SUSTAINABLE footwear brand Nike, arose from the

 

SUSTAINABLE INNOVATION AT NIKE. PRODUCT DEVELOPMENT
AND INNOVATION STRATEGIES

 

People have
fascinations for certain brands, since they can identify in some way with what
they represent or simply because they marked their lives in some sense. In this
case, the feeling that everything is possible, that the human being is capable
of doing many incredible things is what has made Nike one of the leading brands
in the market of footwear, clothing, accessories, equipment and sporting goods
in all the world.

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Despite all the
controversies about the quality and manufacture of its products, Nike is a
successful brand. In the United States alone, it distributes its products to
more than nineteen thousand retailers and its annual revenues exceed
twenty-five billion dollars in sales. Among its most outstanding products are
sports shoes for a diverse range of disciplines such as athletics, basketball,
soccer, etc., as well as balls and, lately, applications for smartphones.

The birth of the famous footwear brand Nike, arose
from the motivation of a curious athletic trainer from the University of
Oregon, Bill Bowerman, when in 1950 he tried to give his athletes an advantage
during competitions. One of his students was Phil Knight, who as a sports lover
wanted to be part of the Bowerman team. As they were integrated, during long
talks, they came to the conclusion that it was necessary to make changes to
competitive shoes. Said dissertations, it would be what motivated them to draft
a proposal to some footwear manufacturing companies in Japan, to persuade them to
make modifications to their products and gain the dominance of the sports
footwear industry in the United States.

It is known that at
the end of the 50s, Philip Knight, professor and ex-athlete of the University
of Oregon, sought to make a name for himself in the sports shoe distribution
business, so he traveled to Japan to propose to the company Onitsuka Tiger distribute
their famous shoes for athletics in the United States through an alleged
merchant called Blue Ribbon Sports. When telling this to Onitsuka’s
representatives, Knight was lying to them, because the aforementioned BRS did
not really exist. It
was not until 1964 (when the Tiger distribution business was completed) that he
legally constituted it in partnership with his ex-coach and friend, Professor
Bill Bowerman, who not only contributed his capital but his knowledge in the
sport.

Later, at the end of
the 60s, the company already had considerable income and Knight decided to
change the name to Nike, which comes from the word Nike and refers to the
goddess of victory in Greek mythology. Being one of the most
famous symbols today on a global scale, the Nike logo is known by the name of
Swoosh, and was created by the graphic designer Carolyn Davidson in 1971, at
the request of Knight himself, who wanted a logo ” with movement. ”
She was inspired by the wings of the goddess Nike, represented in the Hellenic
tradition as a winged woman running at great speed. After several sketches, the
designer achieved what would be the definitive image of the brand.

 

Bowerman was a teacher who taught athletes the secrets of success. Nike
invites you to experience all the innovative and inspiring Nike products.
Nike’s mission statement is “Offer inspiration and innovation to all
athletes in the world”. Legendary athletic trainer at the University of
Oregon and co-founder of Nike, Bill Bowerman, said: “If you have a body,
you are an athlete.”

“Innovation is everything for Nike.” With this declaration of
intentions, Mark Parker, CEO of the US company, began his speech during the
presentation at its headquarters in Beaverton, Oregon, at the news that the
brand has been prepared for this season. Four new elements in different fields
that revolve around a fundamental concept for Nike: innovation. Because, as
Parker himself explained in a sober staging in the style of Apple’s magisterial
notes, it is innovation that defines the core of the brand, redirect the design
to a differentiating point with respect to other sports companies for which it
is designed to solve a problem, improve an existing concept and not for the
mere fact of designing. From this idea was born the ‘Nature Amplified’
philosophy, a set of four technological and design innovations designed to
improve the natural abilities of runners.

The design and research team of Nike conceives the four novelties of ‘Nature
Amplified’ as a complement to the body in movement and is supported at all
times in the exhaustive scientific research carried out by the company in its
central facilities. The research carried out working side by side with the
athletes, motor and main client of the brand, at the Nike Sports Research Lab
located in Beaverton, and through biomechanics studies backed by advanced
monitoring techniques, are able to quantify each one of the elements that
intervene in the movement of the user, which allows to improve the natural
abilities of the human body. As Trevor Edwards, vice president of the brand and
Man GQ of the week, told the press during his presentation: “If you have a
body, you are an athlete, our desire is to help you reach your maximum
potential”.

This is the reason why ‘Nature Amplified’ reveals two new running shoes, Nike
Free Flyknit and Nike Free Hyperfeel; and two innovations in the textile field,
Nike Aeroloft and Dri-FIT Knit. Four innovations that come to help demonstrate
what Parker exclaimed strongly at the end of his speech, that for Nike,
innovation is the antidote to limits.

FLYKNIT FREE
Free Flyknit technology is a logical step for the brand that combines two of
its most acclaimed scientific innovations. The Flyknit upper part, which adapts
to the foot as a second skin, providing in each area of ??the foot the
necessary support depending on its particular performance; and the Free sole, designed
to bring the athlete as close as possible to the experience of running barefoot
with a sole that adapts perfectly to the movements of the muscles of the foot.
Free Flyknit thus provides a natural movement but with a perfect grip.
Model Nike Free Hyperfeel

NIKE FREE HYPERFEEL
Reduce the number of layers between the foot and the ground to a minimum.
Designed thanks to the results of foot pressure mapping performed in the Nike
Sports Research Lab applied to Lunarlon midsole technology combined with the
Flyknit system, it gives the feeling that the shoe is just an extension of the
foot.

 NIKE AEROLOFT
It arises from the need to protect athletes from low temperatures but without
providing too much heat. Thanks to its perforation system it allows to regulate
the temperature activating the ventilation when the body begins to move. The
first garment to incorporate this technology is the Nike Aeroloft 800 vest,
which combines this technology with Dri-FIT Knit and will be on sale from
September 1.

NIKE DRI-FIT
The well-known Nike Dri-FIT system is renewed with three new innovations. On
the one hand, Dri-FIT Knit offers an ultra-soft and light fabric with openings
in the areas of sweat and without seams, which adjusts to the body and allows
all kinds of movements with comfort.
Flyknit free special edition

When we talk about
marketing and sports brands very few times are we as consumers we think about
technology. However,
this is intimately linked to marketing, because in many cases the technology
itself will indicate the path that the marketing department must take to carry
out the strategy of one or the other product.

A report released by
Macquarie Capital revealed that during 2013 Nike registered 540 patents with
the United States Patent Office, a number that was 60 percent higher than the
340 obtained in 2012, but the most interesting thing is not the
increase or the high number of patents obtained by the brand, but as little by
little the brand’s priorities have been changing.

According
to the numbers released, only in 2006  76%
of the patents registered by the American brand corresponded to innovations in
sports shoes, either in the sole, the shoelaces, the lining or any other
element related to them, while
in 2013 this number decreased by 26 percent, to be only ‘half’.

But
the most significant change has occurred in terms of digital technology, since
while in 2006 this section only comprised 3 percent of the total patents
obtained by Nike, by 2013 this number grew to 16 percent (something like 81
patents), most of these digital patents referring to the different applications
used to measure performance through mobile devices.

The
above takes relevance when we realize that the average user of smartphones
worldwide has within its device only 26 applications, according to data from
Google’s Our Mobile Planet, a number much lower than the number of patents that
Nike obtained during 2013
in the digital area.

In
this way we can infer that the growing interest that the sports brand has shown
in the development of technologies in the digital world in recent years has as
its purpose to take over a market that is in full development and that will
remain in clear growth for the next
years, especially taking advantage of the increasing link between the way we
practice sport and how we can measure it through our different devices.

So
Nike’s work in the near future will no longer focus so much on registering new
patents (which it will undoubtedly continue to do at the pace it has been
doing), but rather finding the perfect balance between “functional”
innovations and digital
innovations.

Nike was ranked first
in the 2013 ranking of the most innovative companies, according to Fast Company
magazine. Amazon
and Square follow, and to the surprise of many, Facebook and Twitter are
absent. Fast Company argued that during 2012 Nike completed two market hits.
One of the innovations is FuelBand, an electronic wristband that provides
details of the physical activity and movements of its user throughout the day,
with a cost of US $ 150. It was highlighted by its elegant design and
“clean” interface. Pressing
its single button displays how many calories were spent, the number of steps
that were given or the total Nike Fuel points, an activity metric that can be
shared online. For
Fast Company, “the Fuel Band wristband is the clearest sign that Nike has
become a digital force.” The other product is Flyknit Racer footwear,
featherweight that feel as comfortable as average. It
involved a new way of thinking about the manufacturing process of Nike, and the
result was a more environmentally friendly shoe, which in the long term can
help reduce production costs. In 2012, the company’s turnover reached 24
billion dollars, 60% more than it entered in 2006, year in which it took the
reins of the current CEO Mark Parker, considered in good part the engine of
this innovative drive that keeps
Nike healthy.

Nike is a benchmark company in everything it does. His
control over the complicated textile market keeps her in the spotlight of
activists and NGOs. Especially
as a result of a report from the BBC discovered sexual abuse and exploitation
in the factories of some suppliers of Nike in Asia.
Currently,
Nike is at the top of the sports equipment industry with approximately 37% of
the market. It
is also the one that has produced the most production jobs outside of North
America. According
to Setem, a federation of NGOs specialized in cooperation and development
issues, this North American firm carries out 99% of its production in the Third
World.

Developing
countries are attractive to factories because they offer cheap labor and more
flexible social, fiscal or environmental legislation. There
Western companies work with local factories to produce a specific product, so
that everything that refers to employees, working conditions, salaries, etc. it is in
the hands of the native producers.

With
this system, companies have begun to expand, businesses have increased and the
big magnates of the textile industry are reaching a power that some NGOs and
institutions find suspicious. The
lack of transparency that characterizes this type of production and the
difficulty in acquiring information about the contracted factories has caused
Nike, among other large multinationals, to be closely watched by the critical
eye of integrated associations within the anti-globalization movement.
Social
responsibility at Nike

Consequently,
Nike tried to tackle the problem by organizing various activities aimed at
increasing their social work in the countries where they worked.

To give voice to the measures that they took, a great communication
campaign was launched with the ultimate goal of getting consumers to end up
associating their brand with universal values ??of justice and equality.

The shares of the largest sportswear maker, Nike Inc, fell on Monday 2.44%
to $ 53.61 per unit, after Jefferies analysts downgraded the Buy to Hold
recommendation in the light of increased competition in the United States. United,
by its main rival, Adidas.

Nike’s
efforts to innovate and redesign have affected the brand, while Adidas has
successfully avoided the downward trend of shoes and sportswear. An
example of this is that in May, sales of Adidas went up 74% while those of Nike
fell half a digit.

Added
to this, the sports retail sector has not presented good quarterly results,
increasing concerns about an excess supply which generate a price war in the
industry.

The
roles of Foot Locker, one of the most important sportswear chains in the United
States, continued to fall on Monday, falling back 7.45% to $ 31.82 per unit
because they reported worse results than the estimates of the quarter. Their
earnings were adjusted by 0.62 dollars per unit of the estimated 0.90 dollars
per unit. So
far this year they have lost 34 percent of their profits.

For
its part, Hibbett Sports, sporting goods store, reported a net loss of 0.15
dollars per share compared to 0.29 the previous year. While
its sales fell 9.13% to 188 million dollars.

Analysts
indicated that clothing traffic fell in the last three months, and in July the
most pronounced decrease of 4.6% was registered, in addition that traffic fell
4.1% between January and July.

Richard
Johnson, CEO of Foot Locker, also blamed the lack of new innovative products in
the market and expects the trend to continue throughout the year.

In
addition, analysts indicated that the slowdown in retail sales also corresponds
to Amazon’s participation as an online seller.

The
problem facing Sportsman’s Warehouse and Hibbett Sports is simple: “Would a
customer prefer to drive 30 minutes to one of their stores or stay at home and
buy from Amazon, especially with free shipping?”, said Nathan Yates, Director
of Research at Forward View Consulting, in an email. (With information from
Reuters and Business Insider).

Nike is the leading company in the footwear and sportswear industry, with
an excellent track record of growth and returns for its shareholders. The
shares of the firm came to quote below the $ 13 in the year 2000, while
currently they are above the 74 dollars after having exceeded the maximum of
2008 in recent weeks.

The
excellent track record that shows the history of Nike is based on two main
pillars:

1. Marketing and advertising. The
company has one of the most popular brands on the planet, a clearly
identifiable logo around the world and a strong presence in different sports
disciplines. The
consultancy of brands Interbrand designated Nike as the most valuable sports
brand during 2009. This product differentiation is also supported by a wide
market and advertising campaign on a planetary scale, acting as a sponsor for
many of the world’s leading stars in different sports.

2. Design and innovation. Nike
works permanently with a team of interdisciplinary experts that allow it to be
at the forefront of innovation and quality in its products. Engineers,
designers, athletes and doctors, among others, are part of Nike’s advisory
team, which has achieved over the years to keep the company in a position of
leadership regarding the quality of its products.

The
industry in which Nike operates is not simple, since consumer spending is
usually very volatile in times of economic uncertainty, and competition between
companies is quite difficult. However,
based on the aforementioned factors, Nike has managed to maintain a clear
leadership position over its competition. The
main competitors of the firm are Adidas (which in 2006 acquired Reebok), Puma
and Under Armor.

The
growth strategy for the coming years is based on the acquisition and promotion
of new brands (Nike owns Converse and Umbro) and also in the geographic
expansion towards emerging markets, in which Nike finds interesting growth
rates. The
arrival of the World Soccer Championship during this year will surely serve to
increase the visibility of the company and the attention of investors.

Financially,
the company does not present any problem, since it has almost 4,000 million
dollars in liquid investments and a debt to equity ratio of 0.9. The
solid earnings record of the company through economic cycles is another factor
that reflects its financial solvency.

Nike
is trading at a P / E ratio of 17 times its estimated earnings for next year,
which, while not too low, is not excessive for a company with such solid
fundamentals. When
found at maximum prices, we prefer to wait for some rest before entering the
position. A
level close to 70 dollars compared to the current price of 74 dollars would be
convenient. We
have a target value of $ 82 for Nike shares in the next 12 months, and we
recommend placing a stop loss in the area of ??$ 65 per share.

Therefore, Nike has
had to establish and maintain its place in a competitive and changing market. To
achieve this, Nike has designed and refined a series of intelligent, responsive
and dynamic marketing strategies, which have contributed to the conception and
improvement of the brand that the whole world knows today. Simona
Botti, assistant professor of marketing at the London Business School,
attributes the success in the development of Nike’s brand image and branding to
its understanding of the market and the use of this information for strategic
purposes. Botti
assures that “continuous revitalization requires constant investment in a
consumer study”. This
strategy also allows the multinational company to quantify and qualify the
perception of the brand and its alignment with the identity of the same.

However,
Nike has not been infallible in the market. In
the mid-80’s their profits began to collapse; This
is because the company failed to identify the aerobic exercise boom, so Nike
lost market share.

Nike
learned the lesson and their marketing strategies depend on market knowledge. Thus,
Nike wants to continue approaching its customers, not only to communicate with
them, but also to study and understand them. For
example, Nike noticed that its users often listen to music while exercising and
in 2010 introduced an iPhone application that, using the phone’s accelerometer,
helps users to measure their resistance and distance traveled, allowing them to
share these advances through networks social. This
not only adds value to the product, it also allows Nike to continue gathering information
from its users.

First and the most
important strategy is  innovation. This
application has its antecedent in the Gadget released in 2006: Nike + iPod
Sports Kid. The
tool helped runners to measure distance and speed. With
these innovative marketing strategies, Nike becomes more than just a brand of
sporting goods. Nike’s
marketing strategy positions it as an entity that motivates, trains and
empowers the masses.

However,
innovation as the main marketing strategy lies in the product itself. Nike
launched the first innovation in its products in 1979, introducing pad
technology in footwear. With
this technology, sports shoes have air-filled plastic membranes that provide
more comfort to the athlete during training.

Subsequently,
in 1987, Nike launched Air Max; These
contained two bags of compressed air that absorbed impacts during jumps or
walks. These
bags can be seen through a special window in the bottom of the shoe. Nike
subsequently customized the product in such a way that users could easily
select their shoes depending on the sport they practiced.

Nike’s
branding as a marketing strategy is undoubtedly as relevant as the product. In
1973, the brand “Nike” was born, a name that refers to the Greek
goddess of victory. The
emblematic design of the logo was created by the student Carolyn Davidson (in
the amount of $ 35). Both elements are pillars of the Nike philosophy that
tries to motivate and empower users: “If you have a body, you are an
athlete”. Likewise,
Nike differentiates itself from its competitors by promoting ideas of
individualism and personal empowerment. The
iconic slogan “Just do it” represents the rebel athlete who
aggressively challenges himself and struggles to overcome his own limits.

Nike’s innovation and
branding have been exposed to the masses through dynamic advertising campaigns.
Although
the Air Jordan, launched in the 80’s, was technologically advanced sports
shoes, many consumers found the value in their appearance “great …
really great”, says Kai Sato, columnist for the business newspaper Inc. As
part of its promotional strategy, Nike has also required celebrity athletes. In
1973, BRS signed its first “endorsement” with professional athlete
and tennis star Ilie Nastase. Over
the decades, Nike has selected iconic athletes from different disciplines, such
as basketball legends Lebron James, Jermaine O’Neal, Charles Barkley and of
course Michael Jordan; of football
soccer Roberto Carlos, Ronaldo and Ronaldinho; and other
famous athletes like Lance Armstrong and Tiger Woods. Nowadays,
noticing the popularity of digital media within its target market, Nike
concentrates its promotional strategies mainly on social networks, trying to
connect on a personal level with its users.

From
my point of view, Nike’s success lies in its ability to understand its market,
design an inspiring and dynamic brand for a complex and ever changing market
and develop an identity that distinguishes it from competitors and makes it
unique.

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