Nike, Inc.: Analyzing Revenue Goals, Challenges, and Market Strategies

This case study provides a comprehensive analysis of Nike, Inc., focusing on its goal of achieving a $50 billion revenue target. It explores the company's historical background, marketing strategies, competitive landscape, and internal challenges. The study examines Nike's pricing strategies, branding, and marketing environment, including celebrity endorsements and the impact of the "swoosh" logo. It also delves into Nike's core competencies, sustainable competitive advantages, and strategic intent, emphasizing the importance of diversity and inclusion within the workforce. The analysis considers the challenges faced by the new CEO, John Donahoe, in navigating controversies and scandals while striving for growth. The report concludes by highlighting the key factors influencing Nike's success and the importance of adapting to market dynamics and addressing ethical considerations. The analysis includes a discussion of Nike's diversification strategy, the influence of the marketing environment, and the impact of the brand's social and political advertising, and competitors like Adidas and Under Armour.

Nike, Inc- will Nike reach their revenue goal of $50 billion?
1.0 Executive Summary
Nike Corporation has been able to create and sustain their brand over many decades
due to various marketing strategies. These strategies have been desirable for a long
time, however do they have the capability to achieve their $50 billion goal? The
demand of various Nike products seems to fluctuate throughout the years. This case
study highlights the history, competition, current fashion trends, and internal
challenges of Nike, which impact its current position in society and around the world.
As stated in the case study, the main aim of Nike is to “inspire and bring innovation to
all athletes around the world”, whilst the vision is to “remain the most genuine,
connected and most distinctive brand globally” (T. Rothaermel, 2019).
John Donahoe is the new CEO of Nike, currently in Beaverton, Oregon, and is in the
process of realising the importance of growth for Nike and focuses on how he needs
to execute the vision. Donahoe has been appointed CEO while Oregon sports have
been faced with numerous controversies and scandals, of which he needs to handle
and manage. Will he be able to achieve the growth that he had promised?
The following case study highlights the biggest challenges Donahoe will have to face
and discusses the various competitive markets he will have to battle with to continue
to lead and manage this favourably up-and-coming firm. The report will discuss the
marketing environment which has an influence on brand positioning, the value
proposition of the brand, and the internal and external challenges that will have to be
overcome for the growth of the business.
2.0 Pricing
Why is it that people pay hundreds for Nike products when there are clearly other
options that are much cheaper? Nike has developed and diversified its business and
their products through the means of various acquisitions of which include the shoe
companies Converse, Cole Haan, and Umbro, the athletic attire and equipment
company. The rise of sneaker culture has ultimately risen the cost of sneakers and

therefore consumers are prepared to spend hundreds of dollars on Nike products as
they view it as “good investments or bold statements” (Cain, 2019). The Air Jordan’s,
Nike’s most well-known brand, is based on the popularity and famous legacy of
Michal Jordan, the NBA star, is recognised by the iconic logo of Jordan dunking the
basketball. They are made in China and cost just over $15 a pair, however, are priced
on Amazon for around “$250-$550 a pair” (O'Keefe, 2017). Celebrity collaborations
and endorsements have become extremely popular and are truly nothing in relation to
sneakers. Entertainers such as Lebron James, Kobe Bryant, Christian Ronaldo and
many more, are able to attract and leverage the existing fanbase that they have created
and hence have helped boosting products. The symbol of the Nike tick also plays a
large role as it sells a mentality for consumers to purchase it and to “Just Do It”,
promoting it in a way that captures the audience while not making them feel guilty
either. Nike’s competitors including Adidas, Under Armour and New Balance all
need to work hard to overcome each other ways of promoting and selling similar
products. Pricing a product ethically is such a big decision for companies to make,
and “fair pricing” is used by producers to sell products at wholesale costs. They need
to be able to pay for employment, materials and other things to make the products
with a margin of profit that is reasonable. Retailers will have to bump up the price up
a few times higher so that they can pay for their employees and overhead with a
considerate profit margin for the company (Springs, 2020). However, considering
other aspects such as unethical advertising, use of child labour, environmental
degradation and more, the ethicality does decrease.
3.0 Branding
Nike has acquired several apparel and footwear companies, with many footwear
factories and nearly 365 attire factories that generate Nike’s products around the
globe. As stated in the case, Nike owns Converse, Hurley and the Jordan brand, all of
which have made significant revenue, as well as being diverse from pure athletic
apparel to swimwear. By keeping these brands, they result in more sales, as seen by
the case study, the Converse brand, they plan to doubling their sales from $2 billion to
$4 billion from 2015 to 2021 respectively. (T. Rothaermel, 2019). Diversification
strategy is an important strategy used by many companies to increase profitability
and the overall success of the brand. It helps companies expand and explore industries
that they haven’t so yet (Pilcher, 2020). By diversifying and expanding their horizon,

companies minimise the future risks of “industry downturn” (Pilcher, 2020). As
mentioned in the case study, similar to Nike’s inspiration SONY, it highlights the
importance of maintaining diversity among various product lines to allow consumers
to think of Nike as a brand that provides a wide variety of products from premium
products to casual wear too, done by Converse. Nike should definitely keep all of its
brands such as Converse, Hurley and the Jordan’s as they continue to provide extra
revenue for the business. Entertainers are able to promote these brands online, via
Instagram and Twitter which now are some of the most popular ways consumers
purchase items.
4.0 Marketing Environment
It is really important that the marketing environment is analysed, in order for there to
be differentiation between businesses, and hence to allow for the greater success of
the business. Some challenges that Nike faces within its macroenvironment is the
social culture of its brand, since there have been many controversies with the
business, and scandals, positioning the brand at great risk. Throughout the years, few
of the so called “Nike’s heroes”, were so called “cheaters, frauds, and criminals”, with
some committing serious offences. As long time CEO and chairman Phil Knight has
said, these scandals are “part of the game”. For example, as mentioned in the case
study, “NBA star, Kobe Bryant was accused of rape”, “Tiger Woods was engulfed in
a sex scandal”, “Michael Vick was charged with conviction of running a dog-fighting
ring and engaging in animal cruelty” and many more likewise (T. Rothaermel, 2019).
The “Boy’s Club” was another major controversy where women also complained
about the minimal opportunity for promotions, the pay differences between gender
and inappropriate work behaviour which all present a major challenge that Nike faces
in relation to the workplace culture. John Donahoe must address this and press the
importance of culture to value diversity and inclusion within the workforce. The
business is always open to public eye as it is more engaged in social and political
advertising. Therefore, the CEO, John Donahoe should definitely be more focused on
encouraging diversity, improving leadership training, and modifying the current HR
processes to minimise such scandals in the future.
5.0 Competencies/Sustainable Competitive Advantage

Core competencies are the capabilities of the company that function as a competitive
advantage in comparison to its opponents. Nike Inc has a unique mixture of
capabilities and competencies that place the company in a higher position of
sustainability. Nike is one of the most sustainable companies and is highly renowned
by other corporations in rank of sustainable performance. Effective marketing
strategies and innovative designs both deliver value and many benefits to Nike’s
consumers, and can be used of advantage to majority of their products and target
markets. Nike has the ability to lure clients in with a marketing strategy which focuses
on their brand image, with the “swoosh” as their well-known logo and the advertising
logo “Just Do It”. Due to their long history of producing such high-quality products
consistently it has earned the trust of consumers. Another advantage that Nike has is
the ownership of many other brands as mentioned above of Converse, Hurley, Jordan
etc, so with the diversification of these brands, it allows Nike to have control over a
market share. Several features of the firm, which contributes to be such a fundamental
part of the company and therefore is important in its sustainability positioning include
organisational design, market strength, market positioning and culture.
6.0 Strategic Intent
Nike’s strategic intent of wanting to be a company that “stands for something
meaningful”, relies heavily on making a positive impact on its consumers, and
therefore its target market. The vision of Nike clearly outlines that the aim is to
inspire all athletes, while defining an athlete as anyone who has a body (T.
Rothaermel, 2019). That really does have a optimistic influence as it promotes all
kinds of people to buy their products. As mentioned in the case study, Nike took a
stand with the Black Lives Matter movement and hence shows a positive approach
taken and hence changes the historical view that Nike was the forefront for the ethical
issues of child labour and sweat shop (T. Rothaermel, 2019). The “#boycottNIKE”
slogan started being a trend and was a result of Nike taking a stand, which can
ultimately lose possible markets. (T. Rothaermel, 2019).
7.0 Conclusion
Hence, throughout this report, it is seen that there are various aspects of marketing
that are required, and that John Donahoe has to face, in order for the company to

remain and grow even more successful. Undeniably, there are many complications to
leading a top firm such as Nike with many aspects to look at once, while ensuring
many different marketing tactics are being used, to result in positive growth. It can be
perceived that, analysing the market environment, the competitors and the internal
and external challenges that must be faced are all equally important for the growth of
the business.
Reference List

Cain, Á., 2019. Shoppers Are Now Willing To Drop Hundreds Of Dollars On Sneakers —
And They Might Need To Spend Even More In The Future. [online] Business Insider
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expensive-shoes-footwear-2019-7?r=US&IR=T> [Accessed 8 August 2020].
O'Keefe, T., 2017. [online] Citizen-times.com. Available at: <https://www.citizen-
times.com/story/opinion/contributors/2014/07/27/real-costs-pair-sneakers/13181055/>
[Accessed 8 August 2020].
Solereview. 2016. What Does It Cost To Make A Running Shoe?. [online] Available at:
<https://www.solereview.com/what-does-it-cost-to-make-a-running-shoe/> [Accessed 8
August 2020].
Springs, J., 2020. Ethical Issues Of Pricing Strategy. [online] Small Business - Chron.com.
Available at: <https://smallbusiness.chron.com/ethical-issues-pricing-strategy-17441.html>
[Accessed 8 August 2020].
Pilcher, R., 2020. What Is Diversification Strategy? (Definition And Examples). [online]
Lighter Capital. Available at: <https://www.lightercapital.com/blog/what-is-diversification-
strategy-definition-examples/> [Accessed 8 August 2020].