Nike: Product Design and Quality Management

INTRODUCTION/ COMPANY BACKGROUND
Operational strategy
Product design
Process design
SUPPLY AND CHAIN MANAGEMENT
Quality management
Conclusion
references

Introduction
History
Formerly known as Blue Ribbon Sports, Nike, Inc. was founded in 1964
with its headquarters in Beaverton, Oregon by Bill Bowerman, a field
coach at the University of Oregon, and his student Phil Knight. Originally
started as a sportswear company, Nike launched their first shoe in 1972
shortly after which it was officially renamed to its present name in 1978
and went public in 1980. Even though they opened their first retail outlet
in 1966, they have numerous outlets and distributors today in more than
170 countries. Soon after being recognized in the industry during the late
1980s, Nike slowly expanded its footprint by branching out their lines of
products by acquisitions and mergers – a few prominent ones being Cole
Haan, Converse, Canstar Sports and Umbro. Officially designed in 1971,
the “swoosh” or the curved checkmark is recognized worldwide as Nike’s
logo today (Britannica, February 2019).
Product Portfolio
The flagship product of Nike, Inc. is shoes. Along with manufacturing
shoes specific to many on-field games like baseball, golf, soccer,
basketball, tennis and volleyball, Nike also produces shoes meant for
consumer fashion such as Mary Janes or flip-flops. They have numerous
other offerings when it comes to shoes meant for running, cross-training,
bicycling, wrestling, cheerleading, auto-racing, aquatic activities or any
other athletic and recreational purposes. Moreover, Nike also
manufactures apparel for sports activities for both men and women. Nike
features a wide variety of collection for its apparel line, including Nike
Free, Livestrong, SPARQ and Nike Pro as part of campaign initiatives.
Additionally, sports equipment is also a part of Nike’s business. These
include yoga mats, swimming caps, gloves, baseball bats, rackets, balls,
golf clubs, protective wear etc. (Writer, C). They even expanded to Nike
ACG (All Conditions Gear) for extreme sports products like equipment for
snowboarding and mountain biking. Their accessories such as bags,
watched and socks are also well-known. As of today, their product lines
also offer portable heart-rate monitors and high-altitude wrist compasses
(Britannica, February 2019). Consumer technology such as the Nike+ app
that includes physical education classes, music, and other competitive
activities are also part of Nike’s product portfolio (Writer, C). For every
brand and product offering associated with Nike is a clearly defined,
different customer which branches out opportunities for Nike’s long-term
growth (Nike, Inc., 2019).

Product Strategy
Given the vast amount of product offerings, Nike implements a
combination of Differentiation and Cost Leadership strategies. This is a
mix of two or more of Porter’s generic strategies which aim to reduce
costs of production while maximizing profitability or reducing selling
prices. In the late 1990’s, this generic strategy has helped Nike recoup its
customers from the industry competitors, especially Adidas. Nike’s cost
leadership strategy is also used to build lasting customer relations and
develop brand loyalty by providing rewards for premium customers. From
saved costs through their cost leadership strategy, Nike uses their budget
on developing innovative and unique products as part of their
differentiation strategy. Their aim through innovation is to become more
sustainable and keep up with competition through creating highly
differentiated products and product lines (Miller, D., 1992).
Nike’s mission statement focuses on innovation implemented by means of
new designs for shoes and all related products that they manufacture.
Going in line with their mission statement, product development acts as a
crucial strategy for Nike’s intensive growth which simply involves the
introduction of new products for the purpose of increasing sales revenues.
Since customer preferences are constantly changing, product
development through new technology ensures that these products remain
appealing to the consumers by being set apart from Nike’s competition.
Additionally, this product innovation strategy implemented in the design
of sport shoes, apparel and equipment also fulfils their financial objective
by increasing Nike’s market share (Parnell, J.A., 1997).
Product Lifecycle Planning
The stage sequence of growth and development of an organization or a
product is called as the Product Life Cycle. It is characterized by four basic
stages: Introduction, Growth, Maturity, and Decline (Kopp, C., 2019). In
this section, we will go over the lifecycle analysis of Nike, Inc.
During the Introduction stage, Nike launches a new product accompanied
by a wide range of advertisements in the form of posters, billboards and
magazines. Because Nike knows that many consumers demand that new
product, the cost of advertisement is covered up by selling even a small
quantity of the new product which are usually expensive for the
consumers. In fact, some products get so popular during the introduction
phase that Nike pushes up the prices to get more profit. As this process is
repeated, the company generates more profit and that is when Nike
enters its Growth phase. Presently, Nike is in the growth state of its life
cycle which allows it to develop the skill for value creation and obtain
more resources. This increase in resources helps the company to upgrade
their labor and use them as competitive advantage. With this skilled labor,
each team focuses on a specific product for developing and completing
the demand of the customers for that market segment. After growth

comes the Maturity stage. In this stage, the customers are not as excited
about the product as they were during the introduction stage. The shoes
sales might be hitting up, but it does not last long. This is the critical point
for any company. If Nike doesn’t take any step in introducing new
products with exciting features and innovation, the company would go to
decline phase and eventually death. During the Decline phase, the shoes
are out in the market but the hype among the customer is not as
expected. So, the price of product goes downhill and hence, so does the
profit. For any company in the maturity phase, it is very important to
retract back to the growth phase as soon as possible to ensure their
position stays intact in the market. As depicted in Fig. 1, it is evident that
Nike obtained the growth phase soon after the maturity phase. This
requires a proper product cycle planning which is why the company is still
flourishing in spite of being in a huge competition. This planning starts
well before the growth stage, where the development of the business plan
is done. This phase includes various aspects like SWOT analysis, market
segment analysis, product opportunity, resource statement, feasibility
checking and a detailed plan of business goal (Writer, C., 2019).
Good and Services Design Approach
In order to keep product design consistent with business goals, Nike
concentrates on advanced technology and market preference, and
implements a strategy called the Closed-Loop Business Model. This
strategy reuses and recycles all materials to ensure zero waste. Under this
strategy, Nike’s products are produced by recycling waste materials as
innovators create new product designs that can also be easily
disassembled. Nike’s Considered Design range of products includes the
newest products that integrate sustainability and current sport needs
using the Closed-Loop business model. In the long run, Nike attempts to
design products that utilize fewer materials from nature and that can
safely go back to nature at the end of their lifecycle. The ultimate goal of
Nike Considered Design is to think about sustainability from the beginning
of the design process. Instead of designing a new shoe, Nike creates a
new model of design which thinks about manufacturing process of shoes.
One example of the implementation of this strategy is the Nike Fly-Knit
Racer, which is considered to be more environmentally friendly while
decreasing long-term production costs. Nike also broke its old rules of not
fixing something which is not broken as with this product, they capture
50% of the running shoes market and 92% of basketball shoes market
(Writer, C., 2019).
Customer Involvement
Nike is very adept at maintaining customer relations and incentivizing new
customers to join the Nike family. Not only do they provide member
benefits, but they also provide excellent customer service to all
customers. Nike’s Nike+ app provides personalized recommendations and
offers to users under ‘Featured Picks’ based on customer data and
purchase history. Using smart recommendations, Nike makes the
purchase process for users easier thus increasing chances of sales and

building brand loyalty. Additionally, they also provide benefits to Nike+ app
active users by using their goals and interests to offer access to fitness
classes, guided meditation and even music. Thus, users can earn and
receive rewards digitally based on their physical engagement with Nike
products through non-transactional behavior. For example, in November
2017, Nike rewarded its consumers for a non-purchase behavior by
inviting them to run a 25-minute 5K through the Nike+ app. The area of
interest for consumers was a pair of Nike Zoom Fly trainers which would
be given out free of cost to all those who complete the 5K run in under
twenty-five minutes. Nike also boasts excellent customer service as they
utilize their social media platforms answer all support questions in a
timely and friendly manner. Their Twitter account, @NikeSupport, is
functional all day, every day and the customer service agents are
proficient to assist customers in numerous languages included Dutch,
Spanish, German, French, and Italian. In their flagship store, Nike is also
building a fifth floor that is exclusive to Nike+ members, thus further
encouraging customer engagement with the brand outside of
transactional behavior and incentivizing membership. This floor will be
characterized by events, special gear, and even one-on-one assessments
by Nike experts. Nike keeps the membership free and uses it solely to
capitalize on customer relations rather than fee profits (Langrock, S.,
2018).
SWOT Analysis
Nike has a very strong brand name and it is well known all around the
world. They operate in more than 160 countries. Nike also uses rapid
prototyping and innovation techniques to stay ahead of the competition.
Nike has a large number of suppliers and subcontractors. Nike also has
great customer relation. It provides outstanding customer service. Nike
doesn’t manufacture any of their products on their own. They get it done
offshore. Because of this they cannot constantly inspect them on a regular
basis. This lead to variance in quality. Nike isn’t focusing more on
developing countries like China for their sales. They image went bad
because of labor controversies. This was because of offshore contractors
exploiting workers. Nike has less product line. They should try to explore
more sections like formal wear, electronic section etc. Nike has the
opportunity to invest in new product development and innovation to get
ahead in the competition by releasing different products. There are a lot
of developing countries where Nike can focus on to increase their
customer base. Nike can also try to improve sustainability by recycling
shoes to make them shoes again as customers nowadays are more
inclined towards environmentally friendly products. Nike can also try to
integrate their sportswear with fashion wear so everyone can wear them.
Nike has faced a lot of competition but has able to cope up with it but now
because of internet age, many new online based companies can face as a
threat to Nike in near future. Nike also face the problem of duplicate
products being produced and sold as Nike. This reduces the sales of
original Nike product. Nike is mostly dependent on footwear for it revenue.

They need to change this strategy. With rapid technological change, Nike
is not able to cope up with it. Also it requires a large initial investment.
Quality Management Strategy
Quality and Strategy
The degree to which a product lives up to its endurance, maintainability,
order characteristics and performance that a customer expects to get
from the product is defined as the quality of that product (Goetsch and
Davis, 2014). Nike products are known for their high quality as they
successfully meet the demands of consumers from all around the globe.
Nike recognizes that the quality characteristics of products and services
can be defined in terms of their functionality, appearance, reliability,
durability, recovery and contact. To meet the quality standards Nike
focuses on various strategies various strategies like TQM (Total Quality
Management) and Lean Manufacturing (Shanley, 2004).
Nike Focuses on quality during the manufacturing process to meet the
customers’ demand and maintain high standards of quality. Nike’s
manufacturing process is inclined towards TQM (Total Quality
Management). While other companies’ TQM restrict innovation and
creativity, Nike uses it to motivate creativity which lets it to be in the
position of continuous improvement and development of new products.
TQM helps the company to maintain its image, improve working
conditions along the supply chain and encouraging new processes and
development. The combination of these three elements through TQM
enables Nike to secure market share, differentiate themselves from its
competitors and create value for its customers. TQM at Nike also focuses
on the production and deliverable capability of the products and services
that the market demands in the short and long run. Therefore, Nike ends
up utilizing quality management in the entire production facet (Shanley,
2004).
When it comes to the design of Nike products, the concept of design
management plays a crucial role in the implementation of TQM. Various
methods and techniques are examined to ensure the development of an
active system and an organizational structure best suited for product
development – Computer Aided Design, Robust Design, Value Analysis,
Modular Design and Environmentally Friendly Designs to name a few
(Shanley, 2004).
According to Nike, the number of faults in a design along with the
efficiency of achieving market demand numbers is a strong indicator of
the quality of the design process. For the last few years, Nike has vowed
to eliminate waste during production processes by developing
environmentally friendly designs. In a world where resources are limited
and the threat of water scarcity, climate change and other resource
constraints are a much greater threat than the financial crisis, Nike is
implementing Green Manufacturing to conserve water, increase energy
efficiency and reuse and recycle (Shanley, 2004).