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Nike in one of the world’s leading marketer, designer, and distributer of athletic footwear. Nike also offers other athletic apparel, equipment, and accessories for a variety of sports. It sells, distributes, and licensees its produces in approximately 200 countries around the world. Nike specializes in the industry of footwear. Nike achieves long-term revenue growth by building deep personal consumer connections, creating innovative must have products, and delivering compelling consumer experiences.
Nike is based out of Beaverton, Oregon. They work with contract manufacturers that invest in developing skills and capabilities of their employees.
They promote collaboration among workers and managers. They also collaborate with a wide range of stakeholders to think creatively and pool their skills to address risks and improve outcomes for contract factories, workers, and their communities.
Like all leaders in sportswear, Nike is also subject to risks associated with overseas sourcing, manufacturing, and financing. Declining global capital and market conditions threaten business, financial condition, and operating results.
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To combat this, Nike continues to innovate across all segments of the company. They will do this by leveraging new ideas, driving through new channels, expanding into new spaces, and divesting to invest.
Mission Statement ‘To bring inspiration and innovation to every athlete in the world’ If you have a body, you are an athlete.
Vision Statement ‘The Nike goal is to carry on his legacy of innovative thinking, whether to develop products that help athletes of every level of ability to reach their potential, or to create business opportunities that set Nike apart from the competition and provide value for our shareholders.
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The main focus of the company is to gain the leading role in the athletic market and increases its market share. It wants to produce quality products and innovative products for target customers. It will use three strategies to achieve these goals. Nike uses a value based/price leadership strategy. It offers customers high prices for its produces to create a niche market to serve with valuable products. It uses its market expansion strategy to expand its distribution channels all over the world through constant improvement in product lines. It has also relied on outsourcing strategies to outsources its product manufacturing. Nike continues to hold contracts with different countries like Japan, Indonesia, Chine, Vietnam, and Brazil.
Brand Image – This is a major strength for an international brand. Not only does this just mean higher popularity but also means higher sales and revenues. Nike has built a very strong image over time. It is known on the global market as an ethical, innovative, and customer-oriented brand. It is also known for excellent marketing, produce innovation, and good quality products. Its logo is easily identifiable and its fame comes from stylish products. It’s main focus on quality, innovation, design, and ethics has resulted in faster growth and a strong reputation.
Financial strength – Strong financial performance is a key strength. Nike holds a much stronger financial position in the US and global market. In 2017, Nike achieve record growth in earnings per share and in revenues despite continuing foreign currency headwinds.
Large and well managed supply chain and distribution network – A brand can achieve outstanding results with the help of a large and well managed supply chain and distribution network. Nike’s is quite charge. It is almost fully reliant on independent manufacturers for the production and supply of its products. It has thousands of stores internationally and websites in 45 countries. It also continues to work on new innovative models for getting closer to the customer.
Overdependence on the US market – Nike relies heavily on the US market for its sales and revenue. The US accounted for 46% of its revenue in 2017, where 54% came from outside the US. Nike has expanded quickly overseas, but the US market continues to be its biggest source of income.
Increasing marketing and overhead operating expenses – With the rise of competition in the apparel and sports shoe market, there has been a rise in related marketing expenses. In 2016 and 2017, they spent higher than 3 billion dollars on marketing. There was a 60-million-dollar marketing expense increase from 2016 to 2017 alone. Overhead operating expenses for 2016 and 2017 were also higher than 7 billion dollars.
High product price compared to Adidas – Another weakness is Nike’s prices when compared to some of its competitors. Adidas is one example of a competitor whose price for a similar product is drastically decreased when compared to what Nike charges.
Digitization and product innovation – Nike needs to continue to remain focused on digitization and product innovation in order to continue to grow. In the coming years, digital marketing and ecommerce are going to have the highest effect on growth and profits. Competitors are investing heavily in these areas. If Nike focuses on these things it will affect the consumer experience as well as its sales and profits.
Acquisitions – Acquisitions can offer a very good method for Nike to find growth faster both nationally and internationally. To do this, Nike can acquire related businesses.
International expansion – If Nike wants to see faster growth, it will need to focus on faster international expansion. It is currently operating websites in 45 countries. By exploiting both ecommerce and physical retail channels it can see faster overseas expansion. This will also help to reduces its dependence on the US market.
Increased competitive pressure – There is rising competitive pressure in the sports shoe and apparel industry. Nike is feeling this pressure which has led to growing investments in marketing as well as operations. Competitors such as Adidas and Under armour are also focused innovation and investing in marketing, which has led to higher competitive pressure on Nike. Nike needs to retain its focus on innovation, product quality, and supply chain management in order to manage the competitive pressure.
Growing human resources and marketing expenses – Due to the growing size of its business, the human resources and marketing expenses of Nike have also grown quickly. The brand is also experiencing higher wage related and compensation expenses.
Higher legal pressures – Due to compliance on international businesses, the legal pressures have grown globally. Compliance related costs are also increased. Regulatory standards must be complied with as failure can lead to financial losses as well as risk the brand’s reputation.
Nike has the following segmentation to create consumers groups to target:
Nike has segmented an age and gender group that is it has such products that serve male and female that has age range of 15-55.
Nike has this segmentation to answer why consumers need its products and what the consumers interest and purchasing habits are. There are a few divisions in this segmentation - sports or athletic oriented and active lifestyle (interest in fitness and exercise for recreation).
Nike has segmentation to serve its target customers all over the world. It has major markets in USA, Asia-pacific Europe, Africa but it has continuous objective to cater markets in other countries as well like North-America, China, Japan, and Middle-East etc.
For market segmentation, Nike has niche market to serve. Nike focuses and targets athlete or sportsperson segment. It then provides required products to them as footwear and apparel products, which have quite specific and unique feature as compared to other footwear products.
Target strategies of Nike include:
Target strategies include aggressive marketing. This is to make target consumers aware of its products and enable them to get their desired products through customization process. Athletes or sportspersons are offered their own signature shoe (i.e. Michael Jordan to have his shoes names Jordan’s).
Another targeting strategy includes sponsorship of Nike’s produce through a sports team or through celebrities. It styles its produces through psychological tactics on target market. IT does this by linking success with apparel. This way its produces are viewed as victorious when sponsorship is done by an athlete or celebrity.
Lastly, Nike established a targeting strategy in 1989. Nike cross training was established to cater to athlete participants all over the word and train different sports activities.
Nike has positioned itself as the leader in sports goods. It makes products to satisfy its niche market with all produces related to sports. It uses its slogan ‘Just do it” to make an appeal to target customers. They buy the produce with a sense of inspiration and confidence which has made it a major competitor in the athletic industry. Nike states “For every serious athlete Nike provides perfect shoe or sports products that gives confidence for every sport activity”. It positions itself by using strategies that enhance athletic lifestyle, appeal to style and attitude, appeal to quality level and valuable products. Nike also positions itself as a premium brand with well-designed products.
Nike has a leading role in marketing and one of the strongest marketing mixes. It offers a wide range of products which include shoes, equipment, and apparel. These are top selling product categories and are all specialized for sports products.
Nike offers running shoes. In addition to these, it also offers baseball, tennis, ice hockey, soccer, basketball, lacrosse, and other ranges of sports products such as cricket shoes, racing shoes, and other outdoor activities.
Nike also offers a sub brand which allows customers to design their Nike footwear through offering a selection of shoes. Customers can choose what they want – different colors and fabrics, etc. Customization allows the customer to create different designs in large quantities. They do not have to design the shoe themselves but can purchase a selection of premade designs.
Nike’s pricing strategy is more competitive than other retailer shoe companies. It is bases on the basis of target customers as a premium segment. It commands a high premium and uses pricing strategy to make use of vertical integration. Differing channel levels or roles in operations levels offer more than one channel to control cost and impact product pricing.
Nike’s strong branding has made it so well known that many people pay more money for this product. Nike uses cost based/value based pricing to target customers in its niche which have the financial capability to purchase the product as a status symbol.
Nike shoes are sold by other multi brand stores and also by exclusive Nike stores worldwide. Nike sells its products in about 200 countries worldwide and 20,000 retail accounts in the United States. Independent distributors, licensees, subsidies sell Nike products in the international market. There are also manufacturing facilities located worldwide as well as customer service and other operational units. Nike has long term plans to open more stores and franchises to reach target customers and to expand the maximum buyers.
Nike has an effective marketing communications mix because it attracts new customers and creates a balance between keeping existing customers. It has introduced its offers to most environments and is extremely sensitive. Nike uses print advertisement, commercials, celebrities, and billboards to make its target customers aware of its offers. Nike also uses television and social media. It sponsors events such as The Golden West Invitational. Its brand image is also one of the most recognizable brands in the world.
Nike’s marketing campaigns are effective. It is a global brand and the number one sports brand in the world. Nike’s revenues have grown at an annual rate of 20% and the return on investment is about 47%. It dominates the world’s athletic footwear market by appealing to a particular customer. Nike creates a way of life as a sports culture. They appear to care about customers’ lives which ensures that each customer relationship remains profitable.
Nike has a very targeted customer demographics and geographic segment. Their successful strategies of segmentation, target marketing, and position have resulted in an increase of customer retention and sales. These activities have proved beneficial for Nike’s performance. It is ranked number one in the United States and top five in European markets. It is clear that Nike has very powerful competitive advantages, which include their innovative brands and products.
Nike can continue its success by ensuring its correct marketing plan through controlling procedures of top management and with proper guidance to all departments. Objectives of the company can be achieved by checks and balances of their market share, sales, profit, budget, and continuous analysis of their departments. It can be seen from this analysis that Nike has great potential to execute its objectives and offer new produces and expand its share by looking at its overall strategies and objectives.
Marketing Analysis of Nike Company. (2021, Mar 18). Retrieved from https://studymoose.com/marketing-analysis-of-nike-company-essay
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