Nike has undergone remarkable growth and success over the years. Recently, it has clinched top position over its competitors such as Reebok and Adidas, due to revenues that surprised analysts. Its success can be greatly attributed to its investment strategies. Investors are enjoying the current increase in shares up to 25 percent. Nike expects to spring up its portfolio comprising of Nike Brand, Cole Haan, Converse, and Umbro among others, to a target of $27 billion by 2015. A few of the Nike’s investing strategies are competitive strategies, which include direct-to-consumer, down-market strategy, Nike’s consumer-focused category, international expansion and aggressive marketing, as well as corporate social responsibility (CSR) or community investment strategy.
One of Nike’s most successful investment strategies is direct-to-consumer. It involves selling goods to the consumers without intermediaries. Nike has opened many outlets that make it possible to directly deal with the consumers. In this strategy, they are highly focused on working with retail partners to bring about superior and differentiated customer experiences incorporating the implementation of category-segmented ideas in key markets. Retail partners account for over 80 percent of Nike’s overall business. Nike intends to invest $500 to $600 million in funds to expand the direct-to-consumer trade and construct means to sustain equally owned and wholesale-retail efficiency (Horovitz).
An additional investment strategy is that of expanding growth by means of international extension and aggressive marketing. This is characterized by massive product differentiation in marketing approaches and product offerings. For instance, Nike plans to invest aggressively within China with other budding markets. In this, it is aiming at low double-digit growth with extra $3 to $3.5 billion annual revenue by 2015. Nike has taken advantage of its six geographical opportunities to market its increased brands. It has also increased its brand products to supply more in various categories as well as countering competition (Walters 1). For instance, there are brands for action sports, women’s training, football, running, basketball, and sportswear just to mention a few. In marketing, Nike uses brands that everyone all over would reckon with such as Michael Jordan (Horovitz). It has also invested highly in internet marketing considering the different needs of athletes and consumers who make use of the website for communication. This communication captures content and product information in depth as well as athletes’ perceptions. It explains the process of forming the product and its benefit in training. The website is provided in different languages displaying different athletes and sportsmen as well as their inspiration of being stronger athletes.
One of the most powerful strategies by Nike is community investment strategy. This strategy is the form of corporate social responsibility has seen many athletes from all occupations identify with Nike. For instance, the Nike Foundation centers on teenage girls in developing nations serving as powerful agents of change in their societies. Additionally, it has used the power of its brands like Converse, Umbro, and Cole Haan to leverage a connection with consumers on issues that deeply affect them (Nordin 16). It aims at using the power of sports to instigate social change, for instance through support of Homeless World Cup or Ninemillion.org (Nike & (RED) 1). Concisely, Nike has used community investment as a great way of getting returns. It has ensured that it gets all the revenue, publicity, and advertising that comes in hand with being recognized by the community thus great returns.
Down-market investment strategy for Nike has also seen great success. A few years go it decided to venture into fashion and value-conscious line of shoes for women. Nike has a way of taking risks to penetrate in each market and increase their revenues. It thus ensures there is a certain brand that is exclusively targeting a particular segment of the market, for instance, Tailwind that focuses on women. This has seen Nike supply a wide range shoes for almost every sport (Hobson 37). Nike has successfully ventured into consumer-focused strategy that focuses on the athlete to offer not only shoes but also surrounding products that are needed for experience by the athlete (Walters 1).
Hobson, Katherine. “A Passion for Fashion.” U.S. News & World Report 131.5 (2001): p37. Print.
Horovitz, Bruce. “NIKE’s CEO knows how just to do it.” USA Today. 2009. Print.
Nike & (RED). Our Approach: communities. 2010. Web.
Nordin, Kendra. “When A Product Gets A Social Life.” Christian Science Monitor. 93.63 (2001): 16. Print.
Walters, Hellen. “Nike’s New Down market Strategy.” Bloomberg Business Week. 2007. Print.