Please, demonstrate and evaluate the stages involved in the product development, from conception of an innovation product, through the research and development stage, to brain storming, production and market risk

CASE STUDY:

NIKE - Product development from concept to consumer

Introduction

Nike is the world's largest sports and Fitness Company, earning $US14 billion in revenue. The company, with one of the world's most identifiable logos - the 'swoosh', is a leader in sports equipment research and development (R&D). Nike identified a gap in the sports shoe market - a shoe which mimics barefoot running to strengthen runners' feet and legs, giving them more power and speed while reducing the risk of injury. After extensive R&D, the shoe, Nike Free, was developed. Nike Free was given an initial, strictly controlled, limited 12-month release before being promoted to consumers worldwide.

Nike's 'swoosh' is one of the world's most identifiable logos and, in just 32 years, Nike has grown to be the industry's largest sports and Fitness Company. Revenue for Nike in financial year 2005 was $US 13.7 billion. Nike directly employs approximately 24,300 people and Nike's suppliers, shippers, retailers and service providers employ close to one million people on six continents.

Nike's mission is:

'To bring inspiration and innovation to every athlete in the world.'

According to Bill Bowerman, one of Nike's founders, "If you have a body, you are an athlete."

In addition, Nike's corporate responsibility mission is to help the company achieve profitable and sustainable growth and to protect and enhance the brand and company by new ideas and innovation. Nike believes that corporate responsibility work should not be separate from the business but should instead be fully integrated into it. The company's sustainable growth suggests that Nike will be around for generations to come. The principles of sustainability also require Nike to find ways of generating profit while minimizing any potentially negative impact on communities or nature.

Nike's mission statement is intentionally broad and outward looking, focusing on the needs of athletes, and, through its corporate responsibility work, consideration is given to the needs of communities around the world. Nike's focus is to continually seek to innovate, design and develop products to improve athletic performance. Its overriding desire is to design products with true performance innovation and technology benefits which help the athlete perform better. With its latest innovation, Nike scientists and designers by brainstorming, have developed Nike Free, a sports shoe described as a foot-strengthening training tool. Tagged 'natural technology', Nike Free has been designed to copy barefoot running. By running barefoot, the foot is strengthened, gaining greater flexibility and range of motion which leads to better performance because you are less prone to injuries.

Anticipating the needs of the consumer

Innovation is what sets Nike apart in the industry. It started in 1971 when Bill Bowerman, then a University of Oregon track coach, poured rubber into his wife's waffle iron hoping to create a new and better sole for running shoes for his track athletes. The result - a light waffle sole that transformed the running world. When thinking about what consumers might need in their footwear, the next innovation came in the form of Nike Air, a durable and lightweight cushioning system for athletic shoes.

Nike had anticipated the need for a shoe which had a cushioning system which lasted longer than foam, reduced shock and distributed pressure.

Research and development

How does Nike develop its products and decide what does and doesn't make the cut when it comes to innovation? The Nike Sports Research Laboratory (NSRL) is located on the Nike campus in Portland, Oregon in the United States of America. The research and development (R&D) center's role is to identify the physiological needs of athletes. The NSRL works directly with Nike's design teams and has established partnerships with major universities throughout Asia, Europe and North America.

To research and develop products, the scientists have an incredible array of measurement and analysis tools. Their data collection includes virtually every variety of muscle sensor, pressure platform, breath analyzer, foot scanner and thermal imaging device. There are high-speed video cameras that capture soccer kick data at 1,000 frames per second and a scanner that produces, in just seconds, a perfect 3D digital image of your foot.

The NSRL takes an idea, and researches and prepares a design brief. The brief is then passed over to the company's Innovation Kitchen - an incubator for new projects.

In the first phase of developing what was to become Nike Free, the 'cooks' in the Kitchen took the NSRL description of 'natural technology' and started asking what sort of shoe people might be looking for next. In the process of talking to athletes and coaches, the designers spoke to Vin Lananna, then the track coach at Stanford University, who told them about his unusual training method - having athletes run on grass without shoes. According to Lananna, the athletes were stronger, healthier and less injuryprone. This was a great idea but contrary to Nike's business - making and selling sports shoes.

However, the idea led to an extensive biomechanical research project to see exactly what happens when we run barefoot. Sports shoes provide a certain amount of control or cushioning based on the notion that they are needed to complement the natural action of the foot. Nike researchers wanted to know why Lananna's athletes, who ran barefoot in training, raced faster.

The researchers brought in 10 men and 10 women to run barefoot on grass to see exactly how the body reacts without shoes on. They were videotaped with high-speed cameras to capture their movements; they had reflective markers attached to their joints to allow easy calculation of joint angles during their stride, and wafer-thin pressure sensors attached to the bottoms of their feet to measure their impact with the ground. At the end of the experiment, Nike had the most comprehensive picture of the biomechanics of barefoot running ever developed.

Testing the prototypes

Before Nike Free was known to the athletic world or commercially released, Nike undertook extensive independent testing. The company used elite athletes as well as everyday runners and a few sports journalists, i.e. people who exercise and run regularly, to undertake product testing. In a six-month trial, 110 every-day runners used the shoe. One group, consisting of 30 men and 27 women, wore the Nike Free shoes for four 30-minute runs, four times a week. The control group - 30 men and 23 women - used their regular personal training shoes. Outside the four 30-minute runs a week, both groups continued their usual workout schedules. All participants were tested at the start of the six-month period on their abilities in many physical areas - shuttle runs, lateral running short sprints, and leg

strength - and were tested again at the end of the six months. These tests measured qualities such as speed, development, coordination and optimal speed.

Researchers found some slight improvement in the control group, registering a little more speed and a little more coordination - but not enough to be statistically relevant. However, the test results from the group wearing the Nike Free shoes showed improvement in all the parameters measured, and improvements in speed, lateral movement, and coordination were significant - in the 10 to 20 percent range. That is a significant improvement considering the shoes were worn only two hours a week over a six-month period. An improvement of one percent in speed could mean a meter's difference in a 100-metre sprint - often the difference between first and fourth place.

In simple terms, Nike Free was acting not only as a running shoe, but as a training technique! Athletes in the test group using Nike Free were found to be stronger and more flexible. One of the researchers put it this way: "Nike Free is a gym for your feet."

Nike's challenge:

"Nike had developed a product that measurably improved athletic performance but flew in the face of all conventional thinking."

Ensuring correct product positioning

Nike was conscious that Nike Free needed to be positioned as an additional training shoe in your kit bag, not necessarily as a replacement to your traditional running shoes. Unlike typical athletic shoes, Nike Free shoes allows the foot to move, flex and grip just as it would if running barefoot. The advertising and marketing campaigns were carefully crafted to ensure that consumers recognized Nike Free as a training shoe which could help build additional strength and therefore the ability to train longer - not as a replacement to its other sports shoes. This product positioning was a balancing act, requiring careful communication and application.

Education was the key to positioning the shoe in the market. Nike Free was launched under limited and very tight distribution in the lead up to the major advertising campaign. The shoe was distributed initially only through running specialty stores before being broadened to general sporting goods stores. Nike Free was also placed with key people ideas such as running coaches, podiatrists and physiotherapists with the aim of introducing Nike Free as a new product and training concept before taking it to the broader market.

Part of the strategy was to take this 'barefoot' shoe directly to runners. To do this, Nike used the tried and true, labour intensive method of driving mobile vans to areas in the USA, Europe, as well as Australia, which attracted large amounts of runners. (In the early days of the company, co-founder Phil Knight sold shoes from a van parked at a local athletics track.) Staffed by running and footwear experts, offering great analyses and the chance to test Nike Free, the mobile vans took the 'barefoot' shoe straight to consumers. This basic tactic engaged consumers on their terms and in their own territory, letting the Nike Free story be told on an individual basis.

Reaching the consumer

Advertising is synonymous with Nike. In partnership with its advertising agency, Nike has created some of the world's most attention-grabbing advertising. You may recall some Nike television advertisements: the cinema epic of soccer players battling it out in the hull of a ship or Pete Sampras and Andre Agassi playing tennis in the streets of Manhattan.

Nike does not rely solely on television, cinema and outdoor advertising. Nike understands that its consumers seek information online and as such it targets different online audiences around the world. The Internet has become an essential component in Nike's marketing campaign.

Nike produces a range of products which are unique to a particular sport or athletic endeavor. Nike's marketing considers the different needs of athletes and consumers and uses its website to communicate with these groups via in depth content, product information and athlete insights.

Staff product awareness

Having a new and innovative product is one thing, but a company must ensure staff working in sports stores understand the product, its benefits and how it should be used. To do this, Nike created a flash animated multi-media learning environment. Called Nike Sports Knowledge Underground (Nike SKU), it mirrors a subway rail system with each 'stop' representing a training activity where new shoes such as Nike Free are displayed. Participants are taken on a three-minute course explaining design, benefits, features and top selling points of the shoe. At the end, they take a brief quiz to ensure they know about the product and can immediately use the information in customer dealings on the shop floor. A technical specification sheet can be printed to help with customer queries. Appreciating that many sales people are young, Nike's SKU is like a video game, with information packaged in short sound bites.