Operations Management Case Analysis: Case Study

NIKE Football: World Cup 2010 South Africa- Marketing Case

The case narrates the birth of the Nike Company as a shoe merchandiser and its journey to become a

global designer and manufacturer of own brand of footwear. It brings to the fore the evolution of

marketing strategies Nike employed with emphasis on brand, product and customer leadership.

Throughout its history Nike has been associated with high quality and performance athletic apparel

and footwear. In the first instance the co-Founders changed the company name from Blue Ribbon

Sports (BRS) to Nike, after the Greek goddess of victory and began using a distinct logo. (Johnson,

2013) Brand name is one of the key elements of a good brand. Nike is memorable, appealing and

transferable. Its transferability is very evident with the birth of Nike Football later in the 70s. Its

strategy over the years has been around performance superiority hence its emphasis on product

differentiation through innovative designs and aesthetic styles. In order to deliver total quality to

guarantee customer satisfaction Nike moved towards customer intimacy through data mining and

producing footwear that was responsiveness to specific customer needs. These strategies have been

dynamic and fluid in response to competition (Adidas brand) and tournaments/ disciplines over time.

Nike as a Multi National Company (MNC) operates in vastly different territories with diverse

audiences. Its products need to appeal to a wide range of nationalities, age groups, characteristics

and needs. Trying to satisfy all customers is futile. In preparation for the World Cup 2010 in South

Africa, Nike Football needs to reflect back on how well it has done in the previous World Cups and

what could be improved. The World cup is a good opportunity to reach out to over 26.9 billion viewers

over the course of the games. However, not all customers are created equal. Nike has always

aligned its products and services with the wants and needs of its most valuable clients. To achieve

this Nike has employed the three principles of marketing (viz. creating customer value, product

differentiation and segmentation, targeting and brand positioning). Since the 1994 World cup Nike

has enhanced customer value by expanding and improving on its soccer boots. Its soccer boots

could be effortlessly be indentified and differentiated from competitor products. Furthermore, Nike

undertook market segmentation to identify which subset of the audience can be reached out with a

distinct marketing mix. Nike used psychographic and demographic approaches including

characteristics of customers (Brazilian Football, Netherlands, high performance teams in Europe) and

the benefit they sort to segment them from the rest of soccer playing nations. In selecting this target

market it noted also the size of the market, growth potential, future dollar value and stability of the

market. Nike went further to indentify super stars and gave them individual sponsorships. This was

impactful as consumers drove meaning from these stars and transferred same meaning to the

product. It is also a great way to advertise the product and the firm.

Nike has also changed its brand position to focus on 16-17 year olds from the 13 year olds with the

specific goal to maximise its long term financial value. Key to this strategy is to celebrate customer

heterogeneity and distinguishing the profitable customers from the less profitable. The focus is on

customer life time value. The brand mantra was to create a new culture and target the more

independent customers who regularly played and followed football. By so doing Nike is connecting

experience to the brand. In essence Nike will enhance profitability through acquisition, retention and

development of young consumers. By picking this age ground Nike is communicating and connecting

to potential super stars. The long term strategy should be to find more like them and avoid over

investing in the rest.

Nike understands that markets no longer favour the seller, due to globalization, deregulation, and

competition and buyers ability to select from many available options. As such Nike’s growth strategies

come from developing new products based on shared experience. Nike uses data mining to create

products that the user needs. Examples include Ronaldo prior to the 1998 World Cup and Ronaldinho

prior to the 2006 World Cup. One element that stood out was the use of colour. This allowed multiple

connections in consumer memories – memory encoding advantage. By doing this Nike brand grabbed

customer’s attention through the distinctive colour and position of the Nike Logo. It also analysed the

over tournament performance of its boots compared to competitors and used the information to

improve on its products. By so doing Nike maintains its global brand status, offering value across

different countries and diverse cultures.

The

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