CASE STUDY

NIKE-2004
(Marketing Management 2A)

Mark Louisse Valdez

Francis Cuyag

John Zulueta

Melgazar Emnas

Dancris Gantang

Juvylyn Dionaldo

Chessa Reyes

Mary Grace Borja

Remedios Narciso
 University of Caloocan City

College of Business and Accountancy

Case Study - Nike

I. Time Context:

The year 2003 was a year of “firsts” for Nike. The company had the
highest revenue in its history and also earned more revenue outside the United
States for the first time. However, the company continues to deal with
controversies on a number of fronts such as manufacturing, ethics, lawsuits and
criticism of the high endorsement fees paid to the athletes.

II. View Point:

CEO Phil Knight decided to see things positively, and continually improve their
strengths, going the extra mile and being certain of their ability to compete
and win.

III. Statement of the Problem:

The CEO Phil Knight faces adversities from Global competitions and
lawsuits set by Marc Kasky.

 How can Nike protect their company’s image?

 How will they respond to the public’s criticisms?

IV. Objectives:

Short-term objectives

1. Maintain superior quality products and effective marketing strategies.

2. To offer a broader range of sports shoes and apparel products.

Long-term objectives

1. It plans to double its current sales level of women’s product ($1.5 Billion)
by 2005.

2. By 2007 Nike expects global soccer revenues to reach $1Billion.

V. Areas of Consideration

The Company must consider that the public is always keeping an eye on
them. Whatever move they make regarding with these social problems will
reflect on their brand. If their action will result in a negative impression, this
would lead them to their downfall.

VI. Alternative Courses of Action

Short-term objectives

1. Improve Research and Development team; use sports-superstars and high-

profile personalities in advertising.

2. Acquire companies that produce superior-quality sports apparel which are

not yet in their product mix.

Long-term objectives

1. More Nike Goddess stores are planned in 2004 and beyond.

 2. To get a high-profile endorser in the field of soccer and support major
soccer events.

VII. Conclusion:

Since Nike Company had already gained a high level of brand equity, it is
easy for them to lead the athletic shoe industry. With their superiority in
Research & Development and expertise in Marketing and Distribution, their
competitors would really have a hard time on turning the tables. However, the
company should not be content on the situation they are in.

There are several things that they must consider; one of these is dealing
with economic conditions. Since Nike Company is not actually producing shoes,
they have contracted manufacturing factories internationally. Nike must keep
an eye on its disadvantages. Others are social responsibilities, legal issues and
problems in distribution.

Fortunately, some of these problems were already resolved. They have

joined different social organizations to cope with their social responsibilities;
they take the initiative in regard to recycling old shoe by “Reuse-A-Shoe”
program; provided an advance ordering system to secure on time
replenishment and shipments to merchandisers.

One of the biggest adversities that their CEO-Mr. Phil Knight had
encountered is when they got involved in a false advertising lawsuit in 2002. It
was Marc Kasky who sued Nike for false advertising after accusing Phil Knight of
lying when Knight responded to question about Nike sweatshops in a letter to
the editor printed in the New York Time. Fortunately, the case was dismissed
in June 2003 and the case was sent back to California Supreme Court to be
reviewed.

Despite of this of adversities, Nike is still doing a great job in maintaining

the lead in the athletic shoe industry. They are still pursuing on strengthening
their weaknesses by developing new products and deepening their product
line.
VIII. Recommendation:

Since Nike has been doing a great job in dealing and resolving their
difficulties, the only thing that will make them stay on top is to protect their
image. We recommend that the company should always properly monitor
everything from the top management down to the lowest department.

Furthermore, the company should also follow strict compliance in legal

and regulatory issues. They must be very careful and sensitive to their actions
–- how they manage operations, how they answer criticisms and how they
relate to society specially on advertising.

Their expertise in advertising is no doubt their strength, what they have

to do is to use it properly, otherwise, it will bring negative impressions and will
cause them to fall.

Regarding on maintaining their competitive advantage the company

should focus intently on Research and Development keeping the lead in
producing superior quality products.