Product development FINANCIAL REVIEW from concept to customer Case Studies BUSINESS NEWS 1 Introduction 3 Research and development At the end of the experiment, Nike had the most comprehensive picture of Mike's 'swoosh' is one of the world's most identifiable logos and, in just How doas Nike develop its products and decide what does and doesn't the biomechanics of baralact running awar developed. 32 years, Nike has grown to be the industry's largest sports and fitness make the out when it comes to innovation? The Nike Sports Research The challenge was to translate that barefoot experience, which promotes comparry Revenue for Nike in financial year 2005 was $US 137 billion. Laboratory [NSPL] is located on the Nike campus in Portland, Oregon in the good biomechanics for runners, into a show. Nike directly employs approximately 24,200 people and Nice's United States of America The research and development (R&D) cantre's role is to identify the physiological needs of athletes. The NSAL works Researchers developed prototypes, using any materials which could closely suppliers, shippers, retailers and service providers employ alose to came the challange to build he shoe. Ashoe is ina million people on six continents. directly with Nike's design teams and has established partnerships with major universities throughout Asia, Europe and North America to be built an built on a model of the fact, caled a last, allowing the upper and outersala char'shad to develop a brand new version of research and develop products, the scientists have an incredible array the last in order to copy the way a bare foot operates. This resulted in the Nike's mission is of measurement and analysis took. Their data collection includes virtually shoo's upper being designed in a mash that has small holes in it, allowing 'To bring inspiration and innovation every variety of musde serveas pressure platform, breath analysis, foot the foot to be encased but feel free. There is no heel counder, instead the to every athlete in the world." scanner and thermal imaging device. There are high-speed video cameras heal fits snugly in the show as the inner sale allows the fact to sit naturaly According to Bill Bowerman, that capture socow kick data at 1,000 frames per second and a scanner in a neutral position. The kay is the outersale which can move and flex one of Nike's founders, hat produces, in just seconds, a perfect 20 independently with each section being sliced so that the foot is allowed to "If you have a body, digital image of your foot. nove as naturaly as possible in the show. The shoes are meant to be used in tandem with other training and racing you are an athlete." But it does not shop there! There are beating surfaces, such as a huge section of shoes. The goal is to use Nice Free to help strengthen the feet in addition to regulation basketball hard wood, artificial using more traditional, supportive running and training shoes. soccer turf, a 70-mater sprinters' track In addition, Nike's corporate responsibility mission is to help the run way and endless field tasting that takes Testing the prototypes company achieve profitable and sustainable growth and to protect place outdoors in various terrains. and enhance the brand and company Independent testing The NSRL takes an idea, and researches and Before Mike Free was known to the athletic world or commercially Mike believes that corporate responsibility work should not be separate prepares a design brief. The brief is than passed released, Mike undertook extensive independent testing. The company from the business, but should instead be fully integrated into it. over to the company's Innovation Kitchen -an used elite athletes as well as everyday runners and a few sports The company's sustainable growth suggests that Mike will be incubator for new projects. journalists, i.n. people who exercise and run regularly, to undertake around for generations to come. The principles of sustainability also h the first phase of developing what was to product testing require Nike to find ways of generating profit while minimizing ary become Mike Free, the 'cooks' in the Krichen took potentially negative impact on communities or natura the NSAL description of 'natural technology' and In a six-month trial, 110 every-day runners used the shoe. One group, carmisting of 30 men and 27 women, wore the Nike Fred Nike's mission statementis intentionally broad and outward started asking what sort of shoe people might b looking for next. In the process of talking to athletes and shoes for four 30-minute runs, four times a week. The control looking, focusing on the needs of athletes, and, through its coaches, he designers spoke to Win Lananna, than the group -30 men and 23 women - used their regular par sonal corporate responsibility work, consideration is given to the needs of communities around the world. track coach at Stanford University, who told them about training shows. Outside the four 20-minute runs a week, his unusual training method - having athletes run an both groups continued their usual workout schedules. All Nike's focus is to continually seek to innovate, design and develop grass without shoes. According to Laranna, the athletes particip ands were tested at the start of the six-month period products to improve athletic performance. Its overriding desire is to were stronger, heather and lass injury-prone. This was a on their abilities in a number of physical areas - shuttle design products with true performance innovation and technology benefits which help the athlete perform better With its latest great idea but contrary to Nike's business - making and runs, later al running short sprints, and leg strength - and were tested again at the and of the six months. These innovation, Nike scientists and designers have developed Nikos Free, selling sports shoes tests measured qualities such as speed, development, a sports shoe described as a foot-strengthening training tool. Tagged However, the idea led to an extensive biomechanical co ordination and optimal speed "natural technology', Nike Free has bean designed to copy barefoot reed arch project to see exactly what happens when we running. By running barefoot, the foot is strengthened gaining greater un barefoot. Sports shoes provide a cartain amount Researchers found some slight improvement in the control of control or cushioning based on the nation that they group, registering a little more speed and a little more feasibility and range of motion which leads to better performance because you are less prone to injuries are needed to complement the natural action of the coordination -butnot enough to be statistically relevant. Foot. Mike researchers wanted to know why Lananna's However, the test results from the group wearing the 2 Anticipating the needs of consumers athletes, who ran barefoot in training, raced faster. Mike Free shows showed improvement in all the parameters measured, and improvements in not what Innovation is what sets Nike apart in the industry. It started in 1971 The researchers brought in 10 men and 10 speed, lateral movement, and coordination woman to run barefoot on grass to see exactly were significant - in the 10 to 20 parcant I used to be when Bill Bowerman, then a University of Oregon track coach, poured how the body reacts without shoes an. They ranga. That is a significant improvement rubber into his wife's waffle iron hoping to create a new and better sale for running shoes for his track athletes. The result -a light waffle were videotaped with high-speed cameras to considering the shoes ware wam only capture their movements, they had reflective two hours a week over a six-month sale that transformed the running world When thinking about what markers attached to their joints to allow away period. An improvement of one percent caresumer's might need in their footwear, the next innovation came in in speed could mean a metre's the form of Nike Air, a durable and lightweight cushioning system for calculation of joint angles during their stride, and water-thin pressure sensors attached to difference in a 100-matre sprint athletic shoes. Mike had anticipated the need for a shoe which had a -often the difference between cushioning system which lasted longer than foam, reduced shack and the battons of their feet to measure thei Inpact with the ground. truhing In Mis From a.a First and fourth place distributed pressure. visit www.afrbiz.com.au & www.bizcs.co.nz For extension activities and questions on Case Studies edition Downloads . Company info . Current Case Studies sevenIn simple terms, Nice Free was acting not only an a running shoe, but as a documentary on Craig Mattram attached to the front cover of Appham training technique! Athletes in the test group using Mike Free were found magazine and print advertising. sales people areyoung Nike's SKU is like a video game, with information packaged in short sound bites. to be stronger and more flexible. One of the researchers put it this way: "Hike Free is a gym for your feat." Web sites Source: Flowing GINI Technology by Larry Eder Sumner 20CH ATF Pass orca Ca My, Vol 12 Nike does not rely solely on television, cinema and outdoor advertising. 6 Conclusion Nike understands that its consumers seek information online and as such Mike aims to bring inspiration and innovation to every athlete in the world Nike's challenge: it targets different online audiences around the world. The Internet has - and it considers everybody to be an athlete! As a high profile, industry "Nike had developed a product become an essential component in Nike's marketing campaign leading sports company, Mike continually strives to keep itself at the farefront of product innovation and design. Through extensive research and that measurably improved athletic Nike produces a range of products which are unique to a particular sport or athletic endeavour. Nike's marketing takes into account he different needs development, the Nike Free show was created in response to the recognition performance but flew in the face of all of athletes and consumers and uses itas weberla to communicate with them that barefoot running can strengthen athletes feet and legs naturally. conventional thinking." groups via in depth content, product information and athlete insights Mike Free was developed after extensive research and product testing. With The Nike Free website is used to explain how the shoe was developed a sir alegit promotion campaign, Mike hopes to deliver the message that 4 Ensuring correct product positioning 3 and the benefits of the training shoe. This interactive micro-site has Nice Free is not designed to replace athletic performance footwear but to be three sactions: an important part o us improving parlormance. Hike was conscious that Nike Free needed to be positioned as an . Leaveyour old self behind additional training shoe in your kit bag, not necessarily as a replacement lo your traditional running shoes. Unlike typical athletic shoes, Nike Free Go barefoot running in a chow shoes allows the foot to move, flex and grip just as it would if running . Reincarnate in this Ha. GLOSSARY barefoot. The advertising and marketing campaigns were carefully crafted The site is lively and colourful, featuring information on the development Control group In a test or trial, the group that does not receive the to ensure that consumers recognised Nike Free as a training shoe which of Mike Fred, the models and technical specifications. The site challenges new product or process being studies and which is compared to the could help build additional strength and therefore the ability to train longer visitors to le am, providing thein with the tools and group that does receive the product or process. - not as a replacement to its other sports shoes. The product positioning and act for themselves. Offered in a range of languages, he side utilizes was a balancing act, requiring careful communication and application number of sp case how each person let their Corporate responsibility The obligations or responsibility an organisation has to a spached group such as the local community, Education was the key to positioning the shoe in the market. Mike Free old self behind and worked to change themselves into a butter and stronger employees and the like and or to a wider cause or bsu: such as the was launched under limited and vary tight distribution in the lead up to athlete. Examples include Lance Armstrong, world-renowned cyclist who environment. Often referred to as corporate cluenship the major advertising campaign. The shoe was distributed initially only fought to return to the peak of his sport after his battle with cancer. Design brief A written explanation given to a designer, outlining through running speciality store's before being broadened to general he aims, objectives and milestones of a design project. sporting goods stores. Nike Free was abo placed with kay people such A thorough and articulate design brief is a critical part of the as running coaches, podiatrists and physiotherapists with the aim of lesign process. It helps to develop trust and understanding introducing Nice Free as a new product and training concept before between the client and he designer and serves as an essential taking it to the broader market. reincarnate now point of reference for both parties. "art of the strategy was to take this "barefoot' shoe directly to runners. Innovation A new and creative idea, product or service. The To do this, Nike used the tried and true, labour intensive mathod of process of converting knowledge and ideas into better ways al driving mobile vans to areas in the USA, Europe, as well as Australia doing business or into new or improved products and services which attracted large amounts of runners. (In the early days of the 5 Reaching the consumer that are valued by the community. The innovation process Using television and cinema incorporates research and development, commercialization and technology diffusion arguing to synonymous with Nikes. In partnership with its Mission statement The statement of an or genisation's current and advertising agency, Nike has created some of the world's most attention- future business goals grabbing advertising. The Nike Free advertising campaign was derived from a truth about the Positioning A strategic statement of what differentiates a product or brand competitively in the market and in the mind of a I'm not product. As the only shoe on the market that works with the natural car gat consumer. mation of your foot to make it stronger, it gives people the ability to It is vital that Mike communicates to consumers how essential the input of become stronger, better athletes than they have ever bean before. The its elite athletes in during product development. Nike relies on their expertise Profit The excess of income earned by a business over its expenses. what i used campaign, Aslocamats, was about athletes 'leaving their ald selves and feedback to develop the best product for athletes and, hance, the best Prototype A working model developed in the design stage of a behind' and discovering their potential. The tennis player Maria Sharapova, product for consumers. These high profile coaches and athletes are then product -used as best prior to developing the final product. to be the footballer Cristiano Ronaldo and Wimbledon champion Roger Federe used in Mice's advertising and communications campaign because they are were among the athletes used in a TV commercial to advertise Nike Free, known by the consumer and they can help tell the product story. Research and development (R&D) Future-oriented, langer term activities that result in technological advances based around three called Power to your feet. Staff product awareness stages research, invention and innovation. The advertisement which ran in Australia was different from Nike's Having a new and innovative product is one thing but a company must Strategy The major forward plan by which an organisation sets out "blockbuster' ads, there ware no spectacular crowd scenes or camera to achieve its objectives tricks. The scripts took months to write and the advertisement was heavily ensure staf working in sports stores understand the product, its benefits Sustainable growth Development that does not exhaust in the short dependent upon dialogue. The advertisement featured Arsenal's Thiany and how it should be used. To do this, Nike created a fash-animated multi Henry. He is shown wrestling with his own inner demons and evan doubling ia learning environment. Called Me Sports Knowledge Underground berm those resources that will enable the development to continue in himself. His new, 'reincamated' self wins the battle in order for him to go an j. it mirrors a subway rail system with each 'slap representing a the long term. company, co-founder Phil Knight sold shoes from a van parked ata to be a better athlete and he leaves his 'al d of in the past. e new shoes such as Nike Free are displayed local athletics track.] Staffed by running and footwear experts, offering Mike Australia reintroduced the Rein gait analyses and the chance to test Mike Free, the mobile vans took campaign via local Participants are taken on a three-minute course explaining design, benefits, Soccerap star, Marca Bresciano, and track athlete Craig Mottram. They 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 Questions & Extension Activities for Nike are the 'bareloot' shoe straight to consumers. This basic tactic engaged consumers on their terms and in their own territory, letting the Nike From brought to life how they ware 'leaving their old selves behind' and reincarnationg into different and batter athletes. Advertising mediums information in customer dealings on the shop floor. A technical specification on www.afrbiz.com.au & www.bizcs.co.nz story be told on an individual basis. induded outdoor (billboards, sides of trams and buses), a DVD sheet can be printed to help with customer queries. Appreciating that many You will also find links to the Nike website visit www.afrbiz.com.au & www.bizcs.co.nz For extension activities and questions on Case Studies edition . Downloads . Company info . Current Case Studies seven