Nobody take the admonition "Just Do It" more seriously than Nike, the company for whom [the] slogan was written. Whether its entering a new sport, moving into a new geographic market, developing a new product, Nike approaches its mission with the dedication and single-mindedness of an athlete training for competition. And whatever the task, the goal is always the same: To turn in a peak performance, one that leaves no doubt as to who the best is. That's because at Nike, winning is not merely a corporate philosophy—it's the company's business.
Nike has become a dominant player in sports apparel. With track, basketball, tennis, and other traditional sports in the "win" column, Nike recently has turned its attention to building franchise in soccer, cricket, rugby, hockey and in-line skating, among others.Being a global brand is extremely important to Nike because its home market, the United States, is nearing saturation. According to John Horan of the newsletter Sporting Goods Intelligence, sporting-goods chains have over expanded and profit margins are threatened. When Nike announced that its second quarter earnings in 1997 would not live up to Wall Street's expectations, its stock dropped 13 percent. With others spurs at home, Nike has to look overseas there it has only 27 percent of sales compared to 43 percent in the U.S. to generate additional revenue.
But going overseas is not a sure win for Nike. Understanding what sports the people in a country play, and then being great at those sports is always a challenge. Outside the United States soccer is the main sport, and Nike has pursued the soccer player and fan with a vengeance. In the United States, Nike has signed a Multiyear contract with major league soccer that calls for it to spend $3.75 million a year to sponsor 5 of the league's 10 teams. In addition, the contract contains a clause that allows Nike to retain sponsorship of half of the League's teams as it expands. Overseas, Nike spend $20 million in a sealed bid process to sponsor the Italian national team. During last year's European championships, it bought up all the billboards around stadiums where matches were held, effectively undermining the event's official sponsor, Umbro. In the spring of 1997, it sponsored a worldwide soccer tour that featured top teams. It has also spent millions of global advertising campaigns and signed leading national soccer stars such as Eric Cantona (captain of the national champanion Manchester United soccer team in the U.K.) to highly lucrative contracts.
But nothing matches Nike's sponsorship agreement with the Confederacao Brasil deFutebol, Brazil's soccer federation, which cost the company a breath-taking $200 million. Why Brazil? It won the 1994 World Cup soccer match. The contract is a 10 year deal that includes appearances in Nike-produced exhibition matches and community events. Nike will apply Brazil's national teams with sports kits. In return, the teams will participate in five annual friendly soccer games that Nike is arranging, and to which Nike retains the television rights. Nike will also have access to training clinics in Brazil and to the infrastructure of the game.
Nike has applied the same technical skill and drive to soccer shoes that it applied to the basketball shoes. For example, when Nike couldn't find equipment for testing the best stud configurations and traction in cleated soccer shoes, it decided to build its own. The goal is to create the world's best soccer shoe, but that won't be easy. First, the competition is not yet ready to roll over and play dead. Adidas retains sponsorship of many top teams and players, including the national teams of Germany, Spain and France. It also sponsors World Cup 1998, with the right to sell official soccer balls and sports apparel. Further, Adidas has invaded Nike's home turf, sponsoring three U.S. teams and featuring players from those teams in its U.S. advertising. "We don't think that anybody can get near to us on the product side," says Peter an Adidas spokesman. Reebok, Nike's main competitor in the U.S., has also signed contracts with at least 30 professional soccer clubs throughout the globel.
And there's competition at home from firms such as Vans, a small California company that aims directly at the teenage market by targeting the California adolescent—an Internet-Surfing latchkey kid. As the number of teenagers in the United States grows from 25 million in 1997 to over 31 million in 2010, this move could prove shrewd. These kids are not into team sports; instead they are attracted by individual sports such as skateboarding, snowboarding, surfing and mountain biking. Within two years of entering the market for snowboard boots in 1995, for example, Vans has become the third largest company in the business. So, it's in a position to make move on Nike. Still, with over $9 billion in sales in 1997, Nike remains the biggest player in the game. Adidas is a distant second with $3 billion. With its free spending, Nike appears to have changed the economics of the game. Nike intends to be the number one supplier of soccer gear by World Cup 2002, but so far its efforts have produced only $200 million in annual sales. It has a long way to go before it scores a match-winning goals in the global soccer market.
Questions :
a. Identify and explain the Nike's markets and Nike's positioning in these market.
b. Describe the company's global soccer marketing mix.
c. What marketing recommendations would you make to help Nike achieve its quest [of] global soccer dominance? Discuss.
d. How serious is the threat of a firm like Van's? Is Nike likely to be successful in global soccer? Give your views.
