Mark Parker has reorganized Nike's business in the United States into six departments: football, basketball, running, male training, women's fitness and sports culture.

Prior to that, Nike's business was divided into three categories: footwear, clothing and equipment.

At the same time, Nike is also actively developing towards the low end.

At the beginning of this year, Nike invited Brandi Chastain and Hope Solo (Hope Solo) and volleyball star Logan Tom (Logan Tom) to launch in New York, and released a new brand Tailwind (Shun Feng), a brand targeted at female consumers. (Nike)

At present, the brand has 6 styles, ranging from 19.99 to 34.99 dollars.

Previously, Nike has alienated low-end consumers because of its high price and Nike brand's emphasis on sports.

Tailwind gave Nike an opportunity to attract these consumers.

In response, Mark Parker said: "if we innovate, we can lead."

The power of marketing machines, Nike is famous for its good marketing.

However, for some time, faced with some trends that may have a major impact on its future survival, Nike, who is king of marketing, has to make major adjustments.

Nike executives have publicly expressed the hope that they will become the world's leading soccer apparel suppliers by 2010, thus directly challenging Adidas's position in the football apparel market.

To this end, Nike has invested heavily in marketing.

Nike offered 778 million dollars to the German Football Federation in 10 years to sponsor the German national football team.

This move is a "black tiger" for Adidas, because Germany is not only the base of Adidas, but Adidas has been a sponsor of the German team for a long time.

Sponsoring the German national team is only part of Nike's marketing pformation.

In fact, Nike's other innovations in marketing are still visible.

Behind these changes is the destruction of old business rules and the constant establishment of new business rules.

In recent years, under the digital revolution, the voice of consumers has been greatly improved.

In Nike CEO Mark Parker, digital driven consumers are reshaping the picture of the retail industry, and now the power is in the hands of consumers.

To this end, Mark Parker believes that Nike and other consumer Brand Company need to adjust according to the new market trend.

"The influence of consumers has never been as strong as they are today," he said. "They have more choice opportunities and access to these choices, and the power has obviously shifted to consumers."

In view of this situation, Nike put forward a strategy of "consumer decision", which means that the focus of its competitive strategy should be on creating personalized consumption experience.

To this end, Nike first made further subdivision of its products.

In September of this year, Nike released a sneaker Air Native N-7 specially designed for Native American Indians.

According to Nike, this product is designed based on the company's research on the foot structure of the Indian people. It is wider and higher than the general sports shoes.

In marketing strategy, Nike also made targeted adjustments, such as further subdividing marketing target consumers.

In the past, Nike managers generally believed that 18 to 22 years old were the same group of consumers.

Now, Nike has given up the way of bundled marketing and subdivided it into different markets according to their age and interest preferences.

In addition, it develops new marketing methods according to the characteristics of digital revolution.

It is learnt that Nike has designated AKQA as the global digital marketing advertiser for all football related online marketing advertisements in Nike, Europe, Asia Pacific, Latin America, the United States and Canada.

Nike's cooperation with Apple Corp is considered to be a magic pen for Nike's innovation.

In 2005, Mark Parker made a phone call to Apple Corp CEO Steve Jobs, and put forward a bold idea to Jobs: combining Nike running shoes with Apple Corp's popular iPod digital music player.

Jobs and Mark Paz, who are also known for their innovation and marketing, chime in with each other.

Under the close cooperation of the two companies, Nike launched Nike Plus.

This is actually adding a micro wireless sensor in Nike's running shoes, automatically monitoring the running time, distance and the amount of heat consumed, and sending the information to iPods, so that those who have iPods can clearly understand their movements.

Trevor Edwards, vice president of Nike global brand and product category management, said Nike Plus combines the real world with the digital world.

Many people think that this is Nike's marketing innovation.

In fact, this innovation has blurred the boundary between product innovation and marketing innovation, and is the organic combination of the two.

First of all, it is a product innovation, but at the same time, because it is relying on apple, aiming at the iPod users who already have a large audience, it can also be called marketing innovation.

According to market research firm, Nike's share of running shoes market increased by 47.7% last year, which is closely related to the launch of Nike Plus.

Nike's own survey also shows that 35% of Nike Plus users are buying Nike sports shoes for the first time.

The company's goal is to use 15% of the 100 million runners in the world to use Nike Plus.

At the same time, Nike also seized the opportunity of digital rise, vigorously carried out three-dimensional marketing including the combination of print media, mobile phones, retail outlets and network marketing.

Taking the marketing of the company in the UK market as an example, according to data from Nelson media research company, about 269 thousand of Nike's 9 million 200 thousand pound advertising in the UK market is going online, and this proportion will increase further next year.

Mark Parker's aggressive marketing offensive is easy to reminiscent of Nike's founder and current Nike chairman NAT.

In Knight's post, Nike has made great progress through its generous sports sponsorship and the endorsement of famous sports stars such as Michael Jordan and tiger Woods.

Of course, Nike naturally has to "spend money".

In the 2005 fiscal year, Nike spent $1 billion 600 million on advertising.

It is against this background that NAT, who wants to strengthen financial discipline to a certain extent, has recruited Peres from outside the company.

Unexpectedly, the world is not as good as people wish.

After taking office, Peres tried to control costs by cutting advertising fees and other measures.

However, he obviously conflicts with Nike and knight's idea of marketing as king, so he can not agree with knight. In the end, Peres hastily came and hurried away.

Mark Parker naturally knows Peres's lesson, so he has no doubt about advertising investment.

Over the past two years, Nike's annual advertising expenses account for about 11.7% of its revenue.

But does all this guarantee Mark Parker's success?

Some analysts questioned.

They point out that if Nike's revenue is to reach US $23 billion in 2011, the average annual growth rate will be around 9%.

The problem is that the bigger the company is, the greater the friction will be.

This will be a challenge for Nike to face.