By Steven & Ross

Contents Company Overview 1 Chinese Market 2 5 force analysis 3 4P analysis 4 Suggestion 5

Company Overview Bill Bowerman (Founder) Phil Knight (Founder)

Company Overview more than 700 shops and has offices located in 46 countries More than 44,000 Employees Brand Valued at $10.7 billion with revenue > US$24.1 billion Brand Valued at $10.7 billion with revenue > US$24.1 billion Most Valuable Brand Among Sports Businesses

Global Market Share

China Market Share

Football Basketball Men’s Training Women’s Training Nike’s Sports Wear Action’s Sports Main Products

To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete. NikeNike Mission

Chinese Consumer Source: McKinsey Insight China-Macroeconomic Model Update(March2011) Present(2010) Domination by Value Consumer ( ￥ 6000 to ￥ ） Future(2020) Domination by Mainstream Consumers ( ￥ to ￥ ）

Chinese Consumer Source: McKinsey Insight China-Macroeconomic Model Update(March2011) Present(2010) Major Existence of Mainstream Consumers in Advanced Cities Future(2020) Emerging Mainstream Consumers across China

Chinese Consumer Behavior Source: McKinsey Insight China-Macroeconomic Model Update(March2011) Increasing Spending on Personal Items Aspiration-Driven Trading Up  Judge people by what they buy Rise in Expectation  Sought Comfort and quality in apparel  Use Well-known brand as indicator of quality and safety 改進

Substitutes Buyers Porter’s Five Force Numerous competitors exist low cost products by Domestic companies Same average selling price provided by Adidas New Entrants Suppliers Rivalry Strong Rivalry Strong Rivalry

Substitutes Porter’s Five Force Numerous potential suppliers Homogenous or similar Materials provided by Suppliers Low Switching Costs Rivalry Suppliers Buyers New Entrants Weak Suppliers Strong Rivalry Strong Rivalry

Substitutes Porter’s Five Force Economies of scale Strong and well established brand name High capital requirements Difficult Access to Distribution Channels Cost advantages independent of scale (e.g. proprietary technology) Suppliers Buyers New Entrants Strong Barrier to Entrants Weak Suppliers Strong Rivalry Strong Rivalry

Substitutes Porter’s Five Force Price Sensitive Low Switching Cost Full Information No large volume Purchase relative to seller's sales Suppliers Buyers Strong Buyers Strong Barrier to Entrants Weak Suppliers Strong Rivalry Strong Rivalry

Substitutes Porter’s Five Force No Substitutes for Professional Athlete Special Design for Sports Wear Low Pressure of Substitutes Strong Rivalry Strong Rivalry Strong Buyers Strong Barrier to Entrants Weak Suppliers

Perceptual Map ExpensiveCheap Professional Amateur

Target Group Premium to middle class Middle Class to Lower Class Market Share [Global(China)] 7%(16%)6%(13%)(10%) Revenue in China (Millions RMB)(2012) [Global(China)] ￥ 146,795( ￥ 15,447) ￥ 116,087( ￥ 12,770) ￥ 6,739 =>Loss of ￥ 1,592 Positioning in China Professional Traditional Domestic Brand Cheap Substitute of International Brand Strategy Continuous R&D Multi-brand Expansion into lower tier region Multi-Brand From cheap substitute of global brand to international brand Increase footwear proportion Competitor Analysis

4P Analysis Product: Quality and Professional Product Environmental Friendly Packaging Customized Design Collaboration with Apple

4P Analysis Price: Skimming Pricing High end Customer Market Profit oriented Pricing Discounts Offer

4P Analysis Promotion: Integrated Marketing Communication Direct Marketing Celebrities Endorsement Public Relations Mass Advertising Sales Promotion Social Media(e.g. facebook)

4P Analysis Place: E-commerce Retail Factory Outlet Urban Areas Strategy

Suggestion Income Distribution in China Distribution of Nike Retail Store Distribution of Domestic Brand

Suggestion Price Range of Sports Brands in China(RMB) Extend the Price Range Explore Lower Tier(Lower Price) Market

Benefit Price of Domestic Brand : $170-$250 Attract people with Nike priced at $300 People switch to Nike Beat Domestic Brands Expand Market Share

Feasibility Possibility of Lowering Price Cost Structure Raw Materials Supplier’s Margin Nike’s Margin Distributor’s Margin Labor CostMarketing Expense Overhead Lowering Profit Margin => Cost Reduction Achieve Price Target of RMB$300

Feasibility People Acceptance of Foreign Brand Ogilvy China’s Survey: -Consumers in lower tier area are less willing to try out foreign product Solution: Heavy Marketing

Feasibility Brand Image Problem Lowering Price will Damage Premium Brand Image Precedent Exist!  Produce Another Product Line

Time for Q & A !!!

Skimming pricing Outlet, Retail Store Selective and exclusive distribution Vertical marketing systems: contractual System Add characteristics of Chinese Localization Threat Nike is facing(losing Market Share to Domestic Brand)=> Solution( Move to lower tier area)

Spotlight on NW Creative: Nike Makes A Better Box JANUARY 8, 2011 BY DAVID BURNLEAVE A COMMENTDAVID BURNLEAVE A COMMENT Nike is interested in helping to create a Better World. For instance, to help reduce packaging waste, Nike took a fresh look at their shoebox. According to NikeBiz.com, corrugated cardboard is Nike’s single- largest material purchase. The shoebox and its shipping carton account for half of Nike packaging. So they reengineered the shoe box, which now uses 30 percent less material than a 1995 vintage box, the company’s first 100-percent recycled-content box. The new shoe boxes, now in use, will save the equivalent of 200,000 trees annually.Better WorldNikeBiz.com

Intervening factors that affect purchase decisions: Attitude of Others => Increase no. of ppl wearing Nike Shoes on the street => Create a trend of wearing Nike/ Increase the popularity of Nike Affect Transfer Effect: Some Unconscious exposure will affect ppl’s decision