YOUNG ATHLETES’ Z ONE
@NIKETOWN NYC
TABLE OF CONTENTS Executive Summary
1
Nike Company Overview
2 - 22
New Strategic Initiative
23- 34
Visualizations
35 - 38
Market Overview
39 - 42
Target Consumer
43 - 46
Communication and Promotion Plans
47 - 48
Conclusion
49 - 50
EXECUTIVE SUMMARY The Nike Young Athletes’ Zone is a new initiative under the Nike brand that focuses on new marketing potentials. Nike is global and powerful in promoting their cutting edge footwear designs and top professional athletes. However, Nike is experiencing a generation gap within their marketing sector. Products for Nike Young Athletes are accessible, but lack a sense of empowerment for this age group. Direct competitors have already marketed toward today’s younger generation in hopes to win their brand loyalty. Nike needs this recognition, as well as advancement in their digital efforts.
NIKE’S MISSION
BRING INSPIRATION AND INNOVATION TO EVERY ATHLETE* IN THE WORLD
The Nike Young Athletes’ Zone teams up with Lumo, a company offering innovative technology with a business model catering to kids. This collaboration will not only expand the market share for interactive in-store technology, but also create a path for Nike to follow and attract the attention of today’s youth.
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*IF YOU HAVE A BODY, YOU’RE AN ATHLETE
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NIKE, INC. HISTORY
1964
-Phillip Knight and his former University of Oregon track and field coach, Bill Bowerman founded Blue Ribbon Sports (Today I Found Out)
1985 -Nike signed Michael Jordan to endorse the brand and the Air shoe (Soni)
-Blue Ribbon Sports launched in response to Knight finding Japan parent company of Tiger running shoes, Onitsuka, that wanted to sell sneakers to American runners (Today I Found Out)
1969-1981
-A $10 million television campaign displaying “Just Do It” launched (Soni)
-This partnership fizzled out when Blue Ribbon Sports launched a footwear line called “Nike” (Today I Found Out)
mid-late 1990s
-Nike, Inc. was incorporated in Beaverton, Oregon (Today I Found Out)
-Nike signs Tiger Woods for a $40 million endorsement deal in 1995 (Soni)
-The name emulates the Greek Goddess of Victory, which often has imagery of wings attached to its name
-Expanded products to sports equipment in 1996
-The Nike “swoosh” logo was designed by a graphics design student for $35 and was first used (Soni)
-In the late 1990s, Nike is charged with abusing workers overseas with poor working conditions and low wages
-Nike went public with offers of two million shares of stock
2003-present
-Nike establishes a distribution center on the east coast and establishes factories in China (Reference USA)
1982 -In 1982, Nike had more than 200 product lines of footwear for basketball and racquet sports and 200 different types of apparel (Reference USA) 3
1988
-Nike makes a comeback by buying Hurley International and Converse in 2003 (Soni) -In 2013, Nike filed as many as 540 patents -The company has grown globally to achieve revenues as high as $27.8 billion (FY2014)
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CURRENT OWNERSHIP STRUCTURE
CURRENT REVENUE FY 2014
Nike, Inc. is a public parent company traded on the New York Stock Exchange. Its incorporation date is September 8, 1969 (Reference USA). Their quote symbol is NKE. Nike, Inc. has a Jordan brand division and subsidiaries that include NIKE, Hurley International LLC. and Converse, Inc.
Nike Brand:
$26,112,000
Men’s:
$14,001,000
Women’s:
$4,971,000
Young Athlete’s:
$3,737,000
Others:
$1,081,000
(Annual Report)
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S
W
O
T
Strengths
-Nike is the world’s largest seller of athletic footwear and apparel (Soni) -Strong presence in adult and children’s markets -Established in-store technological capabilities -Diverse portfolio of brands, products, and customers (Reference USA)
Opportunities
-Optimize in-store interactive technology that differentiates company compared to competitors (Annual Report) -Expand kid-friendly spaces in retail stores -Invest in new business initiative geared toward younger generation
Threats Weaknesses
-There is a generation gap that focuses on adult consumer and lacks a future direction for children’s market -Nike stores mostly promote the adult professional athlete (Nike.com) -Nike’s key competitors have already differentiated themselves with a focus on promoting younger target market 7
-Top competitors, such as Under Armour has already established a focus toward the younger generation -Rapid changes and updates are occurring for in-store technology (Reference USA) -Retail competition is increasingly intense and brings risk of imitated -Intense competition in marketing makes it harder to gain market share and consumer demand 8
PERCEPTUAL MAP NARROW MARKETING
INNOVATIVE CONSERVATIVE
BROAD MARKETING The perceptual map scales how the Nike brand competes in regards to innovation and marketing. Nike is at the top in categories, such as footwear and global advertising compared to Adidas, Under Armour, Puma, Li Ning, Lululemon, and Reebok. The brands are placed on the map according to their successes or shortfalls in wearable technology, in-store technology, promotions on websites and social media platforms. All of the brands are competing to be the top innovative sportswear brand. 9
Nike has implemented a holographic outdoor advertising area in Amsterdam, as well as NikeiD Studio in their Chicago flagship store where customers customize products (Retail Customer Experience). Nike is the top innovative company next to Under Armour because of their Nike+ FuelBand and Nike Flyknit technologies. Under Armour’s Chicago Brand House has top instore technologies and interactive features, such as a 5-sided LED cube, a digital ceiling structure, an Otojump Interactive Experience and UA Record Kiosks at the “wearables bar” (Retail Design Blog). Puma is slow to add in-store technology, but does have iPads to help customers design shoes (Retail Customer Experience). Li-Ning, based out of China, is the least recognized of Nike’s competitors. The company mainly markets the Chinese market and shows in-store customer engagement with a reactive and motion-detecting wall (YouTube). Lululemon displays innovation primarily in their textiles, but also has implemented RFID technology for customers to easily access items (Retail Design Blog). Reebok is catching up to the top sportswear innovators with a shoe wall kiosk, allowing customers to build, purchase, and ship a Reebok shoe in stores (Retail Customer Experience). Similarly, Adidas has incorporated a virtual footwear wall where customers can pre-order new shoes in their London flagship store (Retail Customer Experience). The market share for wearable and in-store technology is congested. There lies a huge opportunity for conservative brands to broaden their marketing capabilities. However, for Nike and its competitors, innovation takes priority. Li-Ning, Lululemon and Puma are strategizing to become a global brand, but their marketing performances are not as broad as Reebok, Adidas, Nike, and Under Armour. Adidas, Reebok, Under Armour and Nike have similar marketing techniques, which focus on the serious and often professional athlete. Under Armour has recently set themselves a part from competitors because of their broadened marketing methods. The company makes it obvious to customers that they don’t just sell running gear for professionals. Under Armour promotes their golf, fishing, and hunting gear and fully marketing the young athlete. Nike is lacking a direction for their young athlete customer and should follow the footsteps that Under Armour has taken. Nike could be the first sportswear brand to implement technology geared toward the young athlete. 10
CURRENT PLACEMENT Nike, Inc.’s North America corporate offices called Nike World Headquarters are located in Beaverton, Oregon, New York City, Chicago, Los Angeles, Toronto, and Texas. The Nike Brand has 5 primary U.S. distribution centers in Memphis, Tennessee. Nike apparel and equipment are also shipped from a Foothill Ranch, CA distribution center. There are 16 distribution centers that operate outside of the U.S.
SALES VOLUME BY CHANNEL -Wholesale revenues are largest amount of Nike Brand revenues -Continuing direct-to-consumer business in each geography -Nike Brand direct-to-consumer operations consists of Nike-owned in-line and factory stores and online sales through Nike-owned sites.
(Annual Report)
Nike, Inc. has annual sales revenue of $18+ billion (Reference USA)
-FY14: Direct-to-consumer were 20% of total NIKE Brand revenues (18% in FY13) -Direct-to-consumer revenues grew 22% in FY14, comparing to 10% increase in FY13
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-Young Athletes’ business had 16% increase because of expansion in Basketball and Football (Soccer) offerings
Nike Brand in-line stores, including NIKETOWNs and employee-only stores -US: 33 -Non-US: 71 The Nike store at www.nikestore.com offers products to North America, Europe, Greater China, Japan and Emerging Market. 150 footwear factories that are located in 14 countries supply the brand’s footwear. 430 apparel factories that are in 41 countries supply Nike’s apparel products.
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Nike’s promotional activities represent their strong market oriented organization. Instead of focusing on the product first, Nike establishes their target market and strategizes to create a value for customers. The company adjusts to customers’ ever-changing tastes and fully satisfies their wants and needs. (UK Essays)
CURRENT PROMOMOTION ACTIVITIES
Nike conducts a high level of market research and has heavy investment in marketing. This allows the company to use celebrity athletes and professional teams as part of their promotional campaigns. Athletes representing Nike include soccer player Ronaldho, Ronaldinho, basketball player Michael Jordan, tennis player Maria Sharapova, and golf player Tiger Woods. Promotion costs go toward a variety of activities, such as television advertisements, sales promotion, and public relations. Nike spreads out their promotion activities by serving their product through different distribution channels. Their product is sold and advertised in retailers, such as Dick’s Sporting Goods and Belk. Retailers selling Nike may have a distinct way of promoting the brand, but do it in a way that is consistent with the company’s overall strategy. Nike has had worldwide success in promotional activities because of their efforts to break down geographical barriers. The company is known for catchy slogans, such as ‘write the future’ and ‘just do it,’ which are promoted on TV, magazines, and social media platforms. Nike not only creates campaigns that relate to people all over the world, but they also deliver it in a way that is extremely accessible. Nike is successful at identifying new customers in new geographical areas and making them feel a part of the brand in a genuine manner. 14
ANNUAL SPENDING EXPENDITURES
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-Capital Expenditures FY14: $880M (38.36% growth) (NKE Annual Cash Flow Statement)
-Spent $3.031 billion FY14 on “Demand Creation” aka marketing. Up 10% because of increase in sports marketing expense, marketing for World Cup and key product launches. (Forester)
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C URRENT ADVERTISING AND CRM ACTIVITIES Nike’s 2014 Annual Report refers to their advertising costs as “Demand Creation Expenses.” This consists of endorsement contracts, television, digital and print advertising, brand events, and retail brand presentation. Most of their expenses in this category come from their endorsement deals. The company believes advertising is a huge part of maintaining, promoting, and growing their brands. (NIKE WordPress) Nike has several CRM activities that optimize their brand experience through online and in-person channels. Their priorities lie in digital marketing to increase direct-to-consumer sales. In 2010, Nike brought in a business called Nike Digital Sport (NDS), which expands product lines of technologies and devices. Consumers use these products for personal fitness and health while Nike tracks consumer behavior data that is then collected and stored. NDS has enabled Nike to identify consumer needs and react to them through innovative technologies. Nike+ is a multifaceted app that is used to enhance customers’ relationships with Nike, as well as other athletes. It was built based as social networking service consumers can use to connect with people and communities. Nike+ is an iPhone and Android app, as well as an entirely separate channel found on their main homepage. The website promotes Nike+ Training Club where users choose from over 100 workouts from Nike Master Trainers. Nike+ users are a part of a lifestyle community that can connect to the NikeFuel band that measures performance and records progress. Users are able to communicate with Nike and discover athletic trends and insights.
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With over 200 million fans connecting with the brand every day, Nike optimizes their CRM activities with customer service policies and enhanced web site navigation. Nike has links, such as “Fast Answers,” “Search Our FAQ,” and “Contact Nike” that offer quick solutions, as well as an accessible online chat. On nike.com, customers can easily find products using the search function. Registering with Nike online allows customers to access exclusive releases and limited products, free returns on all nike.com orders, complimentary in-store shoe trials and pant hemming, and Nike+ services, benefits and promotions (Nike.com) When customers rate products online, Nike asks for the purpose of the visit, if the customer is satisfied, and if they have anything to share. Nike.com offers filter options to make the online shopping experience extremely efficient. For safety purposes, Nike.com has an SSL certificate, which provides a secure checkout with privacy settings for customers. Nike’s website services creates a positive brand experience, while ensuring brand loyalty and satisfaction.
SOCIAL MEDIA
Nike has become increasingly reliant on social media for brand image and promotional purposes. Their digital strategy to boost online sales operates alongside social media efforts to strengthen consumer awareness and brand development. Official Nike accounts are on Facebook, Twitter, Instagram, Pinterest, Vine, YouTube, Google+ and Nike+. Nike leads in number of followers when compared to top competitors, Adidas, Under Armour and Reebok. These companies attract customers with similar interests in textile and technology innovations, as well as athlete empowerment (Annual Report).
number of followers
22 M
3.4 M
14.8 M 85.27 K 275.7 K 3.701 M 20
SOCIAL MEDIA number of followers
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COMPARISONS
22 M
3.4 M
14.8 M
85.27 K
275.7 K
3.701 M
19.5 M
2M
4.1 M
16.7 K
29.8 K
2M
3.5 M
478 K
939 K
15 K
33.4 K
16.7 K
3.8 M
625 K
323K
4.2 K
23 K
678 K 22
The Best Practices
The Opportunity
In Nike’s 2014 Annual Report, it is stated that the company is increasing investments toward their digital infrastructure. The company will be spending more on demand creation to support marketing efforts. The generation gap that Nike holds in their promotional activities can be corrected. Nike has a large budget for advertising, but delivers mostly to an older target market. Nike has the money and global power to fill this generation gap and market to their Generation Z customer. Kids were first established as a target market in the 1960s and they play a huge role for retail marketers (Marwick). There are three parts to this young target market. One is identified as ‘kids primary market,’ which reflect what kids buy with their money. The second segment is called ‘kids influence market’ where marketers discover how kids may encourage or discourage their guardians buying decisions. The third part of this target market is ‘kids future market,’ which is what will this generation buy years from now (Marwick).
The Competition
Nike’s competitors including Under Armour and Adidas have conducted stronger promotional activities to their kids market. Under Armour has targeted heavily toward America’s youth in order to maintain relevance to these kids, as well as their families. UA has set up a campaign for this market called “The NEXT Generation,” which is used to promote kid-friendly themed items, such as their superhero product line (Under Armour). In 2012, Adidas recognized the attraction between young customers and fast fashion. They responded by delivering inventory of the NEO line 6 times a week to stores (Midwood). They want to satisfy the needs of their young target market, which is why they felt they needed to compete with fast fashion retailers and constantly supply fresh products. What this means for Nike is that their competitors are surpassing their efforts to market the youth (Warc). Nike’s campaigns are more geared toward older consumers, leaving their Young Athletes market behind. The brand has a small market size for childrenswear, but a significant market share for children’s footwear, which is why Nike is able to reach them easily.
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There have been best practices of marketing Generation Z for the past several years. An interactive screen is placed at Child’s Play Activity Center, a play space, in Las Vegas to display age-appropriate games and classes, such as music and drama (Gesturetek). This special effects screen has touch screen capabilities with the help of a camera and projector attached to the ceiling. The technology, from WallFX, enhances the child’s experience and retains customers. Other kid-friendly technologies include interactive touch screen stations used at Build-A-Bear (Lee). Their young child demographic already has experience with mobile devices and tablets, which is why this technology is so fitting. Build-A-Bear has teamed up with Infusion to implement these screens that enables users to have a digital experience customizing the bear’s color, pattern, species, outfit, and temperament. Build-A-Bear has seen a sales increase of 30% due to this technology that makes building a bear fun and innovative.
NEW INITIATIVE The Idea
Nike has an opportunity to implement interactive technology for their Young Athletes. Technology from Lumo will be placed in New York City’s NIKETOWN store on Fifth Avenue as part of a marketing campaign to promote the Nike Young Athletes’ Zone. The purpose of this initiative is to continue Nike’s digital strategy, while building brand awareness and gaining market share of children and youth. With the help of Lumo, this technology will be fully customized to the Nike brand. Projections in the Nike Young Athletes’ Zone will show sports games, current advertisements and promotional videos.
LONG TERM BENEFITS Through this new initiative, Nike will be filling a generation gap that has occurred in their marketing efforts. The interactive projecting technology from Lumo will serve as a test to better connect with the Nike Young Athlete. If Young Athletes respond well in the 5th Avenue NIKETOWN store, childrenswear will be experiencing an increase of sales. Nike’s promotional activities with Generation Z will present an increasing competitive environment for Under Armour and Adidas. The market share for children’s apparel and footwear will become more crowded, but this allows companies to explore further innovations. The ultimate goal for Nike is to increase digital sales. Although this technology is advertising, the Young Athlete will gain familiarity to Nike’s digital efforts, which will positively influence their parents digital shopping habits.
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SENSOR PROJECTOR
PROJECTOR FOCUS
Where it goes
Lumo hangs on the wall of its preferable location (Lumo Play). It is small, childproof, and easy to install. Its wall-mounting bracket has a child lock out of reach in order to ensure safety. The technology has flexibility and can be hung on the wall or the ceiling because the projector ball swivels. The projection is 6 feet by 4 feet and kids can interact with the games by jumping, kicking, stomping, moving, and waving arms.
INFRARED LIGHT
Installation Features
Recommended by the company, Lumo can be installed in the living room, a child’s bedroom, in the classroom, in a small business, or at an event (Lumo Play). When the user is ready to play with Lumo, they can choose from over 100 games that are included. The device is intricate with the ability to act as a regular projector when plugged into the HDMI port. It also supports computers, laptops, Apple TV, Chromecast and other playback devices. Lumo includes content creation tool for kids to be able to design customizable games. It is easy with no coding requirement and adds to the many benefits of the toy.
THE TECHNOLOGY About
Lumo is an interactive projector that displays games and visual effects for kids. Invented in 2013 by founders of PO-MO Inc., LumoPlay, Inc. has a mission to change the way kids play (Lumo Play). The designers of this team observed positive reactions with kids and interactive projections. This influenced their decision to make an innovative toy that kids can have in their home and even bedrooms.
Purpose
The philosophy behind Lumo is to make children’s time in front of a screen productive and fun (Lumo Play). The 40 hours per week that children have near a screen negatively affects their social and cognitive progress because it lacks interaction. Lumo provides a welcoming playspace that encourages use of motor-skills and athleticism.
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How it Works
Within this device, the team installs a sensor and programs data to detect motion (Indiegogo). Lumo’s technology consists of ambient IR light and a built-in sensor with low resolution. This is how it knows if something is moving in front of it. The data that is programmed specifically to Lumo is patent-pending tracking algorithms. The interactions seen between the user and the image on the floor is a reaction to the programmed algorithms. All together, Lumo includes a sensor, projector focus, the main projector, and infrared light.
Lumo Games
Benefits
Lumo offers over 100 games and digital effects to educate the youth in an innovative form (Indiegogo). The games have an emphasis on childhood skill sets and growth processes. Young users utilize motor, collaborative, social, problem solving, and memory skills through the Lumo games. Kids are also able to test their pattern, color and shape recognition, as well as language and STEM skills.
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BUYING COSTS
As donators decide how much to give Lumo for funding, they can choose an amount according to what Lumo will be offering (Indiegogo). For example, Lumo will list the donator as a member of their community on the website if they give $5. Another deal is at $190, a donator can reserve a Lumo now and pay the rest when it ships in 2016. The regular price for Lumo is $549, but if someone pre-orders it will be $499. The deal that is best for retailers, such as NIKETOWN is a package for $3,990. Lumo offers the interactive play space at this price and comes with 10 complete Lumo interactive projector systems. The package also includes 10 Lumo projectors, as well as a wall/ceiling mounting plate. Retailers can enjoy 100 games and effects, mobile app to control Lumo and a year’s unlimited Kids Content Creation account where you can make custom games using template tools. Donating money for this package includes shipping and guarantees delivery around April 2016.
LumoPlay, Inc.’s CEO, Megan Athavale and her team have been creating and developing Lumo since 2013 (Indiegogo). Currently, the technology is not on shelves, but is in the market for pre-orders. The Lumo team has been collecting funds for the past month on Indiegogo.com in order to attract early adopters, such as teachers and parents. With the help of 177 people so far, Lumo has surpassed their $60,000 USD goal, reaching $61,995 USD. The funding will be closing soon, which is when the company is expected to work on producing more products. Additionally, Lumo wants to use this funding to expand their technology further and provide more customizable activities for children and youth. They want to work with developers to improve the technology and software. Reaching their goal, the Lumo team is able to make their innovative technology more accessible to parents, schools and businesses. 31
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@NIKETOWN NYC
ACTIVITY MAP DEC Technology Development Update LumoPlay Corp. in Canada to NYC Office Shipping Trial NYC Office to NIKETOWN Transportation Installation Opening Data Evaluation
JAN
LAUNCH JUL
NIKE’S FLAGSHIP STORE
Completed 1997 $2,500 a square foot 85,000 SF 4-10 East 57th St. (Sciame) The initiative to bring interactive technology for Nike Young Athletes will take place at the NIKETOWN in NYC. NIKETOWN, one located in NYC and the other in Los Angeles, is considered as a flagship store for the brand (Weiss). A large amount of inventory is brought in to NIKETOWN to accommodate a high level of foot traffic. The 85,000 square foot store on Fifth Avenue in NYC attracts tourists from all over the world, as well as shoppers with luxurious taste. NIKETOWN is promoted as a must-see destination because it is designed to serve fans with five levels of Nike inventory. The flagship store sells sportswear and shoes, while also showcasing product in glass displays. NIKETOWN also has a space for customization services called NIKE iD Studio. This is where the latest innovations are featured, which is why Nike’s Lumo technology in the Young Athletes section will be successful. NIKETOWN formed a New York Run Club that brings a community together to exercise, train, and socialize. NIKETOWN’s domestic and international customers will appreciate the Lumo technology seen on the fourth floor where the kids are able to play while the parents shop. NIKETOWN is a massive store, which is why the Lumo projector will serve as a pastime for the Young Athletes. NIKETOWN is able to invest the right amount of money for this technology and have the proper resources to implement it as well. The Lumo projector will fit NIKETOWN’s global atmosphere and innovative purpose. 33
PRE-LAUNCH FEB MAR
POST-LAUNCH AUG SEPT
APR
MAY
OCT
JUN
NOV
Technology Development Update LumoPlay Corp. in Canada to NYC Office Shipping Trial NYC Office to NIKETOWN Transportation Installation Opening Data Evaluation
The 12-month activity map begins December 2015 and ends November 2016. It is broken up between Pre-Launch, Launch, and Post-Launch time periods. During PreLaunch, NIKETOWN NYC is focusing on the development of the projection technology customized to their current promotions and game selections. Once updated, the technology software and projector is shipped from the Lumo headquarters in Canada to the Nike NYC office where a trial will be performed. If it is approved, the Nike NYC office will then ship the technology to NIKETOWN NYC. Launch will be in July 2016 where the technology is installed, ready for the opening, and continuing updates depending on the week. During Post-Launch, updates continue and an evaluation is conducted each month. 34
VISUALIZATIONS
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The Nike Young Athletes’ Zone projects Nike customized sports games, campaign ads and promotional videos
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NIKE Young Athletes’’ Zone @NIKETOWN NYC
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MARKET OVERVIEW
Other competing technologies Nike’s launch of the Lumo projector has potential to face future competition. The technology from Wall FX is currently implemented in a Las Vegas child’s play activity center (Gesturetek). The company uses a camera and projector that is attached to the ceiling to provide kidfriendly special effects. GestureTek patents the body movement recognition software. Wall FX is similar to Lumo, but does not offer customizable options. This gives Lumo a competitive advantage, but does not stop Wall FX from catching up to them. Infusion has teamed up with Build-A-Bear Workshop to create technology that accommodates to what kids are familiar with (Infusion). Touch screen capabilities are now available when creating and customizing a Build-A-Bear. Infusion has helped this brand adapt to a generation that is growing up with mobile devices and tablets in their hands. This innovation is different than Lumo because it is not a projection. However, Build-A-Bear is a widely known brand and has capabilities to enhance and add technology quickly.
Other Competing Retailers
Market Size of Children in the U.S. -Total revenues of $57.2 billion (2013) with annual growth rate of 4.7% from 2009 to 2013 (MarketLine) -Clothing, footwear, sportswear, and accessories retailers account for the largest portion of sales in the US childrenswear market
When Nike’s new innovation launches, their competitors may mimic the idea and implement it into their stores. Future competition in the U.S. will most likely be Adidas, Puma and Under Armour. These are brands driven by technology and understand the important of customer experience. Adidas has developed digital signage for in-store promotion. It will feature sales, product videos and specials. Taking a step further, Adidas teamed with Intel and designed a 3D interactive virtual footwear wall (Johns). Adidas also has MiAdidas in stores for customers to feel and choose fabric swatches for customizing select products on a computer device (Tokyo Weekender). The company is not afraid to partner with other brands and build new spaces to help them gain better in-store technology. Puma has implemented a ‘Creative Factory’ where customers can customize sneakers in stores and then order them online. Creative Factory provides a personalized shopping experience similar to Nike’s NikeiD and Adida’s MiAdidas (Nayak). These brands have potential to tap into the children’s market with technology for marketing purposes, mimicking Nike’s new initiative.
-Market Distribution in U.S. Clothing, Foot/ Sportswear & Accessories Retailers is 64.2% among Hypermarket, Supermarket, and Discounters, Department Stores, Discount, Variety & General Merchandise Retailers 39
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PORTER’S 5 FORCES Buyer Power-Low
THREAT OF NEW ENTRANTS MODERATE-HIGH
-Low barriers of entry -Specialist knowledge needed -Low economies of scale
COMPETITIVE RIVALRY-LOW
Threat of New Entrants
Supplier Power
-Not many competitors -Leaving market is costly -Low buying power and high supplier power are deterrents to new buyers
Buyer Power
Competitive Rivalry
There is high competition in sportswear retailing, but only the top, global brands are concerned with buying the latest innovations for their stores. This is mainly because there are very few suppliers. When retailers, such as Adidas implements in-store technology, it is often in a flagship store operating as a trial. Size of orders is small and costs to change is high because buyers do not have power to drive prices of this technology down yet. They are more focused on the quality of the technology and not very price sensitive yet.
Supplier Power-HIGH
Suppliers, such as Lumo are dictating the prices of this interactive technology because they are among the few who are selling them. At the same time, there are few customers since the service is unique. Costs to change buyers are high because there are very few of them worldwide.
Threat of New Entrants-MODERATE HIGH
There are low barriers to enter this tech-savvy market, but it does require specialist knowledge. There is software and technological features that are needed in order to deliver a high quality product. In-store interactive technology similar to Lumo has low economies of scale because suppliers are not giving out this technology in bulk, which may discourage new buyers.
Threat of Substitutes-MODERATE-HIGH
SUPPLIER POWER-HIGH
-Scarce amount -Small number of customers -Service is unique -Cost to change is high
BUYER POWER-LOW
Threat of Substitutes
-Large number of sports brands -Concerned with quality over price -Size of orders is small -Costs to change is high
THREAT OF SUBSTITUTES MODERATE-HIGH
-Substitution is becoming available -Cost of changing can be high
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The market allows substitution to occur, but costs of changing can be high because suppliers are scarce. Buyers may sacrifice a decent cost for a newer, better technology that is in a different country.
Competitive Rivalry
Lumo is an example of how fast suppliers are developing ideas and creating innovative technologies. The ideas are becoming more concrete to innovators and more accessible to retailers. However, the current market for this type of in-store technology shows risk for smaller retailers. In the sportswear market, major companies are going after companies like Lumo in order to complement their latest wearable technologies and textile designs. It is apparent that these companies are willing and able to invest in all types of technology. They are implementing innovations in a strategic manner, indicating gradual acceptance. This creates a deterrent for the rest of the retailers in the sportswear market, which is why competitive rivalry is low.
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MARKET ANALYSIS Nike Young Athlete Customer in the U.S. Nike’s younger target market is referred to the Young Athletes. They are a growing focus for the brand because competition to win their loyalty in sportswear is increasing. The youth plays a huge role in Nike’s sales strategies, particularly in soccer, basketball and running categories.
Demographics
Nike’s Young Athletes in the U.S. are a part of Generation Z, their main target market in the future. In the U.S., Generation Zers are those born in 1995 or later (Oster). Currently younger than 18-years-old, they account for more than a quarter of the U.S. population at 25.9% (Sparks & Honey). This generation has a disposable income at an average of $70 a month. Their purchasing power of $44 billion per year reflects their strength as a consumer (Gasca). There are 74% of moms in the U.S. their Gen Z child influences them when buying apparel. Also, over 50% of moms say that the child effects their decision when buying technology items including mobile devices and computers (Sparks & Honey).
Psychographics
Generation Z is a powerful group when it comes to technology and online shopping. They have grown up as natives to technology, which is why brand marketing and storytelling has to be in 5-screen form among phone, computer, TV, tablet, and wearable (Saettler). When engaging with a brand, they are used to live-streamed videos to take in the information. They use technology, especially mobile devices to gain content, research, shop, and connect with friends on social media (Gasca). Gen Zers are more comfortable communicating online than in person, which proves their tech-savvy behaviors (Peterson). They are independent and self-educators when shopping. Guilty of living in “FOMO,” fear of missing out, Gen Zers want the next big thing out there. 43
Behavioral
Gen Zers spend more than three hours a day in front of a screen, using Facebook most often, but Instagram, Snapchat, Twitter and Tumblr are not far behind (Peterson). They are not afraid to become a “Vlogger” on YouTube in order to influence listeners with their interests, such as beauty and fashion. This is an idealistic generation because they have grown up in a post 9/11 world and during the recession. As a result, Generation Z they are motivated to change the world, which is why they are attracted to brands with a valuable message and quality products (Gasca). When researching brands, Gen Zers demand transparency and are drawn to retailers embracing individuality and acceptance. Convenience is a huge factor when browsing, shopping and receiving customer service. As retailers collect consumer data in stores and online, Gen Z is more careful with what they expose and retailers should understand this. As brands market Generation Z, they have to consider their decreasing attention spans. The average American currently has an attention span of 8 seconds and 11% of children ages 4-17-years-old have been diagnosed with ADHD (Sparks & Honey). The way retailers should set up content is in the form of “snack media” where information is delivered bite sizes, but also easy to understand (mobilemarketer). The typical Gen Zer thinks in 4D because of their natural behaviors to zoom, pinch and swipe with an easy touch onto a screen. The Generation Z demographic has a mindset and lifestyle that is unlike any other generation, which is why retailers are competing for their loyalty. Nike’s Lumo Projector fits what Gen Zers are looking for in content. It is interactive, concise, and innovative. 44
CUSTOMER PROFILE
NAME: Ellie
NIKETOWN NYC Location
NIKETOWN in NYC has a Young Athletes section that takes up a quarter of the store on the fourth floor. It is located at 57th Street on 5th Avenue, which has consistent heavy foot traffic of diverse customers. The main customer in this flagship store shopping in the Young Athletes section will be moms and dads from all over the world. NIKETOWN NYC attracts a global, high-end and tech-savvy customer with a high disposable income. The local NYC resident living in this area has a median household income of $81,316 annually (NYC.gov). Neighboring retailers of NIKETOWN NYC include Tiffany’s & Co., Louis Vuitton, and the Apple Store. Additionally, The Museum of Modern Art and the Four Seasons Hotel are nearby and contribute to the high level of tourist and local foot traffic. The Lumo Projector implanted in NIKETOWN NYC serves shoppers who are drawn to customer engagement. Fifth Avenue in NYC focuses on serving customers needs, but on a different caliber solely because of its location. The 5th Avenue shopper who is at Tiffany’s and the Apple Store will want the same innovative experience at NIKETOWN. This is why NIKETOWN NYC has created a unique space for NIKEiD, as well as digital signage in the storefront windows with touch screen capabilities (Tangram). NIKETOWN’s Young Athletes’ Zone also solves problems that parents often have when shopping with their kids. Parents need more time to consider the value of the products, but are not able to do that if their child is right next to them (Smart Insights). The games that Lumo provides will engage with the child while the parent is deciding on products for themselves or the child. As the Young Athletes become involved in a soccer game or video campaign, he or she will be inspired and will most likely influence the parent to buy more product to satisfy the child. This enhances brand loyalty within a family and ultimately will increase store revenues. The interactive floor projections provide a one-ofa-kind experience that captures the child’s attention and becomes something they will not
AGE: 11 HOMETOWN: Long Island, NY INCOME: $50 monthly INTERESTS: video games, soccer, lacrosse, basketball, movies, baking PARENTS: Michelle & Jeff KIDS: Lily & Mark AGES: 35 & 37 AGES: 6 & 7 HOMETOWN: Philadelphia, PA HOMETOWN: Philadelphia, PA OCCUPATION: M-Yoga Instructor & stay-at- INCOME: $20 monthly home Mom each J-IT Specialist INTERESTS: sports, INCOME: digital games, the M-$50K annually outdoors, nature, music J-$100K+ annually LIFESTYLE: Constantly INTERESTS: Family-oriented, entertained by one trend conscious, sensitive to another, as well as other quality family members; time occupied with attending LIFESTYLE: Busy work and school, playing games family lives; needs athletic on iPads, shopping with clothing for healthy lifestyle; parents and spending business-oriented and favors time outdoors latest innovations
LIFESTYLE: Gets together with friends In between soccer, lacrosse or basketball practice; researches baking recipes with her mom on the family iPad; watches movies, Disney Channel, and plays games on downloaded apps; favors NIKE and Target
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PROMOTION PLAN DEC
JAN
PRE-LAUNCH FEB MAR
APR
MAY
JUN
Outdoor Advertising Subway Ad Timesquare Billboard NIKETOWN NYC Window Print Advertising Wired Magazine Online Marketing Hashtag Campaign YouTube Google+ Twitter Facebook Instagram Vine E-newsletters Nike.com Ads Event Marketing Launch Party Professional Athlete Appearance
LAUNCH JUL
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Outdoor Advertising Subway Ad Time Square Billboard NIKETOWN NYC Window Print Advertising Wired Magazine Online Marketing Hashtag Campaign YouTube Google+ Twitter Facebook Instagram Vine E-newsletters Nike.com Ads Event Marketing Launch Party Special Athlete Appearance
POST-LAUNCH AUG SEPT
The 12-month promotion plan begins in December 2015 and continues through November 2016. The Pre-Launch time period will display limited outdoor, print, and online marketing. The Nike Athlete Zone will be promoted through a hashtag campaign called #YoungAthletes’Club. Other hashtags that will be seen are #NIKETOWNNYC to localize the campaign and #JustDoIt to make it globally known. On a subway advertisement, Wired Magazine, and all online marketing platforms, the campaign will be revealed giving viewers a sneak peak to what is coming for the Nike Young Athlete. OCT
NOV
The Launch of the Nike Athletes’ Zone in NIKETOWN NYC will take place in July 2016. There will be a launch party on Friday, July 15 before the opening of Nike Athlete Zone on Saturday, July 16. During this time, a billboard in Times Square will feature a Nike ad featuring Kayla Montgomery, an inspiring young athlete to kick off this new space in NIKETOWN NYC. Kayla Montgomery will be at NIKETOWN in July for a special appearance for kids to learn about her experience as an athlete living with multiple sclerosis. All social media platforms, E-newsletters, and nike.com will display the in-store technology at NIKETOWN. The #YoungAthletes’Club offers registered memberships to either parents of young athletes or young shoppers. Members receive exclusive access to special athlete appearances and certain promotions on Nike products. During the Post-Launch period, Nike will continue promoting #YoungAthletesClub. Depending on the special athlete, the product line, and season, the Nike Athletes’ Zone will project various sports games, videos, and ads. This material will be used in the NIKETOWN NYC window, as well as in WIRED Magazine, and online platforms. The goal for Post-Launch is to attract many types of customers to the Nike Young Athletes’ Zone. Having a global target market in this NYC store will help spread the word about Nike’s efforts to expand digital innovations and broaden their marketing capabilities.
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CONCLUSION Research shows that the Nike Young Athletes’ Zone in NIKETOWN NYC offers a competitive advantage for the brand. The technology and software from Lumo will improve the digital and social interaction between customers and the brand. Lumo’s business model geared toward a child’s wellbeing complements Nike’s mission to inspire all athletes. Generation Z has not been forgotten in the Nike Brand, but lacks modern enthusiasm and impact. As Lumo collects funding, Nike will be the first to implement this technology. The Nike Young Athletes’ Zone is expected to drive sales among Nike childrenswear, as well as establish differentiated and coveted in-store technology. After careful evaluation of the space in NYC, Nike will be able to decide if Nike Young Athletes’ Zone should launch in additional NIKETOWNs across the country.
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Shaina F. Levin FASM 430 | Professional Portfolio Practices Professor Patti Cappalli Taylor