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By Steven & Ross
Contents
Company Overview1
Chinese Market2
5 force analysis3
4P analysis4
Suggestion5
Company OverviewBill Bowerman(Founder)
Phil Knight (Founder)
1960’s
1970’s
1980’s
1990’s
Company Overview 2013
more than 700 shops and has offices located
in 46 countries
More than 44,000 Employees
Brand Valued at $10.7 billion with revenue > US$24.1 billion
Most Valuable Brand Among Sports Businesses
Global Market Share
Adidas(&Reebok) Nike Puma Under Armour Lululemon Athletica Asics0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
Cumulative Annual Growth Rate(2010-12)
China Market Share
Football
Basketball
Men’s Training
Women’s Training
Nike’s Sports Wear
Action’sSports
Main Products
Main Products
To bring inspiration
and innovation
to every athlete in the world.
If you have a body ,
you are an athlete.
NikeNike
Mission
Chinese Consumer
Source: McKinsey Insight China-Macroeconomic Model Update(March2011)
Present(2010)•Domination by Value Consumer(￥ 6000 to￥ 16000）
Future(2020)•Domination by Mainstream Consumers (￥ 16000 to￥ 34000）
Chinese Consumer
Source: McKinsey Insight China-Macroeconomic Model Update(March2011)
Present(2010)•Major Existence of Mainstream Consumers in Advanced Cities
Future(2020)•Emerging Mainstream Consumers across China
Chinese Consumer Behavior
Source: McKinsey Insight China-Macroeconomic Model Update(March2011)
Increasing Spending on Personal Items
Aspiration-Driven Trading UpJudge people by what they buy
Rise in ExpectationSought Comfort and quality in apparelUse Well-known brand as indicator of quality and safety
改進
Substitutes
Buyers
Porter’s Five Force
•Numerous competitors exist
•low cost products by Domestic companies
•Same average selling price provided by Adidas
New Entrants
Suppliers
RivalryStrongRivalry
Substitutes
Porter’s Five Force
•Numerous potential suppliers
•Homogenous or similar Materials provided by Suppliers
•Low Switching Costs
Rivalry
Suppliers
Buyers
New Entrants
Weak Suppliers
StrongRivalry
Substitutes
Porter’s Five Force
•Economies of scale
•Strong and well established brand name •High capital requirements
•Difficult Access to Distribution Channels
•Cost advantages independent of scale (e.g. proprietary technology)
Suppliers
Buyers
New EntrantsStrong Barrier to Entrants
Weak Suppliers
StrongRivalry
Substitutes
Porter’s Five Force
•Price Sensitive
•Low Switching Cost
•Full Information
•No large volume Purchase relative to seller's sales
Suppliers
BuyersStrong Buyers
Strong Barrier to Entrants
Weak Suppliers
StrongRivalry
Substitutes
Porter’s Five Force
•No Substitutes for Professional Athlete
•Special Design for Sports Wear
Low Pressure ofSubstitutes
StrongRivalry
Strong Buyers
Strong Barrier to Entrants
Weak Suppliers
Perceptual Map
ExpensiveCheap
Professional
Amateur
Target Group Premium to middle class
Premium to middle class
Middle Class to Lower Class
Market Share[Global(China)]
7%(16%) 6%(13%) (10%)
Revenue in China(Millions RMB)(2012)[Global(China)]
￥ 146,795(￥ 15,447)
￥ 116,087(￥ 12,770)
￥ 6,739=>Loss of ￥ 1,592
Positioning in China
Professional Professional •Traditional Domestic Brand•Cheap Substitute of International Brand
Strategy •Continuous R&D•Multi-brand
•Expansion into lower tier region•Multi-Brand
•From cheap substitute of global brand to international brand•Increase footwear proportion
Competitor Analysis
4P AnalysisProduct:•Quality and Professional Product•Environmental Friendly Packaging•Customized Design•Collaboration with Apple
4P Analysis
Price:•Skimming Pricing•High end Customer Market•Profit oriented Pricing•Discounts Offer
4P Analysis
Promotion:•Integrated Marketing Communication•Direct Marketing•Celebrities Endorsement•Public Relations•Mass Advertising•Sales Promotion•Social Media(e.g. facebook)
4P Analysis Place:•E-commerce •Retail•Factory Outlet•Urban Areas Strategy
SuggestionIncome Distribution
in ChinaDistribution of
Nike Retail Store
Distribution of Domestic Brand
SuggestionPrice Range of Sports Brands
in China(RMB)
•Extend the Price Range
•Explore Lower Tier(Lower Price) Market
Benefit
Price of Domestic Brand : $170-$250
Attract people with Nike priced at $300
People switch to Nike
Beat Domestic Brands
Expand Market Share
FeasibilityPossibility of Lowering Price
Cost Structure
Raw Materials
Supplier’s Margin
Nike’s Margin
Distributor’s Margin
Labor CostMarketing Expense
Overhead
Lowering Profit Margin=> Cost Reduction
Achieve Price Target of RMB$300
FeasibilityPeople Acceptance of Foreign Brand
•Ogilvy China’s Survey:-Consumers in lower tier area are less willing to try out foreign product
Solution: Heavy Marketing
Feasibility Brand Image Problem
•Lowering Price will Damage Premium Brand Image
Precedent Exist!Produce Another Product Line
Time for Q & A !!!
• Skimming pricing• Outlet, Retail Store• Selective and exclusive distribution• Vertical marketing systems: contractual System
• Add characteristics of Chinese• Localization• Threat Nike is facing(losing Market Share to Domestic
Brand)=> Solution( Move to lower tier area)
• Spotlight on NW Creative: Nike Makes A Better Box• JANUARY 8, 2011 BY DAVID BURNLEAVE A COMMENT• Nike is interested in helping to create a Better World. For instance, to
help reduce packaging waste, Nike took a fresh look at their shoebox.
According to NikeBiz.com, corrugated cardboard is Nike’s single-largest material purchase. The shoebox and its shipping carton account for half of Nike packaging.So they reengineered the shoe box, which now uses 30 percent less material than a 1995 vintage box, the company’s first 100-percent recycled-content box. The new shoe boxes, now in use, will save the equivalent of 200,000 trees annually.
• http://www.adpulp.com/spotlight_on_nw_84/
• Intervening factors that affect purchase decisions: Attitude of Others
• => Increase no. of ppl wearing Nike Shoes on the street
• => Create a trend of wearing Nike/ Increase the popularity of Nike
• Affect Transfer Effect:• Some Unconscious exposure will affect ppl’s
decision
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