By Steven & Ross

Contents

Company Overview1

Chinese Market2

5 force analysis3

4P analysis4

Suggestion5

Company OverviewBill Bowerman(Founder)

Phil Knight (Founder)

1960’s

1970’s

1980’s

1990’s

Company Overview 2013

more than 700 shops and has offices located

in 46 countries

More than 44,000 Employees

Brand Valued at $10.7 billion with revenue > US$24.1 billion

Most Valuable Brand Among Sports Businesses

Global Market Share

Adidas(&Reebok) Nike Puma Under Armour Lululemon Athletica Asics0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

Cumulative Annual Growth Rate(2010-12)

China Market Share

Football

Basketball

Men’s Training

Women’s Training

Nike’s Sports Wear

Action’sSports

Main Products

Main Products

To bring inspiration

and innovation

to every athlete in the world.

If you have a body ,

you are an athlete.

NikeNike

Mission

Chinese Consumer

Source: McKinsey Insight China-Macroeconomic Model Update(March2011)

Present(2010)•Domination by Value Consumer(￥ 6000 to￥ 16000）

Future(2020)•Domination by Mainstream Consumers (￥ 16000 to￥ 34000）

Chinese Consumer

Source: McKinsey Insight China-Macroeconomic Model Update(March2011)

Present(2010)•Major Existence of Mainstream Consumers in Advanced Cities

Future(2020)•Emerging Mainstream Consumers across China

Chinese Consumer Behavior

Source: McKinsey Insight China-Macroeconomic Model Update(March2011)

Increasing Spending on Personal Items

Aspiration-Driven Trading UpJudge people by what they buy

Rise in ExpectationSought Comfort and quality in apparelUse Well-known brand as indicator of quality and safety

改進

Substitutes

Buyers

Porter’s Five Force

•Numerous competitors exist

•low cost products by Domestic companies

•Same average selling price provided by Adidas

New Entrants

Suppliers

RivalryStrongRivalry

Substitutes

Porter’s Five Force

•Numerous potential suppliers

•Homogenous or similar Materials provided by Suppliers

•Low Switching Costs

Rivalry

Suppliers

Buyers

New Entrants

Weak Suppliers

StrongRivalry

Substitutes

Porter’s Five Force

•Economies of scale

•Strong and well established brand name •High capital requirements

•Difficult Access to Distribution Channels

•Cost advantages independent of scale (e.g. proprietary technology)

Suppliers

Buyers

New EntrantsStrong Barrier to Entrants

Weak Suppliers

StrongRivalry

Substitutes

Porter’s Five Force

•Price Sensitive

•Low Switching Cost

•Full Information

•No large volume Purchase relative to seller's sales

Suppliers

BuyersStrong Buyers

Strong Barrier to Entrants

Weak Suppliers

StrongRivalry

Substitutes

Porter’s Five Force

•No Substitutes for Professional Athlete

•Special Design for Sports Wear

Low Pressure ofSubstitutes

StrongRivalry

Strong Buyers

Strong Barrier to Entrants

Weak Suppliers

Perceptual Map

ExpensiveCheap

Professional

Amateur

Target Group Premium to middle class

Premium to middle class

Middle Class to Lower Class

Market Share[Global(China)]

7%(16%) 6%(13%) (10%)

Revenue in China(Millions RMB)(2012)[Global(China)]

￥ 146,795(￥ 15,447)

￥ 116,087(￥ 12,770)

￥ 6,739=>Loss of ￥ 1,592

Positioning in China

Professional Professional •Traditional Domestic Brand•Cheap Substitute of International Brand

Strategy •Continuous R&D•Multi-brand

•Expansion into lower tier region•Multi-Brand

•From cheap substitute of global brand to international brand•Increase footwear proportion

Competitor Analysis

4P AnalysisProduct:•Quality and Professional Product•Environmental Friendly Packaging•Customized Design•Collaboration with Apple

4P Analysis

Price:•Skimming Pricing•High end Customer Market•Profit oriented Pricing•Discounts Offer

4P Analysis

Promotion:•Integrated Marketing Communication•Direct Marketing•Celebrities Endorsement•Public Relations•Mass Advertising•Sales Promotion•Social Media(e.g. facebook)

4P Analysis Place:•E-commerce •Retail•Factory Outlet•Urban Areas Strategy

SuggestionIncome Distribution

in ChinaDistribution of

Nike Retail Store

Distribution of Domestic Brand

SuggestionPrice Range of Sports Brands

in China(RMB)

•Extend the Price Range

•Explore Lower Tier(Lower Price) Market

Benefit

Price of Domestic Brand : $170-$250

Attract people with Nike priced at $300

People switch to Nike

Beat Domestic Brands

Expand Market Share

FeasibilityPossibility of Lowering Price

Cost Structure

Raw Materials

Supplier’s Margin

Nike’s Margin

Distributor’s Margin

Labor CostMarketing Expense

Overhead

Lowering Profit Margin=> Cost Reduction

Achieve Price Target of RMB$300

FeasibilityPeople Acceptance of Foreign Brand

•Ogilvy China’s Survey:-Consumers in lower tier area are less willing to try out foreign product

Solution: Heavy Marketing

Feasibility Brand Image Problem

•Lowering Price will Damage Premium Brand Image

Precedent Exist!Produce Another Product Line

Time for Q & A !!!

• Skimming pricing• Outlet, Retail Store• Selective and exclusive distribution• Vertical marketing systems: contractual System

• Add characteristics of Chinese• Localization• Threat Nike is facing(losing Market Share to Domestic

Brand)=> Solution( Move to lower tier area)

• Spotlight on NW Creative: Nike Makes A Better Box• JANUARY 8, 2011 BY DAVID BURNLEAVE A COMMENT• Nike is interested in helping to create a Better World. For instance, to

help reduce packaging waste, Nike took a fresh look at their shoebox.

According to NikeBiz.com, corrugated cardboard is Nike’s single-largest material purchase. The shoebox and its shipping carton account for half of Nike packaging.So they reengineered the shoe box, which now uses 30 percent less material than a 1995 vintage box, the company’s first 100-percent recycled-content box. The new shoe boxes, now in use, will save the equivalent of 200,000 trees annually.

• http://www.adpulp.com/spotlight_on_nw_84/

• Intervening factors that affect purchase decisions: Attitude of Others

• => Increase no. of ppl wearing Nike Shoes on the street

• => Create a trend of wearing Nike/ Increase the popularity of Nike

• Affect Transfer Effect:• Some Unconscious exposure will affect ppl’s

decision