Nike: Expansion and Consumer Relationship Construction

Categories: Nike

This paper seeks to outline the brand marketing strategies used by Nike to maintain its global competitiveness. Nike appears to operate with two main objectives: to expand geographically and through deeper market penetration, and to build profitable consumer-brand relations. The former is achieved in part through successful brand portfolio management and subsequent marketing tactics. The latter is realized in part through raising brand recall and relevancy, which will result in brand esteem. In so doing, Nike combines the benefits of retaining old customers and acquiring new ones, all the while seeking out any possible means of cost savings.

Business entities seek success in the form of sales, profit, and market share. Nike finds new customers directly through geographic expansion and continued market penetration, both of which inherently contribute to increases in sales and profits. This process of broadening brand appeals would ordinarily lead to the dilution of the flagship brand and its meaning; but Nike has prevented this with two tactics.

The first is to change its brand meaning from a running shoe brand to a sports equipment and athletic lifestyle brand, allowing for products ranging from soccer cleats to winter coats. The second is to disassociate new products which are too unrelated to its core identity via distinct brand names, such as with Converse or Cole-Haan. Nike’s brand strategy likely focuses exclusively on recall rather than knowledge as a whole because brand awareness is more important than understanding in its current situation. The athletic apparel and equipment industry standard are to constantly release newly innovated products and to invest heavily in media ads and distribution; thus, it is through diverse portfolio expansion, endorsements, and collaborations that Nike is able to achieve its competitive advantage.

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Each of these tactics assist in the psychographic, demographic, and/or geographic expansion of the brand by promoting recall and relevance, which results in esteem. This article investigates the relationship between brand equity and several equity risk measures. Our results mainly suggest that strong brands experience lower total equity risk and unsystematic risk, confirming the findings of previous studies.

Furthermore, we do not observe any relationship between brand equity and systematic risk. Indeed, the effect of brand equity is found to be significant only for downside systematic risk. strong brands enjoy relatively lower volatility in stock returns during market downturns, implying that, in unfavorable economic conditions, investors consider strong brands “safe havens.” Moreover, the findings of this research support the notion that a sizable proportion of a firm’s market value may emanate from its intangible resources and that organizational performance seems to be affected by intangible resources, such as brand equity, innovation, and customer relationships. As competition in the global manufacturing industry intensifies, the profits that manufacturers obtain from products are decreasing. To survive in this situation, many manufacturers, including IBM, GE, Michelin, Toyota, etc. have transformed their business models from being providers of products to becoming providers of both products and services. This transformation of manufacturers, which is called servitisation, has become an important developing trend in the manufacturing industry. Servitisation is defined as ‘the increased offering of fuller market packages or ‘bundles’ of customer focused combinations of goods, services, support, self-service and knowledge in order to add value to core product offerings’. Servitisation shortens the distance between the manufacturer and the consumer and makes it more likely that the manufacturer will satisfy the consumer’s underlying needs. Thus, manufacturers can earn profits and achieve sustainable development during the process of servitisation. Because the services that the manufacturer provides in the process of servitisation can add value to the product, meet consumers’ demand and improve manufacturer’s profits, the services are called value-added services.

Conclusion

In conclusion, Nike has achieved an unrivaled global dominance in the athletic apparel industry by keeping a close eye and a steady hand over two key objectives: expansion and consumer relationship construction. Furthermore, Nike is meticulous in its efforts to achieve marketing synergies through the use of tactics that accomplish more than one marketing goal, thus greatly reducing marketing expenses by reducing the amount of marketing activities needed. In the process of servitisation, manufacturers provide not only products but also value-added services. With regard to consumers, they can choose to buy value-added services at the time they buy products or they might wait to buy the services when they need them in the future. The time at which consumers choose to buy the service also affects manufacturers’ profits. To improve profits, manufacturers always adopt the pricing strategy that they charge consumers a relatively low price when they choose to buy the services simultaneously with the products and charge them a relatively high price when they choose to buy the services in the future.

Cite this page

Nike: Expansion and Consumer Relationship Construction. (2021, Apr 26). Retrieved from http://studymoose.com/nike-expansion-and-consumer-relationship-construction-essay

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