Nike Marketing Research by Kathleen McEntire

12/4/2012 Kathleen McEntire Anja Harris KaDee Ellis Quincy Mugg Corey Wallace

Table of Contents

Executive Summary………………………………………………………………………………………. 3 Situational Analysis Summary …………………………………………………………………….. 4-8 Primary Research Information ……………………………………………………………………..8-11 Characteristics of the final Sample ……………………………………………………………….12-18 Summary of research Findings ……………………………………………………………...……. 18-19 Recommendations ……………………………………………………………………………..…………19 Works Cited ……………………………………………………………………………………………….. 20-22

Nike is at the cutting edge of what it takes to keep consumers talking about a brand- and they are most certainly at the top of the food chain in the world of athletic 2

apparel and equipment. Their branding is a combination of a strong logo and the tagline- “Just Do It”, in combination with having their finger on the pulse of new technological advancements. The first incarnation of Nike began in 1964, under the name Blue Ribbon Sports. In 1971, Nike incorporated, and began with the mission statement “To bring inspiration and innovation to every athlete in the world.” Their mission was to help athletes get moving, but also to be a brand for those who did not consider themselves athletes. Originally, Nike specialized in athletic shoes, (Where the bulk of their revenue still comes from) but has since expanded their product line to include apparel, sports equipment, and other accessories in over 170 countries. Nike personifies itself as a “hip” brand, as they are always innovating, however they are missing out on a potential opportunity to further increase their market share and expand their product breadth: The Business Casual Shoe. Our objective for this market research is to determine whether a line of business casual shoes for men would be a beneficial addition to Nike’s assortment of goods based on their marketing strategies and current audience. Demographics of Nike’s customers indicate that many of them are young professionals, and given that information, a more stylish, professional shoe seems like the obvious next step.

Situation Analysis Summary Product life cycle 3

• Nike is currently in the growth cycle of their brand’s total life cycle. They have evolved to become global, and as such, they have high brand power and an internationally recognized logo. • The primary aspect in which the company is currently growing is their research and development. Competitors • According to Nike, their key competitors are Puma, Adidas, New Balance and Sketchers. • In terms of revenue, Nike is number one in the market of athletic shoes compared to their key competitors. • Adidas is currently Nike’s biggest competitor, but revenue generated by both Puma and Sketchers are not currently substantial enough to pose any threat. Sales by key distribution

•These our distribution is

numbers reveal that inferior in eastern 4

countries, and therefore we have to develop plans to increase the product flow within the distribution chain. Brand Positioning •Nike associates with high-level athletes, providing them with innovative and high performance athletic equipment. They are number one in performance, and number one in the sporting equipment industry. Nike’s sales overtake some of the other major brands available to consumers such as Reebok, Adidas, UnderArmor, and Puma. •The distribution channel of the company comprises 346 retail outlets across the US. Of these, 145 are Nike factory stores which carry primarily overstock and closeout merchandise, 12 Nike stores which also house Nike Women stores, 11 are Nike Towns which are designed to shelve Nike branded products and three stores are Nike employee-only stores. • Nike company operates 106 Cole Haan stores, 51 Converse factory stores, and 18 Hurley stores in the US Distribution channels •Nike’s current brand marketing strategy is to sell their products to retail stores, and through independent licensed stores. They also sell their products on their website. In addition to brick and mortar stores, the company also offers its products across various countries through three websites: Nike.com, nikestore.com and nikewomen.com.

Share of Market & Rank 5

â&#x20AC;˘ The introduction of new technology and design has increased their sales, and market share as a whole. Nike also caters to specific needs in the athletic footwear markets such as football cleats and soccer shoes, widening their product breadth and increasing their market share. â&#x20AC;˘Growth history:

Five Year Annual Growth Rate 6

Demographics • The demographic of Nike products are males between the age of 25-34 years old. • Some have graduated college, but the majority have not. Their occupations range from professional to sales and office jobs. Their average household income is between $75,000-$149,999, and they are located in the southern region of the United States. They are married with children and own their home that values between $200,000-$499,999. Market strategy • The current marketing strategy for Nike has switched from print and television to online. • Nike does not see the benefit of expensive television advertising when social media is so relevant to their target customer. Since the launch of Nike+ and Nike Fuel Band consumers have been able to interact with Nike fitness products digitally. Creative strategy • Nike’s current creative strategy is to introduce interactive digital elements so the company can communicate directly with its’ customers. Nike+, Nike Fuel Band (performance tracking wristband) enables immediate interaction with consumers. Allocation of advertising dollars • In 2000, advertising was split off from Wieden + Kennedy to add other agencies that specialize in new technology, thereby increasing their social and digital media efforts. Over the past three years Nike’s print and television advertising spending has dropped 40%.

Target audience • Nike’s target audience is 20-40 year olds who utilize their products as multipurpose- for fitness and fashion. The twenty year old in particular is a very active in online communities and engages in digital media daily- so Nike’s strategy of a strong online presence is helpful. Psychographic profiles • The Nike consumer is concerned with health, fitness and their overall wellbeing. Many of them are working toward some fitness related toal. Their free time is spent on internet communities such as; fitness forums, Facebook and online magazines, rather than watching television. Focus group summary Overall opinions of the Nike Brand; value, durability, brand hype, athletic and pricey. Participants also viewed their apparel as high performance which equals a better experience, quality clothes and it is the top of the line sports apparel. Age is very relevant to shoe style. The focus group had no one over the age of 23, but the participants had opinions of what an older market would like but no actual data. It will be important to define a gap between Nike athletic and Nike business casual shoes. Our participants preferred a traditional style shoe and colors (black, brown and tan) with a small updated characteristic. They are looking for timeless style. The price cannot exceed $130 for a pair. The group buys there Nike products at; outlet stores, Macy’s, DSW and Sports Authority. 8

If Nike did come out with a business casual shoe it needs to be something that can be worn, Monday through Friday, semi-casual and needs to be different from the other current business casual shoe brands currently in business. It is unappealing to have the Nike Swoosh logo visible on the outside of the shoe. These were three visuals we used to guide the group:

Shoe #1: The group laughed out loud at this shoe. After the initial negative response participants explained they loved the shoe style just not the color. They liked the clean look of slip on. This opinion was unanimous. Shoe #2: The group favored positively to this shoe. They liked the breathable leather and the style. They thought it was clean cut and sophisticated but still current with the pop of color on the sole. This group believed an entry level professional would wear these shoes. Shoe #3: As a whole the group thought that this style was better off for an older age group. They thought it was boring, conservative, plain but they did like the color. This shoe did not stand out to them and they would want a shoe with some flare.

Primary Research Information Research Methodology As a team, we distributed self-administered surveys, consisting of 16 questions. Due to the nature of our research and our objectives only males were able to complete our survey. Females were filtered out after the first question about gender. Because of they are quick and low cost, self-administered surveys were the most practical, and gave our participants an opportunity to take the survey in the comfort of their own home or at their discretion within the time frame. The disadvantages of self-administered surveys are that the surveyor cannot probe the participant for answers or insights. The participant may also have a question about the survey and has no one to ask, leading to a possible error.

Data Collection and Sampling Methods The survey was available through surveymonkey.com. As a whole, the group posted mass and individual messages with our survey link, https://www.surveymonkey.com/s/2012Nikesurvey through Facebook, emails and twitter to friends and family. We urged participation by sending out an awareness email to inform our friends that a link to our survey will be coming and that it is not spam, but instead is market research for a current class and that their participation is greatly appreciated. The most beneficial sampling method was non-probability sampling. This conducted of both convenient and judgment based sampling. Sending the survey out 10

to friends and family on Facebook, email and Twitter was convenient. As well as, distributing surveys in the lobby of a group members building at 1430 N. Dearborn Parkway, Chicago, IL 60610. Our group used judgment based sampling when sending out individual messages and emails to males only. Surveys were also only handed out to males only in the building lobby. Our group had to make a judgment based on what gender someone was. Research Objectives 1. Measure the percent of males ages 18-30 would purchase a business casual shoe.. 2. Measure the percent of males ages 18-30 who needs a business casual shoe. 3. Measure the preference of materials that customers like to see in a business casual shoe. a. Leather b. Faux Leather c. Suede d. Treated canvas e. Recycled Material. 4. Determine the age bracket of males who are more likely to purchase a Nike business casual shoe. a. Under 18 b. 19-20 c. 20-25 d. 25-30 e. Over 30 5. Measure the age bracket who is more willing to purchase a Nike business casual shoe between the price ranges of $75-125 a. Under 18 b. 19-20 c. 20-25 d. 25-30 e. Over 30 6. Measure the age bracket that is more willing to purchase a Nike Business casual shoe between the price ranges of $125-200? a. Under 18 b. 19-20 11

c. 20-25 d. 25-30 e. Over 30 7. Measure the age bracket who is more willing to purchase a Nike Business causal shoe between the price ranges of $200-275? a. Under 18 b. 19-20 c. 20-25 d. 25-30 e. Over 30 8. Measure the percent of males who currently purchase a business casual shoe that prefer a rounded or square silhouette/details? 9. Measure the percent of current Nike customers between the ages of 18-30 who purchase Nike products for the style rather than the comfort. 10. Measure the percent of males who purchase a Nike business casual shoe that would prefer the swoosh logo visible when worn.

Characteristics of the Final Sample During the course of our research we targeted Males. More than half of our participants were between the ages of 17-21. We decided that we would cross tab our conclusions to focus on that age group. The majorities of males between ages 1721 are in college and have an annual income of less than $10,000 before taxes. In total, 45% had an overall opinion of Nike that was “good.” Out of the total 66 responses, 47 male participants currently own business shoes. In which, just over 1/3rd were “somewhat satisfied” with their last business casual shoe.

Our studies also confirmed that as a whole, the majority of our male participants wore business casual shoes once a week, however those between the ages 17-21 wore a business casual shoe only once a month.

When asked where these individuals wore their business casual shoes, responses were split evenly between job interviews, restaurants/bars, special occasions, and everywhere. More than half of our participants purchased their last business causal shoe less than a year ago and paid a range from $50-$99 dollars for that shoe. However, if Nike released a business casual shoe 3/4th of our participates would expect to pay anywhere from $75-$124 dollars.

Almost 2/3rds of Males ages 17-21 believe that the most important trait in a business casual shoe is Style. The next leading trait is comfort, with about 1/3rd response from the ages of 17 - 21.

Overall our participants want a rounded toe box silhouette and for the shoe to be leather. In specifics just less than half of males ages 17 to 21 would prefer a rounded toe box. 15

In total, 40 percent of males believed that the Nike swoosh symbol should not be visible to the eye. Survey Error Every survey has an amount of error, in our survey the most prominent errors were; random sampling error, non-response error, administrative error, sponsorship bias, prestige bias, interviewer bias and threat bias. Random sampling error occurs in all surveys unless a census is conducted. This is rarely done and could not have been accomplished with our time or lack of budget. Non-response error was easily detected in the paper copy surveys. There were a couple surveys that had missed questions or got confused on the skip questions and continued with a later question than what was directed. Non-response error was also present when females took our 16

survey even though the directions say, “males only.” Females were filtered out after the first question, but this is a case where our respondents vary from nonrespondents. It is also possible that the brand Nike was used in the second question and could sway anyone who is in favor or strong disfavor to complete the survey out of personal opinions. It was challenging as the administrative team to analyze the paper copy surveys. Some marks were made in between choices making it difficult to read what the participant really meant. There were questions asked about education and age in which people may over estimate to seem more prestigious then in reality. When the paper copies were handed out, the surveyor was present and asked a couple of questions. Even just being present can cause interviewer bias. For future surveys, we need to increase the participation numbers to meet or exceed our quota. This could have been accomplished by more personalized messages and more encouragement to take the survey. If we have the ability to give an incentive for completed survey, this should increase the level of participation. Increasing the time frame in which the surveys can be conducted will always be beneficial if possible. In the future we could station ourselves in different areas for a better representation of the male consumer. In addition to this, we failed to ask one of the questions relative to our initial research objectives. When we started our research we wanted to ﬁnd the percent of males between the ages of 18-30 that would buy a business casual shoe from Nike, however we did not ask a question that helped answer this question.

Research Findings As a group, we set out to research the possibility of introducing an additional product line of business casual footwear under the NIke brand name. From the results of our research data, we were able to find that ultimately, Nike could definitely successfully introduce a new product line. We were able to see that 71.2% of our sample owned a business casual shoe, however 31.4% of our sample said they were either dissatisfied or indifferent in some way with their last business casual footwear purchase.

These numbers express an opportunity to introduce a business casual shoe that men can be satisﬁed with. Just under 65% of our total participants within our sample claimed that they wear their business casual shoe everyday or once a week. In knowing this, we can see that there’s is a deﬁnite need for this product among males within our sample. About 82% of our sample chose style and comfort over color and price. In order to successfully integrate a product such as this one, it must be stylish and comfortable to wear. In addition, 74.2 % of male participants said they would not like to see the Nikelogo visible outside of the shoe. Leather was the most popular of the choice materials for this business casual shoe.

Most male consumers would only be interested in paying $75-$124 for a businesscasual shoe from Nike. If they were to successfully introduce a product like this one, price would play a large role in its success, so as not to alienate our intended audience.

Recommendations It would be beneficial for Nike to expand their product line to include a business casual shoe. Males ages 17-21 would be willing to pay $75-$124 for a comfortable leather rounded toe box shoe. The shoe should not feature the iconic Nike logo on any part that is visible. Based on our research, the best way to promote this new line would be through an online campaign, where it is most visible to Nikeâ&#x20AC;&#x2122;s target audience.

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