59-Nike Builds Brand Loyalty

Nike, ever the innovator, has found a new way to build brand loyalty. It has created a web site, NikePlus.com, that connects runners around the world. This web site tracks a runner’s data and allows a runner to join with other runners all over the world to improve their times.

To make this online group work easily, the company developed a $29 Sport Kit sensor that, when synched with an iPod or Nano, calculates the runner’s speed, mileage and calories burned and provides a method to upload that data to NikePlus.com. The company has sold over a million NikePlus iPod Sport Kits. Runners have used the web site to create groups where members challenge each other to improve their times and distances. Does this work? Well, in 2006, Nike accounted for 48% of all running shoe sales in the U.S. By 2008, its share was up to 61%. At least some of that must be due to the social networking site.

Over the last few years, we have studied several thousand product innovations. We have found that product innovations fall into three major categories: First, you can provide information to your customer; second, you can reduce the resources your customer uses with the product; and, third, you can improve your customer’s experience with the product.

Recently, we developed an article which outlines eleven questions, based on these three categories, that you can use to develop your product innovations. (See “Patterns of Product and Service Innovation” in the Perspectives on StrategyStreet.com.) Nike’s innovation falls under the “improve the customer’s experience” category. Nike has provided a good answer to one of the eleven questions: Can you add to your customer’s sense of pride and well being?

Congratulations, Nike, on another customer insight.

Posted 11/17/08

Update:

In 2018, Nike discontinued services to its wearable device products which connected to the Nike+ website. The company discontinued manufacturing wearable devices in 2015 under the pressure of more dedicated smartwatch manufacturers.  The company increased its efforts to work with true smartwatch products like the Apple watch.

While the customers of Nike’s wearable devices were undoubtedly disappointed, Nike’s move had relatively little effect on its market share. In 2020, Nike led the market for athletic footwear. It’s share was growing and it enjoyed total sales that were greater than the combined sales of the next 4 competitors in the industry.

Nike succeeded in this market for several years, until product specialists developed better products and better economies of scale. Then, Nike wisely withdrew from that market. An innovation does not have to last forever, just long enough to recover its costs and enhance your relationship with the customer. HERE is an overview of product innovation approaches. You can use our many product innovation concepts and examples to brainstorm improvements for your own company.

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THE SOURCES FOR STRATEGYSTREET.COM: For over 30 years we observed the evolution of more than 100 industries, many hostile.  We put their facts into frameworks applicable to all industries and found patterns.  Strategystreet.com describes the inductive results of these thousands of observations and their patterns.