Nike+ presentation
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A brief strategy about how to improve Nike+ profitability
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Nike+ presentation
- 1. Group Case Analysis Nike+ FuelBand MKTG 6231F Entertainment Marketing Schulich School of Business Rita Hao Valeria Lamberti Patrick Stoesser
- 2. Industry Overview “Bracelets” that monitor fitness activity – Track movement and sync results with mobile applications Relatively new industry product invented in early 2000‟s $400MM market annually (2016) Dominated by 3 players (97% of market) – Nike – FitBit – Jawbone 1
- 3. Private start-up founded in 2009 Wide variety of products Focus on „health‟, „fitness‟, and „individualism‟ 2
- 4. Entered market in 2006 with Nike FuelBand+ IPod Product Heavily marketed and advertised Focus on „sporty‟, and „the Nike community‟ 3
- 5. Nike vs. FitBit Nike FitBit Entered Market 2006 2009 Average Cost $149 $130 Measurements Time, Distance, Calories, Steps, Daily Progress, “Nike Fuel” Time, Distance, Calories, Steps, Elevation Technology Bluetooth connectivity, 3Bluetooth connectivity, 3-axis axis accelerometer , ambient accelerometer, vibration motor, 10% 68% light sensor, li-on polymer li-on polymer battery battery FitBit is a start up with a fraction of the marketing budget of Nike, yet they are dominating the market Market Share Why is this and how can Nike position themselves to increase their market share? 4
- 7. The Healthy Consumer Contradiction The Healthy Consumer The Natural Athlete The Health Conscious Consumer Contradictions Smart, “the every man”, responsible Strong, masculine, fun Negations Implicatives Implicatives Unrealistic, intimidating, naive Gap between reality and ideal (as experienced in everyday situations) Too much work, boring, not fun Time Identity Confirmation (discourse, practices, performances) The Pursuit of Healthy Living (through Brands) 6
- 8. The Problem Nike is trying to win over “The Healthy Consumer” Marketing message focuses on “The Natural Athlete” – – Contradicts message with “The Health Conscious Consumer” Strong and sporty vs. responsible choices, everyday battles Appealing to “The Work Machine” – Technology leads to productivity, success, efficiency FitBit appeals to every other segment – Expressive, ease of use, empowerment, community building, those intimidated by technology Given this, how does Nike position FuelBand to gain market share? 7
- 9. Key Success Factors A. Strong Brand Recognition – Premium brand – High quality products – The “cool” factor/brand personality “Nike-as-a-person is exciting, provocative, spirited, cool, innovative, aggressive, and into health and fitness” 8
- 10. Key Success Factors B. Style and features – – – – – – Different colors and design Comfort Silent alarm, water proof, sleep monitoring Cross-platform wireless syncing (android device) Social connectivity (NikeFuel community) “One size doesn‟t fit all” - Fitbit 9
- 11. Key Success Factors C. Financial sustainability – Nike was the first one into the market • Experience and technology – Ability to develop new products in house with minimal risk – Strong history of alliances • Apple partnership – Selective in M&A – Extremely high marketing budget 10
- 12. Ansoff’s Four Strategies Present Product Nike+ Fuel band Nike+ Fuel band SE Present Market New Product Market Penetration Product Development Market Development Diversification Athletes, active people New Market Everyday Joe who wants to be more active and healthy 11
- 13. Alternative Solutions 1. Status Quo Pros: – Less risky – Serving the same niche market Cons: – Losing market share (10% Nike vs. 68% Fitbit) – More players coming into the market (LG, Sony, Garmin) – Premium price with less functionality 12
- 14. Alternative Solutions 2. Acquire FitBit Pros: – Big corporation vs. start-up – Access to FitBit‟s activity tracking logarithms (trade secrets) – Instantaneous results Cons: – Financial risk – Cannibalize sales 13
- 15. Alternative Solutions 3. Market development Pros: – Develop a new sub brand with a focus on developing a new market – Improve software compatibility with different operating systems – Different pricing tiers – New marketing campaign focusing on “healthy people” instead of “athletes” – Leveraging Nike brand Cons – Time demanding – Customer perception 14
- 16. Evaluating Alternatives Key Success Factors in the Activity Tracking Industry Nike‟s Strength Strong Brand Name Style/features Financial sustainability Status Quo Acquisition Market Developmen t ✔ ✔ ✔ ✔ ✔ ✔ 15
- 17. Developing a New Association Just do it Sport Fun Trainers Running Athletes Motivation Shoes 16
- 18. How? Just do it Sport Sport = Health Just do it = Health Keeping healthy through sport activities Keeping healthy through everyday simple and small efforts Nike+ Health sub brand is all about healthy everyday living 17
- 19. Let’s Take the Field! New product features New spokesperso ns Online strategy Nike+ = Health Review Nike+ ads Strategic sponsorship s 18
- 20. Make Health Count! ACTUAL COMMERCIAL 40%-50% of images related to sports only few about everyday healthy living Review Nike+ ads NEW COMMERCIAL 70% of images related to everyday healthy activities Sport is not the only thing that counts! 19
- 21. You Know It, It Counts Strategic sponsorship s Contact companies which stimulate their employees to practice more healthy activities Sponsor healthy programs organized by high schools and universities Sponsor city marathons 20
- 22. Web Counts Too Online strategy Improve the Nike+ FuelBand community: – possibility to share your “health results” with your friends – users and company generated suggestions on how to keep you healthy Facebook and Twitter pages totally dedicated to the new Nike+ and the health topic YouTube channel integrated with the new commercial and spokespersons‟ videos with healthy suggestions “The Healthiest Nike person” contest 21
- 23. Perfection Doesn’t Count New spokesperson s The new Nike+ should no longer be associated only with athletes and sports persons. 22
- 24. Money (unfortunately) counts Activities Cost New spot realization 5.000$ New spot broadcasting 400.000$ Sponsorships 2.000.000$ Social Media 200.000$ Contest 10.000$ Spokespersons 1.500.000$ TOTAL 4.115.000$ Cheaper than an acquisition! 23
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