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Free Case Study on Nike

Case Study on Nike

Nike. Just do it. Ask anyone of age ten and above whether they ever hear of this brand and its slogan, they will give you a definite yes! Nike is one of the top sneaker competitors out there. Today people who buy Nike not just walk in them but also wear them. Its blooming business is so successful that even some companies try to imitate them. They use the all so famous slogans on their products in hope of people will mistaken it for the real products and boast the sale. Why is Nike so popular? Why is Nike such a common household name? Is Nike a trend? What is behind their success? Is it because of its advertising techniques? Or is it because of its packaging?

In this project, we are determined to find out the success behind Nike. We also hope to present an overall view of the public response towards Nike in terms of the quality, price, advertisements techniques and durability. We would also like to draw the public’s attention towards its advertisement techniques so that we can follow those techniques to help boast our local brands’ sale local and worldwide.

First and foremost, we would like to start off with a brief introduction of the history of Nike.
(Taken from http://www.Nike.com)

From our research, Nike is founded way back in 1958 by a man called Phil Knight. Initially, Nike only started off making sneakers for track runners. In 1968, Phil Knight and his coach Bill Bowerman discussed about making better quality running shoes and were manufactured by Itsuka Tiger. They then named their company to Nike after the Greek goddess of victory invoked by the legendary marathon runner.

In 1972, Nike broke with its Japanese manufacturer because of disputes over distribution rights. In 1975, Bill Bowerman came up with a good idea. Looking at his wife’s shoes, he came up with putting some rubber in the compound, made rubber waffles, cut them and put them together to the bottom of the shoes. He then lent them to some of his athletes and they were very satisfied. These creative shoes in the 1970s made Nike the leading big sport company.

Nike and Reebok were competing on the same level until Michael Jordan came along. Nike came up with a pair of shoes called the ‘Air Jordan’, which were worn by Jordan in the NBA court. However, they were illegal because of its colors, red and black which were not allowed. Michael paid a fee of a thousand per game, but kept on wearing Air Jordan. Due to all those attention, Nike’s sales rose from $870 million to a more then $4 billion per year.

Our group feels that the history of Nike has very much played a huge role to their success. Nike has come a long way since 1958. Almost 50 years later, kids all over the world know Nike’s slogan and stories.

Despite all the huge profits, Nike has to take a closer look at its factories which brought up many problems. The following is an extract from an issue of the Campaign for Labor Rights newsletter.

“ My first thought, as I held those shoes in my hands, was pride at how well-made they were and that I had a part in making such fine shoes. And then I put them on my feet. They felt so good! Four years I worked in the factory, and until now I never had a pair of Nikes on my feet. We could not even think of buying them at the wages we received. And then I was very sad when I thought of the conditions under which they were made. And angry.” To purchase a pair of the shoes she makes, a Nike worker would have to devote every penny from two to three months of her paychecks. (extracted from the current issue of the Campaign for Labor Rights newsletter.)

From the passage from above, this is the overall feeling of the workers at the Nike factories. There is also a growing movement of criticizing Nike for underpaying workers in the Asian factories. Nike pays workers in China and Vietnam less than two dollars a day and workers in Indonesia less than a dollar a day. Even though the cost of living is much lower in these countries, critics say workers need to make at least three dollars a day to achieve adequate living standards.

Secondly, in an inspection report that was prepared in January for the company’s internal use, Ernst & Young wrote that workers at the factory near Ho Chi Minh City were exposed to carcinogens that exceeded local legal standards by 177 times in parts of the plant and that 77 percent of the employees suffered from respiratory problems.

Before we started doing this project, we did not know the dangers workers face in those Nike factories. We were shocked. Therefore we feel that most likely more than half of the public does not know of these situations. Will the public buy less of Nike products if they are aware of this? Therefore, in the later part of this report we have asked the public for their response.

Initially, we had difficulties gathering information about Nike. The only source we had was from the internet. We searched National libraries for books on Nike but to no avail. We searched magazines such as Times and Newsweek for articles on anything, which has to do with Nike, but we could not find any. However, we are able to find several advertisements on Nike products on several magazines such as local TEENS, teenage, CLEO, FLIRT, Times and Newsweek. Nike advertisements are not just local but global. On TEENS, September 1999, we could see advertisement which Nike first ventured in making of school shoes. Accompanied the school shoes were Nike bags, socks, water bottles. The most recent ones featured football which promotes the just over World Cup 2002. Its theme is scorpion where soccer famous stars play the game in an enclosed cage. It is also featured on television a series of the followed up ‘enclosed cage games’ and the soccer stars were seen kicking the balls with excellent styles. To further promote this event, the organizers have also organised a 4 on 4-soccer match where players also get to play in an enclosed cage as seen on television.

When we were searching articles online, we found several anti-Nike websites, which were created by anonymous. Therefore, we were very selective in choosing the information we wanted but we made sure we read through the articles in most of the websites so we could get a brief idea of what most people who created those websites feel. To have a more thorough project, we not only need views from online users but also the public in general.

We also encountered many problems in the process. Initially, our group had a total of four members, but one of our members decided to leave for the polytechnic. Though he contributed quite a lot to our project, we felt at quite a lost. We felt that we could not do as well as the other groups due to the lack of manpower. Although we were discouraged, we continued to do whatever we can to complete the project as best as we can.

Firstly, we did not have meetings regularly to discuss about the project details and were rather slow compared to other groups who met up at least twice a week. We did not know how to go about doing it and was quite lost. The communication within the group was not good and had problems communicating with each other, trying to get our point across. We were afraid to open up and bring out our comments and points of view. Not knowing our group members well, we did not know each other’s strengths and weaknesses. This made is difficult for us to divide the work. However, we did most of the work, for example the planning of survey questions and the survey itself together as a team. Only until did we get to know each other better, we then split the work to be done individually. For example, the report drafts are planned, typed and edited by each and different group members.

Our time management was also quite poor as we did the work last minute. Due to the lack of manpower, the work to be done by each member increased and we had difficulty completing our tasks. Juggling school work and project work was difficult.

But despite of all these, we still tried our best to complete our individual part so that the other group members who are waiting for our part could go on with doing what he or she needed.

It was difficult for us to meet due to our busy schedules and strict parents. However we made use of whatever time we could like after schools on the shorts days we have at the end of the week. We stayed back in school to discuss about the project and how to go about doing it. Then we divided the work and the rest was done at home. We would then compile what we have done at our next meeting.

Looking at other group’s work, we felt a little discouraged at the nearly perfect work they could produce in contrast to ours. But even with all these disparities, we were determined to do our best. Encouraging each other along the way, we managed to make it so far and we have the confidence to carry on.

In our survey, we targeted the public of age group 17 – 21. We managed to get a total of 30 males and 30 females to complete our survey. They were of different races though the number of Chinese exceeded the number of Malays, Indians and Eurasians. Thus, we went to two different places to try to get the range of people we required. First, we did our survey at Orchard Road but we found that the race of the people was rather limited. We then decided to go to Clementi Bus Interchange for a wider range. The target was met. In total, we surveyed about 60 people.

We aimed to find out more about their views towards Nike and its products and why many people prefer to purchase Nike products. We were interested to know whether they were aware of what they were purchasing and the cost of it.

The whole survey was done twice as we realized that the survey done the first time did not meet the requirement of what was needed for our report. The second survey done was quite a success since we managed to ask specific questions and get the information we needed.

Firstly, we found out that most of these teenagers at least own one Nike product. The percentage who owned at least one Nike product was 97%. However, it varies from the type of product, example shoes, bags, sports attire, etc. Majority chose to purchase shoes which was about 79% of the overall. This shows that of all the products that Nike sell, shoes are the most sellable, since shoes were the very first product that was manufactured. We can say that many of them are just following the trend that people set when Nike was in fashion quite a few years ago. Ever since then, people have been supporting Nike regardless of the increase in prices. This popularity can be due to either the quality that Nike provides or simply the trend that people are following blindly.

Though some are aware of the cost price of the product and acknowledge that Nike is overcharging, they are still willing to pay a range of $101 – $150 (fig. 1) for products such as shoes. Of all the options that were given, only 6% chose the range of $50 – $100, and the other 94% chose $101 – $150 as their ideal price. None selected the ranges of $151 – $200, $201 – $250 and more than $250. They think that it is only worth paying such a price for the products. From this, we can tell that Nike has made an impact in the society, especially among the teenagers. Nike is able to influence teenagers in such a way that the latter is willing to pay over a hundred dollars when the cost price of the products is much less than that. However, if people are buying Nike products for its quality, then why are they so unwilling to pay a higher amount for such quality products that they require? We can assume that because they are just merely following the trend that they buy the products not simply for their quality. Otherwise, the reasonable price that they would pay would be higher.

Many use these products everyday (fig. 2) which shows that around 25% utilized the products once a week and the remaining 75% everyday. We also gave them the options of once every two weeks, once a month, once every six months, once a year ans more than once a year but none had any response. They claim that the products have an average lifespan of 6 months to a year (fig. 3). 10% said that their product only lasts for six months, 73% said theirs lasted for one year and 17% said theirs lasted for two years. Most probably those whom which products lasted for two years did not use it as often as those who utilized theirs everyday. But, they are still willing to continue purchasing the product at such a high price. Curious, we decided to ask further.

We went round to different Nike shops, recording down the prices of various products. We found out that most of the shops sell them for almost the same price, except for a few which differed by at most a few dollars. The shops had something in common. The way they advertised the Nike goods and the layout of the products were more or less alike. Shoes were mostly displayed on the side panel, allowing passer-bys to view them without entering the shop. Sports attire were hung on racks, categorized by the type of sport they were designed for.

Although the public agreed that the quality of Nike products were good, many think that the prices of the products are not reasonable (fig. 4). 33% of the surveyed public agreed saying that the prices are reasonable and another 67% disagreed. They voiced that in order for Nike to improve their sales, they needed to further improve their quality so that more people will be enticed to purchased them. In this way, people will feel that they are getting their money’s worth and would not mind paying more in exchange for better quality products. However, if many think that the quality of Nike’s products needs improvement, then why do they support and purchase Nike, paying that high price for a product which they think is not of quality? We can thus conclude that they are actually buying these Nike products for the trend and not for the product itself.

We also asked them what makes Nike stand out from the other sporting brands like Addidas and Reebok for example. They said that the design was outstanding and with new ideas being put forward constantly, they feel that Nike is more trendy. There was a example given about being able to design our own Nike shoes abroad and they will try their best to manufacture the shoe of your desire. This attracted many people who wanted to personalize their own shoes so that they were unique.

Nike has also spent a lot of time and effort on advertising their products, making it known to people around the world. The most attractive advertisements that attracted the public’s attention are the advertisements on television and on the posters around town. Through these, they allow people to be aware of their products and we can say that so far, Nike has succeeded.

Nike has made significant changes over the past few years with all their innovations and different designs that their sales has risen tremendously throughout the few years. Especially with the low cost of labor, the profits of the products are much higher.

After getting results from our survey and also on our research, we found out that Nike is selling well in almost all the companies, such as World Of Sports and Royal Sporting House, and also shops that sell Nike shoes and their accessories. Most of these companies and shops in Singapore are earning much money from it. Due to the incoming of more latest and better Nike products, all these companies and shops will import more goods to sell to the public in order to make more money.

However, maybe these companies and shops can have a better way of improving their sales on Nike products. Advertising on the products is one of the essential methods to attract or convince the world how useful their products are. Advertising on television, radio, magazines and newspapers will attract people greatly due to the powerful influence from the mass media. The Nike Company will get sports superstars, such as Ronaldo who is a famous soccer player, Tiger Woods who is a professional golfer and a millionaire, and also Kobe Bryan, a well-known basketball player in the United State Of America. They will either shoot in an advertisement on the television or pose in a magazine with the Nike products, telling the world how useful and cool their products are.

Besides advertising, another way of improving their sale is having discounts on their products. They can give a small discount for there customers in order to gain their trusts. So, they will go back to the same place to buy Nike products, improving the sale in that company or shop. They can also have a big sale, which definitely can attract many people who is willing to fork out money to buy the latest Nike products although there is not much difference between the original cost price and the selling price. Hence, all these companies and shops will earn more profits in this way instead.

Giving away a small free gift, such as whenever a customer has bought a Nike product also will be good idea of convincing people to buy Nike products. This type of method will attract more people to visit the shops and so, more people will buy more Nike products that will increase the sale naturally.

So, we can see that with the help of these methods of selling the Nike products in Royal Sporting House or World Of Sports and other shops, Nike products are selling well. In this case, the Nike Company will be earning more money from it when companies, like Royal Sporting House or World Of Sports and other shops will try to get more goods from the Nike Company whenever there is a new and the latest product coming out in the market.

From this, we can see that many people buy the products not because of Nike’s true quality but because of the trend that in going on. They see people having Nike products and these people actually act as an unknown advertisement which more people are attracted to buy the products. Therefore, Nike is just a trend.

In conclusion, we can see that Nike business is grooming & becoming better each year. Besides that, new products from Nike, such as shoes, clothes & other accessories are coming out in the market quite rapidly each time they have a new design. They will promote their new items through advertisements, like mass media. All these advertisements cost a bomb to them, inviting sport superstars to appear in the advertisements so as to attract people to buy their products. They still earn much profit although they spend a lot of money on the promotion of their new products. Hence, we can see that Nike will be still earning profits due to the support from the world.

Although a few local shoe brands such as Pretty Fit and Urban and co. have made remarkable sales local and world wide, we find that they should have better advertising techniques and presentation. They advertise in magazines but in a typical way. Their advertisements are only of the shoes and nothing else. All their advertisements are the same. Yes, they even begin to expand world wide such as opening a few outlets in Malaysia, Thailand and Australia but we are sure that they will have better sales if they sponsor events as a form of advertising or have more innovative advertisements. If allow, they can even venture into employing stars to promote the goods for them!

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