Nike’s mission and commitment to sustainability
‘Nike’ is a worldwide brand name for sports clothing and it believes in the saying by Bill Bowerman, that, “if you have a body, you are an athlete”. The company adheres by their mission of providing innovative sportswear to all athletes around the world. The motto of sustainability and high quality modernization has created an unbelievable brand value for the customers. Dedicated research team, ecologists have built a model which is guiding Nike to an exponential growth in product ranges along with profit margins. The pro-environmental approach has added to the brand name and encouraged continuous growth at every corner of the globe. Variety in product line, all weather sports accessories has attracted customers from all the age group. The investors and stakeholders are interested in new investment in the company. The core management of the company has undertaken a pilot project to study recent trends in customer satisfaction and profit analysis. The pilot study was conducted in two phases, first for customer analysis and then for company profit analysis based on selected product ranges (Fornell, Rust & Dekimpe, 2010).
The first phase of the work involved customer study based on feedback data of the customers. Satisfaction level, awareness about various product lines, product preference, purchase intent and reliability of the customers were recorded. Customers were divided into three categories based on their selection of product ranges. The gender study was also done for the heavy, medium and light usage category of customers. Focus was assigned to two conclusive queries related to the collected data. The analysis oriented questions were as follows,
- Do the customer attitudes show a contrast for three usage group?
- Do the customer attitudes show a difference for two genders?
The usage group and gender category were two ordinal variables. Comparison of five customer personality traits, which were ordinal in nature, was done for gender and usage group. The appropriate choice of descriptive method for comparison was considered as Cross- Tabulation. The inferential conclusion was drawn from Chi-square test.
The second phase was a profit study, which involved sales figure of one year with nine different product lines. Margin of cost of products (COGS) and total profit, along with payment modes were studied. As the bottom line of every industry is profit, the management decided to focus on the profit figures, associated with product categories. For decisive conclusion, seven research questions were structured as below,
- What are the best and the lowest selling product based on profit figures?
- Do the payment methods significantly differ in transaction amounts?
- What is the product wise relation with COGS of the products?
- What is the product wise distribution of two payment methods?
- Is there any relation between COGS and profit margin levels?
- What is the monthly profit distribution pattern?
- What is the gender wise profit distribution pattern?
The descriptive measures for each research question was found based on nature of the data, and appropriate inferential statistical measure was taken to establish the claims of descriptive values. The chi-square test, t-test, analysis of variance, one way analysis, Pearson’s correlation were used for the purpose of the study (Bergman, B. & Klefsjö, 2010).
Nike’s variety of product lines attracts customers of all age groups
The number of light sportswear users, medium range users and heavy accessories users were respectively 27, 51 and 72. The average and standard deviation of the users have been given in table 1.
Table 1: Usage wise descriptive for different personality traits
Hypotheses were set for the inferential analysis. It was hypothesised that the three user groups did not differ in average number for five attributes. As the analysis included interaction of treatment groups with ordinal nature with block variables of scale variable, ANOVA was the choice for the inferential test. The three user groups differed significantly in, awareness about Nike products (F = 82.3, p < 0.05), satisfaction level (F = 139.9, p < 0.05), preference of products (F = 23.5, p < 0.05), purchase intension of products (F = 6.2, p < 0.05). But with a pleasant surprise, the groups were equally loyal to Nike products (F = 0.4, p > 0.05). Tukey HSD test established the interrelation of user groups; they differed significantly (p value < 0.05) in awareness and satisfaction scores, but similarity was noticed for purchase intension, preference and loyalty for ‘Nike’ products (Table 3 in Appendix).
The data were collected for 99 females and 51 males. The mean and standard deviation for customer attributes for the two genders has been given in table 2.
Table 2: Gender wise descriptive value for customer attributes
It was hypothesised that gender type has no effect on the attribute scores of the customers. ANOVA was chosen as the appropriate tool for inferential statistical analysis. The results revealed statistically significant difference in awareness (F = 6.0, p < 0.05) and preference in product range (F = 11.4, p < 0.05), and loyalty for ‘Nike’ products (F = 44.3, p < 0.05). The two genders were found to have similar attributes when satisfaction (F = 0.3, p > 0.05) and purchase intension (F = 2.3, p > 0.05) scores were analysed.
The chi square test along with cross tabulation between the three user category and gender of customers was performed. Difference in customer attributes for two genders corresponding to three user groups was not significant
The top and worst selling product were identified as Men’s shoes and Girls clothing. Total profit for Men’s shoes and Girls clothing were $ 1446.3 and $ 8.0. The histogram in figure 1 and box-plot in figure 2 were used to choose and confirm the top and worst selling products.
Pilot study conducted by Nike to study customer satisfaction and profitability
The decision tree analysis was used for confirmation of the histogram result (De Oña, de Oña & Calvo, 2012). Girls clothing was in the less than $ 4.00 profit bracket, whereas Male shoes shared almost 78% of profit for the highest profit bracket (greater than $ 6.00).
The null hypothesis was constructed with assuming equal profit for all the product ranges. The interaction between ordinal and scale variables was cross checked by ANOVA and there was statistically significant (F = 43106.4, P < 0.05) difference in the product lines. The ANOVA between the top and worst selling products revealed (F = 1686.6, p < 0.05) significant difference in total profit. The null hypothesis was rejected based on the results. The Chi-square test for the classification tree (, p < 0.05) completed the inferential analysis for statistically significant difference in the profit total for different level of profits.
Two payment methods, visually PayPal and credit card payment were compared. It was hypothesized that payment methods did not differ based on the product ranges. The average purchase paid with Pay Pal was $ 3.06 with SD of $ 3.31, and with credit card was $ 5.12 with SD of $ 5.14. The t-test established statistically significant difference between the two payment methods (t = -6.18, p < 0.05). Average payment with credit card was higher compared to Pay Pal payment method.
To find the product wise analysis of COGS of the products, classification tree was formed for different product category. Cost of men clothing was found to be the minimum with cost margin less than or equal to $ 1.00 and Men shoes was in the highest cost margin bracket of greater or equal to $ 2.70. ANOVA was used as a measure of inferential technique and the null hypothesis, with the assumption of equality of cost of goods was rejected based on the value (F = 435796.65, p < 0.05) of the statistic.
Box plots were constructed and customised product line was found to be more familiar with Pay Pal payment and payment for Men shoe was done dominantly with credit card method.
It was hypothesized that the product lines did not differ in Pay Pal payment method, ANOVA was conducted with 7 degrees of freedom. It was found that the product lines significantly differ in Pay Pal payment method (F = 819561.63, p < 0.05), and the null hypothesis was rejected (Spies, 2010).
Analysis of customer study based on feedback data
The inter relation between COGS and total profit was a matter of interest. Both variables were scale variables, therefore correlation coefficient was found between them. The positive correlation (r (364) = 0.65, p < 0.01) for two tailed test was statistically significant. The null hypothesis assuming that, the COGS and total profit were uncorrelated was rejected. High profit margin for elevated cost of products was evident from the value of correlation coefficient.
Monthly profit distribution was an important observation from the company’s point of view. Histogram was used to represent the total monthly profit. Due to the brand name and marketing strategy the total profit was found to be equal throughout all the months. An ANOVA was used to cross check the claim, and the assumption of null hypothesis about equality in total sales for all the months (F = 0.7, p > 0.05) got failed to be rejected.
The entire data set was divided in four gender categories, men, women, kids and custom. Total profit for the broad product ranges was studied. Initially a histogram was constructed, which indicated that Men section was earning the maximum profit and kids section was earning the least profit (Keller, Parameswaran & Jacob, 2011).
The classification tree was used for the purpose of confirmation. It was observed that kid category product line had least profit range with profit less than or equal to $ 4.00 and Men range had the most profit with profit greater than $ 7.00. The chi-square test was used as an inferential test and it confirmed with, p < 0.05 for four groups of profit. Hence, Men category sports accessories were earning the most total profit (Sharpe, 2015).
The above analyses were grouped together and some important factors were pointed out to the CEO of Nike. Men’s product lines were sold more than any other products, the sale and profit figures were the highest for the same product line. Credit card was seen as the major mode of payment from Men shoe, and men were found to be more attracted by the marketing strategies of the company. This was noticeable from the awareness of men about the product lines.
It was suggested that variety in female product line was required; kids section needs to be revamped with new products. As a mode of payment, Pay Pal needs to be more attractively marketed with extra discount coupons. Marketing target should be the female section; especially mothers should be the focus of the advertising team (Shank & Lyberger, 2014). .
References
“Nike Official Site.” NIKE, Inc.- Inspiration and Innovation for Every Athlete in the World., Retrieved from www.nike.com/au/en_gb/.
Bergman, B., & Klefsjö, B. (2010). Quality from customer needs to customer satisfaction. Studentlitteratur AB.
De Oña, J., de Oña, R., & Calvo, F. J. (2012). A classification tree approach to identify key factors of transit service quality. Expert Systems with Applications, 39(12), 11164-11171.
Fornell, C., Rust, R. T., & Dekimpe, M. G. (2010). The effect of customer satisfaction on consumer spending growth. Journal of Marketing Research, 47(1), 28-35.
Keller, K. L., Parameswaran, M. G., & Jacob, I. (2011). Strategic brand management: Building, measuring, and managing brand equity. Pearson Education India.
Shank, M. D., & Lyberger, M. R. (2014). Sports marketing: A strategic perspective. Routledge.
Sharpe, D. (2015). Your chi-square test is statistically significant: Now what?. Practical Assessment, Research & Evaluation, 20.
Spies, M. (2010). An ontology modelling perspective on business reporting. Information Systems, 35(4), 404-416.
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