Historical Analysis of Apparel Marketer’s Strategies: Evidence from a Nike Case

In the decades previous to 2010, many firms in consumer product industries, including the apparel industry, have experienced changes both in the structure of the industries (e.g., ownership, control and location of production) and the functions of the firms (e.g., production- or product oriented vs. marketing-oriented) within the industries (Su et al., 2009). One force in this change was the economic globalization that brought about shifts of production and trade from domestic production to off-shore sourcing of production and then of fabrication and design (Ha-Brookshire and Dyer, 2009). Gereffi (1994) argued that the continued interest in this dynamic of globalization in the apparel industry may remain because global restructuring of the economy is historical in shifts of power across commodity chains. As a major industry in the global market, this argument emphasizes the importance of historical analysis for the apparel industry. However, a review of literature revealed that only a few academic studies (e.g., Kincade, 1995; Locker, 2002) have explored issues such as specific details about the growth and change in the apparel industry, and even fewer studies placed these issues in a historical context. The current study is designed to fill this gap in the literature and provide insights into the historical perspective of the U.S. apparel firms’ response changes in its business environment over the last four decades and the importance of the marketing function within this context. The objectives of this study were: (1) to analyze a U.S. apparel company’s shift in organization and strategies in a historical perspective, and (2) to provide relevance of these findings within economic globalization. To achieve the research objectives, a sample company’s case with general industry trends from 1970s to 2009, were investigated. This time frame was determined based on the early 1970s as a beginning point of much of the apparel industry restructure in response to the economic globalization (Taplin, 1994) and with the consideration of data availability for a sample company and its year of establishment. The sampling frame of this study consisted of the companies ranked in The Top Company lists (e.g., The Top 50, The Top 40) in Apparel magazine. Among the seven companies continuously listed during the period of study, Nike, Inc. was selected as the sample for this case study because of the extensive availability of historical data (e.g., data beginning in the 1970s) about Nike and its continued growth and leadership. The case study covered four decades from the 1968, the year that Nike was incorporated, to 2009. In the first period from 1968 to 1975, Nike emphasized production and distribution related to imports and trade. By emphasizing principal business activities (i.e., designing, selling the products) and outsourcing all manufacturing in Japan and other countries, Nike initiated global sourcing in the late 1960s. This strategy became a trend that most other companies would eventually follow throughout the next several decades. In the second period between 1976 and 1983, Nike focused on product innovation with technology to exceed over other competitors (e.g., Adidas, Puma). Through this strategy a new product model, the Air shoe, was developed, which significantly contributed to a reversal in declining sales. In the third period, 1984 to 1996, Nike’s innovative advertising started with the endorsement contract by Michael Jordan. The endorsement strategy built a strong foundation for Nike as a marketing company. Marketing strategies, developed for reinforcing the brand image with its Swoosh logo, the slogan “Just do it,” and endorsements with famous athletes, strengthened Nike’s strategic reorientation as it changed from a traditionally focused production-oriented company to a more flexible and reactive marketing-oriented company. Finally, from 1997 to 2009, Nike has diversified its marketing efforts and taken leadership in the industry. Nike’s advanced marketing strategies include market diversification through branding and niche segmentation (e.g., casual apparel for women, golf shoes), further product innovation with technology (e.g., Nike Plus, Flywire, Swift Apparel), inventive advertising campaigns, and restructuring management operations. Nike’s business strategies exemplified efforts to become more consumer-reactive over the last four decades. Working with dedicated overseas contractors, Nike developed a flexible business structure and maintained a profitably reactive apparel firm. To function as the ultimate marketer and consumer-centric company, Nike readjusted its business strategy from a production-orientation to a marketing-orientation to the goal of being a consumer-oriented company during the decades from the late 1960s to 2009. The case study of Nike well supports the organizational learning theory literature for the apparel industry (e.g., Dyer and Ha-Brookshire, 2008; Kincade, 2002) in that Nike continuously redefined its business strategies as it achieved the key goals for each business period in response to the changing global environment. Following a basic organizational learning approach to strategic planning, Nike focused on what it could do best with available resources, what would be innovative, creative and market-leading, and what would sell to the consumer. In conclusion, Nike’s strategic business responses to a changing and global environment were varied and related to the company’s structure and the business at the time. Historical analysis confirmed that although various strategies were stressed for each period of time, all strategies were implemented as a part of Nike’s overall business planning and were market reactive. The examination of the Nike case study provides support for the general organizational learning theory (e.g., Jemison 1981; Ward and Duray, 2000) and the apparel specific theory proposed by Park and Kincade (in press). Staying reactive with marketing-oriented strategy has become a key strategy for Nike and maybe useful for other firms to achieve competitiveness in a changing market.