The main problem identified in the Wall Street Journal case study on Nike’s CEO Mark Parker (Greenfield, 2015) was how Nike could not only remain competitive, but outpace the overall growth of the athletic shoe market when competitors such as Adidas and Skechers were also vying for the same demographic that Nike serviced. Under the direction of Nike’s third CEO, Mark Parker, Nike has been able to double its worldwide sales since he first inherited the position in 2006. Parker was successful in doing so by continuously innovating; the article begins by describing how Parker is always drawing sketches of shoes that might turn into the next big idea. The case study then provides a description of how Parker has been able to see continuous growth for the established shoe brand by utilizing a strategy of continuous innovation, smart marketing associated with famous athletes, and implementing athlete feedback during the design of its shoes.
Several challenges faced by Parker specifically are discussed within the article. The first problem is the need to constantly reiterate on the design of Nike shoes so that they would remain popular and new products would always be available on the market. As a former shoe designer himself, Parker established a system where each different sport would be given its own division. The philosophy behind this solution was that different sports had different needs; some sports such as track and field require flexibility and speed, while others such as football might be designed for traction. This philosophy allowed designers to focus specifically on shoes that would cater to the needs of each individual athlete, rather than attempting a once-size-fits-all approach. A second problem discussed within the article is how Nike’s attempt to break into the skateboarding shoe market in the late 1990’s created problems with brand perception; the attitude of many professional and amateur skateboarders at the time was that Nike was seen as trying to muscle its way into a market that it had no previous experience with in an attempt to capitalize on skateboarding’s popularity at the time. These skaters were fans of smaller brands, and an overall anti-corporate attitude that many skaters had seemed to work in Nike’s disfavor. The solution for Nike was to bring in several well known skaters to help design a shoe that would appeal to skateboarders. By welcoming and encouraging design elements from established professionals, Nike’s credibility among skaters was improved. This was followed by sponsoring several well known skateboarders that further popularized the Nike brand among skateboarders and their fans, legitimizing Nike in public perception as a provider of quality skateboarding shoes.
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The result of Nike’s willingness to innovate new solutions to business problems is that the company has continued to achieve global success that outpaces the overall growth of the athletic shoe market. According to the article, Nike now has annual worldwide sales of approximately $30 billion, which is about double what it was when Mark Parker first became CEO (Greenfield, 2015). Nike has expanded heavily into new markets, such as the soccer market, which not only expands Nike’s reach but also cuts into the reach of its competitors such as Adidas and Skechers. The main reason Nike has been able to remain successful is because it is constantly innovating on shoe technology while maintaining an attitude that the needs of the athlete must come first. In order to achieve this, Nike has included athlete insights when designing each shoe, as athletes know best the demands of their support.
Several business concepts can be seen throughout the case. The first is Idea Generation, which is the process of developing new ideas that potentially could lead to the creation a new product. Mark Parker’s habit of drawing new shoes whenever he gets a chance, even on restaurant napkins as described in the case, shows how he is constantly creating new ideas with his various sketches. This shows his understanding that in order to remain successful, Nike must continue to come up with new designs. Nike places heavy emphasis on innovation that comes from new ideas; one example provided in the case that led to great success was Nike’s decision to make its air bubble visible on its Air Max shoe, which was a hugely popular product that saw extreme financial success. This was only made possible by the innovative idea to produce a shoe where the cushion of air could be seen, which was previously unconsidered.
A second concept revealed in the case is Opportunity Recognition. Nike recognized that the popularity of skateboarding was a potentially lucrative new market. However, it faced several hurdles; as a newcomer to the skateboarding scene, Nike was initially viewed with skepticism and mistrust, so a substantial image problem had to be overcome. Nike understood that because the opportunity was significant, it would work to establish an image that would be more accepted by the skateboarding community. By reaching out to established skaters and allowing them to design the ideal skateboarding shoe, as well as providing sponsorships boosting Nike’s visibility as a manufacturer of skate shoes, Nike was essentially able to establish street credibility and subsequent acceptance. Other businesses might not have had the foresight to include skateboarders in the design, or given up entirely trying to change its brand image for one specific market. Nike was able to recognize the opportunity that catering to this market would bring, and took steps to ensure this opportunity would be achieved.
A third concept utilized by Nike is Segmentation and Positioning. Nike understands that different sports have different needs, and therefore shoes between each sport must have different design principles in mind. Additionally, it designs marketing strategies that cater to each specific segment: this might include sponsoring female track and field athletes as well as famous NBA players. By identifying role models that appeal to different segments, Nike is able to position itself as an authoritative brand within each individual market it reaches (Morgan et al., 2015). When it is a newcomer to a potential market, as it demonstrated with its foray into the skateboarding market, Nike seeks to quickly establish itself as an authoritative leader by recruiting already-established experts, further legitimizing its position. Nike also runs ad campaigns that are designed to appeal to different segments by utilizing athletes from all different sports, ethnicities and genders (Shank and Lyberger, 2014). This gives Nike wide appeal while each individual segment within the market is also catered to specifically.
A fourth concept used by Nike is investing in New Product Development. Nike is committed to innovation; this concept is illustrated best at the beginning of the case study when Mark Parker is described as always scribbling new designs. By constantly thinking of improvements that can be made to existing shoe technology, Nike has a steady stream of products that will keep customers engaged with the company. Rather than simply producing the same model of shoe year after year, Nike treats its shoe line similar to other fashion designers; fashions change, and by continuously introducing new shoe designs to the market, it remains a relevant brand that doesn’t simply rest on the laurels of its previous successes (Burgelman, 2015).
Conclusions that can be drawn from the case study are that innovation is essential for business success, and producing quality products that cater specifically to the needs of the consumer will often lead to business success. Nike’s decision to employ its strategy of incorporating the insights of professional athletes has had two substantial results: it has allowed its shoes to be designed from an authoritative athlete perspective while also boosting its brand presence through marketing. Lessons that can be taken away from the case study are to continue to seek new ways to appeal to the customer, and that identifying new markets can lead to growth.
- Burgelman, R. A. (2015). Complex Strategic Integration at Nike: Strategy Process and Strategy-as-Practice Combined.
- Greenfield, K. T. (2015). How Mark Parker keeps Nike in the lead. The Wall Street Journal. Retrieved from https://www.wsj.com/
- Morgan, R., Magin, S., Huber, F., & Herrmann, A. (2015). The Why of Buying Nike–Findings of a Causal Analytical Study. In Creating and Delivering Value in Marketing (pp. 223-223). Springer International Publishing.
- Shank, M. D., & Lyberger, M. R. (2014). Sports marketing: A strategic perspective. Routledge.
