NIKE : Evolution of Marketing Strategy


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Case Details:

Case Code : MKTA018
Case Length : 16 Pages
Period : 1958-2004
Pub Date : 2005
Teaching Note :Not Available
Organization : Nike
Industry : Consumer Goods
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction

For the year ended 31st May 2004, Nike, a leader in the global sports shoes industry announced a vastly improved performance, earning almost $1 billion on sales of $12.3 billion. Earnings had increased by 27% while orders worldwide went up by 10.7%. Nike's return on invested capital was 22%, up from 14% four years ago. Having completed a $1 billion share repurchase, Nike had plans to buy back shares worth $1.5 billion over the next four years.

Nike had faced a crisis in the late 1990s. Many analysts felt this was because its creativity had not been backed by operational discipline. Nike had operated on instinct, often guessing how many pairs of shoes to produce and hoping it could offload them in the market. In the past few years, Nike had tried to balance creativity with a strong business focus. Nike had overhauled its information systems to get the right number of shoes to the market more quickly. The company had also streamlined logistics and strengthened its management team. It focused on more efficient management of its portfolio of brands -- Cole Haan dress shoes, Converse retro-style sneakers, Hurley International skateboard gear, and Bauer in-line and hockey skates.

As 2004 drew to a close, Nike realized it could not underestimate powerful competitors such as adidas. When founder Phil Knight resigned on 18th November 2004, it marked the beginning of a new era at Nike under the leadership of William D. Perez. Perez had earlier been president and chief executive of S.C. Johnson & Son.

Nike's Business

Nike was involved in the design, development and worldwide marketing of high quality footwear, apparel, equipment, and accessory products. The largest seller of athletic footwear and athletic apparel in the world, Nike offered its products through approximately 18,000 retailers in the US and various independent distributors, licensees and subsidiaries in nearly 200 countries around the world. Independent contractors manufactured most of Nike's products. Footwear products were mostly produced outside the US, while apparel and equipment were made both in the US and abroad.

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