INDEPENDENT UNIVERSITY, BANGLADESH

Dhaka, Bangladesh

School of Business
MBA Program: Spring Semester 2021

MKT 543 (Brand Management)

CASE 01
Nike: Product development from concept to customer

Introduction
Nike's 'swoosh' is one of the world's most identifiable logos and, in just 32 years, Nike has grown to be the industry's
largest sports and fitness company. Revenue for Nike in financial year 2005 was $US 13.7 billion.

Nike directly employs approximately 24,300 people and Nike's suppliers, shippers, retailers and service providers employ
close to one million people on six continents.
Nike's mission is:

'To bring inspiration and innovation to every athlete in the world.'

According to Bill Bowerman, one of Nike's founders, "If you have a body, you are an athlete."

In addition, Nike's corporate responsibility mission is to help the company achieve profitable and sustainable growth and
to protect and enhance the brand and company. Nike believes that corporate responsibility work should not be separate
from the business but should instead be fully integrated into it. The company's sustainable growth suggests that Nike
will be around for generations to come. The principles of sustainability also require Nike to find ways of generating profit
while minimizing any potentially negative impact on communities or nature.
Nike's mission statement is intentionally broad and outward looking, focusing on the needs of athletes, and, through its
corporate responsibility work, consideration is given to the needs of communities around the world. Nike's focus is to
continually seek to innovate, design and develop products to improve athletic performance. Its overriding desire is to
design products with true performance innovation and technology benefits which help the athlete perform better. With
its latest innovation, Nike scientists and designers have developed Nike Free, a sports shoe described as a foot-
strengthening training tool. Tagged 'natural technology', Nike Free has been designed to copy barefoot running. By
running barefoot, the foot is strengthened, gaining greater flexibility and range of motion which leads to better
performance because you are less prone to injuries.

Anticipating the needs of the consumer

Innovation is what sets Nike apart in the industry. It started in 1971 when Bill Bowerman, then a University of Oregon
track coach, poured rubber into his wife's waffle iron hoping to create a new and better sole for running shoes for his
track athletes. The result- a light waffle sole that transformed the running world.
When thinking about what consumers might need in their footwear, the next
innovation came in the form of Nike Air, a durable and lightweight cushioning system
for athletic shoes. Nike had anticipated the need for a shoe which had a cushioning
system which lasted longer than foam, reduced shock, and distributed pressure.

Research and development

How does Nike develop its products and decide what does and doesn't make the cut when it comes to innovation? The
Nike Sports Research Laboratory (NSRL) is located on the Nike campus in Portland, Oregon in the United States of
America. The research and development (R&D) centre's role is to identify the physiological needs of athletes. The NSRL
works directly with Nike's design teams and has established partnerships with major universities throughout Asia,
Europe and North America.

To research and develop products, the scientists have an incredible array of

measurement and analysis tools. Their data collection includes virtually every variety
of muscle sensor, pressure platform, breath analyzer, foot scanner and thermal
imaging device. There are high-speed video cameras that capture soccer kick data at
1,000 frames per second and a scanner that produces, in just seconds, a perfect 3D
digital image of your foot.

But it does not stop there! There are testing surfaces, such as a huge section of
regulation basketball hardwood, artificial soccer turf, a 70-metre sprinters' track runway and endless field testing that
takes place outdoors in various terrains.

The NSRL takes an idea, and researches and prepares a design brief. The brief is then passed over to the company's
Innovation Kitchen - an incubator for new projects.

In the first phase of developing what was to become Nike Free, the 'cooks' in the Kitchen took the NSRL description of
'natural technology' and started asking what sort of shoe people might be looking for next. In the process of talking to
athletes and coaches, the designers spoke to Vin Lananna, then the track coach at Stanford University, who told them
about his unusual training method - having athletes run on grass without shoes. According to Lananna, the athletes were
stronger, healthier and less injury prone. This was a great idea but contrary to Nike's business - making and selling sports
shoes.

However, the idea led to an extensive biomechanical research project to see exactly what happens when we run
barefoot. Sports shoes provide a certain amount of control or cushioning based on the notion that they are needed to
complement the natural action of the foot. Nike researchers wanted to know why Lananna's athletes, who ran barefoot
in training, raced faster.

The researchers brought in 10 men and 10 women to run barefoot on grass to see exactly how the body reacts without
shoes on. They were videotaped with high-speed cameras to capture their movements; they had reflective markers
attached to their joints to allow easy calculation of joint angles during their stride, and wafer-thin pressure sensors
attached to the bottoms of their feet to measure their impact with the ground. At the end of the experiment, Nike had
the most comprehensive picture of the biomechanics of barefoot running ever developed.

The challenge was to translate that barefoot experience, which promotes good biomechanics for runners, into a shoe.
Researchers developed prototypes, using any materials which could closely copy the barefoot. Next came the challenge
to build the shoe. A shoe is built on a model of the foot, called a last, allowing the upper and outer sole to be built
around it. Researchers had to develop a brand-new version of the last in order to copy the way a bare foot operates.
This resulted in the shoe's upper being designed in a mesh that has small holes in it, allowing the foot to be encased but
feel free. There is no heel counter; instead the heel fits snugly in the shoe as the inner sole allows the foot to sit
naturally in a neutral position. The key is the outer sole which can move and flex independently with each section being
sliced so that the foot is allowed to move as naturally as possible in the shoe. The shoes are meant to be used in tandem
with other training and racing shoes. The goal is to use Nike Free to help strengthen the feet in addition to using more
traditional, supportive running and training shoes.
Testing the prototypes

Independent testing

Before Nike Free was known to the athletic world or commercially released, Nike undertook
extensive independent testing. The company used elite athletes as well as everyday runners and
a few sports journalists, i.e. people who exercise and run regularly, to undertake product testing.
In a six-month trial, 110 every-day runners used the shoe. One group, consisting of 30 men and
27 women, wore the Nike Free shoes for four 30-minute runs, four times a week. The control
group - 30 men and 23 women - used their regular personal training shoes. Outside the four 30-
minute runs a week, both groups continued their usual workout schedules. All participants were
tested at the start of the six-month period on their abilities in a number of physical areas -
shuttle runs, lateral running short sprints, and leg strength - and were tested again at the end of
the six months. These tests measured qualities such as speed, development, coordination and
optimal speed.

Researchers found some slight improvement in the control group, registering a little more speed and a little more
coordination - but not enough to be statistically relevant. However, the test results from the group wearing the Nike
Free shoes showed improvement in all the parameters measured, and improvements in speed, lateral movement, and
coordination were significant - in the 10 to 20 percent range. That is a significant improvement considering the shoes
were worn only two hours a week over a six-month period. An improvement of one percent in speed could mean a
meter’s difference in a 100-metre sprint - often the difference between first and fourth place.

In simple terms, Nike Free was acting not only as a running shoe, but as a training technique! Athletes in the test group
using Nike Free were found to be stronger and more flexible. One of the researchers put it this way: "Nike Free is a gym
for your feet."

Source: Review of Nike Technology by Larry Eder Summer 2004 ATF Resource Guide, Vol. 11.

Nike's challenge:

"Nike had developed a product that measurably improved athletic performance but flew in the
face of all conventional thinking."

Ensuring correct product positioning

Nike was conscious that Nike Free needed to be positioned as an additional training shoe in your
kit bag, not necessarily as a replacement to your traditional running shoes. Unlike typical athletic
shoes, Nike Free shoes allows the foot to move, flex and grip just as it would if running barefoot.
The advertising and marketing campaigns were carefully crafted to ensure that consumers
recognised Nike Free as a training shoe which could help build additional strength and therefore the ability to train
longer - not as a replacement to its other sports shoes. This product positioning was a balancing act, requiring careful
communication and application.

Education was the key to positioning the shoe in the market. Nike Free was launched under limited and very tight
distribution in the lead up to the major advertising campaign. The shoe was distributed initially only through running
speciality stores before being broadened to general sporting goods stores. Nike Free was also placed with key people
such as running coaches, podiatrists and physiotherapists with the aim of introducing Nike Free as a new product and
training concept before taking it to the broader market.

Part of the strategy was to take this 'barefoot' shoe directly to runners. To do this, Nike used the tried and true, labour
intensive method of driving mobile vans to areas in the USA, Europe, as well as Australia, which attracted large amounts
of runners. (In the early days of the company, co-founder Phil Knight sold shoes from a van parked at a local athletics
track.) Staffed by running and footwear experts, offering gait analyses and
the chance to test Nike Free, the mobile vans took the 'barefoot' shoe
straight to consumers. This basic tactic engaged consumers on their terms
and in their own territory, letting the Nike Free story be told on an
individual basis.

Reaching the consumer

Using television and cinema
Advertising is synonymous with Nike. In partnership with its advertising
agency, Nike has created some of the world's most attention-grabbing
advertising. You may recall some Nike television advertisements: the
cinema epic of soccer players battling it out in the hull of a ship or Pete Sampras and Andre Agassi playing tennis in the
streets of Manhattan.

The Nike Free advertising campaign was derived from a truth about the product. As the only shoe on the market that
works with the natural motion of your foot to make it stronger, it gives people the ability to become stronger, better
athletes than they have ever been before. The campaign, Reincarnate, was about
athletes 'leaving their old selves behind' and discovering their potential. The
tennis player Maria Sharapova, the footballer Cristiano Ronaldo and Wimbledon
champion Roger Federer were among the athletes used in a TV commercial to
advertise Nike Free, called Power to your feet.

The advertisement which ran in Australia was different from Nike's 'blockbuster'
ads; there were no spectacular crowd scenes or camera tricks. The scripts took
months to write and the advertisement was heavily dependent upon dialogue.
The advertisement featured ex-Arsenal player Thierry Henry. He is shown
wrestling with his own inner demons and even doubting himself. His new, 'reincarnated' self wins the battle in order for
him to go on to be a better athlete and he leaves his 'old self' in the past.

Nike Australia reintroduced the Reincarnation campaign via local Socceroo star, Marco Bresciano, and track athlete Craig
Mottram. They brought to life how they are 'leaving their old selves behind' and reincarnating into different and better
athletes. Advertising mediums included outdoor (billboards, sides of trams and buses), a DVD documentary on Craig
Mottram which will be attached to the front cover of Alpha magazine and print advertising.

Websites
Nike does not rely solely on television, cinema, and outdoor advertising. Nike understands that its consumers seek
information online and as such it targets different online audiences around the world. The Internet has become an
essential component in Nike's marketing campaign.
Nike produces a range of products which are unique to a particular sport or athletic endeavor. Nike's marketing takes
into account the different needs of athletes and consumers and uses its website to communicate with these groups via
in depth content, product information and athlete insights.

The Nike Free website is used to explain how the shoe was developed and the benefits of the training shoe. This
interactive micro-site has three sections:
1. Leave your old self behind
2. Go barefoot running in a shoe
3. Reincarnate in this life.

The site is lively and colorful, featuring information on the development of Nike Free, the models and technical
specifications. The site challenges visitors to learn, providing them with the tools and information to decide and act for
themselves. Offered in a range of languages, the site utilizes a number of sportsmen and women to showcase how each
person left their old self behind and worked to change themselves into a better and stronger athlete. Examples include
Lance Armstrong, world-renowned cyclist who fought to return to the peak of his sport after his battle with cancer.

It is vital that Nike communicates to consumers how essential the input of its elite athletes is during product
development. Nike relies on their expertise and feedback to develop the best product for athletes and, hence, the best
product for consumers. These high-profile coaches and athletes are then used in Nike's advertising and communications
campaign because they are known by the consumer and they can help tell the product
story.

Staff product awareness

Having a new and innovative product is one thing, but a company must ensure staff
working in sports stores understand the product, its benefits and how it should be
used. To do this, Nike created a flash- animated multi-media learning environment.
Called Nike Sports Knowledge Underground (Nike SKU), it mirrors a subway rail system
with each 'stop' representing a training activity where new shoes such as Nike Free are
displayed. Participants are taken on a three- minute course explaining design, benefits,
features and top selling points of the shoe. At the end, they take a brief quiz to ensure they
know about the product and can immediately use the information in customer dealings on the shop floor. A technical
specification sheet can be printed to help with customer queries. Appreciating that many sales people are young, Nike's
SKU is like a video game, with information packaged in short sound bites.

Conclusion
Nike aims to bring inspiration and innovation to every athlete in the world - and it considers everybody to be an athlete!
As a high profile, industry-leading sports company, Nike continually strives to keep itself at the forefront of product
innovation and design. Through extensive research and development, the Nike Free shoe was created in response to the
recognition that barefoot running can strengthen athletes' feet and legs naturally.

Nike Free was developed after extensive research and product testing. With a strategic promotion campaign, Nike hopes
to deliver the message that Nike Free is not designed to replace athletic performance footwear but to be an important
part of training, thus improving performance.

Tasks:
1. Readings
2. Point out and define band related key terms discussed here.
3. Explain the concept of brand considering the 8 chapters of your BM course outline.
Note:

1. Students are asked to complete and submit this task in a group. Maximum members of a group are 5.

2. Proper coordination among the group members is expected.

3. Each member is supposed to write at least one Chapter.

4. Write your ID numbers and Names.

5. Form of Submission: Handwritten.

6. Last Date of Submission: 25 April 2021.

7. Must have a cover page following the university style.