Chapter 4: The Company

4.1 Company Overview

Nike was founded in 1968 by Phil Knight, who is currently the owner, chairman and CEO of Nike, and his coach Bill Bowerman. Nike was introduced in Malaysia in 1990. In the late ’70, Nike is the most well-known shoe company in the world, not only producing shoes, they only product other sports equipments. In the ’90 with the born of Reebok, Nike faced lots of competition. There are times that Reebok surpassed Nike in the market share. In order to regain their position as the market leader, Nike has diversified its products, especially shoes, for different kinds of sports. In 2006, with the combination of Adidas and Reebok, 2 biggest competitors, Nike face a great threat in losing the market.

4.2 Business description

In the 70’s Nike focus was only on producing shoes, especially running shoes and in the 80’s, Nike expanded its products to multiple kinds of sport. Nike currently focuses on soccer, basketball, running, baseball and tennis. Beside producing shoes, Nike also produces sport apparels. The products of Nike usually stick with an image of a famous athlete, for example: Michael Jordan in basketball, Tiger Wood in golf or Ronaldo in soccer…This method is also an effective marketing campaign. Moreover, in recent years, Nike also develops a new kind of service which allows customers to customize their own shoes and then send the order to Nike. This is a breakthrough in satisfying customer’s needs and wants.

4.3 Company History

Nike originates from the United States of America, its headquarters are near Beaverton which is a small part of Portland metropolitan area, it was later introduced to Malayisa in 1990 as Nike (M) Sdn.Bhd. It was founded by Phillip Knight who was an athlete and his coach Bill Bowerman in 1964. Nike specializes in the production of sportswear, which includes caps, shoes, jerseys, tops and so on. Its label can also be seen on some sports equipment. Its products are sold through 20 000 retail accounts and they are sold in about 110 countries.

When Nike was first incorporated, it was under the name, Blue Ribbon Sports. It started off as an importer of Japanese shoes but later evolved to be the world’s largest contributor of athletic footwear and apparel. The Nike logo which is called “swoosh” came about in 1971 and was officially registered to be used by Nike in 1974. The first product to have the swoosh logo was a soccer shoe called Nike in 1971 and this is where the new company name came from.

The company’s first self-designed product was developed in 1974, it was called a waffle trainer. Nike products sales later soared because prominent athletes were used to advertise the shoes, some of these athletes include Illse Nastase and Jimmy Connors. In just two years Nike sales tripled to $14 million, and this was in 1976 which is 12 years after Nike was born. The following year the sales doubled to $14 million and that is when the company built new factories all over the world to keep up with the demand of the product.

4.4 Key People

v Lee Alison, Marketing Manager, Executive

v Khoo Angela, Accountant, Non-executive

4.5 Location and Subsidiaries

Location

(Headquarters of founder)

One Bowerman Drive
Beaverton, Oregon 97005-0979
U.S.A

(Headquarters in Malaysia)

Lot 238 & 239, 2nd Floor, The Curve No. 6

Jalan PJU 7/3

Mutiara Damansara

Selangor Darul Eshan

Petaling Jaya, 47800

Malaysia

4.6 Brands, major products and Services

Products : Nike Air Max, Nike Lunar Eclipse, Nike free run, Air Jordan

Services : Management services

4.7 Corporate Vision and Mission and Statement

Nike’s mission statement is 'To be the world's leading sports and fitness company.' Nike is well on its way of achieving its mission statement because it is has stores in about 110 countries and has is worth estimately $8.78 million dollars as recorded in 1999. And although Nike maybe be doing well in the industry and the mission statement shows its belief and drive to be number one it could also be a weakness as it resembles a vision statement. While the mission does broadly identify the business it is in, namely the sports and fitness industry, it is not specific as to what products and services they provide.

4.8 Company’s Current Promotional Strategy

2010-Nike mobile truck promotion (Berjaya Times Square)

2009-Nike warehouse sale (Queen’s park retail center)

2009-Nike women free voucher (1 Utama)

2009-Free nike socks for any purchase (Berjaya Times Square)

4.9 Products Sales History

4.10 Current Marketing Objective

Long term

To conquer worldwide markets

Increase market shares

To maintain first position in athletic wear market

To stay ahead of all competitors

Maintain Brand associations with major sports stars

Short term

Promote new products

Use Nike brand loyalty to increase sales

Come up with new creative ways of promotion

Improve brand image

4.11 Media Expenditure

Since 2004, Nike has invested 11%-13% of revenue in marketing annually. For example in 2008, Nike's advertising costs equaled 12.4% of its revenue. Marketing is in the form of traditional television and print advertisement, but focuses more on celebrity endorsements. Nike sponsors use athletes in basketball, golf, soccer, and tennis. In 2008, Nike's advertising efforts in the Beijing Olympics and European Football Championship led to a 15% rise in the company's 2008 SGA expenses. However, in December of 2009 Nike began to feel the ill effects of the Tiger Woods scandal, and are considering spending less on sports sponsorships to avoid similar difficulties in the future (it currently spends 5-7% of sales on sponsorships).