Nike has just launched the Nike Adventure Club, a system that allows children to receive up to 12 pairs of trainers per year. The system operates on a subscription basis. That’ s right: by subscription! The business model is innovative, and in this article, we analyse Nike’s marketing strategy and the background of this business model.
What is the Nike Adventure Club?
This is a “club” reserved for children aged 2 to 10 years old that allows, under the condition of a monthly payment of between $20 and $50, to receive “kits” at home including a pair of trainers (Nike or Converse) and an activity booklet. The idea is, therefore, to associate a pair of trainers with a given activity and thus promote sporting activities and “challenges” between children.
Depending on the value of the subscription, the child will receive each year between 4 pairs ($20/month formula) and 12 pairs ($50/month formula). In other words, the $50/month formula ($600 per year) gives you the right to order, every 30 days, the pair of trainers of your choice.
1 pair of new trainers every month, isn’t that a little too much?
This is, of course, the apparent thought that immediately comes to mind. Isn’t it a consumer push to offer sneakers on a subscription basis? Nike is trying to answer this legitimate question by organising a harvest of used trainers that will be given to families in need.
The website indicates that this harvest will take place twice a year (April and November) and that on this occasion the members of the club will receive a pre-paid label that will allow them to send back the sneakers they no longer want, and that will then be offered to families in need.
Business analysis: Nike’s interest in selling subscription trainers
Nike’s interest in selling trainers on a subscription basis is apparent: regular income streams and satisfaction of the need that will also prevent parents from buying trainers from another brand.
All the analyses we have read highlight the regularity of revenues, of course, but systematically forget that the Nike Adventure Club model is frighteningly well designed to annihilate the competition. Indeed, by satisfying in advance a need (to put shoes on their children’s feet), Nike simply eliminates the need for parents to think about meeting this need, which will necessarily result in a maximum market share on the homes that have opted for this particular option.
Based on the subscription model, Nike also hopes to build customer loyalty among young consumers. This is a long-term strategy whose effects are difficult to predict, as today’s young consumers have become unpredictable and ever-changing.
The marketing strategy for selling trainers by subscription
This new model of selling trainers by subscription obviously requires a rethinking of your marketing strategy. How to convince parents to opt-in advance for repetitive purchases of a sustainable commodity (trainers)? How, in other words, can we move from a sustainable model (the trainers that we keep) to a perishable model (the trainers that we get rid of twice a year)?
The arguments put forward by Nike are primarily aimed at parents (prescribers – payers) and are relatively simple (not to say simplistic): it is the promise to get your child moving with each new pair of trainers, to make him discover a new activity with each new shipment. In a sedentary world and an American society increasingly confronted with overweight, it is, therefore, a simple shortcut that allows parents to overcome their guilt and find a ready-made “solution” (or more accurately, a hope) to subscribe to.
Posted in Strategy.
