ONLINE GROUP DISCUSSION ON MARKETING MANAGEMENT CASE STUDY Case Study 1: Running a Race That Never Ends* Manufacturers of athletic shoes are running their own race, a race that never seems to end. But Nike was named after the Greek goddess of victory for a good reason, and the company has no intention of letting the competition run away. Started by former collegiate sprinter Phillip Knight and his University of Oregon coach, Bill Bowerman. Nike stressed technology and high performance products from the very beginning. An experiment with urethane rubber and a waffle iron got it all started, and serious runners loved the new waffle-soled shoes. By 1981 Knight and his company had about half of the U.S. athletic shoe market, outpacing established overseas competitors such as Adidas and Puma. In the 1980s, Nike offered over 140 models of shoes. As the running boom of the 1970s faded, Knight knew he had to look beyond high performance running shoes to expand the company’s sales. He identified target segments in the sports market, including basketball and tennis players. And with products designed specifically for these athletes, Nike continued to prosper. The 1980s brought a new twist to the market, however. Serious athletes were not the only people interested in athletic shoes. Capitalizing on the aerobic exercise boom, younger rival Reebok boldly poured on the speed, taking the lead by 1986 on the strength of its innovative aerobic shoes. Two years later, Reebok’s share of the market was 27 percent and Nike’s share had tumbled from around 50 percent to 23 percent. Then the aerobics lad was followed by another important change in the U.S. shoe market. Athletic shoes became fashionable footwear. People who had no intention of being serious athletes, or even serious exercisers, adopted athletic shoes as their favorite footwear. Again, Reebok was ahead of Nike in responding to this shift. First, actress Cybill Shepherd arrived at the Emmy Awards ceremony wearing an elegant evening gown and blazing orange Reeboks. Then, on a poster for his hit movie Back to the Future, Michael J. Fox clashed through time wearing Reeboks. What started as a product for dedicated runners had turned into a product for dedicated followers of fashion responding to this shift. And Reebok scored a couple of many publicity victories that brought its products to the attention of millions of customers. Despite impressive technology, its own series of celebrity endorsements, and award-winning advertising, Nike lost its footing in the late 1980s, and Reebok streaked ahead. By 1988 Reebok was selling 75 million pairs of shoes annually, compared with Nike’s 50 million. But the scrappy Knight fought back with new products and an emphasis on style and fashion. Going into 1990, Nike led the pack once again, its percent share just topping Reebok’s 23 percent. Reebok has stayed right behind, pushing hard with an advertising budget of over $70 million a year and a new roster of famous players and coaches to promote its top-of-the-line model. “The Pump”, Recent Reebok commercials told consumers to “pump up and air out”. A reference to Nike’s own Air series of products, L. A. Gear is number three in the market and aggressively bearing down on the leaders, although it’s recent big budget promotional campaign featuring singer Michael Jackson did not meet sales expectations. The race continues. Questions If you were Phillip Knight, what would you do to keep Nike on top while defending against competitors? How would you help Nike meet the ever-changing demands of consumer tastes and audiences in shoe technology? How would you define your market and identify areas of potential growth? What message would you want to communicate to your audience and how would you get that message across? And how would you make your shoes available to more diverse groups of customers?
Posted on: Fri, 13 Sep 2013 10:39:28 +0000
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