Nike Blue Ocean Opportunity PDF

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Triska Lee September 9, 2011 Case Evaluation #2

This analysis of the current market situation will focus on the sporting goods companies Adidas, New Balance, and Nike. The goal of this analysis is to unveil a blue ocean strategy for Nike that will move the company into a new realm of the industry, in which direct competitors are limited and the intensity of the competition is reduced from that of the current market.

Strategy Canvas Weaknesses in Current Industry I evaluated the current industry based on price, quality, partnerships, availability, and customizability (See Appendix, Table 1). The major weakness in the current industry is the inability of the current sportswear producers to truly sell the “lifestyle” that they so strongly promote. NIKE Brand President Charlie Denson stated at a recent Nike progress report, “At NIKE, we are relentlessly focused on the athlete. We lead with innovation and performance product built for the world’s best athletes and teams, and then we capture the imagination of the consumer by evolving, aligning and focusing our business around them” (Nike, Inc., 2011). Nike and Adidas compete heavily over professional athletes and teams (Eckardt, 2007). Instead of focusing on the limited realm of professional athletes, major sporting goods companies should try to capture the support of non-professional athletes and lessathletically inclined consumers. Nike, Adidas, and New Balance sell products that appeal to a particular lifestyle. In order to capture the general consumer, it is necessary for these companies to sell an experience alongside their products, therefore inspiring the athletic lifestyle they want to sell. Nike should also use its partnerships with other companies and celebrities, such as Apple and the celebrity

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workouts featured in Nike Training Club, to leverage itself against its competitors. For these reasons, I believe Nike is in the best position to pursue the blue ocean opportunity I have identified.

Current “Non-Customers” I have identified four major groups of non-customers of the sportswear and sports equipment industry. First, there are those who cannot afford expensive sportswear. Second, there are those who want to take up a sport but do not know which gear is necessary. The third group includes those who have dual-lifestyles, both an athletic or active lifestyle, combined with a professional or urban, etc. Finally, there are those who do not exercise or participate in sports and do not wear sportswear in everyday life. These people do not have the opportunities nor desire the opportunities to utilize the products offered by sporting goods companies. This analysis will focus on the first two types of noncustomers: (1) those who cannot afford expense athletic products and (2) those who want to live athletic lifestyles but do not understand which products would best suit their needs. These customers are very important because they have the desire for the lifestyle that Nike is offering but do not know how to access it.

Blue Ocean Opportunity My suggestion is that Nike implements gyms or training centers that offer “product/service bundles” to customers (Sebastiao, 2011). This will serve the dual purpose of creating opportunities for new products and allowing the company to improve upon existing products, using direct feedback from customers. This strategy would maintain Nike’s focus on the athlete, but also provide an opportunity for those less-active or less-athletic customers to learn more about the athletic lifestyle under Nike’s guidance and observation. It would add an emotional aspect to the functional act of browsing and purchasing sporting equipment. In addition, Nike would be able to utilize its strong partnerships.

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Gyms and training centers would give Nike the opportunity to reach into a new industry by creating Nike-brand gym equipment. This equipment would be equipped with the currently existing Nike Training Club and Nike+ technologies to give Nike gym members a personalized workout and playlist selection. Members would receive discounts and special offers on customized shoes, clothing, and accessories to complement a particular sport or workout routine. These products and services would be available in the gym, allowing Nike to sell its own products upon-demand to gym members. In exchange, Nike would require post-workout feedback to improve its product features and product offerings. Nike would gather consumer feedback on the workout itself (intensity, effectiveness, etc.), the equipment and products used (comfort, ease of use, etc.), and the musical selection. The feedback improves Nike’s knowledge of its products and how they are being used, in addition to building a custom workout “experience” for consumers. Such offers would encourage not-athletic consumers to sample various sports and workouts, and help Nike capture the first- and second-tier non-consumer groups. In addition, to the personalized experience for customers and the direct-customer feedback for Nike, Nike would alter its current revenue model. In addition to generating revenue from the one-time purchase of shoes or apparel, Nike would have a recurring source of revenue from the monthly membership payments. Nike-loyal consumers would be able to exhibit the “ultimate customer loyalty” by not only wearing Nike shoes and apparel, but also by living a Nike lifestyle that is sensitive to their needs and preferences. The challenges of this opportunity lie in maintaining a high level of customer service and customer satisfaction, due to the increased physical presence of Nike products and stores. Nike will have to transition to a more service-focused business from a product-focused business.

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Appendix

Analysis 80 70 60 50 40 30 20 10 0

Nike Adidas New Balance

Works Cited Eckardt, A. (2007, February 28). Nike Challenges Adidas on Its Own Turf. Retrieved September 9, 2011, from MSNBC World Business: http://www.msnbc.msn.com/id/17282642/ns/businessworld_business/t/nike-challenges-adidas-its-own-turf/#.TmowcYKo2so Nike, Inc. (2011, June 28). NIKE, Inc. Raises FY15 Revenue Target to $28-30 Billion. Retrieved September 7, 2011, from NikeBiz: http://www.nikebiz.com/media/pr/2011/06/28_investor_meeting.html Sebastiao, H. (2011, September 5). Creating Blue Oceans.

Honors Pledge As a student of the Dr. Robert B. Pamplin Jr. School of Business Administration I strive to uphold academic integrity and promote ethical behavior. In doing so, I pledge on my honor that I have not given, received, or used any unauthorized materials or assistance on this examination or assignment. I further pledge that I have not engaged in plagiarism and I have cited all appropriate sources.

Triska Lee

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