The highest on the pyramid were the Ultimate/Performance Athletes. These included big names in the fields of running sports. They are the people who join sports to be athletes. The second in line are those people who are not necessarily athletes, however, the activities they carry out are athletic in nature. Lastly, the third tier of the pyramid included those people who are influenced by the culture of sport. Nike decided to target these segments using what they call the Pyramid of influence. They believed that the activities of the small percentage of people in the first layer of the pyramid had a great impact on the larger number of people in the third layer.
The first layer included all top sports persons, such as Michael Jordan and Tiger Woods. Nike learnt early in time that the largest layer of the pyramid and their attitude towards Nike as a brand could largely be affected by how the Ultimate Athletes behave towards Nike. This is the reason why Nike starting running a lot of endorsements that features these sports celebrities in it. Nike chose the celebrities depending on their individual personalities because what the brand and celebrity had a strong association. Nike planned its marketing strategies in advance and therefore benefited from it. Nikes shoes being endorsed by some of the leading sports figures played a huge role in the growth of Nikes sales. Nikes primarily focus on its consumer and signing these big celebrities helped Nike be a more global and successful brand.
2. How did Nike penetrate the European soccer footwear market? Entering the European market would be a challenge for Nike because of Adidas, a German sports brand, already prevalent in the market. Nike knew it had to do something really strong and powerful to make a presence in the continent of Europe. Nike decided to enter the European market through soccer. They realized that if they truly wanted to be a global brand, they could not leave the sport of soccer behind and had to create a great product that would be able to connect with the soccer players. They also diversified to soccer to be more international. Unlike the strategy they used for the American market, in order to gain more brand awareness in the European market Nike started to support some of the major football championships in the continent.
They increased their budget from 10million dollars to 100 million dollars to enter the European market. They also started associating the brand to world known soccer legends like Ronaldo and paired up with the winning team of the world cup soccer tournament. This made people believe that Nike was a performance shoe that was used by major athletes all over the world. This largely increased their awareness and also their revenues. Their profits went to billions form millions. Today, anyone can easily tell that the Swoosh means Nike.
3. What are the key driving forces behind Nikes international competitiveness? Today 97% of the people who see the Nike logo can distinguish that it is Nike. This is because of several factors and strategies that Nike has carried out in the past years. In order to analyze the forces for Nikes international competitiveness, we must use the Porters Diamond Model. Factor Conditions: Nike being a manufacturing industry requires only the basic factors, like raw material, infrastructure and cheap unskilled labor. As these are easily available in third world countries, majority of Nikes factories are located there. However, activities like designing and research and development are done in the home country.
Demand conditions: After having established a strong brand name and large market share in its home country, Nike expanded to international markets. Sports is a universal activity and every country has some form of sports in their culture, which is played with great passion. Nike takes advantage of the huge market for sports products all over the world by using economies of scale. Related and supporting industries: One of the chief factors for Nikes international competitiveness is the related and supporting industries.
Sports is a thriving business and popular entertainment for people all over the world. International sports competitions and events greatly aid Nike in its business. We can see from the case, that Nike gained recognition by entering into partnerships with sports celebrities from different fields (Tiger woods, Ronaldo, Michael Jordan), sponsoring soccer teams (Brazil) and focusing on sporting events like the 1992 Barcelona Olympics and 1994 world cup. Most importantly, these sporting events and associations with athletes were integral in stirring innovation in the company. Firm strategy, structure and rivalry:
* Nikes mission statement is to bring inspiration and innovation to every athlete in the world which shows that their goal is to stay updated with the emerging trends by constantly innovating and improving their products. * Nikes objective has been to grow globally by grasping the three main market segments, which are the performance athletes, participant athletes and those that influence the world and the culture of sport. They also adapt their global strategies in a way that fits locally. * It is a known fact that competition in any given market makes firms more efficient and effective in their management styles as there are more players fighting for a market share. Fierce domestic rivalry with brands such as Reebok and Addidas has made Nike more innovative and dynamic in their marketing approaches.
Government: Various third world country governments encourage MNCs like Nike to build their manufacturing units in their country to provide employment to local people. Cheap labor provided by these countries further reduces the costs of production for Nike. Chance: Risk is an important element in any business as it triggers growth and development. In its early years, Nike adopted different marketing strategies like paying athletes to wear Nike shoes (Steve Prefontaine), sponsoring sports teams and maintaining close partnership with idolized athletes to promote the brand. These strategies gave Nike a competitive advantage, as it became the most widely recognized sports brand.