SALES AND

DISTRIBUTION REPORT
OF NIKE INDIA
(sales and distribution project)

Submitted by:: Abhishek Sabat (13RM901) , Anupam
Bhagwani (13RM911) , Ilamurugu kailasam(13RM916) , Kapil
Batra (13RM918) , Manideep Nulu (13RM927) , Rakesh
Palanimuthu (13RM935)

Group number 3
3/26/2014

SALES AND DISTRIBUTION REPORT ON NIKE INDIA
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Contents

Executive Summary......................................................................................... 2
Nike and its history.................................................................................... 2
Nikes presence in India...................................................................................4
Hierarchy of Nike India.................................................................................... 4
Nike India distribution network.......................................................................5
Distribution through E commerce....................................................................................................8
Personal selling.............................................................................. .8
LEO Sales Corporation .............................................................................................................9
Manufacturing and Buying .9
Sales Force...10
Sales Information Systems ..... 9











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EXECUTIVE SUMMARY

Nike Inc. was founded in 1962 by Bill Bowerman and Phil Knight as a partnership under
the name, Blue Ribbon Sports. Our modest goal then was to distribute low-cost, high-
quality Japanese athletic shoes to American consumers in an attempt to break
Germany's domination of the domestic industry. Today in 2000, Nike Inc. not only
manufactures and distributes athletic shoes at every marketable price point to a global
market, but over 40% of our sales come from athletic apparel, sports equipment, and
subsidiary ventures. Nike maintains traditional and non-traditional distribution channels
in more than 100 countries targeting its primary market regions: United States, Europe,
Asia Pacific, and the Americas (not including the United States). We utilize over 20,000
retailers, Nike factory stores, Nike stores, NikeTowns, Cole Haan stores, and internet-
based Web sites to sell our sports and leisure products. We dominate sales in the
athletic footwear industry with a 33% global market share. Nike Inc. has been able to
attain this premier position through "quality production, innovative products, and
aggressive marketing."

As a result, for the fiscal year end 1999, Nike's 20,700
employees generated almost $8.8 billion in revenue.
.
Nikes market share in India is
comparatively very low when we consider its a global market leader but it owes it to the
slightly different taste of Indian demographics and also due to the fact that India has
never been a sports oriented country(except cricket may be) and also due to the fact
that it had to collaborate with a local player when it entered indian market. Still the sales
and distribution strategies of NIKE India is worth having a look at. It is slowly growing its
market share in India and has one of the most solid distribution network in the country.
This report is focused on NIKE Indias sales and distribution strategies and key
components of the same.

NIKE AND ITS HISTORY
Nike , Inc. is a majorly publicly traded sportswear and equipment supplier based in the
United states. The company is headquartered in the Portland metropolitan area of
Oregan , near Beaverton . It is the worlds leading supplier of athletic shoes and
apparel and a major manufacturer of sports equipment with revenue in excess of $16
billion USD in 2007. It employs 44,000 employees world wide . The company was
founded as Blue ribbon sports by Philip Knight and Bill Bowerman . It officially became
Nike, Inc. in 1978. The company takes its name from Nike , the greek goddess of
victory. Nike markets its products under its own name as well as Nike Golf , Nike Pro ,
Nike plus , Nike Skateboarding and subsidiaries including Cole Haan , Hurley
international , Converse and Umbro. Nike also owned Bauer Hockey (later renamed
Nike Bauer) between 1995 and 2008 . In addition to manufacturing sports wear and
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equipment , the company operates retail stores under the name Niketown . Nike
sponsors many high profile athletes and sports teams around the world , with highly
recognized trademarks of Just do it and the Swoosh logo. The Just do it campaign is
still regarded as one of the most successful ad campaigns and the swoosh logo rightly
projects its athletic inclined products.

MISSION :: To bring inspiration and innovation to every athlete in the world.
VISION :: Innovate for better world .
It is quite clear from its vision and mission statements that Nike has always looked
forward to innovation. The corporate strategy , the marketing strategy and the sales
strategy are all planned accordingly to achieve or meet the objectives as defined by
their mission and vision statements. Few such examples of innovation can be seen from
its products such as Fuel band and Fly knit racer . While Fuel band is an electronic
bracelet that measures movements in the body whether the person plays tennis , or just
walk to work. Red color indicates inactive and green indicates goal being achieved. Fly
knit racer is a series of feather light shoes created from knit threading.

The core values of the company are honesty , competitiveness and teamwork.
Despite its size , Nike operates with a minimum of hierarchy . As a result there is a lot of
collaboration and consensus decision making . Commonly held values are imperative in
such a matrix organization.

In fiscal year 1999, the economy was relatively favorable for footwear manufacturers.
The footwear industry and its profitability are closely tied to economic cycles. Modest
inflation, low unemployment, and a booming stock market will all contribute to healthy
consumer spending.
The theory behind the slowdown in sales is that growth in athletic footwear and apparel
is cyclically sensitive to the Olympics. Historically, years of the Olympic Games have
demonstrated surges in growth followed by difficult sales periods. The outlook for
increased sales trends is optimistic due to the upcoming Olympic Games slated for this
year. Nike can also look forward to a boost in demand from the World Cup events.



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NIKES PRESENCE IN INDIA

Nike has been present in India from 1996 and headquartered in Bengaluru . India is a
cricket crazy nation , NIKE understood the importance of cricket and in December 2005,
it tied up with coaching schools like the BCCIs National Cricket Academy . Now Nike
became official kit sponsor for BCCI Indian cricket team . By paying Rs. 196 crore to
BCCI , NIKE wrested the rights to become the kit sponsor. The first Just do it cricket
ad also made its appearance during the champions trophy.
SSIPL is the largest manufacturer of NIKE footwear in India. It also has the credibility to
have manufactured the first pair of shoes for NIKE India in the year 1996. SSPILs head
corporate office is in Bangalore. In 2005 , SSIPL became the first company in the
industry to disclose the factory list , providing a complete list of contracted factories for
NIKE brand.
When it comes to footwear NIKEs market share in the world is 41% clearly a leader but
in India its market share is 15%. The biggest hurdles for NIKE in India were its entry
model and its lack of aggression . When the global sports major entered the Indian
market in 1995-96 , government policy dictated that they had to have a local partner.
Nike agreed to an exclusive distribution agreement with a Delhi based trading firm ,
Sierra , in early 1996. Reebok had the luxury of entering Indian market as a subsidiary
with a 20% equity stake by Phoenix , a distribution and trading firm and Reeboks
distribution partner.

HIERARCHY OF NIKE INDIA

Nike follows a matrix organizational structure which has become a must for all the
global companies . While the Regional Managers report to country head , and trade and
distribution manager reports to Regional managers , and the sales force (sales reps
reporting to sales executive or sales managers) , it may seem like line reporting but
more or less NIKE India follows a line and staff reporting. It helps NIKE india in closing
deals with enterprises and institutional buyers like schools and colleges and also helps
in empowering the sales reps with the adequate power to satisfy the needs of the
aforementioned buyers. During training of new sales reps also NIKE India follows a line
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and staff reporting structure where in sales reps trainees report directly to Training
managers instead of having to report to sales managers thereby saving time of sales
managers and ensuring the training managers to focus on sales reps and develop sales
force accordingly.


NIKE INDIA DISTRIBUTION NETWORK

Multi brand Outlets , shop in shops and institutional organizations like schools and
colleges are covered by the regional distributors. Exclusive brand outlets are either
company owned or SSIPL owned . There are 378 exclusive Nike stores across India.
NIKE also has joined the e retail bandwagon supplying directly from the company to e
retail websites like flipkart .
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The products either directly flows from the manufacturer to retailer via warehouse or
flows directly to e retailer via warehouse. Nike also follows a distribution network where
in Distributor takes the role of carrying products forward from warehouse and delivering
it to either retailer or customer(schools or colleges or enterprises) through the
manufacturers reps or sales agents.



Nike distributes most of its sneaker products to large chain retailers like Foot Locker.
Nike, the shoe company, has to deliver its products to the retailers like Foot Locker.
This is major task for Nike because a large majority of their sales is made at these retail
locations, so getting product to them is vital to their survival as a company. In order to
accomplish this, Nike makes sure it has several distribution centers and computer
systems that track inventory, deliveries, and orders in their respected retail stores. From
experience, Nike makes use of a POS computer program (point-of-sale) that is
integrated into the cash registers and this allows sales to be monitored at the various
retail locations. Retailers like Foot Locker and Lady Foot Locker can also order
particular products from another retail location for a customer if they are out of their size
in a certain product and have it sent directly to their home. Retailers place orders with
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the shoe companies in order to receive products to sell in the retail stores, usually found
in malls
Most often, the type of channel Nike uses is a producer (Nike), then the producer sells
to the retailer (Foot Locker), then the retailer sells to the consumer. Nike Shox can also
be classified as utilizing selective distribution because they are found in places that
match their target markets and positioning. They are found in retail stores that cater to
athletic wear, including clothing and shoes. These retail stores are found in shopping
malls or freestanding stores where consumers in this market can obtain them when they
want to purchase a Nike Shox athletic shoe. It is selective distribution because the Nike
Shox are not available everywhere, but they are not exclusive either. They can be found
at major retailers catering to the target market of consumers needing athletic footwear
but are not exclusive by any means(Armstrong and Kotler). They meet in the middle as
far as distribution goes.




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Distribution through E-commerce
Nike has taken the lead in e-commerce by being the first to market with its e-commerce
web-site. Nike launched its e-commerce site in April 1999 by offering 65 styles of shoes
to the U.S. market for purchase. Nike increased its e-commerce presence by launching
NIKEiD in November 1999. NIKEiD enables online consumers to design key elements
of the shoes they purchase. The program represents the first time a company has
offered mass customization of footwear. Nikes future plans include opening an online
shop for the Japanese market next year followed by global rollout. By being the first to
market, Nike enables itself to become established while competitors rush to join us.

Personal selling

Nike utilizes a personal selling method in every one of their retail stores. The sales
associates in these stores have direct contact and interaction with the buyers of Nike
products. Because they are the individuals that directly communicate with the
consumers who are interested in Nike products, they must be able to aid in the process
of a successful sale. They are knowledgable of the brand and should be trained in
asking customers the 'right' questions in order to figure out what they are looking for. To
ensure optimal performance from the sales teams, Nike will often send Nike
representatives to retail stores that sell their sneakers to give little presentations to keep
the sales associates up-to-date on the products and the technology behind them. I know
this from a first hand experience because of my job at a sneaker retail store. We
recently had a Nike representative give us a mini training session on the Nike running
shoes and then we discussed what the customers in our store looked for most of the
time and then gave feedback on the Nike running shoes as well as some competitor
brands.

Personal selling allows sales associates to create a relationship with the customer,
though it may be brief. From the time a customer walks in a store until they leave, it is
the sales associate's job to try to establish a relationship with that customer and figure
out what he or she is looking to purchase. The sales force acts as a bridge between the
customers and the company. The company looks for feedback from the sales
associates about their customers, and the customers look to the sales associates to
relay relevant and useful information about the product (Armstrong and Kotler).

In my opinion, Nike does a good job at their personal selling because they are the only
company I have seen so far that has had represenatives travel to retail store locations
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to hold training sessions on their products. Also, often times Nike places a small insert
in the running shoe boxes that gives some information on the particular product as well.

LEO SALES CORPORATION

It is headquartered in Agra and it has regional offices at Jaipur and Dehradun. It covers
400 MBOs across Rajasthan , Uttarakhand , Eastern and Western UP. It also covers
SIS and schools like Doon Dehradun , Mayo Ajmer , DPS Jaipur , in this area. NIKE
follows a selective distribution wherein they have control over their distribution network .
This also prevents any intra brand competition between different retail formats selling
NIKE products. Schools are provided with subsidized prices. This also facilitates legacy
forming as NIKE follows a strategy that if the students or the young athletes are made to
wear NIKE shoes and accessories at a young age representing in different sports , they
will carry on this tradition further increasing sales for the rest of their lives.
SIS are provided with extra discounts as compared to MBOs as they drive extra sales to
the shops and also because of more visibility and exclusivity in a more organized
manner. SIS does have to follow more rules and regulations as compared to MBOs .
They have to submit daily sales reports and stock on hand reports on monthly basis.

MANUFACTURING AND BUYING

Nike shoes are manufactured in Dehradun , Bhagini , Chennai , Sonepat , Jalandhar .
Apparels are mainly manufactured in Bengaluru. All the shoes are shipped to
distributors from Bengaluru whether they are manufactured in India or imported from
china and Vietnam.
Merchandise buying is done on the basis of seasons (SPRING , SUMMER , FALL and
HOLIDAY). Every quarter new collection is launched. Orders are placed 9-10 months in
advance . In between active and inactive orders can also be placed. In active orders ,
certain fast moving items catalogues along with sizes and designs are sent to various
retailers and distributors who can fastly move the items and depending on their choice ,
products are shipped. In inactive orders , they are restricted to the availability of the
articles and their respective sizes as only cut sizes are provided during this.
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Nikes facilities are located throughout Asia and South America. The locations are
geographically dispersed which works well in our mission to be a truly global company.
The production facilities are located close to raw materials and cheap labor sources.
They have been strategically placed in their locations for just this purpose. In general,
the facilities are located further from most customers, resulting in higher distribution
costs. However, the cost savings due to the placement of our production facilities allows
for cheaper production of our products despite the higher costs of transporting our
products. As Nike continues to expand in the global economy and increase its market
throughout the world, these dispersed facilities will prove to be beneficial.
Newness of Facilities - Weakness
Its facilities abroad have attracted bad publicity in recent years. Though its facilities
comply with local labor standards, generally, they have not met U.S. standards. NIKE
want to be a leader and set a responsible corporate example for other businesses to
follow. As part of Nikes new labor initiative, they commit to:
o Expanding our current independent monitoring programs to include non-
governmental organizations, foundations and educational institutions. We
want to make summaries of their findings public;
o Adopting U.S. Occupational Safety and Health Administration (OSHA)
indoor air quality standards for all footwear factories;
o Funding university research and open forums to explore issues related to
global manufacturing and responsible business practices such as
independent monitoring and air quality standards.
While establishing these policies is a step in the right direction for Nike, the difficult task
at hand will be the implementation of the aforementioned goals to ensure the success of
the program.

SALESFORCE

Nike follows a geographical based sales force structure which means different sales
territories are assigned to different sales persons/executives. The sales people familiar
with a particular area is assigned to that particular territory. In a diverse country like
India geographical based sales force structure works best. They have around 30
employees in each territory. The sales managers look after sales person and sets
quotas accordingly for each sales person party wise or store wise. Around 3 sales
agents are responsible for each state. All employees are paid on a monthly basis.
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From a soccer specialty store in Italy to Macys and Footlocker - Nike Sales is the team
that partners with retailers to deliver the stories, services and products that make Nike
the preeminent sports brand. It all starts with the best sales team in the business. Nike
sales reps excel at understanding consumers, the marketplace, and the Nike product.
With a job on your Sales team, youll work closely with marketing, merchandising, and
product engine teams and their retail accounts to create winning sales assortments for
each season. They focus all of this knowledge on developing sustainable and mutually
profitable relationships with Nikes retail partners. The key to their success is thinking
like a retailer, and by being a true business and profitability consultant.
Leo Sales follows a fixed pay for its sales force compensation. They also employ sales
agents while dealing with institutional selling where in the contacts of sales agents
comes into play . Sales managers get 35,000 40,000 Rs. , Operations manager
20,000 25,000 Rs. , and Sales person Rs. 15,000 25,000. Another reason for
selecting sales agents for institutional selling is that it will cost less to NIKE as quantities
less than the level of indifference is best served by third party sales agents .

SALES INFORMATION SYSTEMS

They use EDI (electronic data interchange) in their warehouse for flow of goods from
manufacturer to warehouses for the smooth flow and ordering/reordering of the
products. SAP is used for billing and inventory purposes.
The new Business Intelligence and Data Warehouse system with a code name ARIS
(Analytical and Reporting Information System) provides NIKE with complex information
on the sales of Nikes products by providing links to retailer data, covering the fields of
reporting, scorecarding, ad hoc analysis and budgeting.
Business Benefits
The project brings the benefits of implemented system that enables the staff of Nike to:
Respond adequately to the market situation on an operational and strategic basis
Optimize and better coordinate work with Nikes business partners
Unify and simplify the process of reporting and ad hoc analysis
Enable information exchange between local Nike office, Nike headquarters and its
business partners
Calendarize source data (divide weekly aggregations into days based on weights)
Provide information access via various channels (intranet, MS Excel, email)
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Automate retrieval and cleansing of source data
Use a strategic and secure technological platform that would enable the deployment
of the solution to other Nikes offices in the CEMEA region

One reason for Nike's problems that everyone, including Nike, agrees on, has been the
overproduction of some unpopular shoes and the underproduction of other popular
designs. Nike blames both the new supply-chain software it installed and i2
Technologies Inc., the maker of that software, for these production errors.
Dallas, Texas-based, i2 is a major supply-chain software vendor. The company has
been highly successful, with many customers both large and small. I2's supply-chain
software is designed to improve the management of inventory, production, shipping,
and sales forecasting. Nike turned to i2 because it wanted to be able to respond more
quickly to shoe market changes by being able to plan production schedules and begin
production of a new line of shoes in one week rather than taking a full month after
demand shifts. The system is supposed to help predict demand so that the company
could better plan and control the production of existing products. Thus, Nike would be
able more quickly to reduce the production of shoes that have gone out of style, leaving
the company with fewer unwanted shoes, while increasing its production of shoe styles
that are rising in demand.
Nike had previously made a major commitment to this type of software by installing an
SAP supply-chain management system in the late 1990s. However, the systems were
problem ridden and, in Nike's view, inadequate, leading to Nike's second attempt, this
time with i2. Nike, like most big corporations, has experience with major information
technology projects, the previous one being the installation of an intranet in mid-1997.
That project was meant to bring key people in many countries into close contact with the
headquarters in order to improve global collaboration and so significantly reduce the
time it took to make product design decisions. In that case also, Nike's goal was to
respond rapidly to changes in style demands. But many vital employees seldom used
the intranet. A later evaluation of the project showed that Nike had planned the project
poorly, that key people had been left out, and that the staff was inadequately trained on
both the system and its business value.
The key element of the i2 project was to aid in speedily forecasting market changes. In
addition it was also to automate and so make efficient the way Nike manufactures,
ships, and sells its shoes, and thereby lowering operating costs. Even Federal Reserve
Chairman Alan Greenspan, recognized the potential of that type of software when he
said, "New technologies for supply-chain management can perceive imbalances in
inventories at a very early stagevirtually in real time." He added it "can cut production
promptly in response to the developing signs of unintended inventory building.".
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