NIKE COMPANY
Marketing Strategy (NIKE COMPANY)
Instructions:
The below is the structure that candidates must follow for this report:
Part 1.
Title page
Executive Summary
Table of contents
Introduction
Situational analysis – (PESTLE) (SWOT)
Competitive advantage (USP)
Evaluation of current marketing strategy
Part 2.
Segmentation Targeting & Positioning (STP)
Recommended objectives and goals (SMART)
Recommend marketing strategies, based on the application of the marketing mix to your chosen brand.
Conclusion
Bibliography (with references)
Solution
Marketing Strategy (NIKE COMPANY)
Executive Summary
Nike is a
multinational company based in the United States. The company is one of the
major suppliers of sports equipment globally. Consequently, it is paramount to
assess the factors affecting the company in the form of SWOT, PESTEL, USP and
STP analysis. This highlights any shortcomings of the company, which undermine
its optimal performance across the globe. The strategies used by the company
should also be assessed and reviewed for weaknesses and inconsistencies. This
enables improvements as required while enforcing the desirable implementations.
The assessment also enables easy identification of trends within the company’s
performance for evaluation and goal setting purposes.
Table of Contents
1.5 Political factors affecting NIKE.. 7
1.6 Economic factors affecting NIKE.. 7
1.7 Social factors affecting NIKE.. 8
1.8 Technological factors affecting NIKE.. 8
1.9 Environmental factors affecting NIKE.. 8
1.10 Legal factors affecting NIKE.. 9
3. Competitive Advantage (Unique Selling Proposition). 9
4. Nike Marketing Mix Strategy. 11
5. Segmentation, Targeting and Positioning. 13
6. Recommendation of Goals and Objectives (SMART). 15
7. Marketing Strategies Recommendations. 15
Nike is a company based in the United States of America. It is a multinational company, which engages in design, development and manufacturing, alongside worldwide marketing and sale of products such as footwear, sports equipment, apparel, services and accessories (Sutherland, 2012, p6). The company is one of the major suppliers of athletic footwear and apparel. The company has a vision of empowering athletics in their sport endeavours without any limitation on which person can participate (Knight, 2017, p5). A track athlete, Phil Knight and Bill Bowerman, his coach, founded the company under the name Blue Ribbon Sports. Ever since then, the company has evolved in both name and size, into the major corporation that supplies majority of sports gear around the world. Nike has put in place many marketing strategies that enable it to thrive on a global scale.
A SWOT analysis is a thorough assessment of strengths, weaknesses, opportunities and threats (Alan, 2016, p4).
One of the major strengths of the NIKE Company is its global recognition as a brand of sportswear and footwear (Ozanian, 2014). As a result, the company can target the market at a global scale, reaching a higher amount of the population (Shankar, et al., 2012, p289). Another key aspect is the outsourcing of all aspects of production to the overseas facilities, ensuring that the company is not in charge of any form of manufacturing outlet. This ensures that the company can focus on other activities such as research, design and development. This also saves labour costs, which would be incurred in the traditional form of manufacturing.
NIKE’s major weakness is its overreliance on footwear. This introduces the overdependence on a single segment (Shankar, et al., 2012, p172). This also impedes diversification, as other accessories such as apparel are overlooked, which could be a major income source. The company also distributes through retailers, who also stock other brands’ products. As a result, exclusivity of the company’s products is not upheld, as exclusive retailer outlets have not been established.
The company has a wide range of opportunities for improvement of overall performance in terms of income. This includes the expansion of the product line produced. High value products such as jewellery, sunglasses and watches can be produced on a larger scale, providing alternatives to the over depended upon footwear products (Funk, 2016, p174). Emerging markets such as India and China consist of consumers that aspire to the western lifestyle. The capture of this emerging market would provide numerous opportunities to increase exposure of their products.
One of the key threats faced by the company is the competition. Other brands in the sportswear business are quick to adapt to NIKE’s innovations by providing alternatives (Funk, 2016, p168). This can easily alter the company’s share of the market. Another threat faced by the company is the nature of international trade. Since NIKE is involved in buying and selling of commodities in different countries, the margins and costs incurred are not stable over long durations. This may lead to manufacturing or selling at losses. The price consciousness of the consumer is also a major challenge, alongside the demand from retailers for higher margins. This could result in incurring losses or loss of their market share.
This is the analysis of the external factors that influence the company’s environment (50Minutes.com, 2015, p6).
1.5 Political factors affecting NIKE
Cooperation with the government initiatives such as transparency in their global value chain also benefits the company within the United States (Blakely, 2011, p19). Stable political conditions in the major markets of the company presents growth opportunities for the company to expand its market reach within the countries. The expansion of free trade policies also facilitates the market penetration of the company in the overseas markets. Increased support for development of infrastructure in developing countries further presents opportunity for expansion of NIKE operations in their markets. Therefore, NIKE experiences opportunities that enhance its presence in the market and global expansion in its sportswear, footwear and overall equipment and apparel.
1.6 Economic factors affecting NIKE
The business performance of NIKE is dependent on the state of economy within the countries it engages in sale of its merchandise. For instance, the economic stability of developed countries such as the United States provide an adequate opportunity for the slow but steady growth of NIKE within them. Developing countries whose economy is expanding, also present an opportunity for the increase in operations of the company. The growing markets in the developing countries also offer an opportunity for growth in the customer base NIKE products. On the other hand, the rapid growth of the developing markets also poses a threat to the company, through the increase of labour costs incurred in the supply chain cost and overall production. Additionally, the decrease in growth of economy of China poses a threat, as the country offers a major market for NIKE’s products. Increase in the individual wealth within developing countries increases the opportunities to be tapped by the company.
1.7 Social factors affecting NIKE
Social and cultural issues affect the appeal of NIKE commodities, as they determine the attitude and tendencies regarding the NIKE franchise. Involvement in sporting activity tends to attract large customer base. As a result, the current rise in the levels of awareness regarding health and the accompanying fitness has led to an increase in the market available in various countries (Securities and Exchange Commission, 2015). The economic growth in developing countries results in increase in the social status of individuals, whom want to be associated with well-known brands. As a result, the popularity of the NIKE merchandise attracts the individuals, increasing the customer base.
1.8 Technological factors affecting NIKE
Technological advances affect the business environment. The advances in technology have made investment in research and development a frequent task (Park & Doris, 2010, p189). As a result, competing firms can easily engage in research to gauge the prevailing conditions within the market. The rapid obsolescence of technology also imposes pressure to increase the efforts directed towards product development, in order to integrate emergent technology (Khan, et al., 2013, p300). The extensive use of mobile phone technology and the internet of things provides an opportunity for application of technology in the business. This enables wider and more extensive reach of the market’s customer base through tools such as mobile applications, advertising and online transactions. However, despite accelerating processes within the company’s structure, it may contribute largely to replacement of workers, resulting in increased unemployment.
1.9 Environmental factors affecting NIKE
Issues involving the ecology and macro-environment influence the activity of NIKE. As a result, the company must comply with the set environmental law. The expansion of environmental law provides opportunity to improve sustainability and environmental programs, which enhance the public image and recognition of the company through environmental and social responsibility (Vance & Paik, 2015, p7). The sustainability programs employed can further be used to address climate change, which affects the supply chains and appropriateness of NIKE apparel within a given region. On the other hand, sustainability programs from other competing firms impose pressure for increase in sustainability efforts in the industry.
1.10 Legal factors affecting NIKE
Since the growth of NIKE is reliant on internationalization, the company should adapt to policies and legal framework of its trading regions (Vance & Paik, 2015, p150). Improvements in employment law in NIKE’s trading countries increases labour costs, within areas of production. On the other hand, expansion of consumer law within the developing countries presents an opportunity of assessing customer satisfaction while expansion of safety and health regulations provides opportunity for application of higher standards concerning safety and health. Failure to comply with these regulations results in deterioration of the brand’s image, such as cases of underpayment. (Funk, 2016, p180). NIKE has been positively affected by the U.S government policies, which tend to be growth oriented. This creates a conducive environment for growth of the company through factors such as currency exchange stability, low interest rates and competitive tax arrangements.
3. Competitive Advantage (Unique Selling Proposition)
One of the competitive strategies used by NIKE Company is the USP. This strategy involves a company advertising to their customers informing them of the advantages that they will gain when they use the company’s products (Niu & Wang, 2016, p874). The highlighted propositions are only associated with the company, thus, their unique nature. The management of NIKE understand the advantage of having a unique aspect in gaining a competitive advantage. The unique features attract the consumers in the target market and influence them into preferring the products from NIKE to the competitors’ products (Talabi, et al., 2012, p30).
One of the USP strategies used by NIKE is providing products that it strengthens the users’ feet (Newman, 2011). The company uses technology to ensure that the shoes it manufactures strengthen the feet. Highlighting this fact in the adverts helps the company gain a competitive advantage in the market. The customers interested in making their feet strong therefore opt to buy the shoes from NIKE. The feature helps NIKE get a competitive advantage since the competitors’ products do not have the same feature (Copley, 2014, p236).
The unique features of NIKE footwear further include its ability to reduce injuries (Newman, 2011). People are often injured when running or when they participate in other athletic activities. The company understands this problem and aims at improving the experience of its customers by manufacturing the products that protect the consumers from getting hurt. For example, the sports shoes that the company supplies in the market incorporate innovations that prevent the legs of the users from straining. While using the shoes from NIKE therefore, they can achieve their sport related dreams.
The USP strategies used in NIKE further include the use of a logo that is a tick. The tick is meant to pass a message to the consumer that the brand and its products are right for them (Sanusi, 2014). The logo brings to the attention of consumers a unique aspect of the company, which producing products that suit the needs of the consumer. The tag line “just do it” accompanies the logo. This tag line encourages the consumers to pursue their dreams especially those in line with sports. This influences the consumers into buying sportswear from the company thus a competitive advantage.
4. Nike Marketing Mix Strategy
The Nike Company mainly relies on the marketing mix for maximization of profits and overall growth of the company. The marketing mix refers to a combination of tactics and strategies used by a company to execute its plan for maximum exposure in the market and the returns on products and services rendered (Michael, et al., 2016, p230). These tactics are referenced with respect to four main variables: product, promotion, price and place, commonly called the 4Ps. Ever since the establishment of the company in the year 1964, the routine and practices in the company have evolved and adapted in accordance with the prevailing conditions and dynamics experienced in the global market of shoes, equipment and apparel. This is achieved through modification of the marketing mix to suit the sports market, which ensures that Nike remains one of the leading firms on the global scale.
Product Mix
Product mix refers to the range of products offered by the company (Michael, et al., 2016, p240). The product mix element of the marketing mix that enumerates the outputs offered by the organization to target customers (Rahmani, et al., 2015, p100). Nike offers a vast range of products such as apparel, shoes and equipment. These are the current products that are top selling, which are all specialized equipment and clothing for sporting activity. Shoes are the major product offered by Nike. This includes running shoes, alongside other athletic activity such as basketball, lacrosse, tennis and soccer. Other sport products offered also include jerseys, shorts as well as gear for wrestling, cycling and aquatic activity. In order to suit the specific needs of the activity, Nike has recently introduced shoes designed specifically for a given activity. For instance, cricket shoes have been designed 30% lighter than the rivals’ have. Nike also has incorporated a feature, NIKEiD, which allows clients to design customized footwear based on pre-existing models.
Positioning (Distribution)
This refers to the distribution of commodities in order to avail them to the customer (Michael, et al., 2016, p245). Multi-brand stores alongside exclusive stores worldwide distribute the Nike franchise. The company has approximately 20,000 retail outlets in the United States and distributes the products to around 200 countries. Within the international market, the products are distributed via independent distributors, subsidies and licenses. In order to supply the product to the numerous outlets, the company uses numerous manufacturing facilities that are distributed on a worldwide scale. The specific outlets for distribution of products include Nike town shops, which serve in major cities of countries, flagship stores- retail stores that are contracted by Nike to sell their products-, NIKEiD- an online store that serves customers on a global scale while offering customization services-, discount stores-, which sell the products at subsidized costs. Through the outlets, consumers are capable of easily purchasing the required merchandise that suits their needs.
Pricing
This aspect of the marketing mix categorizes the prices the company assigns to various products in order to maximize fully on profits while attracting the targeted portion of the market (Michael, et al., 2016, p247). The pricing strategy used by Nike is the value-based strategy of pricing. This is a carefully selected and evaluated strategy to ensure the continuity in the growth of sales and accompanying profits attained from the company’s merchandise. In this strategy, the company takes into consideration the perception of the consumers regarding the value of the products. (Masar, 2016, p40) This value is then used in determining the maximum cost that consumers are willing to pay in the purchase of Nike’s apparel, shoes and equipment. Consequently, the company enjoys maximum profits while emphasizing high value of the products, as perceived by the consumer.
Promotion
This aspect of marketing mix covers tactics used by the company to disperse information to the targeted market (Michael, et al., 2016, p250). Effective strategy is required in order to increase the awareness of the brand while maintaining a strong image. Nike’s promotional activity in order of significance are advertising, personal sales, direct marketing, sales promotion and public relations respectively. Advertising is the chief attraction to consumers. This is achieved through iconic figures such as sports teams and professional athletes (Tom, 2013). Additionally, sales personnel persuade consumers to purchase Nike products at retail outlets. Direct marketing involves persuasion of institutions such as colleges, sport teams and organizations (Tracy, 2011, p41). Discounts in form of sale offers are also used to attract consumers. The company also sponsors organizations, promoting the brand of Nike.
5. Segmentation, Targeting and Positioning
NIKE uses STP as part of its marketing strategies. STP is meant to help the company improve in its sales by increasing its competitive advantage (Armstrong, 2012, p402). The strategy involves dividing NIKE’s market into segments that are easy to reach. The company then devises strategies to use in the targeting of each of the segment. Finally, positioning strategies are used to ensure that the products are accessible to the different market segments (Cant, 2016, p104). The advantage associated with using this method is the ease of reaching everyone in the target market. The smaller segments are manageable and easy to satisfy as compared to when the company tries to satisfy a completely generalized market.
One of the segments in NIKE’s market is demographic based. This segment has the target market divided based on gender and age (Lutz, 2015). The company targets the women in the society. They therefore design and manufacture sportswear meant for women interested in sports. They further manufacture sportswear for men who engage in sports. The second demographic aspect that the company considers is the age. The company has a wide range of products meant for children. This segmentation ensure that everyone in the society regardless of the age or gender has at his or her disposal sportswear and can thereby be involved in the sports of his or her wish.
The second segmentation in NIKE is a geographic based segmentation. In this segmentation, the company separates the market depending on their geographical location. The company therefore has consumers located in different regions such as North America, Asia, Africa and Europe. The company further focuses its geographical segmentation on the specific countries when it reaches out and specializes in some countries such as the USA, China, Japan, India and many others (Ahmed, 2016, p12). By dividing the market into geographical segments, the company is able to customize the products to meet the needs of each market, which are different based on the cultures and preferences of each country or region.
The targeting process, on the other hand, involves the company using strategies that aim at informing the consumers of their presence. One of the targeting process it uses is liaising with well known sports people to attract people interested in sports. For example, naming the Jordan shoes after Michael Jordan (Ahmed, 2016, p12). Those who hold Michael Jordan in high esteem are easily attracted through this strategy. The company further sponsors sports activities or teams. Association with these teams or activities helps increase awareness of the company’s existence. The position strategies used in the company are meant to make the target market understand and view Nike as the leading company in selling sportswear. To achieve this, Nike gives statements meant to convince the consumers that Nike is the best sportswear company.
6. Recommendation of Goals and Objectives (SMART)
SMART goals and objectives should be short, measurable, achievable, realistic, and time-bound. The mission of the company is to be a source of innovation and inspiration to athletes across the world (Nike, 2017). As a result, promotion of participation in sports should be a key aspect of its goals Tracy, 2011, p106). This can be achieved by targeting introduction of sporting activity, especially in developing countries. This will encourage participation in sports within the regions while expanding the market of the company. This objective can be achieved through setting up of sports arenas to enable the locals to achieve full athletic potential while sponsoring of local tournaments in such regions would enhance competition. The goal of innovation of the company can be achieved through simple contests for designs, in which the winner is awarded. This would ensure continuous flow of ideas while enhancing creativity on a global scale. Since the company aims to inspire members of the community, short leadership programmes should be established to hone skills of employees alongside members of the community.
7. Marketing Strategies Recommendations
One of the methods that Nike could use to improve its marketing strategies is the introduction of online training sessions. This promotional strategy would work hand in hand with the existing promotional strategies in increasing awareness of the company’s products (Richter, 2012, p31). The company could also improve its marketing mix by increasing the countries that it has established its operations in the world. The company currently has its operations in 200 countries. Increasing the countries that it serves will increase the number of potential clients and its market share in the world’s market (Ramaswamy & Namakumari, 2013, p174).
The marketing mix used by Nike should also be improved by increasing the company’s product range. The company specializes in manufacturing sportswear alone. The products that the company chooses to add to its line of products could be sport related (Knecht, 2014, p71). This will increase the number of people it serves and thereby its profits. The pricing strategy however should not be changed. Nike’s use of the premium strategy helps convince that the products it sells to the market are of high quality (Smith, 2012, p127). Lowering the prices would make the consumers question the quality of the products, which in return would influence their decision against buying Nike’s products (Rajagopal, 2013, p99).
Evidently,
Nike has put in place many marketing strategies that enable it to thrive on a
global scale. The company incorporates the use of diverse marketing strategies
such as the marketing mix, the Unique Selling Proposition and Segmentation,
Targeting and Position strategies. The combination of these strategies enables
the company identify its target market, segment it, and create an appropriate
image for itself in the market. The use of the marketing mix on the other hand
helps the company position itself, price the products correctly, identify the
quality required by the market and the appropriate promotional strategies. This
has contributed to the company being the leading sportswear supplier. However,
it should adopt the recommended changes to increase the effectiveness of the
marketing strategies used.
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