Brand Audit Assignment
Parv Punmia- 17BSP1853
Page | 1
I. INTRODUCTION AND MACRO-ANALYSIS:
1. COMPANY BACKGROUND:
The NIKE brand was officially founded in 1971 and has been on the market for over 40
years (Nike Inc., 2013). NIKE Inc. is a multinational company specialized in various sports
products such as accessories, apparel, and most importantly athletic footwear. In fact, NIKE
is the largest company in sales of athletic apparel and footwear in the world, reaching over
$25 billion in sales in the 2013 fiscal year (Mergent Online, 2013). The company is situated
worldwide, and operates in over 180 countries such as the US, Thailand, the UK, Australia,
France, Canada, and Mexico (Gale Cengage Learning, 2012). The company sells its products
through multiple distribution channels of NIKE-owned retail stores and online marketplaces.
2. INDUSTRY ANALYSIS:
Athletic apparel is certainly a thriving industry and NIKE is the market leader in athletic
shoes and dominates in both sales and share. But with such an identifiable market,
competitors are never far behind. NIKE’s main 2 competitors in athletic shoe sales are New
Balance and Adidas, with Adidas standing as NIKE’s main competitor. According to Lazich
and Burton (2011), NIKE combined with their Jordan and Converse brands own about
48.87% of the market share within the athletic shoe sale industry. Adidas may not have as
much value as NIKE but the company is still able to reach many different endorsement and
sponsorship promotions such as Derrick Rose from the NBA and the main sponsor of the
London 2012 Olympics.
Page | 2
3. CONSUMER ANALYSIS:
NIKE’s current mission is “To bring inspiration and innovation to every athlete in the world”
and that “If you have a body, you are an athlete” (About NIKE inc., 2013). This allows NIKE
to position to every athletic apparel user, whether they are a professional, amateur, or casual.
According to the Canadian Community Health Survey (2012), There is an increasing trend
of consumers going for a casual walk 16-30 minutes everday. NIKE recognized this target
group and built their shoes to satisfy these casual runners, walkers. This ultimately leads to
an increase in sales of NIKE’s athletic footwear
II. BRAND INVENTORY:
1. POSITIONING:
NIKE is a very powerful company in athletic apparel, which has a very strong positioning
with regards to its competitors. In terms of point of parity (POPs), NIKE shares multiple
features with its competitors. For example, NIKE has individual electronic performance
technology that allows customers to train on their own and at their own pace, which called
NIKE+ that works with Apple products. This is true while Adidas has a similar product with
same features called miCoach Pacer (Swoosh or strips?, 2010). What is true about NIKE and
athletic apparel market is that, they all sell sportswear equipment, which this can be the main
point of parity.
In terms of point of differentiation (PODs), there are some features that differentiate NIKE
from its competitors. According to Mathieu Daniel (2013), “What is important about NIKE`s
strategy first of all is its presence in all sports”. We can see NIKE’s product almost in every
Page | 3
different sports from basketball and soccer to golf and ski’s equipment, which this allows
the brand to expand its audience. This is true when some competitors such as Asics is only
focused on running shoes that cause them to limiting their target opportunities.
Another point of differentiation that NIKE has with its competitor is the introduction of
NIKEID, which allows customers to customize their shoes and gear. For example they are
able to change the color of the “swoosh’, the overlay, and the tongue of the shoes.
2. BRAND ELEMENTS:
NIKE is one of the most powerful brands in the world in terms of brand elements. Some of
the elements that they use are brand logos, names, slogans, packaging and endorsements
with celebrity or athlete (How does Nike score in brand elements?, 2013). NIKE has different
logos and names for each of its product. For example, Jordan’s brand has its own name and
logo or Cristiano Ronaldo’s line of product has its own logo and name, which is “CR7”.
In terms of slogans, NIKE has one general slogan that is, “Just Do It”. NIKE’s goal to create
this slogan was to communicate that sport is for everyone and they just have to do it. Another
interesting slogan from Nike is “if you have a body, you are an athlete”, which further
communicates that the brand is for everyone, and anyone can be an athlete.
NIKE tends to connect and sign with famous athletes in different sports to represent its brand
in each different sectors. (Roger Federer for tennis, Cristiano Ronaldo for soccer, Tiger
Woods for golf, etc.) “This makes most of us to believe, that when it comes to buying sport
shoes, clothes or equipment, we just have to step into one of Nike’s shoes to become an
athlete as well” (How does Nike score in brand elements?, 2013).
Page | 4
3. CURRENT MARKETING PROGRAMS:
NIKE currently in Canada has a campaign and promotion called “Speed Unleashed”, which
they promote and sale the Canadian Hockey team’s jersey for 2014 winter Olympics. NIKE
also has a “Free Your Move. Free Your Training” campaign for their new NIKE Free Trainer
5.0 shoes, which is a well-designed running shoes. One of the products that NIKE is trying
hard to promote and advertise is their NIKE+ products and its accessories such as NIKE+
sportwatch and NIKE+ Fuelband SE. They have “NIKE+ community” in which people who
have NIKE+ products can go online and join this community and share their running
experience in terms of their daily goals and distance and places that they have run; with other
NIKE+ users. With this campaign NIKE is trying to encourage more people and runners to
buy this product.
4. BRAND ARCHITECTURE:
Differentiation and segmentation show to be a key aspect within NIKE’s main competitive
strategy. The company has a multitude of products to choose from, making it very simple
for a consumer to find something that appeal to their distinct needs and wants.
NIKE has an extremely deep and fairly broad brand portfolio. They are a company with
many brands that are used to separate into segments of the market to help avoid disconnect
between each other. Although they have a vast amount of brands, they tend to focus on 4
major players: Converse, Hurley International, NIKE Golf, and the Jordan brand. This
branded house however still resides within its core market, the sporty and fashionable
consumer by typically only supplying 3 main types of products: footwear, apparel, and sports
equipment. NIKE’s athletic footwear has proven to be the most successful of the three,
Page | 5
carrying a multitude of extensions such as basketball shoes, soccer cleats, casual sneakers,
and of course the running shoe. Running shoes are NIKE’s most differentiated extension line
due to the amount of modifiers that they have been able to implement. A recent
implementation is the modification of the new “Flash Pack” line, “a reflective and water
repellant line of shoes to keep runners protected from the elements” (Nike, Inc., 2013). These
shoes are designed specifically for someone who is running outside during the winter time
when the sun is down, showing the clear amount of specificity that NIKE has with some of
their extension segments.
NIKE does not supply much outside of these core products fearing any customer confusion
if they were to venture off into the development of non-sport/athletic related products. NIKE
wishes to stay within their market segment and it has proven to be a success as the industry
is steadily growing. This has shown to be one of NIKE’s greatest strengths; they have been
able to achieve their desired brand image and knowledge through the careful and specific
implementation of their brand architecture and portfolio
SWOT analysis:
Strength:
Nike has a huge influence in sports industry; it “has established a strong
position for enhancing athletic lifestyle” (Anonymous, n.d). The logo of Nike
speaks better than the brand name itself which tends to hold the most mind
shares. On top of the impact it has in the athletic footwear sector, Nike also
sponsors celebrities and top athletes in different sports for endorsement.
Page | 6
Speaking of quality, Nike has one of the best research and development team
in the industry; Nike has always been the industry leader in terms of product
quality and product innovation. Nike is always able to implement technologies
across industries, while managing to sustain above the standard product
qualities during manufacturing processes.
Weaknesses:
Nike is known for having factories in developing countries like Indonesia,
Vietnam, China, and more. Several unethical practices are frequently being
reported, such as hiring child labors, paying works below minimum wages,
and enforcing sweatshop that forces employees “to work over sixty hours
each week and punished them if they refused to work overtime” (kr150276,
2013). Even though Nike claims that they have been putting effort into
resolving these disputes, the public still remains skeptical of Nike’s degree of
dedication.
Opportunities:
Nike is able to ride the trend as the technology innovates at a very fast pace.
Nike is able to implement its technology and spirits across industries, such as
Nike+ on Ipod or Nike Kinetic on Xbox 360. Coming up next, as more and
more tech firm eager to introduce more wearable devices such as Google’s
Google Glass or Samsung’s Galaxy Gear Smartwatch to the consumers, Nike
may be interested in investing into wearable technology as it seems to become
an emerging paradigms.
Page | 7
Threats:
As more and more sports brands consider outsourcing and developing multiple
product lines for different target segments, the foot wear market is becoming
more competitive, and Nike is gradually losing the competitive advantage of
having a product that possesses high value with low cost.
On top of it, the international market is on the rise while “the domestic market
is reaching saturation”. However, the risk associated with the trend is due to
globalization and currency fluctuations. Globalization decreases not only the
manufacturing cost but also the retail price. Along with the currency
fluctuations among the global market, Nike has to be extra cautious as
sometimes “profit overseas can turn into a loss” (techanalysisblogger, 2013).
III. Recommendation:
Long term strategic goal: Strengthen the brand by mitigating
damages that cause by the weaknesses and threats.
No matter how strong a brand is, it’s never perfect. A strong brand is a brand that could
identify its weaknesses and find a way to improve them. For that reason, our long term
strategic goal would focus on the threats and weaknesses that NIKE has been facing.
Page | 8
Recommendation 1: Improve working conditions for overseas labours.
From what we have analyzed in the SWOT analysis, one of NIKE’s weaknesses is
unethical practice in manufacturing plants outside of the States. This is eventually a
common problem for giant businesses. Once the demand for their products increase, the
competition within the market also get more intense and as a result, big businesses are
forced engage seeking for cheaper labours overseas. This is where the problem starts, as
cost gets lower, labours are being paid less and also exposed to lower quality working
environment which ultimately leads unethical practice that could damage NIKE in term of
brand image and legal actions. In order to manage this problem, NIKE should act more
aggressive on their overseas manufacturing plants in term of human resources
management: Setting one common standard about working conditions, labours’ wages and
hours to all of its manufacturing plants and any plant that fails to meet the standard will be
shut down.
Recommendation 2: With a reputation of “overpriced” products, NIKE should adjust
their products’ prices to make them available to more consumers.
Although NIKE has created a perception in consumer’s mind with “high price-high
quality” image, NIKE’s products tend to be too expensive for a large portion of consumers
despite their desire for the products. Leaving the high prices unadjusted could cause NIKE
to lose this customer base in the long run and other competitor could pick on this factor to
offer similar products with lower prices to capture the “left-out” customers. In order to
prevent this problem from happening, our team strongly recommend NIKE to adjust its
prices, making their products available to a large portion of customer base with low
purchase power.
Page | 9
Recommendation 3: Improving US-based performance in clothing manufacture.
US-based performance clothing manufacturer, Under Armour (UA) is one of Nike’s largest
and most threatening competitors. Rather than focus on a niche market, UA focuses on the
entire performance apparel market and has made significant growth against Nike. Nike is
still the market leader with a 36% share in the apparel segment with UA overtaking Adidas
to be the new No.2 brand in North America with a 31% share of the market. (Mergent
Online 2013) Currently, Nike is seen as more of a style icon rather than a premium athletic
performance brand as it had been in the past. Consumers have been choosing Under
Armour for their innovations of material and higher quality compared to Nike.Our team’s
recommendation in this case is to import lower cost products manufactured from overseas
and sell them at lower prices comparing to UA.
Page | 10
NIKE SWOT ANALYSIS
Strengths Weaknesses
Strong influences in the athletic goods Child Labor
industry Unethical practices in factory
Powerful brand image internationally environment outside of US
Celebrity and athletes endorsement Some customers view Nike as the
Strong mind share when it comes to sport company that only cares about making
brand money
Has no factories The company is too heavy dependent on
Has a huge loyal customer base footwear products
A range of various product lines that price Nike products are considered expensive
differently
Possesses one of the most advanced
product innovation capability
High quality products and services
Opportunities Threats
Nike has the ability and potential to The retail sector is getting more price
implement and to innovate their sensitive and price competitive
technologies with other different types of Competing brands are catching up in
brand in different industry such as Apple, terms of technology and marketing
Microsoft or Android. strategies
The global economy is changing, Globalization and currency fluctuations
countries like China has an increasing may turn profits overseas into profit loss.
number of consumers who has disposable
income
Page | 11
