Paper: Aggressive Accounting and its Effects on Society, Written for College Composition 2, Submitted Oct 22, 2008, Grade A

Aggressive Accounting and its Effects on Society

Many interesting questions and images came to mind when first being introduced to the term “aggressive accounting”. Is “aggressive accounting” an energetic accountant? Could it quite possibly be an over-achieving accountant? Maybe it could be accounting methods that create hostility? Could it be a course of study in accounting that someone might consider as a profession? Ironically, these examples could be the outcome of anyone involved in the accounting profession that practiced “aggressive accounting”; however, it would not be the defining explanation. A simple definition of” aggressive accounting” is an unethical practice that can be used by accountants, CPA’s, and auditors to produce inaccurate or unlawful accounting methods in order to intentionally inflate the financial records of a company. “Aggressive accounting” has the potential to encourage scandals like the publicized Enron debacle. It also has the potential to destroy the public’s trust in the accounting and audit professions that oversee the safety of corporations, investors, stockholders, families, and ultimately our nation’s economy. To eliminate “aggressive accounting” practices it is important to promote public awareness for signs of fraud. Additionally, enforcement of all current regulations is imperative to insure there is a penalty for unethical behavior. Finally, accounting curriculums should include ethic standards as well as a historical time line of accounting advances to reduce mistakes previously made.

The history of accounting is fascinating, and can be traced back as far as 30,000 B.C. in the prehistoric Near East as described by archeologist Denise Schmandt-Besserat. There were hunters and gatherers that simply consumed whatever they accuired; therefore, there was no need for accounting. As humankind became more evolved, counting became extreemly important (Schmandt-Besserat, 1996, p. 103). She reports there were tokens used in three different stages of counting and record keeping. The first stage in Upper Paleolithic through 12,000 B.C. was very primative in nature. The second stage in the Neolithic era 8000 B.C. became more detailed and the third stage was the Urban era in 3100 B.C. where the tokens became more refined (Schmandt-Besserat, 1996, p. 99). Her research also reveals the complexity of the tokens as accounting began its form. Schmandt-Besserat’s research shows that during these intial phases of counting there was integrity in those who were the “counters.” She points out, “more important than the hunter, more in control than the chief, the holder of the tokens and dispenser of the grain, cereals, animals, or oils was the most important figure in these first small villages because they served as ‘honest brokers’ and controllers of the shared wealth” (Schmandt-Besserat, 1996, p. 28).

The Urban era was an historic time frame when accounting practices were just beginning. What is known about tokens, cords, and even later in tablets, created a very startling fact. The prehistoric “counters” began the process of accounting as it would develop over centuries. They would count every item of “data” and record it with a token for accuracy and accountability. This level to detail was the “perfect” audit model for the future and discontinuing “inventory control” because it became to costly in later years caused the accounting downfall. If this precision in “counting” would have carried through the generations of future accountants it quite possibly could have saved the many scandals and lack of public trust in the accounting and audit profession.

Moving into the 14th century, Luca Pacioli was considered the “father” of accounting with his double entry ledger method, which is still used today. He published a book in the 14th century titled, "Everything about Arithmetic, Geometry, and Proportions" which served as the first and only accounting textbook through the 16th century. This was a milestone for accounting because this textbook created the first students of accounting.

According to research of Mike Brewster, author of “Unaccountable: How the Accounting Profession Forfeited a Public Trust;” implementing the double entry ledger method through the 18th century in England seems to have set the stage for accounting standards for the United States to emulate some years later. Public trust in accounting practices were yet again advanced in England using Pacioli’s contribution to defining double entry accounting. Brewster summarizes, “These advances show that the most powerful members of society invested enormous trust in the top accountants” (Brewster, 2003, p. 32).

The 1960’s introduced the eight global accounting firms called the “big eight”. They were known as Arthur Andersen, Lybrand, Ross Bros. & Montgomery, Deloitte, Haskins & Sells, Ernst & Ernst, KMG, Peat Marwick, Price Waterhouse, and Touche Ross. These firms would face legal indictments over the next years that would reduce the global firms from the “big eight” as we knew them, to currently the “big 4” after Arthur Anderson was found guilty for involvement with the Enron scandal. There was a time in accounting history that the corporation had the upper hand on the auditor. If the auditor wanted to maintain a working relationship year to year there was incentive to be “bullied” in the board room to signing an inflated financial certificate. This shift in ethics when the corporation had the authority to determine when the auditor must acquiesce to the corporation was the down fall for the accounting and audit profession.

With the 19th century is the introduction of George May and Arthur Anderson, founders of two global firms. These two men would affect accounting policies in different ways for years to come. May, was a pioneer of separation of corporate fraternizing during audit procedures. He would discontinue participating in an audit if he felt there was any public speculation of inappropriately conceding to management. Ironically, Anderson on the other hand, was continually defined as an accounting firm that promoted their services “aggressively.” He did promote his accounting firms with a different attitude than the other global firms, and was a pioneer for aggressive selling tactics for the firms “consulting” and audit services. Anderson was the first to introduce computer technology to corporations; this was one more way for the firm to get “inside” the corporations for added revenue services. This advancement in technology for the global firms and corporate world created the next paradigm in accounting.

Public trust in accounting was being acknowledged for the first time due to its many advances. This created a demand for accounting services that could not be maintained by the global firms due to the hardships of travel at that time. This scenario would replay itself in the 1970’s. After the “Great Depression” the accounting staffs were cut back to a minimum. When the economy was ramping back up in the late 70’s the global accounting firms were scrambling for additional help to cover the magnitude of new partnered firms they had created across the country. This amount of travel and time away from families created inaccurate reporting and deadlines that were not met by the accountants and auditors. There were also audits performed that did not catch “aggressive accounting” practices, this once again undermined the public trust. Over time there was reduction of global firms that public companies could choose from to perform mandated audits. This problem only became worse with the newly designed stringent audit regulations of today’s Sarbanes-Oxley Act of 2002.

In comparison, the 19th century introduced Parliament, the first regulatory agency to set mandated audit standards for publicly held companies. The independent audits of public companies mandated by the Parliament were met with great criticism. These regulations created a stressor because there were not enough educated accountants that understood the new regulations to meet the demand. This cycle is repeated throughout history (McDermott, 1993, p. 4). This repetition poses a question, why did we not learn from these mistakes early on? Why did we repeat them over and over? The answer lies in the possibility that only in times when the public trust was violated there was government intervention, not when the problems began organically.

Brewer states, with the advance of auditing of public companies in the 20th century as well as newly formed regulations, there were more securities fraud and con artists than seen before. So do all these regulations that were introduced from the various agencies, both government and private, actually help to protect the public? It seems hasty regulations just antagonize the entire system.

With the invention of the generally accepted accounting principles, (GAAP) there was a format that all accountants must follow and are used currently. When the audit was complete the auditor’s primary role was to sign off on the corporation’s financial certificate that GAAP principles had been followed for accounting and reporting. However, as the auditors reduced their responsibility for detecting aggressive accounting, fraudulent activities increased. In addition there was no more “counting” of inventories to determine if what was in the ledgers actually made up the records of the business. It was as if some accountants had forgotten the integrity of their ancestors. That was unfortunate for the world and the advancement of the accounting profession.

For next we find in 1929 the market crash and the ensuing “Great Depression.” Many people lost jobs, businesses, possessions, and their faith in the economic future of the country. In the attempt to recover the accounting profession the “Federal Securities Act” of 1933 was established and mandated again by a government agency. This act, created out of desperation was full of problems and loopholes that led to overworked accountants tying to comply with the act in a timely manner. With the act of 1933 came the requirement of additional amount of “sampling” (pulling samples of documents that proved the data entry). Audits became extremely difficult and time consuming. Corporations could not fund these expensive audits and a whole new debacle was now on the rise, very similar to what happened after the Enron and WorldCom scandals. Out of these current scandals the securities exchange committee known as the “SEC” formed the Sarbanes-Oxley Act of 2002. Professor Thomas Joo, of UC Davis School of Law defines and explores the many issues with Sarbanes-Oxley Act:

There have been a lot of changes, the main change being the Sarbanes-Oxley Act, which did two things. First, it created the Public Company Accounting Oversight Board (PCAOB), which is in charge of registering and inspecting public accounting firms, and for adopting and modifying audit standards. (Ghoddoucy, 2006)

Joo goes on to say, “the Act does what critics would call a micromanaging of corporate governance by establishing some very specific requirements of corporations. For example, they must have independent audit committees. Again, this is something that historically has been done at the state level” (Ghoddoucy, 2006). He also states, “the classification of ‘independent’ defined by Sarbanes-Oxley Act is that the director of audit committees can not garner a salary from the corporation, yet directors are still being paid to be a voice for the committee” (Ghoddoucy, 2006).

Again, let’s pose the question why did we not learn from this experience? The answer possibly lies in the thought that the government agencies that were creating these acts were not accountants and admittedly did not know much about the accounting profession. Repeatedly, the securities exchange committee butted heads with the accounting profession. Primarily, accountants were offended that this agency would create a policy that accountants for ages had used from principles that had been passed down from generation to generation. With this conflict brewing between the governing agencies and the accounting profession there would be consequences. The effect was reduced public confidence.

There are suggestions for solutions that can be pondered. First, there are investors that are working with large volumes of dollars that have no formal training for this kind of business dealings. Investors should be required to have formal training prior to entering the markets. This would educate them to be better “watchdogs,” as well as be able to detect if companies are implementing controls that will provide ethical business dealings. Joo supports the idea of investor education:

The problem with that is that there is no institutionalized system of investor education. You need a license to drive a car, yet you can buy stocks without knowing anything about investing. There has been no serious attempt of any kind by the government, or anyone else for that matter, to educate investors. Investment is becoming a public policy concern since people increasingly are investing their retirement money into the stock market. We certainly don’t want retired people starving in the streets. I think society should pay for that, but I’d rather it not come to that. So why don’t we make sure that people are well educated when they invest so that these problems don’t occur. (Ghoddoucy, 2006)

Second, the fact that historically regulations have been mandated by governing agencies; however, very few of those regulations were ever enforced. Over time this lack of enforcement sent a clear message that there would be no penalties for unethical accounting practices. The regulating agencies must now send the clear message that “aggressive accounting” practices will not be tolerated and there will be a penalty for such actions. Joo’s insight is very interesting:
One way you can prevent people from breaking existing regulations is to enforce those regulations more strictly. I think it probably would have been better to crack down on enforcement of existing regulations, rather than to pass more of them that ultimately won’t be enforced. If you create an expectation of relaxed enforcement, then people will simply continue breaking whatever additional regulations you do pass. (Ghoddoucy, 2006 )

Third, formal education that trains accountants must be involved and create curriculums that look at the historical timeline of accounting to understand the similarities of accounting successes and failures. Curriculums must also stress the importance of ethics and the ramifications of practicing unethical accounting.

With the current debacles such as Enron, WorldCom, and Fannie Mae are excellent examples of how corporations can undermine the investors with various unethical practices. With the addition of our most current economic conditions it is imperative that “aggressive accounting” must stop. The CEO’s and accountants of each of these scandals were charged penalties of long jail sentences and expensive fines. It is the hope that this will be the beginning of our governing agencies sending the clear message that unethical actions will not be tolerated and punished by the letter of the law.

With our economy in the state that it is presently can the public’s trust in the safety of our countries financial structure be jeopardized any further? It appears that it is important in our society for each individual to be the eyes and the ears of the corporations and communities they are involved in. Much like the neighborhood “watch dogs” that looks for signs of crime and reports concerns; this is a simple grassroots model for the accounting profession as well. With the accounting profession government regulating agencies, and the public putting on their “ethical hats” we can maintain a steadfast economy and rise above these unstable economic times with equanimity.


References
Ackman, D. (2002). Andersen indictment and consequences. Retrieved Sept 30, 2008, from

Forbes website: http://www.forbes.com/2002/03/15/0315topnews.html.

Brewster, M. (2003). Unaccountable: How the accounting profession forfeited a public
trust. Hoboken, N.J.: John Wiley & Sons, Inc.
Ghoddoucy, D. (2006, May). Corporate Governance and Sarbanes-Oxley "Post-

'Post-Enron.'" Retrieved Sept 2, 2008, from UC Davis’s Website:

http://blj.ucdavis.edu/article.asp?id=590.

Gutman, H. (2002 ,February). The Lessons of the Enron Debacle. Retrieved Sept 3, 2008, from

Common Dreams website: http://www.commondreams.org/views02/0207-07.htm.

Jorion, P. (2003). Investing in a Post Enron World. New York: McGraw-Hill.
Schmandt-Besserat, D. (1996). How Writing Came About. Texas: Austin University of Texas
Professional Press.

Class Work by Jill Stidd

For this Web Field Trip you will review the annual reports of the Coca Cola Company and Wal-Mart, two of the largest publicly traded firms in America.
Coca Cola
Go to http://www.thecoca-colacompany.com/investors/annual_other_reports.html. This page shows a link to the 2006 annual report.You will need to scroll through the annual report to find the information that you need to answer the questions. Remember what you learned in Accounting I about financial statements to help you find what you need.
Wal-Mart
Go to http://investor.walmartstores.com/phoenix.zhtml?c=112761&p=irol-irhome. Find the financial information and then annual reports. You will need to scroll through the annual report to find the information that you need to answer the questions. Remember what you learned in Accounting I about financial statements to help you find what you need.
Discussion Question
Please respond to this Discussion Question using the information from the Web Field Trip above. Take time to review the responses of your classmates and provide your feedback.
Compare the accounts receivable turnover ratios for Coca-Cola and Wal-Mart. What characteristic(s) of these companies would indicate that these ratios are reasonable?

http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1


My Response: 8 Sep 08 12:44 PM MST


Initial post: Jill Stidd

Coca-colaAccounts receivable turnover = (net sales) / (average accounts receivable)(24,088 ) / (2,587) +( 2,281) / 2 the AR net realizable values for both years INCLUDE the estimated write off.

To support this statement Coca Cola 2006 report states, “We record trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. We calculate this allowance based on our history of write offs, level of past-due accounts based on the contractual terms of the receivables, and our relationships with and the economic status of our bottling partners and customers.” http://www.thecocacolacompany.com/investors/pdfs/form_10K_2006.pdf . p.76

9.90= (24,088 ) / 2434

Answer 9.90 Accounts receivable turnoverWal-Mart($312,427) / (2,662) +( 1,715) / 2($312,427) /4377 /2($312,427) / 2188,50

Answer 142.76 Accounts receivable turnover

I would say that Coca Cola is completely different customer base from Wal-Mart. The account receivables also come from different sales strategies. Coca-cola, in that it ultimately sells beverage retail products to a consumer; those revenues go to the seller not to Coca Cola. Coca Cola makes it sales as a wholesaler invoicing the seller given the terms stated by Coca Cola, which creates their accounts receivables. (I looked long and hard for and documentation on terms, but did not find any) Let’s assume that they are net 30 and given that there turnover was 9.90 this would justify those numbers and are in line for Coca-Cola.Wal-Mart sells directly to the consumer there for the sales revenue is from the consumer. There receivables are from a very different venue. As stated by the 2006 report from Wal-Mart, “Receivables Accounts: receivable consist primarily of receivables from insurance companies resulting from our pharmacy sales, receivables from suppliers for marketing or incentive programs, receivables from real estate transactions and receivables from property insurance claims. Additionally, amounts due from banks for customer credit card, debit card and EBT transactions that take in excess of seven days to process are classified as accounts receivable.” http://walmartstores.com/Media/Investors/2006_annual_report.pdf p.36

I am sure part of the High turnover or Wal-Mart has two factors. I would like to note that I was very surprised to see this high turnover rate of 142.76 at first, but when I looked more closely it made perfect sense. Give that we use the net sales for the computation, Wal-Mart’s net sales is much higher than Coca-Cola net sales, but both of their A/R values were similar, that would be one reason that Wal-Mart’s turnover rate would be higher. The second reason I would think is because there A/R consists of insurance billing. With the electronic infrastructure of the insurance billing today it happens very quickly once it is submitted to the insurance company. It is all electronic from the submittal, to the response, and finally to the money being directly deposited into Wal-Mart’s bank account. This would create a rapid turnover in A/R .In conclusion I would have to say that yes, both companies in all their differences as companies are reasonable in their ratios of turnovers.

http://www.thecocacolacompany.com/investors/pdfs/form_10K_2006.pdfhttp://walmartstores.com/Media/Investors/2006_annual_report.pdfWarren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.

Paper: Nike Brand Marketing Mix Analysis written by Jill Stidd / Grade A

Nike Brand Marketing Mix Analysis Final Paper
MT219-19: Marketing
Jill Stidd
Kaplan University


Given the importance in marketing for the deeper understanding of the strategic planning process and formulating a strong marketing plan, this paper analyzes the marketing mix for the Nike brand as well as stimulate suggestions and ideas for any areas of their existing marking objectives that change would create a better marketing plan.

I choose Nike brand because of my previous experience with the shoe sales industry and the fact that Nike’s headquarters and cooperate offices are local to where I live in Portland, Oregon. This history of Nike is that before Swoosh and before Nike there were to visionary men, Bill Bowerman and Phil Knight. These two men believed in their vision and invested $500 dollars each which created Blue Ribbon Sports Company. They placed their first order of 300 shoes in January of 1964. Bill sold the shoes out of his car, while Phil tore apart athletic shoes to see how he could make them better. He used one of the very important marketing tools of “trial” having anyone he knew to wear the shoes and give him feedback, hence became the start of customer loyalty and the foundation of Nike shoes. Nike is a major manufacturer of athletic shoes, apparel, and sports equipment there current portfolio is stated on their website, “Nike’s subsidiaries have a significant place in Nike's plan to grow to $23 billion in revenue by 2011. We estimate that 25 percent of the company’s targeted revenue growth in the next four years will be generated by these brands which currently represent revenues of more than $2 billion. Collectively over the past five years, these subsidiaries have nearly tripled revenue and increased their pretax income contribution more than fivefold. As part of our growth strategies, Nike continues to optimize its portfolio, ensuring that the company is investing in opportunities that will generate the highest returns. Nike’s Brand Portfolio currently includes four wholly owned subsidiaries: Converse Inc., NIKE Golf, Cole Haan Holdings, Inc., and Hurley International LLC.
(http://www.nikebiz.com/company_overview/subsidiaries/index.html, reviewed August 3, 2008.)

Nike’s width is action sports, basketball, cycling, eyewear, football, golf, running, soccer, skateboarding, swimming, tennis, women’s and men’s shoes, women’s and men’s athletic clothing, equipment. Nikes Depth in women’s running shoes is for example: Nike Shox Turbo VI+, Nike Air Max 360 III, Nike Shox Navina+, are but a few examples of their depth. Given the research that I have done it seems that the top competitive athletic shoes manufacturers today are New Balance and Reebok, they are all looking at one another to create their change and improvements. Currently Nike’s Position is #1, New balance is #2, and Reebok is #3, these statistics were stated on the New Balance video that we were to watch for a video project.

Given that Nike brand is a heterogeneous market great thought and attention to detail in regards to the target market and segmentation is vitally important to the success of Nike’s marketing plan. Nike’s marketing team without a doubt had to consider all five conditions before starting the task of market segmentation. Nike uses a differentiated strategy for market segmentation. It is clear that they had to use age, gender, race and ethnicity, income, and psychographic variables, such as personality characteristic, motives, and lifestyles to understand their target market in the wide range of athletic shoes they provide in both price and shoe quality, an example is that the “walker” does not need the same shoe as the “marathon runner” or a elderly person is not looking for the newest edgy design patterns as the teenager might be looking for. There is certainly a “status quo” with Nike branding with the promotional celebrities like Michael Jordan, his presence also brings the necessity for race and ethnic segmentation.

Nike brand marketing mix has been well planed in their definition of what they sell as a product via the website and other venues, options for price for the buyer as seen on their on-line store, their placement and distribution has been clearly outlined, and there promotion is state of the art. Because Nike’s product is a major manufacturer of athletic shoes, apparel, and sports equipment the product that they sell is a tangible good that would be classified as a consumer product because the products that Nike offers would be purchased to satisfy personal needs. I would like to note that I feel Nike has the potential to cross over into classifications as a consumer product.

For the average shoe buyer it would be considered a shopping product, but for the avid athlete, marathon runner, or Olympic competitor I think Nike would move into the specialty product. The features and benefits of Nike footwear is that they are a technologically advanced athletic shoe is design, comfort, support that certainly benefits every consumer looking for a shoe that meets their needs. Nike’s basic positioning is as an athletic shoe, apparel, and equipment that has been scientifically designed for athletics as well as those interested in the Nike brand. They support this positioning claim with various areas that are outlined on their website, here is one excerpt, “Today, Nike continues to seek new and innovative ways to develop superior athletic products, and creative methods to communicate directly with our consumers. Nike Free, Nike+ and Nike Sphere are just three examples of this approach.” http://www.nikebiz.com/company_overview/history/2000s.html , reviewed July 14, 2008.


I feel that Nike has researched extensively the basis for pricing their products, be it footwear, apparel, or various equipment offerings. It is obvious that ranked #1 they evaluate cost, demand and competition in setting the price structures. Nike’s price variable is that they have various price points from low to high for each of its categories that if offers. Mark up pricing is the pricing approach that Nike suggests to the retailers that sell Nike products. I think given the industry there is some demand pricing do to the fact of the popularity of some footwear that they designed that have a celebrities name attached as well as some competition based pricing happening with the mid range footwear that they sell. When they release a new product they must consider new product pricing. Given that Nike would be a company that has a goal to maximize profits for an entire product line rather than focusing on just an individual product the implement product-line pricing. It is my experience in the retail setting to see Nike using reference pricing in terms of setting a higher priced shoe of greater quality next to a lower priced “leader” shoe. As displayed in their on-line store they do implement odd and even pricing. They are aware that they use even pricing for their most expensive and top of the line footwear. (http://www.nike.com/index.jhtml?sitesrc=USLP#l=nikestore,grid,_grid,f-10001+12001/so-finalPrice0&re=US&co=US&la=EN , reviewed August 3 2008)

Reduced priced footwear as an odd price point for the appearance that this shoe is a bargain therefore it will be purchased. I also saw evidence in their online store of special event pricing, for example currently “back to school” discounts. I would have to say given my research in our text book and the online I would say that Nike product is a selective distribution. This article I found on the web describes my product category and supports selective distribution. “Selective Distribution Between exclusive and intensive distribution, there is selective distribution. Selective distribution is the strategy in which several but not all retail outlets in a given area distribute a product. Shopping goods are goods that consumers seek on the basis of the most attractive price or quality characteristics are frequently distributed through selective distribution. Because of this, competition among retailers is far greater for shopping goods than for convenience goods. Naturally, retailers wish to reduce competition as much as possible. This causes them to pressure manufacturers to reduce the number of retail outlets in their area distributing a given product in order to reduce competition. The number of retailers under a selective distribution strategy should be limited by criteria that allow the manufacturer to choose only those retailers who will make a contribution to the firm’s overall distribution objectives.” (http://www.web-articles.info/e/a/title/Exclusive-Distribution-and-Intensive-Distribution/, reviewed July 27, 2008.)

In terms of Physical distribution, Nike corporation states that Nike has added 700 manufacturing facilities. “Nike is committed to supply chain transparency by updating publish disclosure of the more than 700 contract factories worldwide producing Nike branded product. Disclosing our factory base encourages transparency and collaboration.

For Nike the Beijing Olympics provide an opportunity to share China's importance to our business. We have established aggressive business targets aimed at improving working conditions in contract factories, improving product through design, becoming climate neutral and investing in youth access to sport.” (http://www.nikeresponsibility.com/#workers-factories/beijing_factories , reviewed July 28, 2008). Nike is producing footwear, athletic wear, and uniforms for USA teams for the 08 Beijing Olympics as stated in the media on Nike’s Website, “EUGENE, Ore. (1 July, 2008) – Nike athletes, including Lauryn Williams, premiered Nike’s USA Track and Field (USATF) uniforms, which will be worn by members of the 2008 Olympic Team for Track & Field, before a sold-out crowd of 20,000 fans at the University of Oregon’s historic Hayward Field during the U.S. Track and Field Olympic Trials.” (http://www.nikebiz.com/media/pr/2008/07/01_USATF.html , reviewed July 28, 2008)
I feel that Nike has a great team that is planning an efficient physical distribution system that will insure decreased costs and increase in customer satisfaction. They have a very simply channel system, producer, retailer, and consumer, they seem to want full control of every operation. This production addition could potentially have great ramifications for the company if they are not fully stocked and ready for increased demand; however this company from all reports seems ready and eager for these goals to be met. This company is very aware of the cycle time of delivery as has researched all the venues for getting their product out to the consumer. They are even implementing some “on-line only” purchases of certain brands some of them the newest and with the most demand, understanding distribution for on-line sales would be extremely important customer satisfaction. Many of these customers would be “I want it now” customer.

Finally is analyzing Promotional techniques used by Nike I was impressed time and time again. Nike is a “new” company today than it was a few years back. Nike as a company was hit hard from a marketing perspective for attention to “toxic factories and the working conditions of their employees there” They have a great hurdle to unravel this debilitating review of their cooperate ethics, however in the financial report and a letter by the CEO of Nike, they are committed to a new paradigm with Nike, “This report covers a crucial period, and not just for Nike. Specifically, we saw heightened attention worldwide on corporate responsibility and the key challenges of climate change, poverty and equity. Simultaneously, we began to transform our vision of Nike’s role in contributing to positive change in communities around the world.
The opportunity is greater than ever for corporate responsibility principles and practices to deliver business returns and become a driver of growth, to build deeper consumer and community connections, and to create positive social and environmental impact in the world. We have made tremendous progress over the past two years in more deeply integrating corporate responsibility into our business model. We see corporate responsibility as a catalyst for growth and innovation, an integral part of how we can use the power of our brand, the energy and passion of our people, and the scale of our business to create meaning full change.”
(http://phx.corporate-ir.net/phoenix.zhtml?c=100529&p=irol-reportsAnnual ,reviewed August 3, 2008)

They use extensive advertising strategies on their website. Their idea to actually have an on-line personal trainer is yet another way to bring consumers to the website and visit and revisit thus promoting customer loyalty. “Jay Johnson currently serves as the Middle Distance Coach for the University of Colorado, his alma mater, where he has coached for more than five years. In addition to his coaching responsibilities, Coach Jay directs the Boulder Running Camp, one of the premier high school running camps in the country, and develops training materials for athletes and coaches of all ages and levels. Each week, Jay will be answering the best training questions we receive from you! If you have a question you want answered, email CoachJay@nike.com”. (http://insidenikerunning.nike.com/2008/07/09/july-9-2008/ reviewed August 1, 2008) , reviewed August 3, 2008) Nike’s decision to use athletes that can be great inspiration for others to start a training program and buy athletic shoes is a brilliant marking concept. Other Athletes they promote and sponsor and in turn promote Nike are: Asafa Powell, Shannon Rowbury, Shalane Flanagan, Bernard “Kip” Lagat, Kara Goucher.(http://insidenikerunning.nike.com/category/athletes/.com , reviewed August 1, 2008)

Other unique marketing promotion idea as well as brilliant integrated marking communications is there collaboration with Apple. An example, Nike + is an individualized site on NIKE.com that you can start your own monitored workout routine. Nike is smart to use the return to site basically every time you work out to record your results, using this device that they sell that you can put in a shoe that they sell! Nike+ teamed up with Apple and the iPod. “Welcome to Nike + iPod-Nike + iPod is your personal workout assistant. Music for every mile Supercharge your workout by creating high-intensity play lists. Check out what’s on your favorite athlete’s iPod.” (http://nikeplus.nike.com/nikeplus/v1/pdf/English.pdf) “Nike said yesterday that second-quarter profit rose 8.1 percent, helped by its iPod-compatible Nike+ line of running shoes. “Nike+ is turning out to be huge,” Nike CEO Mark Parker said in an earnings conference call. “In less than six months, Nike+ users have logged more than 3 million miles and there are over 3 million Plus-ready shoes in the global marketplace; we expect that number to double by the year end. Clearly our confidence in this concept has proven to be accurate.” Later in the call, Parker said, “Nike+ continues to be extraordinary, and we see that just accelerating as we add more styles to Nike+ over this next six to 12 months.” (http://www.ilounge.com/index.php/news/comments/nike-profit-boosted-by-nikeipod-sales/, reviewed August 1, 2008)

I did see coupons and cents off offers on other websites that were selling Nike shoes, however not the Nike website. I did not see any refunds or rebates with Nike shoes, I did not see a frequent user incentive, I know that Nike invests heavily in there brand and logo, their point of purchase materials, in terms of counter cards, display modules, signage, window displays and racks are always recognizable where you see NIKE shoes. I did not see any evidence of free samples, however I do know that they promote several different programs where they give away shoes to young children in “lets Play” program and others like it, if this would be considered free samples then yes, they use this promotion. I would say that Nike uses Consumer Games and contests heavily in there promotion with Nike 10K and Marathon’s, I think you could also add NIKE + personalized training program with this as well.

I am not sure exactly if Nike uses Trade promotions methods, however as I have stated prior, my father owns a european footwear store, and I do know that the shoe manufacturers use many of the trade promotions such as trade allowances (New balance does as stated in one of the video cases we heard) so I am sure Nike follows suite. Buy back allowances are used, scan back allowances are used, merchandise allowances are used , cooperative advertising is used when you place an add with there logo on it they will pay a portion of the add, free merchandise and dealer loader is used, premium money is used, as well as sales contests. I saw all these methods used over and over in the shoe sales industry.
I really feel that Nike current marketing mix is fully embracing there brand position. As I pointed out earlier in this report, Nike in the past had some trouble with this and is currently putting every resource and effort into being the “new” corporate business model. Their involvement in low income programs, as well as “let me play”, addressing child obesity that is rampant in our company, to “toxic-free factories” and shoe manufacturing are just a few of the areas that Nike is standing up to and evaluating in there segmentation. I have to say that I feel that Nike is on the cutting edge of marketing, there website proves it over and over. I feel there are no suggestions on my part in terms of product, pricing, distribution or promotion, as long as they continue this commitment to be a transparent in a information sharing corporation that is creating a green environment at every turn. That would have been my suggestion however they are 100% committed. They fulfilled their objectives of successful promotion by creating awareness of their product and commitment to the consumer, stimulating demand, identifying prospects having web users create their own accounts so there is personal information, retain loyal customers, and facilitate reseller support. When this is all a success the business is a success. Go Nike!




References:
http://www.nikebiz.com/company_overview/subsidiaries/index.html, reviewed August 3, 2008.
http://www.nikebiz.com/company_overview/history/2000s.html , reviewed July 14, 2008.
http://www.nike.com/index.jhtml?sitesrc=USLP#l=nikestore,grid,_grid,f-10001+12001/so- finalPrice0&re=US&co=US&la=EN , reviewed August 3 2008)
http://www.web-articles.info/e/a/title/Exclusive-Distribution-and-Intensive-Distribution/, reviewed July 27, 2008
http://www.nikeresponsibility.com/#workers-factories/beijing_factories , reviewed July 28, 2008
http://www.nikebiz.com/media/pr/2008/07/01_USATF.html , reviewed July 28, 200
http://phx.corporate-ir.net/phoenix.zhtml?c=100529&p=irol-reportsAnnual ,reviewed August 3, 2008
http://insidenikerunning.nike.com/2008/07/09/july-9-2008/ , reviewed August 3, 2008
http://nikeplus.nike.com/nikeplus/v1/pdf/English.pdf)
http://www.ilounge.com/index.php/news/comments/nike-profit-boosted-by-nikeipod-sales/, reviewed August 1, 2008)