Most successful businesses begin with just an abstract idea, but it takes courage, persistence, and a lot of right decisions to make it to a multinational corporation. Phil Knight and Bill Bowerman did precisely this and together built an excellent Nike value proposition.
But how?
Table of Contents
The Unbelievable Story Behind the Top Shoe Brand in the World
Early beginnings
Phil Knight, known as Nike’s creator, was just another graduate distance runner from Stanford. Phil was very eager to start a business. He was very well aware of Japanese production benefits, so he had an idea to explore the Japanese market with his own eyes.
He saw a company with high-quality shoes named Onitsuka tiger. He proposed a contract to them as a shoe distributor and began distributing the Onitsuka shoes to the USA, selling them off from the back of his car to every running track there was. After a while, he contacted his university coach Bill Bowerman. Bill was one of the best coaches in the USA at the time, training multiple athletes, and with the help of his connections, they both managed to reach unbelievable sales.
As the business got more significant, they started hiring salespeople, and their revenue went up. They started changing their design and bettering their materials by adding cushions and using lightweight materials. However, Onitsuka tiger could not keep up with this rise in sales, which eventually led to not renewing the contract. NIKE co-founders managed to wire with a network of subcontractors in Japan and started working on branding. They got the NIKE’s logo for 35$ from a graphic design student and called the brand NIKE after the Greek goddess of victory. Telling their story is essential for learning the basics of the Nike value proposition.
Where Are They Now?
NIKE has more than 1000 stores worldwide. They sell their products through a mix of independent subsidiaries and licensees in over 120 countries worldwide. NIKE sells not only footwear products designed for specific sports and athletic use but also athlete apparel for casual and leisure purposes for men, women, and children. Nike includes accessories designed to complement the footwear products to inform collections with similar designs and specific purposes.
Nike’s licensees produce and sell Nike brand Swimwear, maternity exercise wear, school supplies, electronic media devices, performance equipment, and all kinds of other lifestyle apparel associated with sports. They also have subsidiaries like Bauer NIKE Hockey, offering product selection for street hockey. The Hurley International LLC design distributing sports apparel for snowboarding, surfing, skateboarding. They are selling many athlete apparel lines under different brand names like Cole Haan, Series, Bragan.
What Is the Nike Value Proposition?
A value proposition is a critical foundation that underpins a particular business model and an essential tool for testing your business hypothesis in the world. It’s a value promise to get delivered and communicated to the customer during a long-term expectation of the product. Now, how does the Nike value proposition do better than its competitors?
The Nike value proposition focuses on satisfying its customers with a superior product made out of the best available materials and latest technologies, which is also fashionable and worn by supreme athletes and sports stars and accessible to anyone.
The four main segments of Nike value proposition
- Accessibility:Nike is spreading out to different locations globally, in both official stores and outlets, including online stores and shipment. By acquiring multiple other footwear and clothing firms – its easy access is almost inevitable. Customers can easily reach out to their products in their everyday life.
- Customization:NikeID or Nike By You is a service that allows customers to personalize and customize their merchandise through online use. They also have physical studios in countries like the United Kingdom, Italy, France, Japan, Canada, Germany, Spain, China, and the USA.
- Innovation:This Nike value proposition tends to explore innovation from various aspects. Nike’s team includes research labs like Explore Team Sport Research Lab, focusing on designing cutting-edge products and Nike Advanced Product Creation Center incorporating technology in their products.
- Brand/Status – Partnering up with rookie athletes was just the beginning of this company’s success. Today, Nike has signed contracts with the top three leagues in the USA – MBL, NFL, and NBA. Many others have also signed deals with this brand, sports stars like Cristiano Ronaldo, Micheal Jordan, and Tiger Woods, which puts this value as a core of the Nike value proposition.
You can check the Adidas Value proposition here.
What About Their Revenue Model?
The Nike revenue model consists of selling all of its footwear and sportswear products through its independent manufacturers. This company divides their financial measures through the three brand it owns – NIKE brand, Converse, and Corporate. The Nike brand contains 94.6% of total revenue and into further geographical segments:
- Europe
- North America
- The Middle East and Africa
- China
- Latin America
- Asia Pacific
- Global Brand Divisions
Another characteristic of Nike’s revenue model is that it reports its revenues into product lines:
- Footwear 68.7% Categories include Running, Basketball, Football, Women Training, Men’s training, Golf sportswear.
- Apparel 27.3% covers most of the already mentioned categories through the same marketing distribution channels.
- Equipment 3.5% Includes performance equipment and accessories like eyewear and gloves, digital devices, bags, socks, and other plastic products through its wholly-owned subsidiary NIKE IHM Inc.
This Nike business model predominately focuses on design, marketing and development, and outsourcing of non-core activities like manufacturing to their independent contractors and building a global brand in its entirety, which makes Nike value proposition one worth considering.
But How Does All of This Work?
First of all, to have a profitable business, you have to have a good marketing strategy, that is – to let the customer connect with the product. The Nike value proposition does not allow its marketing strategy to slide.
When it comes to connecting to a product and choosing the right one, emotions override facts and logic. It’s widely known that the more emotionally involved we are in a particular thing, the less objective and critical we are of its mistakes and flaws.
The Nike strategy of marketing does this through one of the most effective ways – vivid storytelling. They tell inspiring stories about athletes and regular people going through hardships, even though they have nothing to do with the product. Their marketing will never tell you why their product is better than their competitor’s one, but you get the idea through honoring great athletes and athletics.
Nike strategy of doing marketing goes through two types of effects:
- Halo effect – cognitive bias in which our overall impression of a person influences our message’s opinion. Customers are more receptive to ideas than they usually wouldn’t consider. It happens in politics where people vote for more attractive candidates, and in other areas in life. It seems like a conflict between emotion and reason, and the Nike value proposition to the customers manages to use this tool correctly.
- Scarcity effect – products becoming more desirable when we feel there is a lack of them or are less available. This effect is usually showing limited supply (only five left in stock) or limited time (offering sales for only the weekend). People typically don’t want to miss opportunities, which is why this works so well.
What’s Their Primary Strategy?
In 2017 Nike business strategy changed into a triple-double plan, which means
- x2 innovation
- 2x speed to market
- 2x direct connections.
The successful Nike value proposition includes the perfect business model. The Nike business model is a little bit different than the regular business model. The typical business model goes like this:
Manufacturer -> Distributor -> Retailer -> Public– which makes the product price tag rise.
Nike, on the other hand, tries to use the DTC strategy (Direct To Consumer):
Manufacturer -> Consumer– lowering the total supply chain cost and, therefore, the product’s price.
This Nike value proposition shows its customers that they are the most integral part of the story.
Direct connectionis the ideal business model shown as a great Nike value proposition, through:
- Online selling and shipping
- Paying for ads to the target market
- Nike Direct – wholesale distribution with their partners, which they are trying to have less of, controls the customer experience more straightforward.
Nike objectivesare focused not on profit, but add in the Nike value proposition with:
- Minimizing environmental waste – using less and better energy, innovating new solutions for sustainable materials, and reuse/recycle of materials
- Continuously transforming manufacturing, Nike focuses on creating technology-driven manufacturing by hiring valuable and highly skilled workers and building sustainable factories.
- They are unleashing human potential– in both customers and employees. The company aims to inspire and challenge its employees each day.
Nike Key activitiesinclude marketing and selling athletic footwear, distribution and logistics, quality control, production, manufacturing, development, design, sponsoring, marketing, branding, apparel, equipment, accessories, and services.
What About the Nike Customer Relationship?
Nike knows how to serve its customers. In the retail stores Nike offers, there is not a lot of customers – seller contact. It’s more of a self-serving nature. Nike’s value proposition provides other ways to communicate.
- FAQ on their website
- Available personal assistance (through phone, live chat support, email)
Additional info- Find the best email marketing software for your company.
Nike manages their site in which offers various useful tools for their community. They provide catalogs for Nike’s apparel, which helps customers access the brand, including articles associated with its purpose.
Nike value proposition also offers an official app for runners to track their results, engage in content, and build community.
Probably the most effective tool of the Nike value proposition is customization. Customization can connect customers with the brand more closely. It helps companies attract fickle but lucrative young shoppers, membership (providing access to ultimate gear, expert guidance, incredible experiences, and endless motivation), cool brand, sustainable innovation, community impact, online experience, offline channels, gift cards, Free delivery + Free returns.
Relationship marketing is the key to grow the audience and increase company profits in long run.
In conclusion:
An incredible start of a business does not guarantee its long-term success. Maintaining a success rate is done not only through a profitable business model but enhancing quality, keeping good customer relationships, and creating innovative ideas of eliminating waste and increasing profit. Nike has managed to find its way to success, will you?
Indika Bandara
Indika is the founder of ecom hustler.com.And director of Bluechip mind. He runs his own digital marketing agency.
“Helping Someone Online Saves Lots of Airfare”
FAQs
What is the value of proposition of Nike? ›
Nike's Value Propositions
Nike offers products to inspire anyone to become an athlete. Their products heavily rely on the quality, innovation, and status of the brand. This is the foundation of the brand, and it is exactly what the customers seek when they buy a Nike.
The top personal values for Nike customers are equality, protecting all people and social justice, and tolerance and acceptance of different individuals, beliefs and behaviors.
How does Nike add value to their customers? ›By offering more products to more people, in more markets than any other sports company, they are able to capture a far greater market share of the market than any other company. Like most leaders in the market, Nike values the consumer and the importance of providing a quality product.
What is Nike's unique selling proposition? ›As you might know, Nike sponsors top athletes in many sports branches to promote their products, technology, and design. In fact, you can track that down to the brand's unique selling point. By saying that its mission is to bring inspiration and innovation to every athlete in the world, it targets an audience.
What makes Nike different from its competitors? ›What makes Nike unique? Core associations for Nike include: innovative technology, high quality/stylish products, joy and celebration of sports, maximum performance, self-empowerment and inspiring, locally and regionally involved, and globally responsible.
What is your value proposition to the customer? ›- Improve the buying process. Value can exist outside your product or service. ...
- Focus on brand perception. ...
- Get customer feedback. ...
- Make a unique product. ...
- Provide a positive experience. ...
- Prioritize quality over price. ...
- Identify your strengths. ...
- Adjust your marketing strategy.
To put it simply, Nike doesn't just sell products. It tells customers what they want — and then makes that value readily available. The key is Nike's ability to cultivate customer trust.
What is an example of a value proposition? ›While the two can have points in common, a value prop is more product- and service-oriented while a mission statement is more goal-oriented. Here are two examples for HubSpot and our CRM platform: Value Proposition: “An easy-to-use CRM.” Mission Statement: “To help businesses grow better.”
Why do customers choose Nike? ›More Reasons for Nike's Popularity. Not only has Nike been a trendsetter, but the shoe giant also seems to find a way to make the best use of existing trends. Shoppers today are focused on health and wellness, and more people are buying athletic shoes so they can exercise.
What is Nike's positioning strategy? ›Positioning of Nike
Positioning is all about placing the company's brand in the market with other competitors. Nike has strategically positioned its brand as a market leader for sports equipment that provides innovative and premium quality technology.
Why is Nike just do it so successful? ›
The campaign embodied Nike's image as an innovative American icon associated with success through the combination of professional athletes and motivational slogans emphasizing sportsmanship and health. This led to customers associating their purchases with the prospect of achieving greatness.
How can Nike improve their marketing strategy? ›Therefore, Nike to increase its marketing activity should increase their collaborations, but not only focus on one market. Perhaps look at engaging with other brands from different sectors, this will increase their brand awareness, and market share.
What is value proposition in business? ›A value proposition is a simple statement that clearly communicates the product or service benefit you promise to deliver to your customers. It's ultimately what makes your product attractive to your ideal customer.
What strategies did you consider to have a unique selling proposition for your product? ›- Make a list of all the potential differentiators of your brand and what you sell. And get specific. ...
- Research the competition. ...
- Compare your most unique angles against your audience's needs. ...
- Compile the data. ...
- Think about viable ways to apply it across your business.
Nike's Strengths – Internal Strategic Factors
Huge Customer base – Nike has millions of customer from around the world who loyally follow Nike's trends, participate in Nike events, and even provide customer feedback. Due to its huge popularity, Nike's market cap has grown to $232 billion as of Jan 2022.
Nikes competitive strategy seems to maintain competitive due to their low cost structure. They have an extremely low cost to create ratio compared to how much they are actually selling all of their products for. Additionally, they sell their products to such a large target audience.
What is Nike's brand identity? ›The Swoosh Logo
In 1971, Phil Knight, the founder of Nike, hired graphic designer Carolyn Davidson to help him create a logo for his new show brand, which would become Blue Ribbon Sports and eventually Nike. They chose the Swoosh logo because it has a smooth motion that represents speed.
Nike. In Greek mythology, Nike is the Winged Goddess of Victory. The logo is derived from goddess' wing,'swoosh', which symbolises the sound of speed, movement, power and motivation.
Why is customer value proposition important? ›The value proposition is the fundamental reason a customer should buy from your company. It is a single, clear statement that concisely communicates the value your company creates in the world. So in a market-based economy, a strong value proposition is crucial for a company's success and survival.
How do brands create value for the customer and the firm? ›How do brands create value for the customer and the firm? They facilitate purchases by making a product easily recognized, they establish loyalty because consumers begin to trust certain brands, they protect the firm from competition, and reduce marketing costs.
How do you show value to customers? ›
- Share customer testimonials.
- Leverage competitor comparisons.
- Collect and apply feedback.
- Provide outstanding customer service.
- Gather and share social proof.
- Create content just for your customers.
- Build a customer community.
With quality to back it up, the company can charge more for its products than competitors while still making a lot of money. 79% of Nike consumers said the special incentives are a big part of why they stick with the brand. Exclusivity and rewards work well together to make the loyalty scheme ideas work.
How does Nike communicate with customers? ›Nike Inc. uses advertisements to communicate with large populations of target customers in the global market. This element of the marketing communications mix promotes the company's brands and sporting goods to customers, thereby improving brand recall and purchase likelihood.
What is Nike advertising strategy? ›Nike's marketing strategy also relies on celebrities and influencers. The brand supports individual athletes, and working with people who have been on the same road will make brand communication stronger. This is because people look up to others who could rise amidst the struggles in their lives.
What makes a strong value proposition? ›Every value proposition should speak to a customer's challenge and make the case for your company as the problem-solver. A great value proposition may highlight what makes you different from competitors, but it should always focus on how customers define your value.
What is Nike's brand message? ›We're all familiar with Nike's classic tagline of “Just do it,” Over the years, the brand's shoes, along with famous athlete endorsements and the swoosh logo, have become more popular among consumers than ever.
What is Nike best known for? ›The world's largest athletic apparel company, Nike is best known for its footwear, apparel, and equipment. Founded in 1964 as Blue Ribbon Sports, the company became Nike in 1971 after the Greek goddess of victory. One of the most valuable brands among sport businesses, Nike employs over 76,000 people worldwide.
Are customers satisfied with Nike? ›As such, the Nike customer satisfaction survey shows that most clients are somehow happy with Nike products.
What is Nike current slogan? ›Nike believes in the power of sport to unite and inspire people to take action in their communities.
What is the best advertising slogan of Nike? ›1. “Greatness is not born, it is made.”
Where did Nike slogan Just Do It come from? ›
An original "Just Do It" commercial. Wieden coined the tagline, "Just Do It" for the then smaller sportswear brand based out of Oregon. The phrase immediately took off, and signaled an upward trajectory for Wieden and Kennedy, as well as Nike.
How does Nike promote their products on social media? ›Instead of just selling their products, Nike positions the brand as a healthy lifestyle motivator. Simple, powerful slogans and emotional storytelling are elements of communication. Brand empower their target audience and present news from the world of sport.
What was the key insight that helped Nike develop a holistic marketing strategy? ›Nike adopted a range of digital exercises such as a strong emphasis on storytelling, being an authentic brand, understanding and communication with customers on their terms, being extraordinary and shareable, and allowing complete customization.
What is Nike future plans? ›The sports giant is now expecting 2022 revenue to hit over $50 billion, Chief Financial Officer Matt Friend said on a call with analysts. As with previous years, Nike is honing in on digital and DTC. The company is expecting to reach 50% digital — through its own channels and its partners — by 2025 (from 35% now).
What is an example of a value proposition? ›While the two can have points in common, a value prop is more product- and service-oriented while a mission statement is more goal-oriented. Here are two examples for HubSpot and our CRM platform: Value Proposition: “An easy-to-use CRM.” Mission Statement: “To help businesses grow better.”
What is Apple's value proposition? ›Breaking down Apple's platform strategy. Apple's value proposition is built thanks to its ecosystem. In short, Apple's “implicit promise” is to create a smooth experience, as long as you are within Apple's ecosystem. This is what enabled Apple to become a multi-trillion-dollar company.
What is the value proposition of Coca Cola? ›Our vision is to craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better shared future that makes a difference in people's lives, communities and our planet.
What is Adidas value proposition? ›Adidas offers three primary value propositions: innovation, customization, and brand/status. The company places a high priority on innovation.
What statement is the best description of a value proposition? ›A value proposition is a simple statement that clearly communicates the product or service benefit you promise to deliver to your customers. It's ultimately what makes your product attractive to your ideal customer.
What is the purpose of value proposition? ›A value proposition is a statement that clearly identifies the benefits a company's products and services will deliver to its customers. A well-crafted value proposition will differentiate the company and/or its specific product or service in the marketplace and among a target market or target audience.
What is Starbucks value proposition? ›
To inspire and nurture the human spirit - one person, one cup and one neighborhood at a time. With our partners, our coffee and our customers at our core, we live these values: Creating a culture of warmth and belonging, where everyone is welcome.
What is value proposition of a product? ›A product value proposition is a statement that articulates the product's features, uses and differentiators while taking into account the customers' problems, wants and needs. It is the north star for product messaging. A product value proposition describes what the customer will get out of the product.
What is Amazon's value proposition? ›Amazon's Value Propositions
Jeff Bezos defines that Amazon's business model is based on three value propositions: low price, fast delivery, and a wide selection of products.
Coca-cola
The unique selling proposition is the main reason why Coca-cola has been around for a long time now since 1886. It uses universal storytelling and everyday moments to connect with its customers globally. Coca-cola doesn't sell beverages; it sells happiness in a bottle.
Coca-Cola designed a content-based marketing strategy to drive consumer conversations, inspire purchases, and enhance brand value. Storytelling is a powerful tool to use within a company, just like it is for your target audience.