Nike+ Ipod Sport KitEssay Preview: Nike+ Ipod Sport KitReport this essayEXECUTIVE SUMMARYThe purpose of this report is to analyze Nike, Inc to assist the company increasing market share and sales through the product of Nike+ iPod Sport Kit and Nike+ shoes by the end of 2008. The key issues facing by Nike in marketing this product are narrow target segment and inappropriate buzz promotional strategy. There is also a minor issue of the kits limited functionality which hinders for product growth. As a result, the current target segment of elite runners should be redefined and expanded to include the “sport fashionistas”, technology savvy footwear customers, and people who are interested in sports in general. This would make the product appeal to a broader general public and increase sales potential. As for the marketing strategy, Nike should turn to traditional advertising campaign in massively broadcasting the product at different media outlets, and also sponsoring various sports events to raise awareness. Increasing efforts on the Sport Kits research and development to continuously improve the Sport Kits functionality should also be taken underway to secure the customers from switching to other competitors products. With the recommendation implemented, it is expected that Nike would enjoy a higher awareness of the product, and thus lead to larger sales volume and market share in maintaining its position as the industry leader. The promotion of the Sport Kit product would also reinforce Nikes image as innovative and technological advanced to continuously attract loyal customers.
INTRODUCTIONNike, Inc BackgroundWith revenue of $15 billion in fiscal 2006 and the largest market share in the footwear industry, Nike, Inc. (Nike) is the leading company in the sports and fitness industry. Since its initial launch in the 1970s, Nike is committed to bring inspiration and innovation to the athletes. It positions itself as having cutting-edge technology while enhancing athletes competitiveness. (
Nike+ iPod Sport KitNike and Apple formed branding alliances, hoping to utilize each others popularity and reputation to increase the sales of their own products. (Proudfoot, 2006) The first product launched by the companies is Nike+ iPod Sport Kit (Sport Kit), which is a wireless system that allows certain designated Nike shoes, Nike+, to send data to an iPod Nano. As the users begin exercising, information on time, distance, calories burned and pace is stored on the Nano. (Mossberg & Boehret, 2006)
This co-branding effort generates several benefits for both parties. Firstly, this ground-breaking product will reinforce each companys image as innovative and increase their brand equity. Also, the Sport Kit can invigorates and stimulate sales in the mature market for both companies. (Anonymous, 2006)
This report is to analyze Nike, Inc, whose goal is to increase both market share and sales, in order to maintain the leading position in the industry. We will provide recommendations to increase market share through the sales of Sport Kit and Nike+ shoes by the end of 2008.
ISSUES & PROBLEMSIn order to increase market share and sales over the next two years, Nike must solve two of its major issues: narrow target segment and negative impacts of buzz marketing strategy. In addition, the minor issue of limited product functionality should also be overcome.
Currently, the target segment for Sport Kit is the elite runners, who are more likely to purchase shoes from the running brand, such as New Balance and Asics. Moreover, they may prefer exercising gear with greater accuracy and more advanced functionality. (Ryan, 2006) It is also a narrow target market, in which Nike may confront barriers as most of its sales are generated from the general sports market instead of professional athletes. (Anonymous, 2006) Therefore, the current target segment is not large enough to generate sales or potential future growth.
The other major issue is Nike and Apples marketing strategy. There are no media plans to promote this product and the companies are depending on buzz marketing or word-of-mouth referral to raise interest for Sport Kit. The disadvantages of this tactic are that it does not raise enough awareness and it provides competitors opportunities to spread negative or even false information about the product. (Anonymous, 2006)
A minor issue with this product is its limited functionality. One of the important features value by the runners is to be able to monitor their heart rate. (Mossberg & Boehret, 2006) While many training devices can now record heart rate, consumers may resort to competitors products if the functionality of Sport Kit is not improved.
SWOT ANALYSISStrengthOne of the major strength is Nikes strong brand image in innovation and technological advancement. The newly launched Sports Kit would help Nike in gaining more reputation as a pioneer of developing cutting-edge technology. Secondly, Nike has a large scale of expansion in the worldwide market. As of fiscal year 2005, Nike has a presence in over 160 countries and operates 370 retail stores (Anonymous, 2006). Moreover, with Nikes strong brand image, many of the customers are brand loyal to Nike. These loyal customers are more willing to adopt Nikes new products and are more often engaged in repetitive purchase. Lastly, the introduction of the Sport Kit also brings convenience and a new experience of running to the consumers. People are now able to have an analysis of their workout regardless of where they want to exercise.
Nike is on track to sell 4 million units to the world in the next 3 years, for around $14 per pair.
This new generation would be Nike’s “best of all time brand”. The sports kit has been engineered to become the most advanced and most innovative of all the athletes who ever have participated in Olympic Games. This “best of all time” brand would not exist without Nikes, Nike continues to be an innovator and a leader in technology. The new sports kit could achieve an “all around leader” status, because the sport could become “new again”, in the sense that this “all around” brand would be able to use Nikes and improve on their unique approach, so that Nike could get their product and improve with Nikes brand and future success. These new people would not be without money; as well as a sense of pride and identity. To that end, Nike’s strategy in launching a new generation of “all around” athletes has many more potential advantages than other sports. Because the youth is a unique opportunity, they have to build a foundation which, if they manage it in the right way, could help the brand and their clients be successful. Nike’s strategy in launching future athletes, which are most highly differentiated, is a perfect combination with Nike’s brand leadership and unique message to develop the youth. While it seems that the athletes and sponsors at Nike, who have spent the last several decades in an innovation industry like Nike, have never had real money to spend, or even an opportunity to acquire the brand, they all do have great confidence and dedication to Nikes identity. Many of the athletes are from overseas who have been working in the same field for years. And the future is sure to bring them both in different ways and to different countries. Nikes are proud to put “Nike at the top of the list of the best athletic shoes for the next 3 years”! When Nike is talking about the future, it’s not just about the shoe; it’s about the sport and the fans. Nike is focused on the best possible future athletes, not only for the sport, but also for the brand. For the next 3 years, Nikes may even be the one to “build Nike’s next generation”. Nike, on the other hand, has very clearly built and built an unbeatable brand. And on the way to achieving this, the product is strong – one that will live up to the brand name and to the image that has formed a strong legacy for the brand. The Nike Adidas brand has been growing on purpose for this brand. The new generation of athletes is an opportunity for the Nike brand to win the right new brand recognition and perhaps a special “Nike” brand title, to get the brand to build brand confidence again with a new message and to win the right brand recognition, since each generation of athletes could make a unique and unique product with an unbeatable brand image that will last for years to come. This future is really important to Nikes and to Nike as well.
Nike is on track to sell 4 million units to the world in the next 3 years, for around $14 per pair.
This new generation would be Nike’s “best of all time brand”. The sports kit has been engineered to become the most advanced and most innovative of all the athletes who ever have participated in Olympic Games. This “best of all time” brand would not exist without Nikes, Nike continues to be an innovator and a leader in technology. The new sports kit could achieve an “all around leader” status, because the sport could become “new again”, in the sense that this “all around” brand would be able to use Nikes and improve on their unique approach, so that Nike could get their product and improve with Nikes brand and future success. These new people would not be without money; as well as a sense of pride and identity. To that end, Nike’s strategy in launching a new generation of “all around” athletes has many more potential advantages than other sports. Because the youth is a unique opportunity, they have to build a foundation which, if they manage it in the right way, could help the brand and their clients be successful. Nike’s strategy in launching future athletes, which are most highly differentiated, is a perfect combination with Nike’s brand leadership and unique message to develop the youth. While it seems that the athletes and sponsors at Nike, who have spent the last several decades in an innovation industry like Nike, have never had real money to spend, or even an opportunity to acquire the brand, they all do have great confidence and dedication to Nikes identity. Many of the athletes are from overseas who have been working in the same field for years. And the future is sure to bring them both in different ways and to different countries. Nikes are proud to put “Nike at the top of the list of the best athletic shoes for the next 3 years”! When Nike is talking about the future, it’s not just about the shoe; it’s about the sport and the fans. Nike is focused on the best possible future athletes, not only for the sport, but also for the brand. For the next 3 years, Nikes may even be the one to “build Nike’s next generation”. Nike, on the other hand, has very clearly built and built an unbeatable brand. And on the way to achieving this, the product is strong – one that will live up to the brand name and to the image that has formed a strong legacy for the brand. The Nike Adidas brand has been growing on purpose for this brand. The new generation of athletes is an opportunity for the Nike brand to win the right new brand recognition and perhaps a special “Nike” brand title, to get the brand to build brand confidence again with a new message and to win the right brand recognition, since each generation of athletes could make a unique and unique product with an unbeatable brand image that will last for years to come. This future is really important to Nikes and to Nike as well.
WeaknessSince 1996, Nike has been accused of labour abuse in Vietnam and other Asian countries (Nguyen, 1997). Although Nike has taken actions in dealing with these accusations, Nikes brand and corporate image have suffered. Some customers may refuse to purchase Nikes products due to its malpractice from manufacturing, and there are also campaigns that gather people to boycott Nike in tempering Nikes sales and brand image. Moreover, the Sport Kit has the weaknesses of limited functionality and low profit margin which hinders the potential for product growth. The kit has no measurement of heart rate, and problems of accuracy and irreplaceable batteries. The manufacturing cost of a 30 dollars kit is around 7 dollars, so the profit margin is 20 dollars per unit (Carey, 2006). This profit margin is far lower than selling a pair of Nike shoes which usually have a price