As the team has looked at the trends in female market, it saw it as a great business opportunity, culminated with creating global women’s footwear division in 2001, addressing the differences of the women’s physique and style preferences. Creation of Nike Goddess retail marketing project has been another milestone in women’s direction. This limited chain of Nike stores with the 1-on-1 service philosophy (a la Starbucks for women) has given the nudge to see how the collection could be brought to life per customers’ demands. Thus, in 2003, when the Sport Lux collection sold out, this event served as a final lesson confirming the formation of the new strategy.

This break-through has alleviated the pressure of justifying the need to encompass the women’s fitness market, however the issues of developing product lines, broken down to various sports categories, synchronizing the product life cycles to deliver the line at the same time all around, sending the right message to the consumer posed a challenge of strategically formulating the new change to the senior management for launch approval.

3. Describe the new strategy for global women’s fitness proposed by the Change the Game team.

The Women’s Fitness strategy suggested the integrated women’s line, encompassing all items (footwear, apparel and equipment) dedicated to initially designated 5 types of sports, with the idea of expanding into more once the strategy proves it success. This idea implied addressing the entire market broken down in six categories: running, men’s training, basketball, soccer, women’s fitness and sportswear.

This strategy was a set out to be a start of the “dialogue and an emotional connection with women”. Creating such bond and communication pathway would lead to understanding the company offerings by their female clientele, turning them from window shoppers into loyalists. As indicated in the article, the vision that was presented (Exhibit 1) was a powerful strategic principle[1]:

4. What were the greatest internal and external barriers facing the team in implementing the new strategy? In what ways did they manage these challenges well? How are consumers’ needs taken into consideration?

Internal Barriers:

During the Women’s Fitness integration

– Frequent staff rotation

– Multitasking between 2 priorities

– No guarantee of success

– Not full back up of the senior management

– Creating a dialogue with women: message and its delivery methods not yet clearly defined

– Lack of HR: Emma Minto – the only full time associate assigned with strategic lead.

– Competing Priorities – lack of resources. Most had to take on double roles

– No additional financial compensation for adding on additional tasks affecting staff motivation

– Various degrees of centralization in Footwear and Apparel businesses, specifically in product design and development

– No firm backing by senior management, 51% favor showed a lot of reservations

Post Women’s Fitness strategy integration Challenges:

– Category-driven approach company-wide global integration

– Scheduling operations across departments to meet unified deadline to deliver the collection

– Breaking the stereotypes of evolving one product instead of all-encompassing line of products

– Sustainability of SCM: synchronized delivery to all the vendors (6000 doors at the same time)

– Investment in integrating SCM wasn’t scalable, therefore only temporary

– No integrated systems to capture the results of the Women’s Fitness Business

– Prioritization of styles: 20% of styles sustains 95% of business

– The change adaptation is slow

– Needed to make “Believers” out of supporters and skeptics

External Barriers:

– Lack of market data supporting women’s athletic habits to present in favor of Women’s Fitness category.

– Undefined competition (Old Navy vs Adidas) presented inability to process the trends and aspirations of women in fitness department

– Estimation of market growth potential was based on the trends, such as sports participation rates or gym memberships

– Uneven market opportunity split among footwear (25%), apparel (70%), equipment (5%) representing difficulty forecasting of the collection success

– Various global fitness trends and demands (consumer needs) necessitating different approaches to collection priorities in terms of sport (Dance vs Cardio)

In what ways did they manage these challenges well? How are consumers’ needs taken into consideration?

Company’s mission addresses athletes, but defines athletes as each and every individual. It had no longer dominated product markets and pushed forward with dominance in sports and masculinity.

To get to this integrated approach and overcome all the listed above challenges, Women’s Fitness Team has prioritized the styles to be available for delivery to selected retailers. It emphasized the women’s physique peculiarities (print ads: Thunder Thighs, Shoulders, Butt) and build the feel of originality on these. Nike spoke to women of all athletic degrees of involvement to provide them with desired alternative and deliver female product. Being male focused was starting to become a philosophy of the past as the company started to move into all encompassing, category-driven mindset. Although they had sparse human and physical resources, the team juggled between 2 jobs without extra compensation, demonstrating full commitment. They have experimented with the investments into the infrastructure to monitor sales and ROI as well as synchronizing the deadlines across the business units. Overall, the company has made a significant shift with outstanding results.

5. What are the advantages and potential disadvantages to Nike of shifting from a product-driven to a consumer or category-driven business in the women’s market? Across the company? What new skills/competencies does the new approach require? What skills/competencies must the organization be careful not to lose?

Advantages:	Disadvantages:

The skills/competencies new approach required

In order to distinguish among different skills and competencies the new approach of delivering integrated collection vs differentiated products, the resource identification model was considered, see Exhibit 2. The most evident skills and competencies are identified as following:

Organizational skills:

Business Competencies:

The skills/competencies the organization must be careful not to lose:

MVS (Most valuable skills) as outlined in the organizational capabilities model below and evidently utilized by Nike corporation to benefit during the re-organization of its business are:

6. How will Nike’s latest reorganization potentially help the global women fitness team moving forward?

The company will be able to tell a story with their product offering. It can, by means of advertising, campaigns, events, and other marketing tools, engage women in fitness, for various reasons (fashion, performance, self-image). From the business perspective this means the company will not only capture the new share of new market, but also take away market shares of the competitors. Secondly, Nike will be able to offer integrated fitness appeal based on the specifics of the country, not just follow the trends in particular product, but capture the gyms, tracks, studios members to full capacity in different corners of the world.

7. What potential risks should the group seek to manage?

Outlined below are the risks and challenges associate with the reorganization of the company and the addition of the Women’s Fitness Business

– Fears of success in women’s business would erode men’s business, therefore diluting the brand

– Finding the right strategy to communicate to the most current and trends-based needs of women

– Frame the collection appealing to ALL athletes, that is to retain sports enthusiasts seeking performance and address the casual fitness participants to address the fashion aspect

– Describe the collection approach to all the customers in 3 different tiers

– Establish Dance Category until it reaches profitability to ease the pressure on the less “sexy” supporting categories to allow their potential expansion

– Manage the complex matrix organization allowing room for innovation and creativity

– Incentivize employees to deliver based on double-tasking to sustain enthusiasm

– Watch out for the competitor counter moves in similar direction, or potentially capturing unexploited category/capitalizing on men’s fitness thus taking the market share away from Nike

8. What are your recommendations how to create and sustain a competitive advantage in the global women’s fitness?

In order to give the recommendation how to create and sustain a competitive advantage, Diamond-E (+c) framework should give the platform to oversee the factors contributing and detracting from the sustainability of the competitive advantage. Although the strategic principle has been addressed by the company in its vision (see question2), the Diamond E+C framework gives a more overarching presentation of the internal and external factors, see Exhibit 3.

Resulting from the framework, the recommendations to sustain the competitive advantage are the following:

9. Risks associated with recommendations

Recommendation	Risk
Worldwide Expansion	Is there a World Athlete? How does Nike see Athletic Strategy worldwide, considering that sports and athletics vary significantly all over the world? Is there a unified direction? Would the company have benefitted better by retaining product driven approach in emerging countries? Will there be a joint movement of fitness expansion to support their categories?
Lifestyle Fitness	Athletic Brand vs Lifestyle? Where does Nike position itself when comes to differentiating between athleticism and fashion? It appeals to women seeking for self-expression in fitness, but what how does it message women seeking performance support from a company, is there a brand dilution loss or an alternative direction?
Woman’s Empowerment	Does the strategy threaten men’s performance market, following “Diet Coke footprints”, risking diluting the brand “losing some of the testosterone” or turning the company into women’s brand in men’s perception

10. Additional questions that would enhance the comprehensiveness of the case analysis

11. Case summary that highlights key marketing principles as reflected in the learning objectives and how they were applied to the case

12. What were the lessons learned from this case?

13. Exhibits

Exhibit 1: The Vision

Vision presented to the senior management team at the end of phase one – April 2004:

“To shift the focus of women’s fitness from a brand-strokes series of initiatives to a sustainable, profitable brand-enhancing portfolio of sports businesses that in combination make Nike the aspirational brand of choice for her.”

Exhibit 2: Organizational Capabilities Model

Resource Identification
Implement New Goals	What are the most critical organizational capabilities required by the goals of the new strategic proposal?
Dedicated Management team, financial incentives, integrating tracking resources to validate profitability from the proposed initiative, integrated timelines for all of the business units, motivation and collaboration across business units, departments and cross- functions
Implement New Value Propositions	What are the most critical organizational capabilities required by the value proposition of the new strategic proposal?
Appeal to the women, delivering fashion in fitness wear, allowing for self-expression in variety of “sports”. Promoting Dance category, gym wear and other supporting categories of women of all ages all over the world. Messaging, advertising, design of apparel, footwear and equipment, communication across the departments
Implement New Product-Market Focus	What are the most critical organizational capabilities required by the product market focus of the new strategic proposal?
Delivering integrated collection, in targeted fitness categories in a timely, accessible manner, at major retailers, on-line and all over. Supply Chain, Value Chain and integrated planning are the most critical resources.
Implement New Core Activities	What are the most critical organizational capabilities required by the key activities of the new strategic proposal?
Employee motivation, human resources, time, deadlines coordination, financial investment into R&D and new sales execution tools, software, ROI reporting programs
Close Resource Gaps	What are the most critical organizational capabilities required to close the resource gaps identified in the resource analysis of the strategic proposal?
Data supporting advances in female fitness, support (51%) of the executive management, financial resources availability to sustain increased COGS, global presence and growing demand
Close Performance Gaps	What are the most critical organizational capabilities required to close the management preferences gaps identified in the preferences analysis of the strategic proposal?
Capable and talented management, enthusiasm of the team to deliver the product in a new manner, sought out by the consumer, communication within virtual team and autonomy to produce test collection to gain more support from the executive team.

Exhibit 3: Diamond E+C Framework

Organization	Management Preferences	Resources	Customer	Strategy	Environment
– Fragmented business lines (equipment, apparel, footwear) representing varying market shares – Matrixed organizational structure – Executives rotating departments	– Desire to optimize innovation and execution around primary products – Seeking for sustainable competitive advantage – Adaptation to global changes – Strive for leadership across footwear, apparel and equipment simultaneously	– Virtual teams consisting of various dept. heads juggling 2 jobs – No compensation for extra tasks – Small designer team working on women’s shoes (3 vs 12 on men’s) – Nike Goddess stores – a success – Nike resonated with women more than any other sports brands	– Growing spending among women – Different view of fitness from men’s – Desire to express HERself – Varying approaches to fitness as a lifestyle – Seeking out the Goddess line	– Change the Game – several initiatives (5) – Focus on innovation – Exploring opportunities and new markets – Adapting to customer trends	– Growing number of gyms ( Curves franchise opened every 4 minutes) – Growing participation in every fitness category – Growing shopping trends in fitness

Exhibit 4: Blue Ocean Strategy

Blue Ocean Strategy
Create uncontested market spaces:	Dance Category: “Nobody owned it” (p.9)
Make the competition irrelevant:	Creating the collection approach, something that other athletic companies have not delved into, being still fragmented per product lines
Focus on non-customers:	Being strictly athletics oriented company, offering dance collection would encompass those females that are in fitness not for sports but for self-actualization, offering them clothes to look and feel good, not simply performance efficiency
Create and capture new demand:	Dance market was new, nobody owned it, and it was abundant with celebrity athletes to provide the competitive edge and captivate the attention of those women who have not found themselves in the fitness world. It would offer the comfortable, non-threatening/competitive place where a woman could feel good and long for that, consequently contributing to the creating and capturing of the demand by Nike.
Break the value-cost tradeoff (seek greater value to customers AND low cost simultaneously):	Although the Dance category would be the break-through for the company, the foundation for its development would be built of “slightly less sexy stuff to pay the bills” (p.10).
Align the whole system of a firm’s activities in pursuit of differentiation AND low cost:	Creating the Women’s Fitness Strategy consisted of 3-tiered approach to market. Although Dance was the tier one category providing “sharp point”, promising good revenues, tier two was the financial platform for the time of the development of the new edge, while tier 3 was the all-encompassing aspect that would close the circle of addressing most of the fitness directions women’s category is broken down to. This way, the team created the approach where it provides the competitive edge, yet not overcompensates for it with the higher cost, making it unattainable to the customers.

[1] HBR: Transforming Corner-Office Strategy into Frontline Action – by Orit Gadiesh and James L.Gilbert

Nike’s Global Women’s Fitness Business: Driving Strategic Integration

Contents

1. What are the key issues in the case?

2. Prior to the Change the Game proposal for global women’s fitness, how would you describe Nike’s strategy in the women’s market? What important lessons had been learned through these efforts to help shape the Change the Game proposal?