Brands key to Nike growth

30 June 2011

NEW YORK: Nike, the sportswear group, is seeking to use brand equity, portfolio management and innovation to fuel its future growth.

Mark Parker, the firm's chief executive, argued its leading ranges - Cole Haan, Converse, Hurley, Nike, Nike Basketball, Nike Golf and Umbro - would play a central role in achieving such a goal.

"We have seven distinct, high-energy brands, each with a powerful connection to its consumers," he said at a company meeting.

"It's really those connections that give us the insights that we need to create the amazing products and experiences, and ... do that over and over again."

Beyond this, however, Parker suggested the joint strength of the business's core assets offered considerable possibilities.

"While each brand has an enormous potential in its own right, the real power of Nike Inc comes from making the overall value of the portfolio greater than the sum of the parts," he said.

Parker deliberately adopted a broad definition of the term "portfolio", demonstrating a belief that Nike's varied capabilities allow it to push costs down and leverage resources across all brands and categories.

"It's our Nike brands and everything that drives them. It's our product, our retail partners and executions, our supply chain, our strong balance sheet, and then our very focused and talented management team.

"We use the power of the portfolio to manage risk and then to attack our biggest growth opportunities."

Innovation is the key component binding together all the elements of Nike's operations, based on a three-pronged strategy applicable to more than just new products.

"We innovate obviously to serve the athlete, we innovate to grow the company and then we also innovate to inspire the world," Parker said.

In the first of these areas, Nike's Free trainers, simulating barefoot running, have proved especially successful, while Nike Lunar lightweight footwear is now worth $1.5bn only three years after launch.

Nike has also embraced experiential marketing, such as organising 132 runs in 28 countries in 2010, and the membership levels for its Nike+ web community have risen 40% in the last 12 months.

Elsewhere, the GPS SportWatch can connect directly to Nike+, and provide detailed data regarding the speed and distance logged by runners.

"There are millions of athletes using Nike digital apps [and] billions of consumers watching our athletes all around the world," said Parker.

"The opportunities to deliver meaningful product innovation have really never been greater."

Innovations can transform the marketplaces be it by working with wholesale partners or through wholly-owned branded stores.

"We're on the ground around the world identifying the markets, connecting with consumers and assessing retail opportunities," said Parker.

"We use this knowledge to apply our resources where they make the most difference."

E-commerce constitutes another essential sector, with revenues surging 25% year on year, led by, which has seen a 32% lift.

Finally, Parker discussed innovation that "inspires the world", like partnering with governments, activists and other companies to tackle issues such as climate change and CSR.

"One of the great lessons of the 21st Century is the need for collaboration," said Parker. "I believe nobody can solve the big challenges or reach the bigger opportunities of the future alone."

Data sourced from Nike; additional content by Warc staff