The goal of Nike is to bring inspiration and innovation to every athlete in the world. Although that may be true in the overall scheme of things, there are certain athletes that Nike targets more often because they are more profitable.
Nike has an average annual worldwide revenue of $27.7 billion. That comes from just 858 total retail stores worldwide.
The Nike Brand
Most people associate footwear with the Nike brand and rightly so. Their annual athletic footwear sales total $90 million. In comparison, Adidas moves just $25 million of footwear sales annually. In total, the global market share for Nike is expected to be over 27% by 2020. Here’s how they’re going to be able to do it.
- Nike primarily targets consumers who are between 18-40 years of age.
- The goal is to equip teens under the age of 20 with athletic apparel, especially in sports like football and soccer.
- Nike targets households and teens that have a particular desire to look athletic and fashionable at the same time.
- All socioeconomic classes are targeted as part of the segmentation of Nike’s demographics.
- Most marketing occurs in the United States for Nike, but this is to increase the market share of their athletic apparel more than it is to advertise their footwear.
- No single customer accounted for more than 10% of Nike’s overall sales in the last year, proving that the company has a very diversified market.
- North American sales for Nike are still 2.5x greater than the next closest market, which is Western Europe.
Nike is unique in the fact that they have a very general targeted demographic segment. If anyone wants to be athletic, then they’re going to receive at least one marketing target no matter what their racial profile, economic status, or other sub-demographic may be. Households that make more money will receive additional targets, of course, but everyone who wants to look good while they’re out playing their preferred sport is supposed to want Nike. The company has come a long way since it was initially founded on a smile and a handshake, but there is still a lot of potential to achieve.
Has Nike Lost Their Edge?
- Nike spent more than $3.2 billion to run ads in major media from 1995 through 2012.
- Nike ranks second with consumers ages 45 to 65, third with consumers ages 25 to 44 and fifth with consumers ages 18 to 24.
- More than 12.6 million people “like” the brand on Facebook and Nike has more than 1 million followers on Twitter.
- Footwear revenues still account for 58% of Nike’s total overall revenues.
- Revenues from men’s training products are more than double that of women’s training products for the brand.
- 15%. That’s the percentage of revenues that Nike receives from emerging markets.
Here’s the problem that Nike faces right now. They are a top brand for older Millennials, Generation X’ers, and Baby Boomers because these are the generations that got to see athletes like Michael Jordan play in person. These names have become synonymous with the Nike brand and the nostalgia drives sales upward. Kids might think their parents are cool, but are they going to wear the same brand of shoes? Not usually. This means the targeted age demographics that are key to Nike’s growth are under-achieving because the brand is actually over-achieving outside of its targeted demographic segments.
Could Labor Be An Issue For Nike?
- Younger generations are concerned about philanthropic efforts with the brands they represent and it is known that Nike has in the past routinely violated minimum wage laws and forced overtime.
- One incident in Vietnam had a Nike supervisor hit 15 women with a shoe for poor sewing, sending two of them to the hospital.
- In Indonesia, a worker was locked in a factory room for 7 days under military interrogation because of suspected unionization activities.
- 30% of Nike’s total business costs in Indonesia go to paying off generals and other government officials.
To Nike’s credit, it has worked hard to improve worker standards over the last 20 years so that an economically viable wage would be paid and safer work standards would be implemented. That may not be enough for their demographic segments. Thanks to the internet archives that exist, a simple search for Nike brand representation brings up data like the four points above. Is that something the younger generations want associated with them – a generation that feels like the brands they represent are a direct reflection of themselves? No. Their parents might still see Michael Jordan flying through the air, but their kids are going to see women and children beaten with shoes so they’ll perform.