The product development cycle at Nike Inc.

Answer

• • 1. Product innovation management final assignment:

       Please type your answers into this booklet

       Please complete each question on a separate page

       Question 1 (10 marks)

       Nike is constantly being challenged to develop and launch a continuous range of new shoes.  To do so, they need to understand what product innovation capabilities to develop and embed in the organisation as global markets become more dynamic and consumer’s needs, wants, and behaviours change.

       Discuss expected global market and consumer changes over the next 5 years and what capabilities Nike will need to develop to sustain successful product innovation over that period of time.  Are these capabilities any different for your semester project partner? Why/why not?

       (Word Count: 787)

       This paper analyses the product development cycle at Nike Inc. Nike Inc., a leading sportswear and apparel manufacturer with a steady growth in sales topping $21 billion in 2016 and capturing upwards of 50% of the global sportswear market (Childs and Jin 2018).

       SPORTWEAR MARKET AND CONSUMER TRENDS

       Growth of wearable technologies in Sports

       The e-textiles sector is one of the fastest growing industries in the world. Indeed, parametric studies by Memarian, Rahmani, Yousefzadeh and Latifi (2019) and Sharaf (2020) perceive such technologies as a critical for attainment of “comfort, breathability, soft fabrics, and high sustainability” (Memarian, Rahmani, Yousefzadeh and Latifi 2019). The novel apparels are synonymous with numerous electronic devices such as “integrated circuits (ICs), light-emitting diodes (LEDs), and various measuring devices that take periodic measurements of blood pressure, body temperature, and other important parameters. In addition, electronic textiles are powered with novel batteries and supercapacitors suited for such clothing. It is projected that the aforestated tech offerings will disrupt existing technologies in the sports industry in ways comparable to the “smartphones, tablets, and other gadgets” and their impact on cable telephone (Memarian, Rahmani, Yousefzadeh and Latifi 2019; Sharaf 2020).

       Growth in Heath Consciousness

       The last two decades have seen renewed focus on health and wellness programs. Nike Inc. and other leading sportswear manufacturers are relying on many studies which explore the way in which new products improve ergonomic benefits to the user. In this respect, various properties such as “heel lift stiffness” have been enhanced to improve the posture and walking position, which are tailored for different athletes (Hessas, Behr, Rachedi and Belaidi 2018). This is necessary to help diminish risks of physical injury by tempering the impacts of repetitive activities, “plantar pressure and excessive pronation or supination” (Ramsey, Lamb and Ribeiro 2019). This position largely conforms to recent studies that suggest that associate “heel lifts stiffness” of sports shoes with positive outcomes on “posture and gait patterns” (Hessas, Behr, Rachedi and Belaidi 2018).

       Growth in e-commerce

       Recent studies have established a growing involvement of athletic apparel companies in free community events at its stores, in which potential customers can experience yoga and running lessons (Chiu and Choi 2018). Meanwhile, given the fact that retailers selling products mainly at their physical stores are struggling amid the rise of online retailers, some players are wary of increasing the number of directly-managed stores. One of the best strategies going forward will be aiming to become an SPA that mainly sells products at its own website. At present, sales in developed markets account for a large portion of total sales of sporting goods manufacturers (Chiu and Choi 2018). By utilizing the Internet, such manufacturers can cultivate demand in emerging markets.

       Rising Demand for Fashionable Sports Apparel

       In addition, the company has made its mark in innovation, promotional, and customer service initiatives as it seeks to derive value from a thriving US “sports apparel and athletic footwear” market growing from US$16 billion in 2005 to US$40 billion in 2016 (Chew and Leng 2016; Childs and Jin 2018). Further, current estimates show that the international sportswear is estimated to grow from “US$132 billion in 2011 to US$171 billion in 2018” (Chew and Leng 2016).

       Asia-Pacific is the Fastest Growing Market

       Recent studies on consumer trends have revealed unparalleled demand for wellness, physical exercises, and health programs in the Asia-Pacific region in general (Yuko 2017). Similar trends have stimulated growth of sportswear in countries such as China. This new phenomenon, known as athleisure is something Nike could take advantage of to engender profitability. Meanwhile difficulties in penetrating the Chinese market have been documented in various literatures (Yuko 2017). Yet, it is recommended for Nike to enlist the services of popular stylists from such markets to make a realistic stab at the market.

       Full wellness capabilities

       In addition to existing product lines, the “wellness,” aspect has emerged as a new frontier for growth in the sports industry, as it guarantees Eco friendliness and sustainability. One of the most important areas identified in extant literature is the food and nutrition sector (Yuko 2017). As a growing multinational company, Nike could leverage on the clean energy from small batteries as well as securing sustainability through partnership with Nestle, thereby by creating food and wellness division as a new portfolio.

       Partnerships with tech industries

       While conceding to the availability of fitness apps in various handheld devices, there is growing demand for “health management” offering with accurate records of “exercise and measuring calorie” consumption (Yuko 2017). While Nike has made real progress with Nike+ app in that regard, its competitors have done the same. Thus, it may be necessary to develop superior apps for taking health-related measurements such as sleep patterns, regularity and duration of exercises.

        

       Question 2 (10marks)

       For Nike, developing new products quickly by engaging users, and then launching them effectively, is important for success. Nike, however, are always on the lookout for new or improved ways to implement the product development process and have asked you for advice on what they might consider.

       As a consultant to Nike, and as an expert on product development, discuss the value and evolution of the stage-gate process and how it could be implemented by Nike to develop and launch great new products.  Management has also asked you to consider in your discussion the issue of balancing speed with risk, and the increasing demand by their users for sustainability and eco-friendliness in the products they produce. 

       (Word Count: 791)

       IMPLEMENTATION OF STAGE-GATE PROCESS TO NIKE’S PRODUCT DEVELOPMENT PROCESS

       This chapter applies the Stage-Gate model, developed by Robert Cooper (2001) to Nike’s product development process to entrench “informed decision making and accountability” in the product development process (Dong 2014). In essence, it provides “go or kill” action points necessary to promote inclusivity in communication among cross-team functionaries (Dong 2014). This kind of optimization is necessary for matching speed with risk and increasing demand by users for sustainability and eco-friendliness.

       Figure 1: Stage-Gate Process Model at Nike Inc.

       Source: Cooper (2001)

       The Stage-Gate Model

       The primary aim of the Stage-Gate model is to advance a more robust proposition for the improvement of the quality of ideas utilized in the product development process. It is a known fact that good products emanate from good ideas (Dong 2014). Since costs associated with idea generation are often statistically insignificant, it follows that tons of ideas may not be injurious to the process but beneficial. However, further along the product development process, the costs will inevitably soar. It is at this stage that the Stage-Gate model will be used to entrench a pattern in which “unpromising” products are “killed off” before they gobble up much resource. In this way, the company will match speed with risk while attaining sustainability and eco-friendliness.

       In Stage-Gate processes can be delineated into six milestones/stages as follows:

       1. Discovery: Idea screen

       This stage facilitates acquisition and generation of new ideas by providing a transparent stage for their absorption. Team members involved at this stage are encouraged to indiscriminately accept ideas advanced from the outrightly ridiculous to the most refined. Further, designers are expected to identify “interesting prospects” for recommendation to the next stage, the “screening purpose” (Dong 2014).

       1. Stage 1: Scoping

        At this stage, the ideas funneled from the first stage are used to outline the kind of products to be recommended and to form the mediating circumstances for future discussions. Similarly, this stage will rely on input of designers who will play an integral by producing “the colorways” for discussion (Dong 2014). The intents of the designers at this stage are attained through workshops after which the second screening is conducted. Subsequently, the approved products will be recommended for “business case building” for further refinement.

       1. Stage 2: Build Business Case

       It is expected that the selected products will be subjected to shape “a business case” for every product recommended for design (Dong 2014). At this stage, product related issues such as “consumer segments, targeted channel, selling price, cost, context story, and a preliminary forecast of the demand”, are discussed. Upon completion of this stage, the chosen products are forwarded to the next stage, the tech pack creation process.

       1. Stage 3: Review Tech Pack

       Activities undertaken at this stage involve assessment of the “tech package” and are done by designers and the development team with sustainability as a key criterion. Non-parametric studies by Dong (2014) have identified a number of factors including accessibility to materials, “manufacturability, rough margin analysis” among other considerations. This stage is succeeded by the “prototype samples creation process” (Dong 2014).

       1. Stage 4: Merchandising

       This stage provides the first glimpse of what the product will look like upon completion. This is done by displaying 3-D prototypes of the products. Consequently, this process is aimed at scrutinizing the “prototype samples” and approving the marketing considerations for every product. Upon completion of the “gate filter process”, successful merchandises are passed into the next stage “line confirmation samples creation” process (Dong 2014).  Footwear characteristic features such as the “fit & wear” analysis of the chosen merchandises are then recommended to the footwear forecasting group.

       1. f) Stage 5: Line Confirmation

       At this stage, the new merchandise is presented as a new products line. This process typically entails further assessment of the “line confirmation samples”. In addition, every aspect of the new product is scrutinized in a comprehensive manner, by taking important considerations into account such as “cosmetic looks, demand analysis, materials availability, manufacturability, margin analysis, channel analysis, consumers' mentality analysis, testing results” among other factors (Dong 2014). This stage is followed by the “sales sample creation process” and presents the company with the last opportunity to evaluate the product before rollout.

       1. g) Stage 6: Sales Window

       This is the final part of the Stage-Gate process and is delineated as an event during which the company avails the new product to retailers. It is also expected that retail outlets will purchase their favourite products giving way for to upscale production.  On the whole, the Stage-Gate process, for all intents and purposes, is a “Gate filtering process” of “corporate funneling” process which facilitates the making of informed decisions and acts as the basis of determinations of whether some design of certain merchandizes should be allowed or halted (Dong 2014).

       Question 3 (10marks)

       Design thinking and understanding product design principles are important to the design and development of new products.

       How can designing thinking, and an understanding of product design principles, help Nike reshape and improve the way in which it comes up with new product ideas, tests new product concepts, and designs and manufactures new products that offer value to consumers.

       (Word Count: 764)

       USING DESIGN THINKING AND PRODUCT DESIGN PRINCIPLES TO THE DESIGN AND DEVELOPMENT OF NEW PRODUCTS AT NIKE INC

       In a rapidly changing, fast-paced technological world, it is imperative for designers to provide solutions to multifarious problems, steer across difficult commercial terrains, and generate a new product for the world. Drawing from cross-sequential studies by Black, Gardner, Pierce and Steers (2018) we define design thinking as a procedure generally employing core components of “play, empathy, reflection, creation, and experimentation to collaborate, create, and build upon findings”.

       Generation of new Product Ideas

       It has been suggested in much scholarly literature that the generation of new product ideas as achievable via perception of employees as social innovators rather than workers. In this respect, Mirvis, P. and Googins (2018) perceive the social innovator as a co-creator working in tandem with likeminded entities. They play principal roles as “intrapreneurs” in organizational innovational programs, in liaison with likeminded capitalists, and participate in free “service programs”, and key participants of research and development (R&D) departments in their parent organizations. 

       From the product design perspective, the worker, hereafter referred to as the social innovator, is expected to perceive the idea generation process anchors the process on improvement rather than change.  Specifically, it perceives new resolutions to social problems as incomplete unless they are “more effective, efficient, and sustainable”. In certain instances, the criteria may be adjusted to include products whose solutions are principally intended to serve the community as a whole rather than few individuals (Nicholls, Simon and Gabriel 2015).

       As a company with a strong R&D focus, it may be helpful for the company to encourage its workers to transform into social innovators so as to improve idea generation, especially by considering the needs of the society as a whole. Some scholars have proposed the use of socially innovative interventions to address social problems. To put it into perspective, the suggestion could imply that Nike could address itself to problem associated with health and wellness, such as childhood obesity.  This approach could imply that the social innovator in the company becomes motivated by the prospect of unmasking systemic failures in society and offering real solutions. It could also accord the company a chance to improve its bottom-line. This can be seen, fundamentally, as a distribution problem in terms of both mainstream innovation policy and democratic reform (Nicholls, Simon and Gabriel 2015).  Cumulatively, idea generation by social innovators could derive greater value for the company as it uncovers a new niche from which the company can innovate new products while the society could benefit from new offerings.

       Testing New Concepts

       Several studies have emphasized the need for a paradigm shift in the testing of new concepts by calling for the process to focus on product experience design rather than instructional design (Bergin 2019; Hassenzahl 2018). The product experience design has become popular in recent years as emphasis on “satisfaction and hedonistic” attributes of products gains traction (Hassenzahl 2018). To achieve satisfaction and the feel of the product, members of the idea screening stage are expected to interact with the products themselves, as well as capture the sentiments of users so as to introduce changes in the design. The aim is to preclude the possibility of “annoying the customer” as well as achieving specific desirable behavioural outcomes. In a nutshell, a happy customer is likely to buy the product, engage in repeat purchases, as well as market the product to acquaintances.

       For Nike products, it is recommended that acceptance of new concepts should seek to capture particular sentiments. It is thus expected that the company’s value proposition should aim at designing new products that radiate optimistic and acceptable emotional appeal. Through its products, the “appeal” should ensure that the new products reflect the company’s “sympathetic, pleasant, attractive, motivating, desirable, and inviting” (Hassenzahl 2018).

       Design and Manufacture of New Products

       New studies on design and manufacture of new products have proposed the running if the process by shifting it from “programme evaluation to rapid prototyping” (Bergin 2019). At this stage, it is expected that the process of “prototyping” a new idea, should be initiated as soon as it has been scrutinized for its “validity”. Validity testing is essential for assessing the product for a number of quality standards, such as whether the concept is well-defined and is supported with accurate problem identification and definite outputs. According to the dictates of rapid prototyping, ideas that fail to meet the aforestated conditions should be discarded or sent back for review. Some studies recommend the use of a highly skilled multidisciplinary team to refine the concept, break it down into practical constituents, and integrate it with tech capabilities to meet the customer’s tastes and preferences.

       Question 4 (10marks)

       Launching new products is a challenging part of product innovation.  This challenge is exacerbated when competition is intense, when there is real downward pressure on budgets for launch campaigns, and consumers are hesitant to spend on new products.

       Given a scenario of budget restrictions, high competition, hesitant customers, and the need to achieve a sound ROI, discuss how Nike could use an understanding of the Rogers Diffusion of Innovation Model to help them develop a social media driven campaign to cost effectively launch a new product to non-professional runners in Australia.

       Start your answer here. (max 800 words. Please show word count).

        

       (Word Count: 755)

       USING ROGERS DIFFUSION MODEL TO DEVELOP SOCIAL MEDIA DRIVEN CAMPAIGN AT NIKE

       Rodgers diffusion of innovation model is anchored on the basic tenet that innovations with greater “relative advantage, compatibility, simplicity, trialability, and observability” will gain preferential adoption ahead of innovations without the stated variables (Miller 2015). Nike could potentially benefit from the model by potential product adopters into 5 categories, namely, innovators, early adopters, early majority, late majority, and laggards (Aizstrauta, Ginters and Eroles 2015; Dube and Gumbo 2017).

       Figure 2: Innovation Adoption Model

       Source: (Aizstrauta, Ginters and Eroles 2015)

       Innovators:

       This group is delineated by Roger’s (2003) as opinion leaders with greater capacity to be innovative. Innovators are enthusiastic and are open to trying new things. This essentially makes them to appear venturesome to the point of near fixation. Many scholars regard their fixation with novel concepts as a precursor to their curiosity to a limited group of acquaintances and their membership to groups that are more than typically diverse (Dedehayir, Ortt, Riverola and Miralles 2017). These groups of potential adopters are also known for their vast resources and are not afraid to engage in impulse buying. In addition, this group is known to comprehend and deploy intricate technical abilities. While this group may come across as impulsive and reckless, it is the latter traits that define this group of adopters. Their risk taking characteristics render them resilient against sporadic hindrances in the event of failure of new ideas (Rogers, 2003). It is this group that Nike should target to work with to gain immediate demand for their new products. To use social media effectively, Nike needs to micro target a dependable cast of innovators who will then educate potential buyers from the other categories on the unique attributes of their products (Roberts and Piller 2016).

       Early Adopters

       This category of adopters is characteristically easier to assimilate into a social system in comparison to the innovators. Because of this, early adopters are also identified as localites, a name that is popularly used to differentiate them from the “cosmopolite” innovators (Dedehayir, Ortt, Riverola and Miralles 2017). These categories of customers are widely regarded as the greatest opinion leaders as they are often the sources of vital information to the other categories of adopters. As a result, for Nike to accelerate diffusion of new products, it is important for the company to micro target early adopters and to use them as marketers on social media such as twitter, Facebook, WhatsApp among others. Members of this group are respected among their peers for their unparalleled use of novel concepts (Rogers 2003).

       Early Majority

       Early majority adopters are known for the relative ease with which they accept new concepts ahead of ordinary members of the social system. This group is characterized by strong interactions with colleagues, yet they rarely occupy leadership positions.  As such this group provides a crucial link between the “extremely early adopters and late adopters” (Moran 2014). They enjoy comparatively extended “innovation-decision” times than their counterparts in the innovator and early adopter categories. As such, they seem to take time to reflect before accepting new ideas. As they rarely lead, these adopters are enthusiastic followers and adopters innovations (Cheonsoo Kim & Soobum 2020). This group should be targeted with social media advertising that focuses on the superiority of the products.

       Late Majority

       These are known skeptics, and are often slow to take up new innovations. In fact, they are known to accept new ideas after the average members of the social system. As a result, this group is likely to bulge under pressure from economic considerations and “social pressure” from friends (Rogers 2003). These categories of adopters are careful about spending, are guarded about innovations, and are less motivated to accept new innovations unless members of their social circle join first. As a result, Nike should align its innovation with system norms so as to convince this group. In the current scenario, Nike should work with Non-professional athletic associations through social media campaigns to provide sufficient pressure for this group to adopt (Rogers 2003). 

       Laggards

       These adopters are conservative and are always the last to accept new ideas. They have strange obsession with the past which informs their decisions to adopt or not. They also appear to have a restricted circle of friends most of whom are conservative. As such, they are likely to accept innovations long after they have become obsolete. In addition, they generally are “suspicious” of innovators and “change agents” as well. To reach this group, Nike should cluster this group of potential adopters and employ the services of fellow laggards (Rogers 2003).