New Marketing Strategy Based Upon Nike E.A.R.L Self-Lacing Shoe: Case Study Essay Example

New Marketing Strategy Based Upon Nike E.A.R.L Self-Lacing Shoe: Case Study

New Marketing Strategy Based Upon Nike E.A.R.L Self-Lacing Shoe: Case Study

Executive Summary and Scope:

This piece focuses on Nike E.A.R.L self-lacing shoe, which is commonly referred to as HyperAdapt 1.0. A pair shoe costs a staggering $720 thanks to their power laces which enable the wearers to focus on their race since the shoes are tied automatically. In this case, Nike is using the self-lacing shoe to influence the brand choices amongst the consumers. Clearly, the self-lacing shoe is part of the marketing strategy, whereby Nike tries to communicate a salient image of the brand. The new product was launched as a strategy for Nike to grow. These days, information can be accessed ubiquitously by the consumers; therefore, it has become easier to compare reviews, characteristics and prices for sports’ products. As a result, competition between brands has become stronger; thus, creating the need for new products or product extension. Nike has changed its behaviour and has started producing innovative products to its consumers, which consequently has improved its competitive advantage. Brand extension strategy has become more attractive not only to Nike but also its competitors. Still, the brand extension comes with a number of risks which if Nike identifies in advance, it would become easier to minimise as well as leverage. If the self-lacing shoe is well-established and has quality, Nike is more inclined to achieve competitive advantage on the market. Nike has broadly applied the strategies for a brand extension with the goal of reducing marketing expense in launching Nike E.A.R.L self-lacing shoe and reducing risks. The Nike E.A.R.L self-lacing shoe is seen as a beneficial and popular strategy in introducing a new product into the market with the aim of minimising risks of failure and improving successful opportunity. If a suitable marketing strategy is used, Nike will likely generate quicker positive effects and the purchase by consumers will be heavier. The self-lacing shoe will enhance Nike’s brand image and it will improve the market coverage since new customers will be brought into the brand franchise.

Main Case:

The Product Extension/New Product

Eden (2016) posits that the shoe was produced almost three decades of brainstorming and a decade of research and development (R&D). After many years of delays, false starts, blown deadlines, scepticism, iterations, many prototypes, as well as redesigns, the self-lacing shoe was successfully introduced in the market in late 2016. Every shoe has a cable system, battery, sensor, and motor.. The self-lacing shoes have small electric motors, which loosen and tighten the laces. The sneakers’ sensors react when the wearer put the shoes on; thus, tightening the shoes around the wearers’ foot. In the sides of the sneakers, there are some control buttons that enable the wearers to adjust the shoe’s fit manually. When the wearer steps in, the sensor is hit by his/her heel and the system will tighten automatically. As mentioned by Fairs (2016), the sneakers’ sol has batteries, which are wirelessly recharged through induction. More importantly, a three-hour charge provides sufficient power since the shoe can be used for some weeks without charging. At the sole and back of the shoe, there are some lights which show the level of power; thus, when they need recharging they change from blue to yellow to red. Electro Adaptive Reactive Lacing connotes E.A.R.L. can lace automatically after being activated by the wearers by sliding their feet in the shoes. Besides that, the sneakers have some LED lights which inform the wearers when the built-in battery is running low, but the battery normally lasts for 14 days on a single charge. The thatsneakers Nike E.A.R.L self-lacing shoe, which is a new brand of The new product is known as

This high tech shoe has a high price tag ($720) since it is considered as the first step in the adaptive footwear revolution. The self-lacing shoe can be considered as a strategy for Nike to benefit from the brand knowledge realised in the global markets. Given that the self-lacing shoe is being marketed under Nike’s brand name, which is well-known, the marketing costs and rates of failure are likely to reduce. Basically, competition from companies like Adidas has forced Nike to adopt strategies which would help bring forth competitive advantage. Therefore, the new product’s name contains the brand name, which has associations that are well-established and allows for the realisation of the company’s strategic aim. Nike has invested heavily to develop this new product and although it was a costly process, the company believes that it will achieve many returns after the self-lacing shoes become successful in the market.

How the New Product fit Within the Organisation’s Existing Portfolio

game-changing products and technologies. The existing portfolio that the self-lacing shoe fits into is the innovative portfolio, which has products such as Hyperdunk basketball shoe, Nike Flywire support system, new Trainer 1 shoe and many others. to develop ability to maximise its relevance and reach worldwide. Akin to other products, the self-lacing shoe speaks to clearly defined and different consumers, which diversifies the long-term growth opportunities. The new product is part of Nike’s diversified brand portfolio, which enables the company to leverage its core competencies and resources in marketing, product, as well as operations to steer consistent profitability and growth. Nike’s new self-lacing shoes are not only new and different from other products, but also innovative and better. The new product akin to other products produced by Nike improves overall consumer experiences as well as athletic performance. The company’s connection to athletes and consumers has enabled it the company’sNike utilises a similar form of deliberate and thoughtful strategy to create a portfolio of brands that can reach across multiple price points, lifestyle, and sports categories. The self-lacing shoes are part of the many products produced by Nike, which strengthens

.new product’s portfolio management is a dynamic decision process whereby the list of R&D projects and active new products is revised constantly. New projects in this process could be selected, evaluated as well as prioritised while the existing projects could be deprioritised, killed or accelerated. Besides that, resources are reallocated or allocated to the projects that are activeThe majority of Nike’s innovative products cone from the company’s Sport Research Lab, which is one of the world’s finest centres for advanced R&D in industrial design, exercise physiology, biomechanics, and engineering. Nike depends on advisory boards and research committees, which comprise of coaches, athletes, equipment managers, trainers, podiatrists, orthopedists as well as other experts in reviewing concepts, materials and designs for product improvement. As mentioned by Birgisson (2012),

The Size and Scope of the New Product

With regard to Nike’s new product, Reisinger (2017) posit that the company utilised high-powered components which could accommodate features that are far more sophisticated than just lacing a shoe. Particularly, components such as electronics in the self-lacing sneakers can be modified to make allowance for wireless communication through Bluetooth with smartphones and other mobile devices. Besides that, wearers are allowed to choose diverse lacing ‘profiles’ according to their activity. For instance, a tighter lace-up could be suitable when the wearer is running while a looser lace-up is suitable for walking around the park or mall. Thanks to the new self-lacing sneaker, Nike has provided the general public with the first sneaker that is technologically enabled. As pointed out by Business Insider (2017), the self-lacing sneakers are easy to use and pretty slick and are a clear indication of the things to come. Even though the shoe has not yet been introduced to the limited-time collection, it has been rolled out bit by bit, in waves, and only some stores in the US. Any person interested to purchase the new product must book an appointment to purchase or test the shoe, and the stock is somehow limited. Customers have responded extremely strong to the new product, but its limited supply and high price connote that the product is targeting rich and middle-class customers. As pointed by Green (2013), the process of new product development drives the company’s competitive positioning as well as future growth prospects.

Still, the process is multifaceted and has many risks. As a result, scores of firms decide to work with partners, even if sharing the shortcoming also creates a need for sharing the benefit. Therefore, cooperating companies share not only the development costs as well as risks but also the payoff, knowledge and resources from new product development. Even though cooperative development enables companies to share risks and costs, it increases the risk that the partners could misappropriate the knowledge of the company. With the view to the self-lacing shoe, it is clear that the scope of a product development could be manifested in many ways. Given that the self-lacing shoes entailed an enormous scope of the product development effort, it needed a larger resource commitment for the project to become successful. Given that the new self-lacing sneakers were developed to satisfy the market’s unmet needs, they are inclined to make difference for the for the company and customers since the company managed to navigate the complexities associated with the process of developing new products. The process of making the self-lacing shoe was very long and needed heavy investment. Green (2013) argues that knowing the factors that are associated with product development success could bring forth competitive advantage for companies that repeatedly and regularly embark on developing new products. The Nike’s new self-lacing shoe targeting market is for customers who prefer wearing higher quality sporting footwear. For that reason, Nike concentrates on developing premium consumer experiences through elevated retail presence, brand leadership as well as product innovation.

The consumers/markets that Nike is trying to expand or enter in to

Nike has laid down numerous strategies that would enable the company to target their immediate consumers; sportsmen such as athletes. These targeting strategies consist of products sponsorship by celebrity athletes, professional athletic teams (such as football clubs in Europe), and college athletic teams. . The target market for Nike’s new self-lacing shoes includes both the females and males, particularly those aged between 18 and 35 years. The company has expanded as well as dominated the global sportswear market. Retailing at $720, the self-lacing was available from 2016 holiday season in three colour variations. The target market for this product includes trainers, athletes and other sportspersons. Although the product has started off small, Nike intends to introduce it as basketball and running shoes; thus, making it more ubiquitous in all sports categories (Golden, 2016). The majority of the consumers of the new self-lacing product will mainly be sportsmen due to the utility associated with the products. Basically, the athletes are likely to purchase the new self-lacing sports shoe designed as well as marketed by Nike more as compared to people who despise exercises and sporting. Therefore, Nike will target athletes through agreements between the company, athletic teams, and many others for product sponsorship and ultimately promotion to the team members. As a result, Nike would be able to reach many consumers who are willing to purchase the product. The company normally focuses more on the athletes more as compared to the other groups of persons, but it can also target youths who have embraced wearable technologies

Without a doubt, this strategy is explicitly successful since it enables the company to reach many athletes. For instance, if the coach or manager of the athletic team prescribes Nike’s new self-lacing shoe, the trainees would unquestionably purchase them. Most teams normally buy the sports shoes in bulk; therefore, they are a suitable market for this product. Another strategy that Nike uses to their immediate customers is designing of product destination by relating success with the new product. For instance, since celebrity athlete like Cristiano Ronaldo, Neymar, Zlatan Ibrahimović, and Wayne Rooney sponsors Nike’s athletic shoes, the brand has continually been related to success. This has resulted in psychological effect, which is normally strengthened through advertisements which confirm this position. Besides that, Nike is targeting the consumers who are inclined to generate product intimacy; athletes who focus more on the quality and utility of the self-lacing shoe as compared to the price. For that reason, the $ 720 pricing is not enormously influenced by the bid to accommodate many consumers. Basically, the growth of the wearables market is mainly steered by teams, professional athletes, as well as consumers seeking to improve their performance. In fitness and sports technology, the success of the product depends on its ability to improve athletic performance as well as manage overall personal fitness. The new self-lacing shoe akin to other wearables has turned out to be sports and fitness personal devices. It brings big data, which can be turned into actionable information. The product can be used by coaches and athletes to improve performance as well as to increase the qualities and levels of exercise. Besides that, the new product is poised to influence how professional athletes train and play their game. Smart technology and sports have offered early adopters’ teams a noteworthy competitive advantage.  Professional athletes together with professional sports teams are wearable sensors’ early adopters; thus, they will drive the market growth of the new self-lacing shoe.  

The Benefits and Upside of the New Product/Product Extension

Some of the benefits associated with Nike’s self-lacing shoe include its exclusive specifications and features. The sneakers have anadvanced technology, which makes sure that the feet are attached to the shoe. Besides that, the shoe eliminates the predicament of the equipment since it has a swift automatic system for micro adjustment integrated into it. Furthermore, the laces’ rigid and personalised lockdown could be controlled manually. Besides that, the athletes while performing could be subjected to the pressure attributed to laces’ tight tying or slippage, which normally lead to distractions. Therefore, the self-lacing shoe is mandatory because it eradicates the swarm of mental attrition and every sort of distractions; thus, leading to improved performance. As mentioned by Mounika (2016), self-lacing shoe plays a crucial role in creating a symbiotic relationship between the foot and the shoe, which is attributed to the smart communication between them. Furthermore, the shoe can be operated manually; for instance, when the battery runs out power while the wearer still has the shoes on his feet, he/she can push the bottom to loosen the laces; thus,  freeing themselves. However, the product has some shortcomings; for instance, there is the issue of durability. The athletes or wearers cannot use it when it is raining since the shoes are not water-resistant or waterproof; therefore, a heavy downpour brings forth a major risk. Another issue associated with this product is the price, it is retailing at $720; thus, it is inclined to be bought by people who care more about quality and performance rather than price.

Drawing On Marketing Principles to Analyse the Approaches and Outcomes

For a new product like a self-lacing shoe, good marketing strategy starts with benchmarking competitors as well as social listening. This would enable Nike to move beyond its traditional product marketing approach, whereby the product usefulness is determined before it is placed within the market. Besides that, it is challenging to formulate a successful go-to-market strategy without defining the target audience. Before introducing the new self-lacing shoe to the market, Nike at first researched the ideal customer base, considering that the new product is not suitable for every group of persons. Accompanied by demographic factors and age, Nike considered where customers were located and their spending power. After that, Nike determined whether the customers were part of the company’s customer base and if there was a need for locating them somewhere else. Given that the new product does not exist at the market, there was no need for Nike to readjust its strategy as evidenced by the high retailing price of the new self-lacing shoe. By identifying its value proposition, Nike has been able to set a reasonable price and find the right audience for the new self-lacing sneakers. The company started by examining the top benefits provided by the new product and then determined the possible solutions that these benefits could provide the target customers. The objective was to think like a customer. Upon identifying its specific value proposition, the company initiated the pricing strategy. With the view to the customer base and market penetration goals, the company used value optimised pricing. Nike has also created a unique product strategy for all its target markets by setting promotions. Furthermore, marketers at Nike searched for opportunities to differentiate the new self-lacing shoe from competitors’ wearable products. Without a doubt, not all new products are successful in the market; therefore, if Nike’s product extension project uses the wrong marketing strategy, the company can end up diluting its brand’s value. To ensure success, Nike ensured that costs involved in creating the self-lacing shoes were not underestimated.

Normally, brand dilution can happen when the company extends brands. In this case, Nike has introduced a shoe that is different from other shoes in the market; thus, the product adds value to the customers. Brand dilution can occur if the new self-lacing shoe fails to meet the standards expected by the consumers in terms of price, quality, design, workmanship, or other distinguishing brand features. Furthermore, an inferior brand extension results in negative effects, which also affects the original brand in a negative way. Nike’s sports products have always been successful in the market; therefore, the majority of its loyal customers trust the brand in every product category and are ready to pay a price premium for new products such as self-lacing sneakers. As mentioned by Lozanova (2016), the transfer of brand associations into a new product exhibits the brand’s underlying value and the meanings assigned by the consumers to brands as well as brand names. With the view to the brand associations, a decision to purchase a new product could be taken and transformed later into brand loyalty. Therefore, the brand image is actually formed by the brand associations. Lozanova (2016) further mentions that knowing how the consumer’s brain, as well as the process of decision making acts, is important for realising the brand and company goals. The level to which the brand associations could be transferred to the new self-lacing product would rely on the association type and category fit to the parent brand. Still, specific attributes of the brand would certainly be transferred to the new product extension regardless of the category fit. In this case, Nike has used perceived fit to strengthen the attitudes of the consumers towards brand extensions and also to protect its equity.

According to Vukasovič (2012), a brand which is well-established and has quality guarantees a competitive advantage and its identity need good treatment and management. While examining how customers react towards new products, Kushwaha (2012) observed that when customers find a great level of fit between the existing brand and the new product, nested brands, sub-brands, and brand extensions become equally preferred. However, when there is little fit, the customers prefer the new brand name more than the brand extensions, nested brands as well as sub-brands. When Nike decided to launch the new product line into the existing product portfolio, the category managers ensure that the product was launched as a line extension. This was achieved by exploiting the existing benefits to the new self-lacing shoe and Nike’s ability to reduce the cannibalization risk.

Closing Paragraph:

In conclusion, this piece has focused on Nike E.A.R.L self-lacing shoe, which enables the wearers to lace their shoes by sliding their feet. This product has resulted in improved performance amongst the wearers and enhanced competitive advantage for Nike. As mentioned in this report, brand extension is a suitable marketing strategy that enables companies to launch new products. Most of the new products are less known to the consumers; therefore, it is difficult to determine how they will react to them. The reactions of the consumers to the brand extensions entail a process of categorization whereby the new product is analysed based on its suitability. The opinions and beliefs related to this brand category could carry to the new self-lacing shoe when the product is perceived by the consumers as fitting to the brand category. This study has demonstrated that when consumers discern a great level of fit between the existing brand and the new product, nested brands, sub-brands, and brand extensions become equally preferred. Furthermore, product innovation is a crucial dimension that drives the business today, and Nike’s new product development strategy has been a crucial performance determinant. To succeed in the complex and competitive market, Nike has invested in resources and has come up with strategies that would enable the company to effectively handle the opportunities and challenges related to product development efforts. At Nike, product innovation is a crucial dimension that drives sales and productivity. The success of Nike’s new product depends on the company’s ability to target the right market and espouse effective marketing strategies. The global sports market provides Nike with a significant opportunity because of advances in communication and technology, reduced trade barriers as well as demand globalisation; therefore, the company is inclined to gain a competitive advantage in this market. The new product can enable Nike to succeed in this complex and competitive market. As mentioned in the piece, the Nike self-lacing shoe would be successful since Nike has been able to minimise the risks of failure. Furthermore, Nike has been able to set a reasonable price and find the right audience for the new self-lacing sneakers.

Case Study Questions and Possible Answers:

1. Does the new product increase expectations towards the brand?

The increased expectations could be viewed from two perspectives: the expectations towards the brand in general and the expectations towards the products. When the new-lacing sneakers were launched, they were evaluated by the customers based on their attitude towards the extension category as well as parent brand. Therefore, since the parent brand is known by many customers, the new product was evaluated in terms of experience and quality since Nike is known for high-quality products.

1. Does the new product offer the missed opportunities?

By producing self-lacing sneakers to improve performance amongst the sportsmen, Nike capitalises on the missed opportunities since the wearers can benefit from the advantages offered by the new brand product. Technology innovations have enabled Nike to build a different product from the existing association, which consequently has enabled Nike to expand into other categories.

1. Is a good fit necessary for the success of the new self-lacing shoes?

Without a doubt, the impact of emergent characteristics on attitudes of the consumer’s increases as the brand’s fit with the new product decreases. Normally, the product price serves as the cue to quality.

References

Birgisson, I. S. (2012). Project Portfolio Management in New Product Development Organizations:Application of accepted PPM theories in practice. Master’s Thesis, Göteborg, Sweden.

Business Insider. (2017, January 20). New $720 shoe marks a big shift for brand. Retrieved from Business Insider: http://www.plive.co.ke/bi/sports/nike-new-720-shoe-marks-a-big-shift-for-brand-id5917154.html

Eden, S. (2016 , October ). The Secret Lab Where Nike Invented the Power-Lacing Shoe of Our Dreams . Retrieved from Wired: https://www.wired.com/2016/09/nike-self-lacing-design-hyperadapt/

Fairs, M. (2016, March 16). Nike launches Back to the Future-style self-lacing shoes. Retrieved from Dezeen: https://www.dezeen.com/2016/03/16/nike-back-to-the-future-style-earl-self-lacing-trainers-sneakers/

Golden, J. (2016, March 17). Nike launches HyperAdapt 1.0 ‘self-lacing’ sneaker. Retrieved from CNBC: https://www.cnbc.com/2016/03/17/nike-launches-hyperadapt-10-self-lacing-sneaker-trainers-sold-in-black-grey-and-white.html

Green, K. M. (2013). Project Scope, Market Size Prospects, and Launch Outcomes in Cooperative New Product Development. American Journal of Management, 13(2), 41-54.

Kushwaha, T. (2012). Brand Extension: A Strategy for Competitive Advantage. Marketing, 5, 18-27.

Lozanova, L. (2016). To Extend or Not to Extend: Advantages and Disadvantages of Brand Extension Strategy. Economic Alternatives, 4, 500-514.

Mounika, J. (2016, March 20). Nike HyperAdapt 1.0 Shoe Specifications, Review and Price. Retrieved from IoT Worm: http://iotworm.com/nike-hyperadapt-1-0-shoe-specifications-review-price/#more-4801

Reisinger, D. (2017, February 9). Here’s What’s Inside Nike’s $720 Self-Lacing Sneakers. Retrieved from FORTUNE : http://fortune.com/2017/02/09/nike-hyperadapt-teardown/

Vukasovič, T. (2012). Launching of a new product with the brand extension strategy. Management, Knowledge and Learning International Conference, (pp. 97-107). Celje, Slovenia.