Placement and Distribution

1. Placement and Distribution Kyle George LaMarcus Bailey Suzi Tullis

2. Nike Mission Statement “To Bring Inspiration and innovation to every athlete* in the world.” Consumer Affairs Mission “To represent the highest service standard within and beyond our industry, building loyal consumer relationships around the world.” *If you have a body you are an athlete

3. Nike Free Run https://www.youtube.com/watch?v=FYdeVUmWR_8

4. What Are Nike Free Runs? Nike Free Run are a special type of shoe designed to maximize running performance and comfort. • Hexagonal Flex Grooves Allow Natural Foot Movements • Flyknit Material Provides Comfort and Supportive Fit • Flywire Provides Great Ventilation And Fit http://tinyurl.com/mygyobh

5. Barefoot Running Benefits: • Strengthens the muscles • endorses a natural running posture Disadvantages of Regular Running Shoes: • Shoes provide too much support • Shoes reduce proprioception • shoes add mass to the foot https://www.youtube.com/watch?v=nsDOqJJmTa8

6. Distribution: Deciding how to get the product into the consumers hands. Distribution = Place

7. Distribution Channels Producer Producer Producer Marketing or Distribution Channel: A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. (P. 341) Distribution Channels are the pathways a product takes from the manufacturer to the final consumer. Direct distribution occurs when the producer sells goods or services directly to the consumer, with no intermediaries. Indirect distribution involves one or more intermediaries. Wholesaler Retailer Retailer Consumer Consumer Consumer

8. Supply Chain Upstream • Set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service. Downstream (Distribution Channels) • Look toward the customer • Wholesalers and retailers • Form a link between the firm and its customers (Kolter and Armstrong, p. 340)

9. California Transparency in Supply Chains Act of 2010 This bill would enact the California Transparency in Supply Chains Act of 2010, and would, beginning January 1, 2012, require retail sellers and manufacturers doing business in the state to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains for tangible goods offered for sale, as specified. (California Transparency in Supply Chains Act of 2010) NIKE is taking action to ensure they are following the California Transparency in Supply Chains Act of 2010 by: • Supply Chain Verification • Direct Suppliers’ Certification of Materials • Standards for Compliance • Training

10. Supply Chain Management Inbound Logistics: Moving products & materials from suppliers to the company Outbound Logistics: Moving products & materials from the company to the reseller to the customer. Reverse Logistics: Reusing, recycling, refurbishing, or disposing of broken, unwanted or excess product’s returned by the consumer or reseller. Inbound Logistics Outbound Logistics Suppliers Company Resellers Customers Reverse Logistics

11. Global Sourcing North American Market • 36% of Revenues in 2011 • 35% of Revenues in 2010 • 363 Stores • 20,000 Retail Accounts International Markets • 64% of Revenues in 2011 • 65% of Revenues in 2010 • 393 Stores • 20,000 Retail Accounts *This is not an actual picture of Nike’s global distribution http://tinyurl.com/movq6js

12. Intermediaries(Channel Level) • Create greater efficiency in making goods available to target markets • Reduce work for producer and consumer • Play an important role in matching supply and demand (p. 342)

13. Nike Distribution Nike Uses Multichannel Distribution • Nike has 8 Nike stores and 26 authorized retailers in California • Nike has approximately 20,000 retail accounts in the U.S. • Nike sells their products in roughly 200 countries Nike sells their products through: • Independent Distributors • Licenses • Subsidiaries

14. Producers & Intermediaries Must Agree On • Terms & responsibilities of each channel member • Price policies • Conditions of sale • Territory rights • Specific services to be performed by each party

15. Producers Must • Establish a list price • Establish a fair set of discounts for intermediaries • Define each channel members territory • Be careful with placement of new resellers

16. Key Functions of Distribution Channels Help Complete Transactions • Information • Promotion • Contact • Matching • Negotiation Help Fulfill Completed Transactions • Physical Distribution • Financing • Risk Taking

17. Channel Design Decision • Analyzing Consumer Needs: • What do target consumers want from the channel? • Setting Channel Objectives: • Set objectives in terms of targeted levels of customer service. • Decide which segments to serve • Decide on the best channel to use for each segment • Identifying Major Channel Alternatives: • Decide the types of intermediaries • Decide the number of intermediaries • Decide the responsibility of each channel member • Evaluating Those Alternatives

18. Channel & Distribution Nike is a highly centralized and extremely focused company. the core functions include: • Brand building and supply chain management • Dedicated sales force selling Nike products to retailers or in a limited number of countries, to distributors. • Nike has relocated production of its footwear and clothing to 600+ contract factories in 40 countries (as of 2011). • Nike manages a worldwide virtual company while combining internal R&D functions with a low cost of manufacturing strategy Market Expansion Strategies • Shared distribution channels among varied product lines lowering cost • Large size provides opportunity for more leverage against competition • efficient use of production facilities lowers cost Nike depends upon highly controlling the athletic footwear supply chain and getting retailers to commit to orders far in advance.

19. Marketing Logistics(Physical Distribution) Planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet customer requirements at a profit. (p. 357)

20. Nike Free Yourself https://www.youtube.com/watch?v=VKz9RRTpH1A

21. References • California Transparency in Supply Chains Act of 2012, S. 657, Governor (2010). Retrieved from http://www.state.gov/documents/organization/164934.pdf • http://nikeinc.com/ • Nike. (n.d.). Nike Free. In Nike. Retrieved March 23, 2014, from http://www.nike.com/us/en_us/c/running/free-run • Kotler, P., & Armstrong, G. (2014). Principles of Marketing (15th ed., pp. 362-385). Harlow, England: Pearson.