Nike + iPod = Sport Kit hit?

By Knowledge@Wharton Tuesday, 01 August 2006

Two of the world's most iconic brands, Apple and Nike, have joined forces for their latest gimmick: the Nike+iPod Sport Kit, a system that allows runners to exercise to the beat of their favourite tunes and receive data about their exercise session. The Kit is genius branding, but will it actually sell more iPods and Nike shoes?

The $29 kit is made of two gadgets: a receiver that plugs into an iPod Nano, and a transmitter that fits into the sole of specially made Nike shoes. In terms of marketing, experts are unanimous in the synergy between the two brands. "It's a way to integrate Nike into the iPod culture and integrate iPod into the running culture," says Patricia Williams, professor of marketing at Wharton. "It's quite a smart move."

The alliance also sends a positive signal that both firms are cutting edge and keep on innovating. But whether this signal will actually convert into more sales is dubious.

The product has a few shortcomings, which may act against high volume sales. The Kit only works with iPod Nanos. Yet Apple has produced several generations of iPods, as well as Minis, Shuffles and Videos, none of which can fit the receiver. Besides, if either the receiver or the transmitter breaks, a whole new Kit has to be purchased.

Who the Kit will appeal to is also another limitation. 'Serious' runners have traditionally sniffed at Nike shoes and have long known about pedometers and heart monitors. Crucially, the Sport Kit does not provide heart rate, which is probably the single most important piece of information for athletes.

The audience, instead, is more likely to be the rising 'sport fashionista' segment. Fashionistas choose their sportswear as a fashion statement, and the iPod and Nike shoes fit their hip style. "Unfortunately, the Nike+iPod Sport Kit goes in the shoe and cannot be easily identified," Americus Reed, also professor of marketing at Wharton says. In that sense, the Sport Kit would just blend into a 'normal' iPod or Nike shoe.

Nike also said they would rely on word-of-mouth publicity rather than traditional advertising, which may be inconsistent with the targeting of 'trendy runners'. But Williams thinks that the Sport Kit may just be the first in a long series of associations with other brands and activities.

"What's interesting about the MP3 player phenomenon is consumers use them everywhere as a complement to almost any activity they undertake," she says. "The question is how Apple can leverage the iPod's position to become more integrated into those activities as opposed to being just an accessory."