NIKE case study: innovation and consumer influence

So a few weeks later I’ve managed to change jobs, book a wedding venue and reopen the Nike Case study series. With exams starting next week, I’m hoping for a prolific next 5 days with lots of writing and thinking and not much TV, couch or Fiancé (or as I like to call it, the Devil’s trinity of procrastination) I’ve managed to wrangle a week of study time between jobs and have dutifully set myself up in a suburban library, as far away from the Devil’s trinity as possible. So without further ado…

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When we’re looking at Nike’s developments over the past decade, innovation and consumer influence over the marketing mix and key product developments have changed dramatically. As Yoo et.al. (2009) point out, digital technology has radically reduced the communication cost for remote collaboration and coordination. While this has implications for all global companies, and how their international supply chains operate, it also changes the ball game for how consumers can interact with the company and what innovations are possible.

Stefan Olander, the company’s director of digital content notes, ‘‘In the past, the product was the end point of the consumer experience. Now it is the starting point.’’ The digital space has opened up infinite avenues for both continuous and dynamically continuous innovation, propelled by both consumer and the brand. A great example of Nike engaging in this space is the Nike + innovation.

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For those of you who have wondered what that Nike + option is on your iOS device, it’s the brain child of Nike and Apple. Insert a small $39 chip into your custom Nike shoes, bluetooth your iPhone, iPod (or if you have really large pockets, your iPad) and a whole data-rich runner’s world will be opened up to you.
Ramaswamy: “By logging into the Nike + web site, runners can find out which routes are most popular, what distances and paces others are achieving, and how their progress compares. From the company’s standpoint, Nike + allows Nike to know a lot about the individual runner. Many dedicated runners now record every run they make, their goals, the courses they run, the partners they run with, and, through the web site blogs and discussions, their personal concerns and feelings about running.”
This almost real-time input and global community provides Nike with a virtual goldmine of data and information for potential innovations that can be guided by real consumer’s usage habits and expressed needs.

The process of creating new ways of engaging with existing product-habits (i.e. using sneakers and listening to music while running) is a product orientated innovation that falls into the ‘continuous’ and ‘dynamically continuous’ innovation strategies. Robertson notes that new products that fall within these categories means that consumers do not dramatically need to change their habits in order to engage with the new products. This can ultimately lead to quicker product adoption due to low product complexity (easy to learn how to use) and high compatibility with current lifestyle i.e the product is consistent with the consumer’s present needs, values and practices.

However the innovations may still need to be adopted by change leaders and technophiles/techthusiasts in order for wide market diffusion to occur. Early adopters of innovative products like Nike +, SportsWatch and Nike FuelBand are likely to fall into particular character traits of the consumer innovator. These guys are likely to have a high need for uniqueness, have a high Optimum Stimulation Level and be more highly involved with the product’s industry touch points (i.e. sports and new technology).  Nike naturally needs to engage the consumer segments who are more open to innovation in order to achieve good initial traction on it’s new products, and ensure on-going diffusion through post-purchase engagement.

Nike have recognised that competition for advantage in the sneaker market has shifted, digital convergence means that brands are able to, and soon will need to, create value through product-use experiences. Brands can create connotative experiences of their product through out it’s life cycle via digital communities, and get the consumer to interact more directly with the brand’s product development.

On another note, why is it so cold in the library ?

Until next time,

BB

References:

Thomas S. Robertson. (Jan., 1967) “The Process of Innovation and the Diffusion of Innovation” Journal of Marketing. Vol. 31, No. 1, pp. 14-19
Published by: American Marketing Association. Article Stable URL: http://www.jstor.org/stable/1249295

Venkat Ramaswamy. (2008) “Co-creating value through customers’ experiences: the Nike case”, Strategy & Leadership, Vol. 36 Iss: 5, pp.9 – 14
Article Stable URL: http://dx.doi.org.ezproxy.lib.uts.edu.au/10.1108/10878570810902068

Youngjin Yoo, Richard J. Boland, Kalle Lyytinen, Ann Majchrzakdoi.
(January/February 2009) “Call for Papers—Special Issue: Organizing for Innovation in the Digitized World” Organization Science vol. 20 no. 1 278-279

Leon G. Shiffman, Angela Paladino, Aron O’Cass, David Bednall. (2010) Consumer Behaviour. 5th Edition, Pearson Publishing.

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2 comments
  1. Ale Kat said:

    ooh microchipped shoes. what’s next? aah maybe I can microchip…
    Love your article but not an arctic library… time to don the Nike’s and start warming up.

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