Innovative Product - Research Paper Example

First Innovative Product Research Paper Introduction In 1962, Nike Inc. was founded as a partnership by Phil Knight and Bill Bowerman under the Blue Ribbon Sports name (Keller 92). The goal at that time was to distribute high-quality, low cost Japanese athletic shoes to consumers in America with the aim of breaking the domination of Germany in the domestic industry (Keller 92). Presently, Nike Inc. distributes and manufactures athletics shoes to a global market, with more than 40% of sales coming from athletic sports equipment, subsidiary ventures, and apparel (Keller 92). The company maintains non-traditional and traditional distribution channels in over 100 countries with its main target market regions being in countries including Europe, United States, and Asia Pacific among others (Keller 92). Nike Inc. makes use of more than 20,000 retail accounts, Internet Web sites, Nike stores, Cole Haan stores, and Nike Towns to sell their leisure and sports products (David 402). It has dominated sales in the footwear athletic industry with an estimated 33% market share globally (Keller 92). The company has been able to achieve this leading position through providing aggressive marketing, innovative products, and quality production. Due to this, for the fiscal year ending 2014 according to Yahoo Nike’s financial income statement, the company’s employees have been able to generate about 27,799,000 billion in revenue (Finance.yahoo.com). Nike Inc. offers a huge range of choices for its consumers from clothes, athletic shoes to sports equipment. The company’s success in generating this massive revenue is attributed to its athletic shoes marketing strategies that focus on the 4Ps of marketing in the midst of competitors like Reebok and Adidas. The marketing mix which Nike Inc. utilize are product, place, price and promotion are as follows: Product: Offering wide range of innovative athletic shoe products. Price: Offering competitive price for its athletic shoe. Place: Selling its athletic shoes in over 20,000 retail accounts in the United States and in about 200 countries globally. Promotion: Promoting its athletic shoe through famous athletes. Nike Inc. Marketing Mix Wide Range of Innovative Athletic Shoes Nike provides a huge range of athletic shoe products that are generally designed for extreme sporting activities including soccer, basketball, and running. The products are considered to be comfortable and of high quality to the athletes with innovative features specific to a particular sport or individual. Some of the innovate athletic shoes made include Nike Air Jordan, Nike Zoom, Nike Air Max, Nike Lunar, and Nike Dunk (Hypedv). For instance, the Nike Air Jordan innovative features were made based on Michael Jordan’s special basketball talent in jumping and scoring. These features have influenced world basketball fans who aspire to be like Michael Jordan, driving Nike’s sales high globally. Similarly, Nike partnered with Ronaldinho from Brazil, who is renowned as one of the world’s best soccer player of all time because of his incredible dribbling, scoring, and passing skills (Hypedv). An innovative soccer shoe was made based on his skills known as Tiempo Guri FG to reflect his special soccer skills (Hypedv). This Nike’s innovate way of making athletes shoe products has seen massive increase in global sales of soccer shoes. The high quality shoes have helped Nike dominate the United States sports market, giving it a reputation globally as an innovative company that makes quality shoes for athletes. Competitive Price for Athletic Shoes Nike’s ability to charge premium prices for its wide range of shoe products has been one key differentiator. The company over the past year has pushed the boundaries of premium brand even further. In 2013, running shoes retailed in the United States at an estimated price of $66.85 (Soni). Even though Nike has products at a low price range, it has seen growth in premium footwear, retailing over $100 (Soni). The premium prices are attributed to higher expenditure on consumer goods that are discretionary and an improving labor market (Soni). For instance, Nike has a 97% share in the United States basketball footwear market, with shoes sold in the course of 2014 costing over $100, an improvement from (Soni). The premium prices Nike charges are attributed to innovative product lunches, brand power, star athlete endorsements, and an improving United States economy. With an improving economy, individuals tend to spend more on expensive products because of confidence in their prospects and jobs. The company moving forward in 2015 is expecting to continue with price hiking strategies to 11% as seen in figure 1 in appendix because of product innovations that enables it to charge higher premiums. This is because the company had 540 patents field in 2013 (Soni). However, Nike faces a risk of slowdown in growth in major markets including Brazil, Japan, and Brazil because of competition from other competing companies like Adidas. This means Nike needs to come up with leading innovative products that will eliminate competition. Over 20,000 Retail Accounts Nike Inc. footwear are sold in exclusive Nike and multi-brand stores worldwide. The company sells its product to over 20,000 retail accounts in the United States and in over 200 countries globally (David 402). Nike in the global markets, sells its products through distributes, subsidiaries and licenses who are independent. It has operational units and customer service worldwide and production facilities in Asia (David 402). The 20,000 retail accounts in the United States provide it with an avenue to sell its footwear products to a huge customer base of both middle and high class customers. In addition, Nike sells its footwear products to help the company reach premium customers in global markets, where top athletes use Nike footwear when participating in global competition. This implies that Nike Inc. has more opportunities to open other branches in other countries because of economies of scale of operation gained from other branches in the United States and in over 200 countries mentioned above. Promoting Athletic Shoes Promotion is considered to be essentially reliant on the accessibility of the location of stores selling athletic shoes to its customers. The company has several famous athletes that position themselves as brand ambassador, such as the Michael Jordan, Jermane O’Neal, and LeBron James for Basketball, Cristiano Ronaldo, Messi, and Ronaldinho for football/soccer, Tiger Woods for Golf, and Lance Armstrong for cycling (Bouchet, Hillairet and Guillaume Bodet 24). For instance, as discussed above, Nike Air Jordan innovative features were made based on Michael Jordan’s special basketball talent in jumping and scoring. These features have influenced world basketball fans who aspire to be like Michael Jordan, promoting Nike high sales of footwear. Nike’s trademark and name “Swoosh” and “Just Do It” have promoted the company and made it one of the most noticeable brands in the world (Pont 27). The “Just Do It” trademark makes customer feel like they can do anything they want with Nike’s footwear. The company’s loyal customer base, great marketing techniques and high quality innovative products have promote and contribute greatly to making the footwear empire a success. Problem Statement In light of the above marketing mix discussion of Nike’s footwear, one problems has been identified that needs to be addressed. The problem for Nike is to come up with an innovative product that can serve premium customers. A survey was conducted to tackle this problem through introducing an innovative shoe product. The innovative shoe product to tackle this problem is a shoe that the sole can be changed to either running, walking or hiking soles. This innovative product will serve the target group of premium customers of ages between 16 and 30 years. The below sections illustrate how the survey was conducted and the results obtained. The results were then analyzed to find out whether they could give Nike Inc. a competitive marketing strategy. Methods Data Collection Information concerning workout shoes was collected through the use of a questionnaire. The questionnaire collected information that included preferred shoe brand, type of activity used with a shoe, the amount of money spent on a shoe, factors that influence buying decision of a shoe, and frequency of purchase of a shoe over a period of time. Please see the questionnaire answers in appendix. Sample Size This survey targeted individuals in the ages between 16 and 30 years. The sample size of the population used in this survey was 20 athletes. These athletes were chosen or were eligible for this survey because they used sports shoes on a daily basis when walking, running and hiking. The analysis was done on these sample size. The sample size is expected to provide important qualitative and quantitative ways of collecting and analyzing information. The results below show how the athletes responded to our questions in the questionnaire. Results The results in figure 2 to figure 10 in the appendix below show how the respondents responded to the questions provided in the questionnaire. In figure 2, the most preferred brand of choice was Nike with 10 respondents, while Reebok was the least preferred with no one choosing it. In figure 3, seven respondents preferred using shoes to run, three preferred walking, and five preferred casual and cross training. In figure 4, two respondents preferred spending about forty or less on shoes, twelve about 50 to 60, five about 70 to 90, and 1 about 100 or above. In figure 5, 10 respondents said that comfort affected their buying decision, 6 said quality, 3 said style, and 1 said social. In figure 6, 8 respondents said that they purchase shoes every 3 months, 5 said they purchase twice a year, 4 said they purchase every month, and 3 said they purchase once a year. In figure 7, 8 respondents said they work out three times a week, 6 said every day, 2 said once a week, and 4 said twice a week. In figure 8, 8 respondents preferred working in the evening, 7 preferred in the morning, 4 preferred in the afternoon, and 1 preferred in the midnight. In figure 9, 8 respondents said they preferred hanging out after workout activities, 5 preferred to eat, 3 preferred to go back home, and 4 preferred to go back to work. In figure 10, 17 respondents said they were interested in the new changeable shoe sole innovation, while 3 said they were not interested. Market Strategy Analysis The results above provide insight into the marketing strategy that Nike Inc. can use to market its product to premium customers. Just to summarize the results, athletes prefer Nike shoes for their daily activities. Majority of them want comfortable shoes for running, but are not willing to pay 100 or above 100 dollars for a pair of shoe. However, majority of the athletes prefer to buy shoes every three months. Also, majority of the athletes prefer to work out three times a week, especially in the evenings and later on hang out with friends. The innovative shoe technology of changing shoe soles for either running, walking or hiking is preferred by many athletes. In light of this summary, let us examine the marketing mix again and see how Nike Inc. can utilize this technology to target its premium customer base. We will focus on product innovation, pricing and promotion. Product Innovation This product innovation of shoes allows Nike to change the sole of the shoes to either running, walking or hiking. This helps Nike differentiate its product from the competitors and may serve its premium target customer base. This is because the customers who pay premium of $100 will perceive the footwear to be taking care of their needs all in one in one shoe in running, walking and hiking. Therefore, the customers willing to pay $50 to $60 for the shoes, may be persuaded to pay $100, and hence increase Nike’s revenues. Product Pricing The pricing of this innovative changeable shoe sole product will be priced at premium because the customers will perceive the product as full filling all their needs all in one shoe. As discussed above, this means that the customers who are willing to pay for shoes for about $40 or less and about $50 to $60 may be persuaded to buy this premium innovative product. Since many of the athletes are of age between 16 and 30 years and willing to try the new innovative technology, it is possible that they will be willing to pay premium, especially after trying out this changeable shoe sole. Therefore, Nike should price this innovative product at premium because of anticipated economic growth discussed above and the perception young adult have of a shoe that can take care of all their needs in one shoe. Product Promotion Promoting this innovative product will be easy because it is one of a kind in the footwear industry. However, Nike should promote the product through the use of celebrities who are between 16 and 30 years so that students at school could be influenced to try this innovative shoe. Existing celebrities like Messi, Cristiano Ronaldo and Rooney could be used to market this shoe when training in the pitch, when visiting friends and when hiking. This will ensure people who like football, people who like hiking and people who like visiting friends purchase it for all these purposes. Conclusion This changeable shoe sole is an innovative product that can change the way people purchase shoes, especially young adults of ages between 16 and 30 years. Because young adults in this age range do not have a constant disposable income, this technology will help them spend more money at a premium price once than they are willing to pay, but will ensure they do not purchase any other shoe for a long time. Works Cited Bouchet, Patrick, Dieter Hillairet, and Guillaume Bodet Guillaume Bodet. Sport Brands. London: Routledge, 2013. Print. David, Fred. Strategic Management: Cases. Upper Saddle River, New Jersey: Prentice Hall, 2001. Print. Finance.yahoo. NKE Income Statement | Nike, Inc. Common Stock Stock - Yahoo! Yahoo Finance. Finance. Web. 8 June, 2015. Web. 8 June 2015. Hypedv. Nike Tiempo Natural Iv Tf - Nike Free,Nike Air Max,Nike Air Jordan Sale Online Shop. Hypedv.com. N.p., 2015. Web. 8 June 2015. Keller, Kevin Lane. Strategic Brand Management. Upper Saddle River, N.J.: Prentice Hall, 1998. Print. Pont, Simon. The Better Mousetrap. London: Kogan Page, 2013. Print. Soni, Phalguni. Understanding NIKE’S Pricing Power And Premium Products Tilt. Yahoo Finance. Web. 30 December 2014. Web. 8 June 2015. Appendix Figure 1: Nike Selling Price & Unit Sales Increases (Soni) Survey Results Questionnaire Business survey from 20 people (athletic) 1. Question 1 Nike 10, adidas 7, new balance 3 2. Question 2 running 7, cross training 5, casual 5, walking 3 3. Question 3 50-60 12, 70-90 5, 40 less 2, 100 above 1 4. Question 4 comfort 10, quality 6, style 3, social 1 5. Question 5 every 3m 8, twice a year 5, every month 4, once year 3 6. How often did you do workout? - Everyday (6) - twice a week (4) - three time a week (8) - once a week (2) 7. When do you usually do workout? - morning(7) - afternoon(4) - evening(8) - midnight(1) 8. What do you usually do after workout? - Working (4) - back home (3) - eat (5) - hangout (8) 9. Will you interested with this innovation of shoes? - Yes (17) - no (3) Read More