Pest Analysis Of Nike Essay
Pest Analysis Of Nike
Follow the steps of entering international markets, analyze the target potential markets external environments using PEST analysis model.
Target potential customers and market
Nike typically targets athletes, men and women generally from the ages 15-30. Their target market is people who are active and enjoy higher quality sporting goods and merchandises. NIKE targets all regions with their geographic expansion. Under its Golf brand, Nike sells golf balls, golf clubs and apparel for both men and women. Nike should continuously develop innovative and stylish golf products to command premium prices. Most people would appreciate as Nike Golf brand has good marketing relationship with Tiger Woods which is a world renowned golfer. For example, Nike Golf’s SQ DyMo driver offers players the ability to customize perimeter weighting to again promote a specified ball-flight. Therefore, sales of golf accessories like golf clubs and golf balls along with footwear assure an additional revenue stream for Nike. If Nike could continuously develop its Golf brand, the target customers would be those people who play golf.
Nike is a global company based in United States. However, the US economy is experiencing a downturn right now. During economic recession, the income of the customers would decrease. Golf is actually a high class activity as the equipment needed is quite expensive. Therefore, the demand for superior goods would decline and the number of purchases by the consumers will be continuously slowing down. If there is Asia economic crisis, Nike would also be influenced as Nike mainly set up its factories in China due to lower labor cost. However, due to the appreciation of Renminbi, the price of raw materials and labor costs also increase. This result in higher production cost when producing products of Nike. The economic growth of the company would be seriously affected. For example, Nike’s golf market share has decreased from 4.8% in 2007 to 4.3% in 2009. However, as Nike is a strong brand coupled with product innovation and marketing initiatives, it would put Nike back on a growth trajectory.
Economic policies created by the government would certainly have impacts on the growth of the company. Luckily, Nike was benefited from the US policies which enable it to advance its products. As the interest rates there is quite low and currency conditions are really stable, Nike could therefore gained help from this.
Changing of lifestyle would be one of the social factors. Nowadays, people yearn for a healthier body and life. As a result, people would like to go to some do exercises such as playing golf more fequently. What they need is a pair of healthier sports shoes and some comfortable apparels. With an increase in demand for those products, Nike has to produce and supply more golf products. However, the sweatshop problem of Nike is becoming more and serious, a negative brand image would be created if Nike is failed to manage it well. This would cause bad publicity and declicing sales because the society demands more socially responsible companies.
Nike uses IT in its marketing information systems very effectively. It applies marketing information systems to the economics of innovation, segmentation and differentiation for most of its businesses. Nike’s leadership status owes in large part to the use of extremely valuable Information Technology, and applying it to every aspect of the product from development to distribution.