EXECUTIVE SUMMARY

Nike is the world’s leading designer, marketer and distributor that specializes in athletic
footwear, apparel and accessories (Mahdi, Abbas, Mazar, & George, 2015). The firm believes
that innovation is the heart of business and they utilize this strategy to become more sustainable
company in the long-run. Nike's products are among the most widely recognized worldwide
with many cutting-edge technologies in their products such as NIKE Air, Lunar, Zoom, Flywire,
Dri-Fit and so on. With ever-changing technology and marketplace scenario, footwear
company, especially Nike finds increasingly difficult to drive more sales as well as engage
customer in the industry. This report will provide an analysis of Nike’s current business
internally and externally. Besides, new product development is analyzed and some suggestion
for Nike’s business also are given.
 Table of Contents

EXECUTIVE SUMMARY ................................................................................................ 1

Table of Figures ............................................................................................................... 3
PART I ............................................................................................................................ 4
I. INTRODUCTION ............................................................................................................... 4
II. ENVIRONMENT ANALYSIS ........................................................................................... 4
1. PESTLE Analysis ..................................................................................................................................... 4
2. Porter’s Five Force Analysis ................................................................................................................... 10
3. Current market strategy ........................................................................................................................... 11
4. Current company performance ................................................................................................................ 12
5. Competitive Advantage ........................................................................................................................... 14

PART II ......................................................................................................................... 16
I. THE INTRODUCTION OF NEW PRODUCT.................................................................. 16
II. SEGMENTATION TARGETING & POSITIONING (STP) ........................................... 17
1. Segmentation ........................................................................................................................................... 17
2. Targeting ................................................................................................................................................. 18
3. Positioning .............................................................................................................................................. 18
II. RECOMMENDED MARKETING OBJECTIVE ............................................................ 19
III. RECOMMENDED MARKETING STRATEGY ............................................................ 19
1. Product .................................................................................................................................................... 19
2. Price ........................................................................................................................................................ 20
3. Place ........................................................................................................................................................ 21
4. Promotion ................................................................................................................................................ 23

CONCLUSION .............................................................................................................. 24
REFERENCES .............................................................................................................. 25

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 Table of Figures
Figure 1 Unemployment rate in the US .....................................................................................5
Figure 2 Interest rate in the US ..................................................................................................6
Figure 3 Inflation and CPI in the US .........................................................................................6
Figure 4 U.S Population by Nativity..........................................................................................7
Figure 5 Consumer Spending in the US ....................................................................................8
Figure 6 Worldwide retail e-commerce sales ............................................................................8
Figure 7 US Population distribution by age .............................................................................17

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 PART I
I. INTRODUCTION
Nike is the global leader in the design, development and worldwide marketing and
selling of athletic footwear, apparel, equipment, accessories and service. Based in Beaverton,
Oregon (USA), Nike’s brands include the Nike, Converse, Hurley and Jordan (nike.com, 2019).
The company nowadays has over 127 footwear factories and approximately 363 apparel
factories over the world, spreading out over 45 countries with 384 retail stores in America and
758 non-U.S Retail stores in foreign nations (Nike Annual Report 2017, 2017). Moreover, as
of 2017, the company had more than 74,400 employee over the world, including retail and part
time staffs (Nike Annual Report 2017, 2017).
Nike’s products of best-selling brands consist of nine main portfolios that is designed
for people from all walks of life: Running, Nike Basketball, The Jordan Brand, Football, Men’s
Training, Women’s Training, Action Sports, Sportswear (Sports-inspired lifestyle products)
and Golf. The company primarily operates globally in the US, EU, Middle East, Africa and
Asia Pacific. In 2017, Nike brand and Converse sales in America made up roughly 46% of total
revenue and international sectors sales accounted for 54% of total revenue.
II. ENVIRONMENT ANALYSIS
1. PESTLE Analysis
PESTEL analysis is a structure used by marketers to investigate the full-scale external
factors (macroeconomic environment) that might significantly impact on the company’s
business. Proposed by Michael E. Porter (2008a) , macro environment includes six external
factors that the organization are unable to control:
1.1 Political
Political instability, civil unrest, the deterioration of the political situation in a country
in which Nike has significant sales or operations, additionally the breakdown of trade relations
between the U.S. and a foreign country in which Nike has significant manufacturing facilities
or other operations, such as China, could adversely affect Nike’s business and the difficulties
of operations. In particular, a change in trade status between the U.S. and China or Mexico
could result in a substantial increase in the import duty of shoes manufactured in these countries
and imported into the U.S. There is currently significant uncertainty about the future
relationship between the U.S. and China, including with respect to trade policies, tariffs,
treaties, and government regulations.
 The instability of politics nowadays can negatively impact on the business of Nike in
worldwide market.

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1.2 Economics
Unemployment Rate in the United States at 3.8 percent in March 2019 and is expected
to decrease significantly by 24 thousand to 6.2 million according to Trading Economics.
Looking forward, unemployment rate in the United States to stand at 4.00 in 12 month-time.
In the long-term, the United States Unemployment Rate is projected to trend around 3.90
percent in 2020.
Figure 1 Unemployment rate in the US

Source: tradingeconomics.com
 The increase of unemployment rate is one of the drawbacks which affect adversely
to the Nike’s business in term of buying power of Americans and decreasing in their
demands.
In term of interest rate, Interest Rate in the United States is expected to be 2.50 percent
by March 2019, according to Trading Economics. It is forecasted that the Interest Rate in the
United States to stand at 2.50 in 12 month-time. In the long-term, the United States Fed Funds
Rate is projected to trend around 2.75 percent in 2020.

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Figure 2 Interest rate in the US

Source: tradingeconomics.com
 Interest rate fluctuations may impact on Nike’s result of operation and investments,
profitability in US market as their main market.
The US annual inflation rate rose to 1.9 percent in March 2019 from a two-and-a-half-
year low of 1.5 percent in the previous month, slightly above market consensus of 1.8 percent.
It is estimated that Inflation Rate in the United States stands at 1.80 in 12 month-time. In the
long-term, the United States Inflation Rate is projected to trend around 1.90 percent in 2020,
according to Trading Economics.
Figure 3 Inflation and CPI in the US

Source: tradingeconomics.com

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  A highly inflationary economies of US can negative impacts Nike’s business
profitability in the future.
Moreover, internationally, the unpredictable changes in trade relations among the
United States and other countries, including a new United States-Mexico-Canada Agreement,
China, or changes in the European Union, such as Brexit that also significantly impact on the
general business globally.
1.3 Social
The below table shows that the number of US population is predicted to increase
steadily from 2014 to 2060. The total American population is forecasted to grow by 98.1
million between 2014 and 2060 with the average increase of 2.1 million people yearly (Colby
& Ortman, 2015). As such, the US demand for shoes is increasing over years.
Figure 4 U.S Population by Nativity

Source: United States Census Bureau

 The growth of population by 2060 is one of the important factors, which contribute
to the success of Nike in US market and segments.
Consumer Spending in the United States is expected to be 13175.91 USD Billion by
March 2019, according to Trading Economics. And it is forecasted that Consumer Spending in
the United States to stand at 13279.91 in 12 month-time. In the long-term, the United States
Consumer Spending is projected to trend around 13802.74 USD Billion in 2020.

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Figure 5 Consumer Spending in the US

Source: tradingeconomics.com
 The increase of Consumer Spending is the opportunity for Nike’s business, in term
of the amount of transaction and product consuming
1.4 Technological
There is the trend of increasing use of high technology among consumer. It is obvious
that consumers nowadays are interested in product offerings on social and digital media at
younger and younger ages. Moreover, an increasing number of consumers who purchase online
as the consequence of technology advances and innovations. It is reported by Statista, in 2017,
retail e-commerce sales worldwide gained 2.3 trillion US dollars and e-retail revenues are
predicted to increase to 4.88 trillion US dollars in 2021. The lines between online and offline
distribution will continue to blur.
Figure 6 Worldwide retail e-commerce sales

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Source: Statista.com
 The noticeable trend in consumer buying behavior via the development of technology,
webpage and social network is the opportunities for Nike in manufacturing and
operating in worldwide market.
1.5 Legal
Consumer information is one of a highly regulated in the U.S. and international markets.
As the business collects transactional and personal information about customers though digital
channel and applications, the company must obey the increasingly complex and detailed
regulatory standards to protect their business. Moreover, In the US, national federal, state, and
local governmental entities, and foreign governments regulate many aspects of business,
including its products and the importation and exportation of its products including product
safety and other safety standards, trade restrictions, duties and tariffs (including international
trade laws and regulations, export controls, and economic sanctions), advertisements as well
as other administrative and regulatory restrictions.
 The various regulations might be detrimental for Nike business since company needs
to be careful to follow these government regulations.
1.6 Environmental
As we are facing urgent environmental problems that mainly caused by human being,
the apparel and footwear industry is also influenced by environmental changing. The current
research showed that this industry generated from 5 to 10% of pollution affect worldwide
(Measuring Fashion: Environmental Impact of the Global Apparel and Footwear Industries

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Study, 2018). Hence, the increase of people’s environmental awareness that leads to the trend
of smart consumption, such as clothing as a service (leasing clothes and take-back schemes) in
order to cut waste. Moreover, more and more company is developing preferred fiber materials
that have a lower environmental impact than the traditional material. Consequently, the
company need to adapt the new trends and increase the cost of product or R&D.
 The increase of environmental awareness of worldwide citizens have great
influence on the operation of toy industry in general. And operating with
environmental sustainability is necessary for any fashion companies nowadays.
2. Porter’s Five Force Analysis
According to Michael E. Porter (2008b), Five Force Analysis is to examine the effects
of external factors on company’s business, including five competitive forces: industry rivals,
customers, suppliers, potential entrants, substitute products. Most importantly, understanding
the competitive forces and the underlying causes offers the basement for projecting and
managing industry competition over time.
2.1 Bargaining power of suppliers
Most of the companies utilize private suppliers in low-wage nations, namely Indonesia,
China and Vietnam. With the high overall supply, firms get a great deal of power over these
contractors and feel comfortable to switch among suppliers quickly without any worry of
product quality. In addition, it also decreases the influence of individual suppliers’ demand on
giant corporation like Nike Inc. Any supplier has capability to manufacture and meet firm’s
quality standards with lower cost will be win the deal.
 Bargaining power of suppliers. is WEAK
2.2 Bargaining power of buyers
Customers have more selection in the footwear and apparel market, hence they are easy
to buy those types of products. Moreover, the other companies also offer various seasonal
promotions and special discount to attract more customer and gain the market share. Hence,
buyers have power to make decision on what they actually purchase.
 Bargaining Power of buyers is MODERATE
2.3 Threat of new entrants
The first obstacle that new entrants in footwear and apparel industry encountering is
the high cost of brand development in order to compete with the giant brands in this industry.
Moreover, the existing companies also gain the high economy of scale with the worldwide
production and distribution channel. Hence, the significant cost of entry impacts new entrants’
ability to disrupt the sportwear business.

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  Threat of new entrants is WEAK
2.4 Threat of substitute products
The product of footwear and apparel industry is very easy to be substituted by other
commodity products such as sandals, boots due to the availability of alternative products in the
market. Nike needs to consider Crocs company in case that they create an alliance to sell Crocs
shoes. Most importantly, the low switching costs pose significant threat on the overall industry
environment.
 Threat of substitute product is MODERATE
2.5 Rivalry among existing competitors
The footwear and apparel are saturated globally with many companies currently operating
in this industry, including Nike, Adidas, Reebok, Puma, Fila and so on. Hence, the players
operate in the athletic footwear industry and always try to grow their product portfolios in order
to gain more market share, even though the market are witnessing a slow growth trend. On the
other hand, brand image and customer loyalty is very important in this industry; hence, those
companies aggressively invest much money in advertising and brand ambassadors.
 Rivalry among existing competitors is HIGH
3. Current market strategy
3.1 Product Diversification Strategy
Nike has strong product portfolio that integrates among its business segments in order
to help the company to increase customer’s retention as well as take advantage of strong
distribution network. Apart from footwear products that is remaining the top-selling product,
they also develop a wide range of categories under the NIKE brand name, including sport
apparel, bags, socks, sports balls, eyewear, timepieces, digital devices, bats, gloves, productive
equipment and other equipment utilized for sports activities (Nike Annual Report 2018, 2018).
Furthermore, Nike also has two wholly-owned subsidiary brands that serves different
customer segments:
1. Converse Brand: focuses on casual sneakers, apparel and accessories under the
Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell.
2. Hurley: focuses on action sports and youth lifestyle apparel and accessories
3.2 Innovation Strategy
Being a leader in sportwear industry, Nike intensively invests in Product Research,
Design and Development as a key element to their success. With the purpose of improving
athletic performance and increase comfort, Nike owns many cutting-edge technologies in their
products such as NIKE Air, Lunar, Zoom, Flywire, Dri-Fit and so on. Nike also continuously

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develop new technologies and innovation by their dedicated specialist in different area,
including biomechanics, chemistry, engineering, industrial design, etc. The company is
considering a pioneer in footwear and apparel industry.
3.3 Manufacturing and Distribution Strategy
All products of Nike are produced outside of American by independent contract
manufacturers in several countries. In term of footwear sector, Nike has totally 124 factories
that situated in 13 countries such as Vietnam, China and Indonesia. Besides, there are 328
apparel factories in 37 countries. Hence, Nike uses off-shore manufacturing strategy to save
labor costs that significantly decrease the cost of sales of their product worldwide.
On the other hand, Nike also has a strong distribution network on the global via various
channels, including NIKE Brand factory stores, NIKE Brand in-line store, Converse stores,
Hurley Stores. There are seven significant distribution centers within the US and more than 62
distribution centers outside of the US. Moreover, their digital commerce platform is available
over 45 countries. Nike currently focuses on direct-to-customer distribution strategy.
4. Current company performance
4.1 Sales Performance
With the presence of many players, the worldwide footwear industry is experiencing
an intensively competitive business scenario, including Adidas AG, Nike Inc., New Balance
Inc., Puma SE, Asics Corporation, etc. These competitors concentrate strongly on product
development, innovation and promotion in order to gain better market share. According to
Statista, with annual footwear sales of about $22.3 billion in 2018, Nike stands at number one
in sneaker market over the world.

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4.2 Company Profitability
Nike is growing company that the revenue continuously increases annually. The
revenue rose up to 8% in 2017 and 4% in 2018 that mainly driven by the sustainable growth in
the NIKE brand and Converse. In detail, the NIKE brand footwear and apparel revenue grew
significantly 4% and 9% respectively in the year of 2018 (Nike Annual Report 2018, 2018).

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5. Competitive Advantage
- Strong brand identity over the world: Nike has a variety of sporting product under NIKE
brand for everyone from shoes and sport equipment to apparel for any kind of sports.
Furthermore, Nike also owns Hurley, Converse and Jordan brands that allows Nike Inc.
are able to acquire a far greater market share than any other company in their industry.
The Nike Inc. believe that their logo is among the most profoundly recognized all the
countries.

- Product Quality and Innovation: as a role of leader in the market, Nike provides a
quality and durable product at the high prices range to customer. Nike designs product
primarily for specific athletic use, however, still a huge percentage of the products are
used in casual and leisure activities. They focus on two aspects of product: innovation
and high-quality construction.

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- Leadership advantage: Nike is the first-mover in creating new products with state-of-
the-art technology and design. Besides, Nike also resets, redesigns and extends their
current product lines and applies new innovation into their products development. Nike
also owns a group of specialists coming from different area such as biomechanics,
chemistry, exercise physiology, engineering, industrial design and other related fields.

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 PART II
I. THE INTRODUCTION OF NEW PRODUCT
Environment sustainability or Green lifestyle is becoming prevalent over the world
nowadays. According to Rogers (2013), there is a significant change of green attitudes and
behaviors in the Generation Y who are born from 1977 to 1998. The report shows that the
percentage of Generation Y in the US who tends to purchase green products is grown up to
36% in 2012. More importantly, 39% of them are willing to buy the eco-friendly personal care
products, such as haircare or skincare as many as they can. As their income has risen nowadays,
plus consumer spending is projected to increase significantly to 2020. Last but not least, it is
suggested that a large percentage of Millennials are more environmental-concerned than the
older generation (Coughlin, 2018). This trend has major implications for business operation,
including Nike Inc.

Nike has always prioritized its customer’s interest and attempts to focus into
sustainability. Therefore, the new Nike x Green Things Collection is created to increase the
awareness of sustainability of Generation Y. With the new collection, Nike introduces new
super material from recyclable natural leather fibre, named as Flyleather that will be applied in
some iconic Nike styles such as the Cortez, Blazer and Air Tailwind ’79. Along with three
classic Nike footwears, Nike also releases green sweat suits and cap. The theme design is green
color pattern that uses premium recycled and regenerated material.

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Photos: Flyleather Technology

Photo: The Nike x Green Things Collection

II. SEGMENTATION TARGETING & POSITIONING (STP)
1. Segmentation
- Demographic:
Demographic is a common technique to use by Nike as the characteristics are easy to define
and measure. More importantly, this way of segmentation could be applied for any market
worldwide and Nike can take advantage of this factor to launch new products in any
marketplace. Nike targets to the customers from 11 to 45 years old (Millenials), with more
concentrated on teenagers in order to build long-term loyalty.
Figure 7 US Population distribution by age

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Source: kff.org (2018)
- Psychographic:
Nike also segments their target customers through lifestyle, personality, activities and
interests. The traditional segmentation of Nike is individual who takes part in outdoor activities
like sports, gym, etc. that activities become a part of their lives. For the Nike x Green Things
Collection, Nike approaches young people who are high environmental-concerned or
environmental activists. Besides, that this group of customers also loves fashion and wants to
be a trendsetter.
2. Targeting
Targeting is the next step of market segmentation in order for company to choose the
appropriate, potential and lucrative segment, so that the company could take advantage of their
resource to achieve their goal.
Regarding the Nike x Green Things Collection, Nike utilizes differentiate strategy that
the company targets fashionista and sporty individuals to provide them unique, limited
collection and innovation products. It should be noted that Nike also concentrates on the
audiences who believe in the importance of protecting the environment and sustainable
products.
3. Positioning
The conceptual positioning map indicates an instrument that showed the positioning
strategy of company (Michael E Porter, 1980). Conventionally, Nike products is positioned at
high price – high quality comparing to other competitors. For the new collection Nike x Green

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Things, Nike also deploy the same positioning strategy, but in higher price than their other
products.

Photo: Conceptual positioning map in footwear industry

II. RECOMMENDED MARKETING OBJECTIVE
 Objective 1: Achieve sales revenue over 50 million USD of the new collection within
the first 30 days after launch.
 Objective 2: Increase 10% in new customers who purchase new collection
 Objective 3: Raise brand awareness of Nike product by driving more 20% organic
search for new collection within 30 days after launch.
III. RECOMMENDED MARKETING STRATEGY
1. Product
In term of product, Nike strategy is continuous concentrate on innovation and invest
intensively in research and development to provide the best products, including footwear,
apparel and athletic equipment. With the new Nike x Green Things Collection, company
remake the iconic Nike styles: the Cortez, Blazer and Air Tailwind ’79 that is made of
Flyleather technology – the lowest carbon footprint leather material ever made. Moreover, they
also introduce alongside matching apparel, these classic Nike’s logo featured collection

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signature green colors in each product. In addition, each shoe is packed with 100% recycled,
environmental-inspired Nike packaging. Moreover, there are also different accessories come
with the collection: Sweat suits and complementary T-shirts and cap.

Photo: The Nike x Green Things Shoes Collection

Photo: 100% recycled and green-inspired Nike packaging (example)

2. Price
Regarding the pricing, as usual, Nike deploys the premium pricing strategy that focuses
on the loyal customers who always follow the latest Nike’s trend. As Nike has a number of
loyal fans, this special kind of intimacy with the brand allow Nike to provide higher price in
order to take advantage of this established relationship. Nike is aware of that their customers
are really willing to pay higher for their products that Nike’s logo is obvious.

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 Items Price
NIKE X GREEN THINGS Shoes $120
NIKE X GREEN THINGS Cap $32
NIKE X GREEN THINGS Hoodie $70
NIKE X GREEN THINGS Tee $40
NIKE X GREEN THINGS Pant $65

3. Place
With this exclusive collection, Nike release and sell the products via two main channels:
online stores and NIKE Brand factory stores, NIKE Brand in-line store.

Photo: New Nike x Green Things Collection is display on Nike.com (example)

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Photos: NIKE Brand Store in sustainable concept

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4. Promotion
- Advertising: Apart from advertising on Nike’s official website, the new Green
Collection also is promoted on many fashion magazines, in-field newspapers, and sport
clubs with slogan NIKE BETTER WORLD.

Photo: Nike x Green Collection Advertisement

- Social Media Influencer: Nike collaborates with many social influencers, especially
environmental activists in order to increase awareness of online community about Nike
responsible brand as well as promote new collection to the online media.
- Sponsorship: with the meaningful of Green Thing Collection, Nike sponsors for many
environmental activities and campaign to foster the global effort to conserve resources
and preserve the environment for future generation.

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Photo: Event Sponsorship
CONCLUSION
Through intensive analysis of internal and external environment of Nike Inc., the report
identified some opportunities as well as obstacle that Nike’s business may encounter in the
current time. We also dig deeper into firm’s strategies and competitive advantage. So that,
based on all review in previous part, some of the judgements for the new development of The
Nike x Green Things Collection is identified, along with recommended marketing strategy to
make new collection successfully launch.

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