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Brad Brophy Meredith Coon Khalid Elwanni Zach Gilligan Rachel Taylor M&L 751 Autumn 2010 Page | 1

Table of Contents Executive Summary.................................................................................................................... 3 Customer Analysis ..................................................................................................................... 4 Segments Motivations Unmet Needs Competitor Analysis .................................................................................................................. 7 Competitor Identification Strategic Groups Major Competitors Competitor Strength Grid Market Analysis ....................................................................................................................... 10 Market Identification Market Size Market Profitability Analysis Cost Structure Distribution System Market Trends and Developments Key Success Factors Environmental Analysis........................................................................................................... 15 Trends and Potential Events Scenario Analysis Key Strategic Uncertainties Internal Analysis...................................................................................................................... 17 Performance Analysis Summary of Past Strategy Strategic Problems Characteristics of Internal Organization Portfolio Analysis Analysis of Strengths and Weaknesses Financial Projections Based on Existing Strategy Strategy Development.............................................................................................................. 21 Business Scope Strategy Description Key Strategy Initiatives Marketing Plan ........................................................................................................................ 25 Product/Service to be Marketed Pricing and Financials Distribution Channels and Issues Promotion for Womens The Girl Effect Campaign Promotion for Mens Stay Strong Campaign Works Cited ............................................................................................................................. 29 Appendix ....................................................................................................................................32 Nike, Inc. Financial Statements Group PowerPoint Presentation Page | 2

Executive Summary Overview Nike is leading the athletic shoe and apparel industry with $19 billion in sales in 2010 Nike Running has 31% market share of running shoes equaling $731 million Nike is the most valuable brand in athletics Internal Analysis Record profit and gross margin in 2010, $8.8 billion and 46.3% respectively Continuing improvement of operations with evaluation and audit tools to improve image of Nike Increasing customer voice with Write the Future online community Global manufacturing and distribution network with industry leader in marketing Large product portfolio includes shoes, clothing, gear, and accessories External Analysis Ages 18-44 represent the largest demographic for running shoes Running shoe choice criteria include comfort, price, style, and performance Competition heavy market (Adidas, Puma, New Balance, Under Armour, etc.) Market has more than doubled: $987 million in 1988 to $2.36 billion in 2009 Innovation driven industry from performance technology to special fabrics Strategy and Marketing Plan The Girl Effect Campaign o Percentage of proceeds from Nike Womens Running go to The Girl Effect Social responsibility program for female rights in Africa o Exploit program to increase market share and sales for Nike Womens Running Gives women ethical choice when purchasing o Mutually benefits business goals and sustainability program o Increase Nike Womens Running advertising during select ads and programs Stay Strong Campaign o Increase usage of current users by promoting running and leisure activities with Nike Running Increases sales and brand loyalty o Promote through traditional advertising and special PR events/promotions Running camps, extreme 5ks to promote masculinity o Accessorize Nike Running through key chains and bumper stickers Relatively inexpensive way to expand Nike brand amongst consumers

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Section 1. Customer Analysis A. Segments


Age Market (respondents who purchased athletic shoes in 2008) 1-18 N/A Usage More likely to purchase athletic shoes for team sports 25% of all individuals ages 12-19 purchased running/jogging shoes in past 12 months 35-44 70% Comments Presence of children in household increases chances of purchasing athletic shoes 98% of children wear athletic shoes Almost of teenage respondents are brand loyal and only alternate between a few brands Children ages 9-11 have a great deal of say in brand of sneakers purchased for them Represent key target market 54% run or jog on a regular basis Most likely to try new brands of sneakers

18-24

73%

25-34

69%

45-54

58%

55-64

47%

67% of respondents purchased shoes for themselves 79% purchased for everyday wear 52% purchased for exercising/working out 35% purchased for certain sport 12% purchased for commuting 6% purchased for some other reason Most likely to have purchased athletic shoes for a child, but greater than 50% also purchased for themselves 81% purchased for everyday wear 53% purchased for exercising/working out 31% purchased for certain sport 16% purchased for commuting 4% purchased for some other reason 85% purchased for everyday wear 51% purchased for exercising/working out 22% purchased for certain sport 17% purchased for commuting 7% purchased for some other reason 80% purchased for everyday wear 48% purchased for exercising/working out 17% purchased for certain sport 9% purchased for commuting 9% purchased for some other reason 90% purchased for everyday wear 38% purchased for exercising/working out 7% purchased for certain sport 6% purchased for commuting 10% purchased for some other reason

39% run or jog on a regular basis

28% run or jog on a regular basis

15% run or jog on a regular basis

8% run or jog on a regular basis

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Age

Market (respondents who purchased athletic shoes in 2008)

Usage 77% purchased for everyday wear 49% purchased for exercising/working out 4% purchased for certain sport 2% purchased for commuting 7% purchased for some other reason Everyday use is most common reason for purchase of athletic shoes 82% purchased for everyday wear 49% purchased for exercising/working out 22% purchased for certain sport 12% purchased for commuting 7% purchased for some other reason

Comments 2% run or jog on a regular basis

65+

37%

All Ages

59%

Running shoes are the largest segment 25% run or jog on a regular basis Convincing consumers to switch brands is difficult Almost 50% of respondents had a few brands they alternate between 33% commit to one favorite brand Nike tops list in brand popularity

Gender
Male

Market
59%

Usage
82% purchased for everyday wear 50% purchased for exercising/working out 30% purchased for a certain sport 14% purchased for commuting 5% purchased for some other reason 82% purchased for everyday wear 49% purchased for exercising/working out 13% purchased for a certain sport 10% purchased for commuting 9% purchased for some other reason

Comments
23% purchased jogging/running shoes 64% likely to buy new pair when old pair wears out Segment has consistent gains 27% purchased jogging/running shoes 53% likely to buy new pair when old pair wears out Sales have significantly grown and are catching up to mens market

Female

41%

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B. Motivations
Age 1-18 Motivations Comfort Style/fashion-focused Brand Celebrity endorsements Wearing same brand as friends Comfort Fashion with function Performance Celebrity endorsements Likely to purchase for child or spouse and themselves (convenient retailing) Comfort Price Likely to purchase for child or spouse and themselves (convenient retailing) Comfort Price Comfort Price Wear same sneakers for exercise and leisure (cross-functional) Comfort Price Comfort Price Style Performance Brand Celebrity Endorsements Latest technology Motivations Buy new pair when old pair wears out Purchase for a specific sport Purchase for everyday wear Comfort Sturdier shoes Lightweight shoes Specific shoes for specific activities Fashion and sophistication Shoes for going to and from classes (like yoga) that can be easily slipped off

18-24

25-34

35-44 45-54 55-64 65+

All Ages

Gender Male

Female

C. Unmet Needs Weather-specific running shoes More fashion-forward running shoes for women High-performance foot support running shoes

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Section 2. Competitor Analysis A. Competitor Identification Most Directly Competitive: Less Directly Competitive: B. Strategic Groups Strategic Group 1. Mainstream Brands from Large Consumer Firms

Adidas, New Balance, Asics, Brooks Under Armour

Major Competitors Nike Adidas Reebok Puma Asics New Balance Brooks Sketchers Converse K-Swiss Others (Under Armour, etc.)

Dollar Share (2007 Athletic Footwear Market) 31% 16% 6% 7% 5% 6% N/A 5% 4% 2% 18%

2. High-End Specialty Brands 3. Other Brands

Strategic Group 1. Mainstream Brands from Large Consumer Firms

Characteristics/Strategies -Focus is on large market -Target the average consumer athlete -Use of sponsorship (USATF, Olympics, etc)

Strengths -Access to capital -Brand name -Consumer accessibility to product -Loyal following (generalized) -Loyal following (specialized) -Offered at lower price point

Weaknesses -Core competency not in running shoes -Dependence on third party manufacturing

2. High-End Specialty Brands 3. Other Brands

-Target specialty athletes -Everyday footwear

-Accessibility to consumer -Hold small percent of athletic footwear market share -Small amount of athletic specialization

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C. Major Competitors Direct Characteristics/Strategies Competitor Adidas -Geographically diverse -Mass marketing campaigns -Sponsorship -Endorsement

Strengths -Access to capital -Loyal following -Increased capabilities due to other departments -Sponsorship of major events (Susan G. Komen Race for the Cure, Lace up for the Cure, etc) -Ability to tap into the new, more fashionable customer base -Marketing to women -Loyal following in specialty stores

Weaknesses -Core competency not in running shoes -Dependence on third party manufacturing -Underperformance of Reebok -Lack of celebrity endorsements -Made in the USA(increased cost) -No current presence in LFA** market -Innovation follower -Lack of market share -Financially limited compared to Nike, Adidas, etc. -Accessibility to product -No current presence in LFA market

New Balance

-Way of living brand image* -Positions itself as a more mature brand

Puma

-The fashionable alternative -Sport lifestyle company -Celebrity lines

Asics

-Specialize in a few sports (Wrestling, Running) -Advertise in specialty medias (Runners World, Triathlon magazines, Wrestling magazines) -Targets younger market with mobile campaigns

Brooks

-#1 ranked in -80% of their shoes are specialty store survey sold at specialty for Brand Strength retailers (accessibility) -#1 ranked in Brand Customer Service -Reputation as an innovator -Not an established running shoe company

Under Armour

-Change the market needs/wants -More team oriented marketing strategies

*New Balances marketing strategy is to incorporate their products into day-to-day life to create the atmosphere of sports is a way of living **LFA market is Lifestyle Fitness Athletic Shoes

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Indirect Competitor Under Armour

Characteristics/Strategies -Create a new product category -Attempting to market training shoe as a competitor to running shoes (athletes should train in these shoes rather than running shoes) -More team oriented marketing strategy

Strengths -Hip factor -Reputation as an Innovator -Increased capabilities due to other departments

Weaknesses -Not an established running shoe company -Strategy has still not gained major traction

-Under Armour has come out and said that athletes should not train in running shoes. They have begun to make shoes specifically for athletic training. This strategy, although not a direct competitor to Nike Running, will indirectly affect the sales of Nike Running. D. Competitor Strength Grid Assets and Competencies Financial Resources Innovation R&D Loyalty Breadth of Product Line Name Recognition Adidas S S S S S S New Balance A A A A A S Puma S A A A A S Asics A A S S S A Brooks W A S S S W Under Armour A S S A W S

S= Strong, A= Average, W=Weak

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Section 3. Market Analysis A. Market Identification: The U.S Running Footwear Industry B. Market Size U.S. Sales of Running Footwear Year 1988 U.S. Industry $987 million Sales 1998 $1.47 billion 2008 $2.31 billion 2009 $2.36 billion

Emerging Submarkets Athletic and performance apparel Sporting equipment and accessories (gear) Athletic training programs and technology Sport specific footwear Womens sport participation Competitive running: marathons, half-marathons, 5k, 10k Market Growth Footwear Average runner purchased 3.2 pairs of running shoes last year (2009) o 3 pairs for the average female runner o 3.4 pairs for the average male runner 60.4% of average runners spends $90 + on their running shoes o 64.4% of female runners o 56.4% of male runners Running shoe sales topped $2.36 billion in 2009 o Increase from the $987 million generated in 1988 Last running shoes purchased by men: Asics (29.9%), Brooks (14.9%), Nike (13.6%) Last running shoes purchased by women: Asics (29.1%), Nike (15.9%), Brooks (14.1%) Race Participation 467,000 marathon finishers in 2009 o Nearly a 10% increase from 2008 More than 1.1 million half-marathon finishers in 2009 o 24% increase from 2008 17 U.S. half-marathons (a record) with 10,000 finishers or more in 2009 40% growth in 5k participants over the past decade (2000-2009) o The most popular race distance The half-marathon has the largest female percent (57%) of any U.S road distance o Switched to a female majority in 2005 o In 1985, female percent was less than 20% for half-marathons Page | 10

Running/Jogging Participation Gender Distribution in Running Populations- Female%/ Male% Year 1993 1998 2002 Running/Jogging Shoe 38.4/61.6 43.0/57.0 44.3/55.7 User All Running Event Finishers Runners, ran at least once/yr 28.0/72.0 N/A 39.0/61.0 45.7/54.3 49.8/50.2 46.0/54.0

2006 52.1/47.9 52.0/48.0 47.8/52.2

2008 53.0/47.0 53.0/47.0 48.0/52.0

U.S Running/Jogging Participation for 2009 Total Runners Core Participants Frequent Participants Run/Jog at least once/yr Run/Jog 50 days/yr Run/Jog 100+ days/yr Total Participants 43,892,000 25,559,000 16,446,000 08-09 +6.7% +9.2% +9.8%

Factors Affecting Sales Levels Positive Affect Recession o A decrease in gym membership due to economy leads to an increase in running outdoors Social Media o Facebook and Twitter provide a community platform to announce ones running goal When its out there for everyone to see, it makes one more likely to stick with it o Races and events broadcast information to recruit race participants Innovative fabrics Technology Growing popularity of running/jogging Negative Affect Increasing footwear choices o Alternate brands and styles Increase in participation for other sports Increase in costs (materials, manufacturing, etc) Page | 11

C. Market Profitability Analysis Barriers to Entry Brand awareness Customer loyalty Budget for advertising and marketing campaigns Technology Retailer relationships Specialty brands Access to suppliers and contractors Technology Potential Entrants The footwear industry is already very competitive, probability of new entrants is low Brands that are already competing in the footwear industry could further expand by introducing specialized running shoes o Reebok o Avia o Sketchers o Fila o K-Swiss o L.A Gear o Puma o Under Armour Threats of Substitutes Barefoot running- Vibram Five Finger Shoes Shift of popularity to other activities and sports Bargaining Power of Suppliers Suppliers in the footwear industry have limited bargaining power They rely on footwear companies to purchase their raw materials and generate revenue o Natural and synthetic fabrics o Plastic compounds o Metal hardware Footwear companies are large enough to put pressure on suppliers for low prices o They can find alternate suppliers in less developed countries China, Vietnam, Indonesia, Thailand Bargaining Power of Customers Consumers have some bargaining power over footwear companies o Can easily switch to alternate brand for better style, better price, more convenience, better quality o Brand loyalty can result in limited bargaining power for consumers Retail customers have limited bargaining power over footwear companies o One retailers sales account for only a small percent of a footwear companys overall sales

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D. Cost Structure Lower Cost Structure Discount stores, superstores, and warehouse clubs Older models, styles, and colors Standard features Materials of lesser quality Cheaper suppliers, contractors, and labor Lower fixed and variable costs Higher Cost Structure Shoe stores and sporting goods stores Specialized performance technology Innovative fabrics Higher quality materials Reputable brand name More costly suppliers, contractors, and labor Higher fixed and variable costs E. Distribution System U.S Sales (in Millions) of Athletic Shoes by Retail Channel 2002 2003 2004 Shoe Stores 9,111 9,328 9,532 Sporting Goods Stores 2,555 2,732 2,920 Discount Stores, Superstores, 1,708 1,782 1,859 Warehouse clubs Clothing Stores 1,204 1,226 1,249 Department Stores 740 667 595 Internet and Other 1,027 1,072 1,125 2005 9,722 3,118 1,935 1,273 528 1,188 2006 9,898 3,326 2,007 1,298 467 1,263 2007 10,059 3,546 2,072 1,323 413 1,351

Observations/Major Trends Shoe stores bring in the most sales of athletic shoes Athletic shoes sold at department stores are on the decline Sporting goods stores had the largest increase in sales from 2002 to 2007 ($991 million) Shoe stores and sporting goods stores generally sell more specialized/sport specific shoes o Superior performance technology o Higher quality materials o Innovative fabrics Shoe stores and sporting goods stores often sell shoes at a higher price than discount stores, superstores, and warehouse clubs Page | 13

F. Market Trends and Developments Performance technology o iPod capability, extreme comfort Innovative fabrics o Smell eliminating, sweat resistant, etc. Continuous introduction of new models and styles Niche marketing towards specific sports and activities G. Key Success Factors Present Brand recognition Shoe quality Access to major retail channels Relationship with suppliers and contractors Introduction of innovative and stylish shoes Breadth of product line Marketing and advertising campaigns Awareness and recommendation by specialists Specialization for specific sports and activities Future Ability to forecast and capture consumer trends Innovative fabrics High performance technology

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Section 4. Environmental Analysis A. Trends and Potential Events


Source Technological Description - IT marketing information systems -Innovative fabrics Strategic Implication -Engage in comprehensive marketing strategies to boost sales -Focus on the performance features of the innovative fabrics (sweat resistance, odor eliminating, etc) -Continuously introduce new ways consumers can track their running data -Develop shoes at a low cost and then pass on the savings to the consumer -Import Duties: -Shoes <$3 48% -Shoes $3-6.50 37.5% -Shoes >$6.50 20% -Footwear covering the ankle (men) 8.5% -Footwear covering the ankle (women) 10% -Endorse running as a stress reliever and way to relax -Support higher footwear prices by focusing on high quality -Sell footwear at many price points -Promote running/jogging as an exercise anyone can do -Endorse running/jogging as a total body workout Time Frame Importance High

Since mid1990s

High

High -Computerized tracking of running Regulatory -US policies and government with general macroeconomic stability, low interest rates, stable currency conditions, and international competitiveness of the tax system -Recession Current

High

Economic

Low

-Economic crisis in manufacturing and supplier countries -Weakening of the US Dollar Cultural -Increasing desire to maintain a healthy lifestyle -Growth of gym and fitness center membership

Low

Med. Med.

Med

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Source Demographic

Description -Increase in female running/jogging participation -Shift to younger demographic (18-34)

Strategic Implication -Create new trendy designs

Time Frame Since mid1980s Current

Importance High

-Focus on more edgy/youthful styles -Maintain a strong brand image and reputation -Promote running as the preferred sport and activity of choice -Continuously introduce new models and styles -Keep up with consumer trends with new styles and models of high quality -Introduce high end fabrics for sweat resistance, odor eliminating, etc. -Implement the latest technology to track runs while providing comfort

High High

Threats

-Accusations of poor labor conditions, i.e. sweatshops -Shift in popularity to other sports & activities -Product line expansion by competing brands

Med.

Since mid1980s Since mid1980s Current

High Med-High

Opportunities

-Growing market for specialized running footwear -Innovative fabrics

High

-Performance technology

Current

High

B. Scenario Analysis Continuously introduce creative, on-trend styles and models utilizing the newest performance fabric and innovative technologies Capture the growing popularity in running/jogging by emphasizing it as a total body workout and ultimate stress reliever C. Key Strategic Uncertainties Will the popularity in running/jogging continue to grow? Will new subcategories emerge as significant markets? Once the recession ends, will people turn to other sports and activities?

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Section 5. Internal Analysis A. Performance Analysis Objective Area 1. Sales

Objective -Expand revenue/market share -Increase direct to consumer sales -Increase shareholder value -Improve quality of operations for improved product quality

Status and Comment -$19 billion in 2010, down 1% -Increased 12% -$8.8 billion; record profit -Continue to evolve Audit Tools, Code of Conduct, and Code Leadership Standards for factories -To represent the highest service standard within and beyond our industry, building loyal consumer relationships around the world -46.3% gross margin; record -Create products by reducing toxics/waste and using environmentally preferred materials -Created Write the Future, online community for customers and experiences -Management Development Program, Marketing Development Program, and Internships -The GreenXchange The Girl Effect Lace Up, Save Lives

2. Profits 3. Quality/Service

-Customer Service Mission

4. Cost 5. New Products

-Decrease cost to increase gross margin -Considered design, innovative fabrics, performance technology -Increase customer voice

6. Customer Satisfaction

7. People

-Develop industry best employees -Embrace diversity and reward imagination -Increase environmental and social sustainability programs

8. Other

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B. Summary of Past Strategy Keeps R&D in developed countries while contracting out manufacturing to developing countries in Asia and South America o This strategy allows high gross profit margin Increased its direct to customer sales by creating Niketown, Nike Outlet Stores, and Nike Store Online C. Strategic Problems Problem Reputation of poor labor conditions Competitors are more well known for being specialized in running Raw materials of poor quality Possible Action Provide customers with a look inside manufacturing plant by becoming transparent More segmenting into specialized running footwear Seek suppliers with higher quality materials

D. Characteristics of Internal Organization Component Description- Fit with Current/Proposed Strategy Environmentally friendly -Named in Top 10 of Newsweeks 2010 Green Rankings Corporate responsibility -Named as one of the 100 Best Corporate Citizens for 2010 in CRO Magazine -World headquarters received Waste Managements 2010 Innovation and Sustainability Award -Tops Climate Counts list in Corporate Commitment to Climate Recognized by The Ethisphere Institute as one of the Worlds Most Ethical Companies for 2010 -Named as one of the 100 Best Corporate Citizens for 2010 by CRO Magazine -Named as one of the Best Green Companies for Americas Children for 2010 -Named as one of the 100 Most Sustainable Corporations in the World by Innovest Strategic Value Advisors and Corporate Knights Inc. -Received top score in Design Innovation from Ceres -Named as one of the Worlds Top Sustainable Stocks for 2007 -Recognized for its Leadership in Climate Change Solutions by World Wildlife Fund in 2007 -Named for Apparel & Innovation on Fortunes 2008 Most Admired Companies -Named to Fast Companys Fast 50 Most Innovative Companies list -Named I.D Magazines 2007 Best of Consumer Products -Industrial Design Excellence Awards in 2005 Page | 18

Innovative

Component Top Employer

Description- Fit with Current/Proposed Strategy -#55 on BusinessWeeks 2007 Top 100 Places to Launch a Career list -100 Best Companies to Work For by Fortune Magazine for 2006, 2007, 2008 -Best Workplace for Commuters, 2004, 2005, 2006 -Top Company for LGBT workers, 2003-2010 -5K for Kids recognized as Youth Program of the Year 2008 -Nike Womens Marathon named Charitable Race of the Year in 2006 -Portland Trailblazers Heart of the Community Award in 2004 -National Head Start Association Award in 2004

Diversity Community Sponsorship

E. Portfolio Analysis BCG Nike is a Star high share, high growth Nike continues to gain market share in athletic shoe, apparel, equipment market Nike continues to increase revenue and profit Current domination in US, Europe with high growth probability in Asia F. Analysis of Strengths and Weaknesses 1. Strengths a. Vertical Integration Nike has own operations from manufacturing to distribution, and third party contracts to reduce operational costs b. Diverse Geographic Revenue US (34.2%); Europe, Middle East and Africa (30.2%); Asia Pacific (15.5%); Americas (6.2%), allows for better market expansion c. Product Portfolio Complement products with athletic shoes, apparel, and equipment for every sport 2. Weaknesses a. Mature Company Nike has sizeable pensions and retirement benefits which grew 30% in 2008 alone G. Financial Projections Based on Existing Strategy Future will bring increased revenue and profit with China expansion o China revenue currently at $1.7 billion, Nike leads this market Nike brand continues to become more valuable and is still the greatest competitive advantage for Nike

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Key Financials $ million Revenues Net Income (loss) Total Assets Total Liabilities Employees Key Financial Ratios Ratio Profit Margin Revenue Growth Asset Growth Liabilities Growth Debt/Asset Ratio Return of Assets Revenue per Employee Profit per Employee

2005 13,739.7 1,211.6 8,793.6 3,149.4 26,000

2006 14,954.9 1,392.0 9,869.6 3,584.4 28,000

2007 16,325.9 1,491.5 10,688.3 3,662.9 30,200

2008 18,627.0 1,883.4 12,442.7 4,617.1 30,200

2009 19,176.1 1,486.7 9,103.0 4,147.0 32,500

2005 8.8% 12.1% 11.4% 1.3% 35.8% 14.5% $528,450 $46,600

2006 9.3% 8.8% 12.2% 13.8% 36.3% 14.9% $534,104 $49,714

2007 9.1% 9.2% 8.3% 2.2% 34.3% 14.5% $540,593 $49,387

2008 10.1% 14.1% 16.4% 26.1% 37.1% 16.3% $616,788 $62,364

2009 7.8% 2.9% (26.8%) (10.2%) 45.6% 13.8% $590,034 $45,745

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Section 6. Strategy Development A. Business Scope- Product-Market Served Target Market: Men and women of all ages B. Strategy Description Value Propositions Brand familiarity Quality Product attribute benefit Assets and Competencies Research and design Global sourcing and logistics Superior marketing Financial capability Continuous innovation Appealing design Superior customer relationships Corporate social programs Exceptional customer relationships State-of-the-art technology Corporate social programs Brand recognition

Alternative Functional Strategies for Women Option A: o Strategy: Attract women to the Nike Running brand by first introducing a line of walking shoes, then promote them to Nike Running once they become more involved in exercising o Primary Goal: Increase market share of womens Nike Running footwear usage by growing with the consumer and establishing brand loyalty o Possible Outcomes/Benefits: Increase market share Increase sales Builds brand awareness Generate new customers Option B: o Strategy: Attract women to the Nike Running brand through an advertising campaign that focuses on endorsements by women athletes and women celebrities o Primary Goal: Increase sales of womens Nike Running footwear through the building of the brands high quality reputation o Possible Outcomes/Benefits: Increase sales Increase market share Page | 21

Build brand awareness Energize brand reputation Retain existing customers

Alternative Functional Strategies for Men Option A: o Strategy: Attract men to the Nike Running brand by launching an advertising campaign that promotes Nikes Lace Up, Save Lives corporate social program o Primary Goal: Increase sales of mens Nike Running footwear through the building of the brands corporate social responsibility o Possible Outcomes/Benefits: Increase sales Increase market share Build brand reputation Generate brand awareness Option B: o Strategy: Attract men to the Nike Running brand by introducing a line of classics with the same styles as the first Nike shoes while incorporating the newest performance technology for running o Primary Goal: Increase sales of mens Nike Running footwear through appealing designs and product attributes o Possible Outcomes/Benefits: Increase sales Increase market share Retain existing customers Create new customers C. Key Strategy Initiatives Womens Strategy: The Girl Effect Campaign Strategy: o Attract women to the Nike Running brand by launching an advertising campaign that promotes Nikes The Girl Effect corporate social program Primary Goal: o Increase market share of womens Nike Running footwear usage through the building of the brands corporate social responsibility Possible Outcomes/Benefits: o Increase sales o Increase market share o Build brand reputation o Generate brand awareness o Create new customers Page | 22

Mens Campaign: Stay Strong Campaign Strategy: o Attract men to the Nike Running brand through an advertising campaign that focuses on endorsements by male athletes Primary Goal: o Increase sales of mens Nike Running footwear through the building of the brands high quality reputation Possible Outcomes/Benefits: o Increase sales o Increase market share o Build brand awareness o Retain existing customers o Maintain leadership position in running footwear for men Growth Strategy Brand energizer o Use products, sponsorships, endorsers, promotions and social programs that significantly enhance and energize the Nike Running brand Energizing through The Girl Effect Campaign Increase the usage of Nike Running by women o Expand buyer base Pull in new customers by persuading them to switch from their current brand of running footwear o Implement comprehensive marketing plan Print ads Digital ads TV spots PR events Merchandise Promotions Energizing through the Stay Strong Campaign Increase the usage of Nike Running by existing male customers o Expand loyal customer base Motivate heavy users to use more o Implement comprehensive marketing plan Print ads Digital ads TV spots PR events Promotions

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Investment Level Growing o Due to the continuous change in the footwear industry, we need to continue to invest in R&D in order to continue our dominance in the market Building/Managing Brand Equity Nike must look at their consumers brand loyalty Reward loyal customers with frequent-buyer programs, special unexpected benefits or premiums Make customers feel that they are part of the organization, perhaps through customer clubs Have continuing communication with customers, using direct mail, the Internet, toll-free numbers, and a solid customer backup organization

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Section 7. Marketing Plan A. Product/Service to be Marketed o Nike Running Shoes o Charity Sponsorships The Girl Effect B. Pricing and Financials o Cost about $15-$75 to make a pair of shoes 50% of retail price o Retails for about $30-$150 o Generate approximately $5.1 million to $2.5 billion in sales o Womens Campaign Invest $34.55 million in promotional campaign o Mens Campaign Invest $65.93 million in promotional campaign o Total Invest $100.84 million in promotions Estimates Advertising to Sales Ratio = $100.84 million/$731 million=13.79% C. Distribution Channels and Issues Low Price Point Discount Stores Superstores Warehouse Clubs -Older models, styles, & colors -Standard features
Method Print Ads Description -Create a print campaign showcasing how real, everyday women benefit from running -Show women in the US running compared to women in Africa running to promote The Girl Effect

High Price Point Sporting Goods Stores Shoe Stores -Innovative fabrics -Specialized performance technology
Where Financials -6 full page ads in Shape ($1,030, 320) (Circulation 1.65 million) -6 full page ads in Fitness ($888,000) (Circulation: 1.5 million) -6 full page ads in Self ($1,044,384) (Circulation: 1.5 million) Projected Outcome/Benefit -Encourage women to run -Propel women to select Nike Running for their footwear -Generate brand awareness -Build brands reputation for corporate social responsibility -Bring in new customers

Clothing Stores Department Stores E-Commerce Sites

D. Promotion for Womens The Girl Effect Campaign


- Shape -Fitness -Self -Prevention -Womens Health

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Method

Description

Where

Financials -6 full page ads in Prevention ($809,400) (Circulation: 2.8 million) -6 full page ads in Womens Health ($1,014,870) (Circulation: 1.5 million) -Approx. $1.50 per click (200,000 clicks)

Projected Outcome/Benefit

Digital Ads

-Use banner ads and pop-up ads that show women running in the Nike Running shoes in the US and Africa

-Shape -Fitness -Self -Prevention -Womens Health

- Lead consumers to the Nike Running website -Generate brand awareness -Drive online sales

TV Spots

-Show womens running -Run during popular rights in the US talk shows and compared to Africa morning shows -Advertise that a percentage of each shoe sale will be given to The Girl Effect -Oprah -The Ellen DeGeneres Show -The View -The Today Show

-Build brands reputation for corporate social responsibility -40 TV ads at approx. -Make women feel better $500,000 per spot on about spending more for popular women shows running shoes knowing it ($20 million) will go to a good cause -$3 million budget to create the ads (including print ads) -Build brand reputation -Increase sales -Establish brand loyalty -Positive corporate responsibility - Sponsor 100 women-only 5Ks at approx. $30,000 per race ($3 million) -Bring in new customers -Get women to participate in running -Build brand reputation -Establish brand loyalty -Generate brand awareness -Bring in new customers -Propels sales

PR Events

-Sponsor womens races where a percentage of the proceeds will be donated to The Girl Effect

-Womens marathons, halfmarathons, 5ks -Across the United States

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Method

Description

Where -Sporting good stores

Financials -5 high-end designer running shoes ($100,000 per designer)

Merchandise -Select women fashion designers to create unique styles and models for a premier footwear line -Percentage of the proceeds will be donated to The Girl Effect Promotions -Give away bumper stickers that promote The Girl Effect with each Nike Running purchase

Projected Outcome/Benefit -Attract more fashionconscious women -Increase revenue from having a higher price point -Positive corporate responsibility reputation

-Sporting good stores

-1,000,000 bumper stickers given out for Nike Running purchases ($264,000)

-Bring in new customers -Increase brand awareness -Generate consumer buzz -Positive corporate responsibility reputation

E. Promotion for Mens Stay Strong Campaign


Method Print Ads Description -Creating a print campaign showcasing our products through athletes Where -Mens Health -Runners World -Sports Illustrated -ESPN Magazine Financials -3 full page Print Ads in Mens Health ($558,000) (Circulation: 1.8 million) -3 full page Print Ads in Runners World ($232,000) (Circulation: 660,000) -3 full page Print Ads in Sports Illustrated ($960,000) (Circulation: 3.15 million) -3 full page print ads in ESPN Magazine ($648,000) (Circulation: 2 million) -Approx $1.50 per click (200,000 clicks) Projected Outcome/Benefit -Increase sales -Increase market share of Nike Running shoes for males -Generate brand awareness -Maintain brand loyalty of existing customers

Digital Ads

-Create games in banner ads to entice individuals to click (offer discounts to winners)

-Mens Health -Runners World -Sports Illustrated -ESPN Magazine

-Drive traffic to Nike Running through online games in banner ads -Used to keep a reminder of Nike Running in consumers mind -Provide incentive to purchase Nike running footwear

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Method TV Spots

Description -Create TV campaign using endorsers to drive individuals to stores or Nike Running website

Where -ABC Saturday Night College Football -NBC Sunday Night Football -Superbowl -ESPN

Financials -20 TV spots on ABC Saturday Night Football ($1.35 million per spot) -10 TV spots on NBC Sunday Night Football ($1.71 million per spot) -2 TV spots during the Superbowl ($4.8 million) -$3 million to create ads and pay endorsers (includes print ads)

Projected Outcome/Benefit -Drive traffic to stores or online -Increase sales -Increase market share -Build awareness of media campaign -Maintain brand loyalty of existing customers

PR Events

-Sponsor Running Camps, Marathons, 5K runs, Extreme 5K runs** -Nike sponsored cool down lounges for after the race [Cool down lounges will include free snacks and water for participants along with free shoe testing]

-Across the United States

-Ads spread over 13 weeks -Sponsor running camps in 5 Regions (West, Midwest, East Coast, South East, and Southwest) ($200,000 per camp) -Sponsor 15 marathons throughout the country ($300,000 per marathon) -Sponsor 100 5k runs throughout the country ($20,000 per race) -Sponsor 20 Extreme 5K runs throughout the country ($20,000 per race) -1,000,000 bumper stickers given out for Nike Running purchases ($264,000) -Give out 500,000 Nike Running key chains ($470,000)

-Increase brand awareness through sponsorship and cool down lounges after races -Build brand reputation -Establish brand loyalty -Bring in new customers -Propel sales

Promotions -Give out Nike Running bumper stickers with each Nike Running purchase -Give out Nike Running key chains to participants of Nike sponsored events

-Across the United States

-Increase brand awareness -Generate consumer buzz

**Extreme 5K runs are events that include obstacles to test toughness. These obstacles include jumping fire pits, crossing rivers, crawling under barbed wire, etc.

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