Nike Augmented Reality Hybrid Catalogue

NIKEz

THE AUGMENTED REALITY HYBRID CATALOGUE FOR GENERATION Z

. YA SA M I N R A H M ANPARAS T . MALLO RY P RE VATT . . JA C QU E L I N E MILLE R . JE NN C AMP B E LL .

CONTENT S.

EXECUTIVE SUMMARY

03

10 THINGS ABOUT GEN Z

04

NIKE OVERVIEW

05

MARKET ANALYSIS

07

STRATEGIC INITIATIVE

11

CREATIVE BRIEF

15

PROMOTIONAL PLAN

25

FINANCIAL PLAN

27

CREATIVE DELIVERABLES

29

CONCLUSION

33

APPENDIX

35

SUMMARY. At Nike Inc., we have recently taken notice to our increase in brand followers amongst generation Z. As a way of reaching out to these customers, we have taken it upon ourselves to implement a new initiative that targets this market specifically in a way we believe they will be responsive to. We are calling this initiative Nike Z. Nike Z will use an augmented reality capable app, smart catalogues, digital photography, film, and gifs, to create a generation Z friendly customer experience that is new, innovative, and eye-catching. Through this combination of printed advertising and digital media we hope to inspire and further the involvement of generation Z within the Nike brand.

Our hybrid catalogues will not only intrigue generation Z, but will be a revamped way of viewing catalogues in general. This idea is strengthened further by the element of sustainability. Nike Z catalogues will utilize exponentially less paper than traditional catalogues. In fact, a Nike Z catalogue is created using only a single sheet of card stock. The factors that we wish to manipulate in order for this initiative to be considered a success are: brand awareness, brand conversion, and brand loyalty. Our main key performance indicator that we will track is the download of the Nike Z app.

Our expectation is that 60% of customers receiving our catalogue will download and create accounts on Nike Z.

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10 THIN GS GENERATION .

Z. YOU NEED T O KN OW ABOUT

1.

They’re the first fully adept digital generation, often using graphic representations such as emojis and GIFs to communicate.

2.

4.

6.

8.

They prefer to work independently.

3.

They are generally more entrepreneurial than previous generations.

They’re often self-aware and more mature at a younger age.

5.

1 in 4 Gen Zers volunteer in their communities.

They make up 25% of the United State’s population.

7.

They’re among the most racially and ethnically diverse workforce to enter American business.

They spend more money on food and drinks than anything else.

9.

25% of Gen Zers left Facebook in 2014.

10.

60% say they want to change the world.

(Martin)

04

HISTORY. NIKE was founded on January 25, 1964 as Blue Ribbon Sports (BRS) by college coach Bill Bowerman and athlete Phil Knight, officially becoming Nike, Inc. on May 30, 1971. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger (which is now ASICS). In 1966, BRS opened its first retail store in Santa Monica, California. By 1971, BRS and Onitsuka Tiger’s relationship was nearing an end, and BRS prepared to launch its own line of footwear, Nike, bearing the famous Swoosh logo, first used on June 18, 1971. By 1980, we had gained a 50% market share in the U.S. athletic shoe market. The company went public in December of that year. We hired advertising firm Wieden+Kennedy and created “Just Do It” for our 1988 ad campaign. In 1990, we moved our World Headquarters to Beaverton, Oregon. Nike markets its products under its own brand, as well as Nike Brand Jordan, Hurley, Converse, and Nike Golf. Between 1995 and 2008 the company previously owned Cole Haan and Umbro. Nike famously sponsors many high-profile athletes and sports teams around the world (O’Reilly).

MISSION. Nike’s mission statement is “To bring inspiration and innovation to every athlete* in the world.” The legendary University of Oregon track and field coach, and Nike cofounder, Bill Bowerman said, “If you have a body, you are an athlete.”

CURRENT OWNERSHIP & REVENUE. Nike is traded as NKE on the KYSE Dow Jones Industrial Average Component and S&P 500 Component. Phil Knight continues in leadership as the Chairman, and Mark Parker is the President and CEO. Revenues in 2014 were $27.8 billion (“NIKE, Inc. Reports Fiscal”).

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FUTURE GROWTH PLANS. NIKE, Inc. grew 10% in revenues between 2013 and 2014. Over the last 10 years, the company has more than doubled our revenue, and we predict $30 billion in revenue by 2015 and $36 billion by 2017.

Since publishing our 2012/2013 Sustainable Business Performance Summary, NIKE’s overall employee base grew to approximately 48,000 workers at the end of 2013, an increase of 10,000 employees. We are also expecting strong growth in Running, Basketball, Football, Men’s Training, Sportswear, Women’s Training and Direct to Consumer sales. As we look forward, we believe that sustainability is one of the key drivers that will catalyze innovation and lead us toward continued growth (“FY 12/13 Sustainability Report”).

N I KE OVE RV I EW

*See Appendix Item I: SWOT Analysis

06

MARKET OVERVIEW. Consumer purchases of sporting goods in the U.S. totaled at 63.64 billion U.S. dollars in 2014 (Statista). This figure included the consumer purchases of many different product types such as athletic footwear, exercise equipment, and licensed sports merchandise athletic apparel but does not include recreational transportation items such as boats, RVs, and snowmobiles. Nike generated the most revenue of the companies compared in the statistics with around 27.8 billion U.S. dollars in revenue in its 2014 fiscal year (Statista).

These reports on the consumer purchases of sporting goods in the U.S. and the overall size of the sportswear retail market in the U.S. means that our initiative will have the potential for interest and success in our proposed location due to the increasing sales volume of sporting goods. We are launching our new fashion retailing initiative during a time where sportswear is in high demand and is being worn as a fashion trend. With Nike’s outstanding revenue for 2014, w e will be able to cover the costs of our new initiative and provide the financial support for the needed technology. By launching our initiative during a time when sportswear is trending and desirable, and by also launching it for a brand that dominates the sportswear industry, our new retail initiative is bound to be successful.

Notable Company’s Using Aurasma: Universal Pictures, GQ Magazine, Lexus, Walt Disney World, Nabisco, and AMC Theatres. *See Appendix Item IX

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Photography by Mallory Prevatt

TARGET CUS T OMER IDENTIFIC ATION .

DEMOGRAPHICS.

More than a quarter of the U.S. population belongs to Generation Z totaling at 25.9% (DeNavas-Walt). Generation Z consumers were born between the years of 1996-2005, making them the largest generational group in the U.S. Their age ranges between 10-19 years old. In the U.S. 35,218,000 households have children between the ages of 10-19 years old (DeNavas-Walt). Generation Z are close with their families and their parents have a lot of control over the decisions that they make. Many Generation Z members live in multi-generational homes, as Baby Boomers age and move in with their kids.

PSYCHO-GRAPHIC.

Generation Z’s average weekly allowance comes to $16.90, collectively amounting to $44 billion a year (DesJardens). Generation Z members spend more money on food and drinks than anything else with their favorite eatery being Starbucks. In total, teens are spending 20% of their money on food, up from 15% 10 years ago (Peterson).

Upper income teens rank their favorite restaurants in this order: Starbucks, Chipotle, Chick-fil-A, McDonald’s, and Dunkin’ Donuts. Average income teen’s favorite chains are Starbucks, McDonald’s, Chipotle, Chick-fil-A, and Taco Bell. Nike remains the top clothing brand for all income levels. American Eagle, Forever 21, Polo Ralph Lauren, and Urban Outfitters also rank among the most popular apparel brands. Teen’s favorite websites for shopping are Amazon, Nike, and eBay.

Generation Z wants to change the world. 60% of them want to have an impact on the world, compared to 39% of millennials (Peterson). Roughly one in four Generation Z-ers are involved in volunteering. Generation Z-ers are digitally over-connected multitasking across at least five screens daily and spend 41% of their time outside of school with computers or mobile devices (Peterson). Generation Z-ers are less active with 66% of them saying that online gaming is their main source of entertainment. They also lack brand loyalty. The products themselves are more important to Generation Z than the brands that produce them. And lastly, because they are so digitally connected, Generation Z-ers communicate with speed and often use emoticons and emojis instead of words.

MA RKE T AN A LYS IS

BEHAVIORAL.

08

09

POR TER’S 5 FORCES INFOGRAPHIC - Always new emerging brands - Few brands can compete with NIKE’s volume, customization, and innovation

LOW/MEDIUM

- Nike does not own factories - No one supplier has a majority

MEDIUM/HIGH

LOW/MEDIUM

- Global athletic apparel companies pose intense competition

- Increasing demand for athletic gear - Counterfeits

LOW

**Refer to Appendix for written rationale.

*See Appendix Item III for Rationale

MA RKE T AN A LYS IS

LOW

- DTC bargaining power low - But wholesalers have more power

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KEY OBJECTIVES.

In recent years the catalogue has become irrelevant to consumers due to the convenience on online shopping and the comeback of brick and mortar retailing.

However, according to Harvard Business Review, corporate companies such as JCPenny and specialty stores like Anthropology have resurrected the catalogue. In 2013, catalogue mailing grew into a 11.9 billion dollar industry. It has been proven by Nordstrom that their customer is more likely to spend four-times as much when the customer has a multi-channel relationship with their company. Multi-channel retailing is highly important to business especially today. With innovation on the rise, it is highly important to have a presence in every type of medium possible. Catalogues are also helpful to marketing due to the control of placement within the catalogue. There is also the idea of the catalogue connecting you to the online website, which is a connection we want to take advantage of. This concept will engage customers, and more importantly, this will engage Generation Z. Within the fashion industry, interactive magazines are not an entirely novel idea.

Magazines such as Garage Magazine and Vogue have used the augmented reality technology with their products. Garage magazine uses the augmented reality that made the recent cover of their issue come to life in 3 dimensions. The idea of making print come to life via an application is something that generation Z will take full advantage of. Their phones and tablets are apart of their lifestyle, more than any other generation (Generation Z: A Look at the Technology and Media Habits of Today’s Teens).

Currently, Nike is the top destinations for company generation Z consumers (Peterson).

We plan to use this initiative to engage the Generation Z consumer and create a lasting bond (Peterson). This technology helps create a sustainable way to re-purpose the catalogue, bringing the catalogue back to life. We are striving to change the format of a catalogue completely by creating an entirely new experience.

S T RAT E G IC I NITIATIV E

Through our augmented reality mail catalogue, we plan to target Generation Z, the new outgoing open-minded consumer changing the game of ideals, beauty, and consumerism. This generation has an entirely new way of thinking, which includes an attachment to technology unlike any other generation; devices are just another appendage for Gen Z (Peterson). We plan to target Generation Z through social media and interactive applications that reconnect them to the physical interface of a catalogue. We want to attract this up-and-coming generation with GIF’s, interactive shop-able videos, and targeted advertising.

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TEC HN OLOGY & IMPLEMENTATION OPERATIONAL CONSIDERATIONS. In this Operational Checklist, we have tasks set out in the order in which they need to be accomplished and the duration over by month. Conducting market research for Generation Z, this initiatives target demographic, is the longest task throughout the operational checklist. Generation Z is an entirely unique and technologically advanced generation. It is crucial to study their lifestyle, habits, and activities so understand who our customer is.

Designing the interface of the application for the augmented reality is responsibility of Aurasma. Aurasma receives all branding and collateral for Nike z and creates the customized app individually. After receiving the app, it takes about one months to create, and an additional month for Apple to review. Overall, there is a two month lead time to design the app and its interface (“Aurasma Support US”).

As a pre-launch activity, Nike will create a promotional piece of mail to all consumers within generation z to introduce the material and the technology.

The Nike Z catalogue will be sent to over 7 million Generation Z-ers which equates to approximately 5 million households (“US Census”). These will also be available in all 30 NIKETOWN’s all throughout the US (“Soni”).

OPERATIONAL C HEC KLIST. Tasks

Monthly Activities 1

Conduct Market Research Research Augmented Reality Technology Allocate Inventory for Catalogue Identify Customer List of Gen Z Implement Nike E-Comm Capability Shoot Prelaunch Catalogue Edit Footage into Deliverable for Catalogue Design App w/ Aurasma and MCommerce capabilities

Create and Distribute Prelaunch mail advertisement

Design Catalogue Print Catalogue Pre-launch Social Media Advertising Mail Catalogue Data Analysis Post Launch Activities Begin Market Research for Upcoming Catalogue

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2

3

4

5

6

7

8

9

10

11

12

1

THE TECHNOLOGY. Technology: For implementing the technology for our hybrid catalogue, we are using the technology created by Aurasma, a platform that has risen to be the top augmented reality platform since its launch in 2011. This augmented reality works with high-powered iOS and Android devices. Augmented reality provides an interface in which you focus on a still image with facial recognition technology through the lens of the camera on your device, phone or tablet. It then recognizes the still images and allows it to then come to life through video and sound on your device.

Universal Auras are Auras that are preset within the Aurasma application and are instantly viewable. This allows businesses to make it easier for customers to access Auras. Universal Auras require one week to go live (“How Do I Request...”). *See Appendix Item VII & VIII

THE SUPPLIERS.

Since it’s conception, augmented reality technology has sparked the interest of almost any business concerned with relevance and innovation. In result of this, suppliers and vendors of this technology have begun to spring up in full force. At the forefront of these vendors stand brands such as: Aurasma, Emotions AR, Metaio, Layar, Gravity Jack, Inition, Blippar, Daqri, SeeMore Interactive, and Apparmo (“Recommended List of Augmented Reality Companies”). The two most popular suppliers of augmented reality applications that are most similar to the technology Nike will be implementing are EmotionsAR and Aurasma. EmotionsAR is a business to business platform which adds sound, interactivity, and motion to all images. EmotionsAR uses augmented reality in order to add life to your products in the easiest way possible. Aurasma was launched in the summer of 2011and has since then become the world’s leading augmented reality platform with over 80,000 customers operating in over 100 countries (Aurasma). Aurasma’s vision is to enable an augmented world, where every image, object and place has its own Aura. Aurasma’s history goes back to 1996 and the formation of a British software company called Autonomy. Autonomy became known for their image recognition solutions that were then adopted by governments, businesses such as Aurasma, and organizations all around the world (“Recommended List of Augmented Reality Companies”).

S T RAT E G IC I NITIATIV E

Aurasma has coined the term “Aura” which is defined as the combinations of a trigger or image and an overlay or video that make the trigger become an overlay.

Aurasma has made it possible for any person to create an Aura through their mobile application not only for personal use but for businesses as well. Aurasma also provides the capability of a business to utilize this technology in a personalized way, called “skinned applications”. In this case, Nike would be using their own branding through the technology through a skinned application for a relative cost. This app would be entirely customizable, to reflect the brand and mission of Nike and this initiative. Aurasma creates the app for the commercial brand interested in the skinned applications which takes about a month to create and become live. It will then take Apple three weeks to approve the application (see operations schedule).

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CURRENT POSITIONIN G

PERCEPTUAL MAP ANALYSIS.

Nike’s current position in the generation z retail market is quite high. Nike remains the most preferred clothing brand among teens as of fall 2014 (Peterson). Within the lower priced segment, Aerie and Forever 21 are leading as up-trending retailers. To be classified as an up-trending retailer means that popularity among generation z consumers has increased within the last year for that particular retailer. However, H&M is not too far behind. Within the higher priced segment, Free People, Under Armour, and PINK follow behind Nike as up-trending brands among teens. With a higher price point than Nike, Free People is ranked third in up-trending brands among teen girls.

And as for Under Armour, their prices are relatively similar to Nike’s prices and they are ranked third in up-trending brands among teen boys. Compared to Nike and Under Armour, Adidas, Puma, and Reebok are lacking popularity amongst the generation z consumers making them fall under the category of down-trending retailers. Our new retailing initiative will help Nike maintain their current position amongst their competitors by reengaging the attention of generation z consumers in an exciting new way.

NIKE’S UNIQUE SELLING POINT. Nike’s advantage point is found in our methods of applying new technologies, such as 3D printing and wearables, within our brand in innovative ways to excite our customers and hold consumer attention. This new strategic initiative will exploit this point of difference by implementing an entirely new consumer channel targeting the up and coming spenders of Generation Z.

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COMPARITIVE PRODUCT PRICING ANALYSIS. This product price comparison chart reveals a correlation between product categories and popularity amongst generation z consumers. Down-trending retailers, or unpopular retailers amongst generation z consumers, lack broad product categories for generation z consumers. For example, Reebok is least popular amongst generation z and that could very well be because they only offer one product category for them which is shoes. Right behind Reebok is Puma and Adidas who only offer three to six product categories for generation z consumers. However, Nike offers generation z consumers nine different product categories to choose from and are the number one up-trending brand amongst generation z consumers. *See Appendix Item IV: Product Comparison Chart

DISTRIBUTION TACTICS & DIFFERENCES. Nike distributes their products through three major channels: by selling products to wholesalers in the US and international markets, by direct-to-consumer (or DTC) sales which include in line and factory retail outlets and e-commerce sales through Nike’s website, and sales to global brand divisions. Under Armour, Free People, Reebok, Puma, and Adidas have similar distribution channels to Nike since they all sell directly to consumers through their own stores and websites while also selling to wholesalers.

H&M, Aerie, Forever 21, and PINK only sell directly to consumers through retail outlets and their websites.

Photography by Mallory Prevatt

C RE AT IV E B RIEF

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CURRENT PL ACEMENT

DISTRIBUTION CHANNELS, MODELS & SALES VOLUME DISTRIBUTION Nike has three major channels of distribution: wholesalers throughout the US and internationally, DTC or direct-to-customer retailing which includes Nike retail locations, factory outlets, and e-commerce, and sales to global brand divisions (Soni).

Furthermore, they form relationships with “category-specific retailers” to create destinations to purchase their merchandise. For example, they have partnered with Foot Locker Inc., JD Sports, and Intersport (Soni).

The majority of Nike’s revenue comes from sales to wholesalers, even though the sales mix decreased in 2014, which decreased revenues from 83.3% in 2012 to 79.2% in 2014. The DTC sales and business however have increased but still remain lower than sales to wholesalers. Currently, they are focusing their efforts on DTC initiatives because direct sales translate to higher margins than sales to wholesalers and plan to grow DTC to $8 billion by 2017, which would be a 14.6% annual growth rate (Soni).

In 2014, it was recorded that there are over 450 Nike Brand factory stores internationally and just under 200 in the U.S. However, there are about 75 Nike Brand in-line stores including NIKETOWN’s internationally and about 30 in the U.S. They plan to improve this by building more NIKETOWN’s and other premium stores to connect with the customer more through an innovative and comprehensive experience (Soni). *See Appendix Item V

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C RE AT IV E B RIEF

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CURRENT PROMO TION AL ACTIVITIES ANNUAL SPENDING: ADVERTISING. 11% of Nike’s sales are committed to advertising, which is a huge contribution to promotions at about $2.7 billion at the end of fiscal year 2013. $1.15 billion of that was spent at the U.S. market alone (“Can Nike Block”).

CURRENT ADVERTISING ACTIVITIES. Nike’s main advertising agency is Wieden & Kennedy, which works for the company in most global markets while media is handled mostly by Mindshare. Wieden & Kennedy creates Nike’s print ads and television commercials while Mindshare is responsible for handling Nike’s social media accounts such as Facebook and YouTube. Nike’s famous ‘Just Do It’ slogan was first featured in a television commercial in 1988. The commercial featured Walt Stack, a then 80-year-old running icon. Today, Nike runs ads on television, radio, in print, on social media, and digitally. Nike also continues to feature athletes and musicians within their advertisements. Nike has made a conscious decision to move away from traditional advertising and focus on digital marketing with a heavy focus on social media platforms including Twitter, Facebook, and their own social network Nike+. Nike+ allows users to track their activity throughout the day either generally or with activity specific applications.

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CURRENT CRM ACTIVITIES. There are many CRM initiatives taken on by Nike as a brand committed to innovation.

Especially notable are our different social media outlets and smart phone apps that target various Nike customer niches.

- Nike has 14.7 million followers on Instagram, who follow our posts and tag us in their own Nike gear. On Facebook, 22 million users follow our content. Over 3 million users follow Nike on Google+.

- Nike is also quite focused on social advertising initiatives to track fitness results. In 2010 we launched Nike Digital Sport (NDS) to develop technologies to allow users to track their personal performance and sift through that data. Nike Fuel enables customers to track their workout progress through Nike plus devices that update customers on the latest Nike sports trends and insights. Nike + Connect uploads’ customers’ Nike+ data from their devices to their nikeplus.com accounts. One of our earlier and more popular apps is the Nike+ running app that enables customers to share their workout progress on social networks such as Twitter and Facebook.

- Our website is not only extremely informative but user friendly as well. The site has a functionality that enables a smart automatic response service to questions posed by customers. We provide various extensive Frequently Asked Questions (FAQ) sections to each brand of the Nike site.

- Above all else, Nike is a brand committed to fitness and activity. Our Nike Training Club app is compatible with iOS and Android to develop a 4 week training program designed for each individual customer. The app has synching capabilities with Nike Running and also provides the music from each user’s personal library to link to each workout.

- There are 9 exclusive NikeLab stores globally, and they are the only locations to see Nike’s newest and most innovative products. These products include exclusive designer collaborations with Nike (“NIKE Lab”).

C RE AT IV E B RIEF

- Additionally, some of these apps are social networking opportunities for customers.

Nike+, for example, builds relationships not only from brand to customer, but through customer to customer community building. The Nike Running app connects runners in each community to gather for club events and games (“NIKE Training App”).

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BUSINESS ISSUES & SOLUTIONS. Generation Z, being a youthful and accepting generation, has the potential to be a disloyal customer. According to marketers, Generation Z consumers are quick to move to products with the same quality at a lower price because they rarely care about brand recognition (Shaughnessy).

With our initiatives for Nike, we plan to target generation Z. Generation Z is highly motivated by social media and interactive advertising, and we plan to use this to our advantage by capturing their attention, while also working to modernize a, said to be “dying”, form of advertising: the catalogue (“Why the Print Catalog Is Back in Style”). *See Appendix Item II

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CREATIVE GUIDELINES: BRAND. FONT

IMAGE LOOK & QUALITY

Nike Font: Futura Extra Bold Condensed

High resolution images, with bright lighting, and hard shadows. Images should look bold and have a playful attitude. (Refer to Mood Board)

COLOR & STYLING

Bright pops of color combined with black & white in a green outdoor setting. Style should include mismatched funky patterns, layering, and hints of fashion trends.

MODELS

Ciera Bowlby (@chasingshores) Markie Stroud (@markiestroud)

PHOTOGRAPHER

DEMOGRAPHIC FACTORS

VIDEOGRAPHER

Joshua McLeod (@victoralexanderco)

PRODUCERS

ARKHAM Group (@arkhammag)

Joshua Mcleod (Videographer) & Mallory Prevatt (Photographer)

C RE AT IV E B RIEF

We are targeting Generation Z, therefore our models should be youthful looking, and potentially androgynous. Generation Z enjoy individuality and hold different standards of beauty. Our campaign will acknowledge that.

Mallory Prevatt (@malloryprevatt)

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CREATIVE GUIDELINES: THEME.

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DELIVERABLES.

We are in need of a mock up application interface, Nike specific, to be able to activate the images on the mail delivered catalogue that shows the feasibility of this idea. For use within the catalogue’s app, we would like you to create one stop motion GIF, featuring the popular Nike logo, and a fashion film activated from a still photo on the catalogue. Our idea requires an interactive interface via smart phone application that uses the camera to hover over any still image, and then projects a moving video onto the screen. We are referring to this innovative promotion tool as an augmented reality hybrid catalogue.

We will be creating a mock catalogue featuring still images for the film and gifs to interact with. For extra deliverables, not required for this application to be successful, we will be shooting a total of three editorial advertisements that will showcase generation Z styled models wearing Nike. These images will be displayed throughout the hybrid catalogue and app.

C RE AT IV E B RIEF

For our initiative to be successful we require three main deliverables. The entirety of this new form of advertising is epitomized within one folded piece of card stock that a consumer will receive via mail, like a form of catalogue. Ours is uniquely different, because it will be significantly less paper and information than your average mail out. This adds, not only an element of sustainability, but a sort of mystery that generation z tends to appreciate. The selling point is in the card’s ability to “come to life” via smart phone through the use of augmented reality.

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PROMOTIONAL ACTIVITY MAP. Tasks

Monthly Activities June

July

August

Pre-Launch Concert Pre-Launch Mail Teaser Social Media YouTube Sponsorships Print Ads in Magazines Push Notifications for Next Catalogue

PROMOTIONAL PLAN ANALYSIS. The Nike Z pre-launch Concert is an event hosted by Nike taking place in June, featuring, the famous artist and producer, Zedd. The performance will be marketing the new technology of the application through visual effect trigger images on stage for the viewers to interact with. During the concert there will be a Snapchat “story� that audience members, or anyone in the vicinity, can partake in by sending snap chats to the location. There will be give aways for the audience presented by special VIP hosts including youtube stars from #teaminternet: Troye Sivan and Tyler Oakley. The PreLaunch Mail teaser will be sent to the mailing list of all the households with Generation Z children in them. This is done to promote and explain the augmented reality technology within the application. This will be sent a month before the catalogue is mailed to the US recipients. For two months, Nike will intermittently post images and promotional material via social media to help promote the app. Generation Z believes that relatable YouTube bloggers are more important than celebrities of other talents therefore Nike will be sponsoring YouTube bloggers with large followings to promote Nike Z within their videos. Throughout summer 2016, print ads will run in select teen magazine publications to promote the app. Nike will be using Xbox as an advertising platform. One month after the app has launched and the catalogues are sent out, push notifications sent from the Nike Z app will be sent to all users to promote the next catalogue and create awareness.

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Sept.

PRO MO T IO N AL P L A N

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THE PLAN. Units

Unit Price

Total Price

Initial Total Total w MarkUp (35%)

2

$26,000 $33,800

$26,000 $67,600

AUGMENTED REALITY APP

1

$75,000

$75,000

FASHION FILM (30S-1MIN)

3

$65,000

$390,000

BTS VIDEO (30S-1MIN)

1

$65,000

$65,000

3D PRODUCT RENDERS

4

$6,000

$24,000

$5,010,000

$0.10

$500,000

PHOTOSHOOT: Photographer Producer Creative Director Hmua Prop Stylist Wardrobe Studio Daily Liability Insurance Coverage Project Manager

PRINTING

1 1 1 1 1 1 1 1 1

$3,000 $1,200 $200 $1,000 $800 $3,000 $8,000 $800 $8,000

$3,000 $1,200 $200 $1,000 $800 $3,000 $8,000 $800 $8,000

$1,212,600

Grand Total

ANALYSIS. The entire initiative will cost a total of $1,121,600 including printing of the catalogue.

Nike is financially stable enough to take on this project, and the loyalty gained by the Gen Z customer for Nike will be instrumental in Nike’s future. Unfortunately, we cannot predict future sales and figures due to the newness of this technology and this idea never being actualized with any company. *See Appendix Item VI: Costing Correspondence

F I N A N C I A L PL A N

Cost of Deliverables:

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Photography by Mallory Prevatt

THE PRINT ADVERTISEMENTS.

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THE APP.

C RE AT IV E D EL IVE RABL ES

THE LOGO.

30

THE FASHION FILM.

THE APPLICATION ADVERTISEMENT.

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THE HYBRID CATALOGUE.

C RE AT IV E D EL IVE RABL ES

FALL 2016 BACK-TO-SCHOOL EDITION

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CONCLUSION. This initiative was designed to bring back the unpopular medium of the catalogue, specifically for Nike Generation Z customers. We wish to accomplish this through augmented reality technology and compelling marketing. We strive to initiate brand loyalty with this up-and-coming generation by creating advertisements and imagery combined with an interactive shoppable interface using mobile devices. Augmented reality technology is easily understood by Gen Z and therefore is the perfect technology to introduce to them through Nike. Unfortunately, due to the novelty of this technology, the sales and figures cannot be forecasted. No other company has actualized this technology to make it functional in a catalogue, therefore Nike will be an innovator. Ideally, we would use all the deliverables made for the initiative not only used for the print catalog but for potential commercials and social media advertisements.

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C O N C L U S IO N Photography by Mallory Prevatt

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“BRING INSPIRATION ANDINNOVATION TO EVERYATHLETE* IN THE WORLD.” About Nike. Web. 28 Apr. 2015. <http:// about.nike.com/>.

“Can Nike Block Under Armour™s Marketing Shot?” CMO Today RSS. Wall Street Journal, 1 Sept. 2014. Web. 22 May 2015. <http://blogs.wsj.com/cmo/2014/09/02/nike-under-armour-ad-spending-kevin-durant/>.

DesJardens, Jeff. “Generation Z: Marketing’s Next Big Audience.” Visual Capitalist. 18 Aug. 2014. Web. 23 May 2015. <http://www.visualcapitalist.com/generation-z-marketingsnext-big-audience/>.

DeNavas-Walt, Carmen. “Income and Poverty in the United States: 2013.” 1 Sept. 2014. Web. 23 May 2015. <https://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf>.

“EmotionsAR Bring Your Images Alive!” EmotionsAR. Web. 22 May 2015. <http://www.emotions-ar.com/>.

“Family Households by Number of Own Children Under 18 Years of Age.” Web. 23 May 2015. <http://www.census.gov/compendia/statab/2012/tables/12s0064.pdf>.

“Footwear Manufacturing.” 4.3.4. NIKE. Web. 22 May 2015.

“FY 12/13 Sustainable Business Performance Report.” NIKE. Web. 22 May 2015. <http://www.nikeresponsibility.com/report/ uploads/files/FY12-13_NIKE_Inc_CR_Report.pdf>.

“Generation Z: A Look at the Technology and Media Habits of Today’s Teens.” Wikia. Wikia, Inc. Web. 3 May 2015. <http:// www.wikia.com/Generation_Z:_A_Look_at_the_Technology_and_Media_Habits_of_Today’s_Teens>.

“How Do I Request a Skinned App and How Long Does the Process Take?” Aurasma Community Network. Web. 23 May 2015.

Lutz, Ashley. “Nike Is Going after 3 Kinds of Customers.” Business Insider. Business Insider, Inc, 7 Apr. 2015. Web. 23 May 2015. <http://www.businessinsider.com/nike-is-going-after-3-kinds-of-customers-2015-4>.

Martin, Emmie. “5 Things You Need To Know About Working With Generation Z.” Business Insider. Business Insider, Inc, 3 Sept. 2014. Web. 24 May 2015 “Nike Advertising & Marketing Profile.” Nike Advertising & Marketing Profile. 13 Oct. 2013.

Web. 3 May 2015. <http://www.adbrands.net/us/nike_us.htm>.

NIKE Lab. NIKE. Web. 22 May 2015. <http://www.nike.com/us/en_us/c/nikelab>.

“NIKE, Inc. Reports Fiscal 2014 Fourth Quarter and Full Year Results.” NIKE, Inc. Web. 22 May 2015. <http://news.nike.com/ news/nike-inc-reports-fiscal-2014-fourth-quarter-and-full-year-results-fiscal-2014-fourth-quarter-and-full-year-results> NIKE Training Club App. NIKE. Web. 22 May 2015. <http://www.nike.com/us/en_us/c/womens-training/apps/nike-trainingclub>.

“Nike’s Suppliers Performance.” Nike, Inc.’s (NKE) Suppliers by Company, Division and Industry. 2015. Web. 23 May 2015. <http://csimarket.com/stocks/suppliers_glance.php?code=NKE>.

O’Reilly, Lara. “11 Things Hardly Anyone Knows About Nike.” Business Insider. Business Insider, Inc, 4 Nov. 2014. Web. 22 May 2015.

Ostroy, Andy. “Why E-Commerce Companies Are Creating Catalogs.” The Huffington Post. TheHuffingtonPost.com, 2013.

Web. 23 May 2015. <http://www.huffingtonpost.com/andy-ostroy/why-ecommerce-companies-a_b_3983952.html>.

Peterson, Hayley. “Here’s How Teens Really Spend Money, What They Like, And Where TheyShop.” Business Insider. Business Insider, Inc., 7 Oct. 2014. Web. 3 May 2015. <http://www.businessinsider.com/how-teens-are-spending-money-2014-2014-10>.

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REFERENCES. Peterson, Hayley. “Millennials Are Old News - Here’s Everything You Should Know About Generation Z.” Business Insider.

Business Insider, Inc, 25 June 2014. Web. 23 May 2015. <http://www.businessinsider.com/generation-z-spendinghabits-2014-6>.

Market Realist, Inc. Web. 3 May 2015. <http://marketrealist.com/2014/12/nike-stands-brand-stakes/>.

Quick Facts.” NIKE, Inc. NIKE. Web. 22 May 2015.

“Recommended List of Augmented Reality Companies.” Augmented Reality Trends. Web. 23 May 2015.

“Sporting Goods Industry.” Statista. Web. 22 May 2015.<http://www.statista.com/topics/961/sporting-goods/>.

Shaughnessy, Brandan. “Looking to the Future and Marketing to Gen Z | Millennial Marketing.” Millennial Marketing. Millennial Marketing. Web. 22 May 2015.

Soni, Phalguni. “NIKE’s Distribution Channels: How Products Reach Customers.” Yahoo Finance. 14 Dec. 2014. Web. 3 May 2015. <http://finance.yahoo.com/news/nike-distribution-channels-products-reach-170108274.html>.

Soni, Phalguni. “Traditionally Innovative: A Must-know Investor’s Guide to NIKE.” Where NIKE Stands In The Brand Stakes.

Taube, Aaron. “25 Nike Ads That Shaped The Brand’s History.” Business Insider. Business Insider, Inc, 1 Sept. 2013. Web. 3 May 2015. <http://www.businessinsider.com/25-nikeads-that-shaped-the-brands-history-2013-8#the-very-first-just-do-it-ad-1988-1>.

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Van Doorn, Philip. “Can Any Company Possibly Beat Nike?” MarketWatch. MarketWatch, 2014. Web. 23 May 2015. <http:// www.marketwatch.com/story/can-any-company-possibly-beat-nike-2014-09-30>.

WO RK S C I T E D

“Why the Print Catalog Is Back in Style.” Harvard Business Review. Harvard Business Publishing, 25 Feb. 2015. Web. 22 May 2015.

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APPENDIX I: S WO T AN ALYSIS. STRENGTHS.

- Customer loyalty is extremely strong with our customers.

- We are one of the most innovative brands in athletics. For example, the very popular FLYKNIT is both aesthetically unique and sustainable in its production.

- Strong cash flow stems from modest dividend payouts and an aggressive buyback program.

- Customizable “Make to Stock” customer order provides fast stock and enhanced user experience.

- Globally recognized Swoosh logo.

- We have the supply chain capabilities to produce high quality product and the lowest price, since our strength is in research and development (“Quick Facts”).

- Sell worldwide in over 180 countries.

- Nike is considered the world’s #1 shoemaker.

WEAKNESSES.

- Five of our largest manufacturing partners represent approximately 60% of Nike footwear manufacturing. These enormous manufacturers hold tremendous power in terms of quality and bargaining power (“Footwear Manufacturing”).

- High volume of sales through traditional retailers may hinder a user experience that is not 100% Nike curated, as we are sold in thousands of third party retailers worldwide.

- We spend high amounts of money on advertising costs, roughly 11% of sales which can be divided into other categories.

OPPORTUNITIES. -

Directly targeting marketing to Generation Z, versus Millenials and Generation X primarily.

Reinstate catalogues or more direct to consumer commerce.

Creating designer collaborations to appeal to a more fashion-forward crowd.

Opportunity to extend brand categories into related items such as expanding jewelry.

THREATS.

- High competition from edgier and up-and-coming athletic competitors.

- The issue of price sensitivity does affect consumers though, as they look towards online commerce for cheaper deals.

- Our global business model leaves us vulnerable to volatility in currencies that fluctuate the difference in margins for our cost of goods and margins.

APPENDIX II: BUSINESS ISSUES AND OBJECTVES With every business there are challenges, and Nike is no exception. Nike is the number one sports brand in the world, outdoing Adidas, ESPN, and other popular brands (Market Realist). However, Nike has plans, as previously stated, to improve and grow their NIKETOWN locations internationally and in the U.S. As stated previously, equipment is Nike’s smallest area of interest, and could potentially be an area of growth. Nike has a great opportunity to expand their sales in Asia, more specifically Japan and Greater China. Currently, China made up about 8.5% of Nike’s revenues, and although China has the highest return on sales among other countries, Nike is working on repositioning itself in the Chinese market by creating product categories specific to China and their wants (Soni).

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APPENDIX III: PORTER’S FIVE FORCES ANALYSIS. BARGAINING POWER OF CUSTOMERS: LOW/MEDIUM

- Buyers are civilian consumers as well as wholesalers.

- Wholesale channels account for approximately 80% of sales.

- DTC channels account for approximately 20% of sales.

- Direct to consumer sales rose by 23%, and the wholesale channel sales rose 6% in 2013.

- DTC bargaining power is low, however customers have the options to buy from other competitors like Adidas and Puma.

- Wholesalers have more bargaining power than DTC channels, since they have the capabilities to provide their own private label (Lutz).

BARGAINING POWER OF SUPPLIERS: LOW

- Nike does not own their factories, so they rely on international manufacturing facilities for production.

- Supply chain transparency on its site reveals over 719 contracted factories in 44 countries that span almost 1 million workers worldwide. In this way, NIKE diversifies suppliers, and no one supplier controls more than 7% of total Nike production.

- International suppliers generally share inflationary fluctuations related to raw material cost, so that variance in price will not be significantly different per country (“Nike’s Suppliers Performance”).

Threat of Substitute Products: LOW - While there are many similar brands to NIKE, the demand for athletic gear is expected to grow and these products cannot be entirely substituted.

- Counterfeit products are however an issue, since the quality of counterfeits has increased greatly.

- In the athletic apparel industry, there are always threats of new entrants, however, few new companies would be able to compete with the volume NIKE produces. NIKE has close to $29 billion dollars in revenues, for example, about double that of one of their strongest competitors Adidas.

- NIKE’s customer base is also fiercely loyal. NIKE’s branding has created an acceptance of charging premium prices over its competitors to its teen base.

- NIKE also has a much wider scope of products to offer than many competitors including shoes, clothing and gear catered for men, women and children.

- Their customization and innovation features are also paramount to their USP (Van Doorn).

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THREAT OF NEW ENTRANTS: LOW/MEDIUM

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APPENDIX III: PORTER’S FIVE FORCES ANALYSIS (CONTINUED).

INTENSITY OF COMPETITIVE RIVALRY: MEDIUM/HIGH

- Global athletic apparel and footwear companies such as Puma, Adidas, V.F. Corporation, and Asics are creating intense competition with Nike.

- NIKE’s reputation of excellence and brand identity is difficult to compete with, though, because of its worldwide appeal and decades of celebrity endorsement.

- NIKE’s innovations in materials technology is also quite ground-breaking, and appeals to the innovation factor of Generation Z. These include the zero-waste shoe Flyknit that is extremely popular, as well as their Restricted Substance List which details chemical compounds that cannot be present in any finished NIKE, Inc. product. They also employ a best practice called “green chemistry” which encourages design that minimizes reductions in waste. Their NikeColorDry technology revolutionarily utilizes new technology to not use water during the dyeing process. And internationally, NIKE supports the Girl Declaration, which empowers women throughout the world to pursue education and social improvement.

- Under Armour is becoming one of NIKE’s greatest competitors. While their stock is dwarfed by NIKE’s, Under Armour boasts over 17 consecutive quarters of 20%+ revenue growth. They are also appealing to the teen generation through branding and marketing from people like young golfer Jordan Spieth.

- PINK’s catalog has become very popular, and the stores are gaining more square footage in the Victoria’s Secret stores. Advertising initiatives such as the Victoria’s Secret Fashion Show hike sales from DTC and Catalog. Victoria’s Secret Direct is responsible for $1.3 billion in sales, and mail approximately 400 million catalogs worldwide every year.

- Free People mails Magalogs to their U.S. customers monthly. It is circulated at approximately 7.4 million catalogs nationwide.

- Adidas has many catalogs for different athletic needs, however their catalog system is a bit complicated. Their catalogs are published online and can be requested in mail, however, purchases do not go through Adidas directly, and instead, third party divisions such as Agron, Inc and SLD are the organizations that deal with the customer transactions. There is a disconnect in the channels operated by Adidas, since Adidas does not deal with the catalog transactions personally.

- H&M offers a mail order catalog that is complimentary. A customer signs up for the catalog on the H&M website. They launch exclusive merchandise on this channel, including the introduction of home furnishings to their 2013 catalog circulated in the US, UK, and Scandinavia. In the US, they circulate 20 different editions of catalogs annually.

- As a reference, J. Crew circulates 44.4 million catalogues annually. They are monthly and are shipped to J. Crew stores. If a customer is a J. Crew cardholder they receive the catalogs at home. 25% of their Internet users report to have referenced their catalog prior to making a purchase (Ostroy).

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APPENDIX IV: PRODUCT PRICING COMPARISON CHART.

NIKE Shorts: $15 - $55 Shoes: $22 - $220 Shirts & Tanks: $10 - $45 Sports Bras: $20 - $28 Pants: $20 - $45 Skirts & Dresses: $20 - $70 Hoodies & Sweatshirts: $25 - $90 Jackets & Vests: $25 - $120 Swimwear: $36 - $46 UNDER ARMOUR Shirts & Tops: $20 - $60 Bottoms: $20 - $45 Outerwear: $34 - $113 Sports Bras: $23 - $25 Shoes: $27 - $80 Accessories: $10 - $150 AERIE Bras: $10 - $50 Undies: $8 - $13 Swim: $20 - $50 Tops: $16 - $50 Bottoms: $16 - $35 Dresses & Rompers: $25 - $45 Sleepwear: $16 - $40 Accessories: $6 - $40 Fragrance: $6 - $40

PINK Bras: $23 - $42 Panties: $11 Swim: $20 - $50 Tops: $19 - $80 Bottoms: $19.50 - $65 Accessories: $8 - $148 Beauty: $4 - $52

FOREVER 21 Dresses: $8 - $25 Tops: $2 - $25 Outerwear: $18 - $38 Sweaters & Knits: $8 - $23 Rompers & Jumpsuits: $12 - $28 Denim: $8 - $20 Leggings & Pants: $4 - $20 Skirts & Shorts: $7 - $16 Accessories: $2 - $15 Shoes: $10 PUMA Shoes: $15 - $100 Clothing: $16 - $48 Accessories: $9 - $25

H&M Tops: $5 - $20 Outerwear: $30 - $60 Bottoms: $7 - $25 Jeans: $10 - $30 Shorts: $6 - $30 Shoes: $10 - $30 Accessories: $3 - $18 Sportswear: $6 - $25 Swimwear: $13 - $18 ADIDAS Shoes: $18 - $140 Tops: $16 - $65 Pants: $25 - $40 Outerwear: $35 - $60 Bras: $25 Shorts: $15 - $38 REEBOK Shoes: $40 - $90

FREE PEOPLE: MOVEMENT Sports Bras: $28 - $75 Tops: $20 - $98 Bottoms: $38 - $118 Surf & Swim: $58 - $420 Footwear: $58 - $178

In 2014, sales volume by product category is thus follows: footwear, apparel innovations, and equipment. “Nike is consistently the number one brand for athletic footwear in the U.S”, says Market Realist according to Nike revenues. It leads by a large margin, with competitors far behind in revenue when compared to Nike. Revenues for footwear in 2014 came in at $16.2 billion, which makes up 58.3% of total revenue for Nike. This is partly due to the increase in selling price of Nike footwear. The trend of athletic footwear being a high commodity in fashion terms created this growth in selling price (Soni).

Apparel innovations being second largest percentage of sales for Nike, amounts to 29.2% of all revenues. Nike is number 1 in running apparel, running apparel being their largest focus within the company. They have products such as Dri-FIT and NIKE Tech Windrunner jackets that pioneer innovation for runners. Finally, equipment, meaning the necessary items needed to be active or play sports, remains last at 6% of Nike’s sales.

Nike has had successful past collaborations with designers such as Sacai, Undercover, and most recently Liberty. These collections feature innovative textiles whether this be for apparel or footwear. Each collection is highly unique and contemporary. For example, Nike X Undercover is a sleek modern collection focused on a symbiosis of Parisian runway and the passion of running.

Nike Lab is their incubator that facilitates all of the research and development with textiles (Nike Lab).

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APPENDIX V: DISTRIBUTION CHANNELS & SALES VOLUME DISTRIBUTION (CONTINUED).

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APPENDIX VI: COSTING CORRESPONDENCE

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APPENDIX VII: AURASMA TECHNOLOGY

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APPENDIX VII: AURASMA TECHNOLOGY

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APPENDIX VIII: AURASMA TECHNOLOGY

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APPENDIX IX: MARKET OVERVIEW There are over 850 Nike retail stores worldwide, 322 of which are in the United States. Sporting goods store sales in the U.S. totaled to 44.36 billion U.S. dollars in 2014 while the U.S. e-commerce sales of sporting goods totaled to 7,844 million U.S. dollars in that same year (Statista). In 2014, the athletic apparel wholesale sales in the U.S. totaled to 32.78 billion U.S. dollars. The average retail price of athletic shoes in the U.S. is $66.85. The total consumer purchases of athletic footwear in the U.S. totaled to 21.17 billion U.S. dollars in 2014. The revenue of Nike’s footwear segment alone in 2014 totaled to 14.54 billion U.S. dollars. The consumer purchases of sports clothing in the U.S. market totaled to 14.1 billion U.S. dollars in 2014 (Statista).

Companies Employing Aurasma: Universal Pictures is one of Aurasma’s 80,000 customers. In celebration of their 100th anniversary, Universal Pictures created a unique range of 15 blu-rays and DVDs with augmented reality sleeves, allowing the magic of iconic movies to come alive in 3D. In the first two weeks on shelves, 100,000 units were sold generating more than 66,000 augmented reality interactions (Aurasma).

You could access these interactions via the Universal 100 app or by following ‘Universal 100’ in the main Aurasma app.

Lexus is another one of Aurasma’s customers. To promote their digital “Always On” marketing campaign, luxury automaker Lexus launched a new print ad in 3D, powered by Aurasma. The ad is found in the 2014 Sports Illustrated Swimsuit Edition and springs to life when it is scanned using the Aurasma app.

In the U.S., GQ Magazine used Aurasma to transform their September 2012 issue into the world’s first fully augmented reality magazine. The covers, every ad, and select editorial content could all be brought to life with the GQ Live! app, powered by Aurasma. The magazine featured 270 Auras that were spread across more than 160 pages and represented a monumental achievement in the field of publishing and augmented reality (Aurasma). Since the initial launch of GQ Live!, GQ has continued to integrate augmented reality into its printed issues. When the September 2012 issue was launched, 25 million end users from 128 countries downloaded the Aurasma app to enhance their print experience (Aurasma).

To promote their partnership with the band One Direction, Nabisco embedded Aurasma’s SDK into the 1D VIP app. Over 20 million packages of Oreo, Ritz Bitz, Cheese Nips, Honey Maid, and Chips Ahoy featured the band on their packaging along with a call-to-action driving to a fan sweepstakes and a special augmented reality experience (Aurasma). Upon downloading 1D VIP, users may select the app’s central Aurasma-powered “scan” feature and then point their viewfinder at the special edition snack packaging to unlock exclusive 3D video content sharing One Direction.

AMC Theatres has used augmented reality throughout their theatres by embedding the Aurasma platform in the official AMC Theatres mobile app. AMC is giving its audience a new way to unlock digital content from the physical venue. Moviegoers simply download the app, select its augmented reality feature, and point it a select movie posters to see the newest trailers and buy tickets.

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Visitors at Walt Disney World during Star Wars Weekends were offered a special augmented reality experience at the park. By downloading the Aurasma app and using it to scan signage and merchandise, guests unlocked exclusive Star Wars videos and movie character. Following the success of Aurasma for Star Wars Weekends, more interactive augmented reality experiences were integrated into Frozen Summer Fun at the park.

. M A L LO RY P RE VA T T . YASAMIN RAHMANPARAS T . . JA C QU E L I N E MILLE R . JE NN C AMP B E LL .

FASM 415: N ON TRADITION AL RETAILIN G PROFESSOR MEETA ROY SAVANN AH COLLEGE OF AR T & DESIGN