Developing and managing products

Marketing

Nike has long been a master at marketing. The company has sold its products on a platform of differentiation, driven by minor technological changes and through the endorsement of celebrity athletes. The company has sought, over the course of the past few decades, to create a mystique about its brand that appeals to a wide range of different consumers. In recent years, Nike has also been at the forefront of the trend towards increasing specialization in athletic apparel. Nike is also known to rely heavily on word of mouth and buzz marketing (Moudoukoutas, 2012).

Nike's comprehensive approach to marketing is expensive, but it also delivers results. For most consumers of athletic apparel there are strong associations with the Nike brand. In recent years, Nike has undertaken a number of strategies to foster closer relationships with its customers. One example is the company has a 30-story billboard in Johannesburg that posts fan tweets (Cendrowski, 2012). New product initiatives are also taking the company in a relationship marketing direction. Nike has developed a device that keeps exercise statistics, something that encourages better fitness results (Ibid). Such a device, combined with highly-specialized product lines, encourages consumers to perceive Nike as specifically attuned to their needs.

Blizzard Entertainment produces what are known as "massively multi-player online role-playing games," or MMORPGs for short. In direct contrast to Nike's product approach, Blizzard has only for product families, World of Warcraft, Diablo, Warcraft and Starcraft. Consumers pay a subscription service to participate in these games, set in elaborate fantasy worlds. By many accounts, Blizzard's MMORPGs are the most sophisticated and detailed in the business. While the company only has four product lines, it bears similarity to Nike in that these products are positioned at the high end of the industry -- they are sold as being the best of type. This approach stems from a philosophy of only hiring gamers to do the programming and design work, and giving them creative freedom (Takahashi, 2008). Nike takes the same approach to the product element of the marketing mix. Nike prefers to hire athletes, if only casual ones, because it feels that people who are in the target market are more likely to develop the products that the target market needs.

Blizzard's approach to relationship marketing is more direct than Nike's. While both companies use product as a component of the relationship, Blizzard relies almost exclusively on it. The company relies on a subscription model, so it needs to ensure that customers keep coming back for more. This is different than with Nike, because in effect Nike must win the customer with each sale. Blizzard only needs to keep the customer with each subscription renewal. Another difference is the importance of any single product. Nike has a steady new product pipeline and any one product can fail miserably, but Blizzard has long lead times and needs every new product to be a hit, otherwise its subscriptions will dry up. Gamers will not have enough loyalty to wait another ten years for the next iteration to give the company another try.

As a result, Blizzard is forced to have a much stronger emphasis on managing products. The products need to be finely managed, and this is why the company gives more leeway to its developers. Nike can afford a miss, but Blizzard cannot. Thus, even though Nike employees are active people, the company relies more on its marketing department to drive product development, while Blizzard very specifically relies on its engineers.

The approach that each company has taken with respect to developing and managing products has worked well for each firm. It is hard to argue with either approach, since both companies are market leaders. However Blizzard's approach is a more pure-form approach. While Nike wants its staff members to be active, random Nike staff members do not make significant contributions to product development. Additionally, product management fells to the marketing department, leaving the developers out of the process. Nike has this idea that it wants to do what Blizzard does, but it does not have the courage to follow through and let, for example, its celebrity athletes actually work on the engineering of the products. That may be a pragmatic decision, but it is also one that results in more flops and a more marketing-driven approach to product development and management.