Summary
1. Nike is looking to boost lagging sales and gain market share in the high end performance running shoe market.
2. Pairing of technology and soft goods that will make "techno sense" to Generation Y.
Analysis
By creating an affordable, sleek, extremely compact music/video player, Apple has become the dominant player in both online music and MP3 player sales. Apple is now attempting to parlay this dominance into new markets by partnering with Nike. Nike, long in need of a B12 shot for lagging footwear sales, is using this partnership to boost sales in the most critical area of their running shoes line - the high end.
Although the worldwide dominator is footwear, Nike core sales strength continues to be derived from basketball. Former dominant running manufacturer, New Balance has ditched the performance running market and hitched their wagon to casual running shoes sold through "big box" retailers. Smaller, "boutique" brands such as Saucony and Asics have recently made significant inroads in the rudderless, fragmented performance running shoes market. After a series of luke warm new product launches and recent languishing sales, the Nike braintrust may be desperate. However, although Nike's tactic here may look like nothing more than a gimmick, it just may prove to be an effective one.
Nike now features a total of 12 running shoes (6 men's, 6 women's), priced at $85.00 - $110.00 in their Nike+, Ipod ready line. In additional, Nike has created a complimentary line of clothing and accessory items designed for upsell. Nike isn't aiming for the marathon runner here, as this market usually begins at a price level of $120.00 and can quickly top out a over $160.00. Besides, the Ipod can only sustain a 90 minute program. Instead, group swoosh is targeting the casual runner who wants to put a technological pop into their workout. Nike is betting that Generation Y will see this as a marriage of technology and fitness that will make the grind and boredom of the daily workout more fun. The interactive nature of the program targets this demograhpics "always on", technology driven conscience.
The "latest and greatest" gadget in the case just happens to be a pair of running shoes.
