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Table of Contents

Executive Summary....................................................................................................................................... 3

1.0 Introduction ............................................................................................................................................ 4

1.1 The company Background....................................................................................................................... 4

2.0 The Market Environment ........................................................................................................................ 4

2.1 Primary Business ................................................................................................................................. 4

2.2 PEST-G Analysis ................................................................................................................................... 4

2.2.2 Economic .......................................................................................................................................... 5

2.2.3 Social ................................................................................................................................................ 5

2.2.4 Technology ....................................................................................................................................... 5

2.2.5 Environment/Green ......................................................................................................................... 6

3.0 The competition ...................................................................................................................................... 6

3.1 Competitive Profile Matrix .................................................................................................................. 6

4.0 The company ........................................................................................................................................... 6

4.1 Sale and Profit Trend........................................................................................................................... 7

4.2 Market Share....................................................................................................................................... 8

4.3 SWOT analysis ..................................................................................................................................... 9

5.0 The Companys Marketing Strategy ........................................................................................................ 9

5.1 Segmentation & Targeting .................................................................................................................. 9

5.2 Marketing Strategy and Positioning.................................................................................................. 10

5.3 Differentiation Strategy .................................................................................................................... 10

5.4 Growth Strategy ................................................................................................................................ 10

5.5 Perpetual Map .................................................................................................................................. 10

6.0 The marketing mix ................................................................................................................................ 11


6.1 Product Mix ....................................................................................................................................... 11

6.2 Product Life Cycle.............................................................................................................................. 11

6.3 Price Mix............................................................................................................................................ 12

6.4 Place Mix ........................................................................................................................................... 12

6.4 Promotion Mix .................................................................................................................................. 13

6.5 Boston Growth-Share Matrix ............................................................................................................ 13

7.0 Evaluation of the companys Strategies and Tactics ............................................................................. 14

7.1 Brand Positioning .............................................................................................................................. 14

7.2 Ansoff Matrix ....................................................................................... Error! Bookmark not defined.

7.3 Recommendation.............................................................................................................................. 14

8.0 Conclusion ............................................................................................................................................. 15

References .................................................................................................................................................. 16
Executive Summary
Nike leads the market in the footwear and sports apparel. Since its establishment Nike has
grown to be a marketing force, sustaining its revenues till date. Although it started as a shoe
company, Nike as a company diversified itself along the its journey and took over many brands
which supported Nike in the relentless shoe market. Nike as a brand is loved by all of its
consumers, whom drive the company profits annually and by the investors whom have led
Nikes stocks to a high price of $90

Nike decided to focus on its marketing strategies, strengths and design by outsourcing product
development. This raised issue to human right activists by highlighting Nikes contracted
employees conditions in lieu to be resolved.

Nike shows devotion to its products, company and athletes by providing its customers with
promise and comfort whilst finding innovative ways to create and connect themselves as a
company to its consumers. They follow their branding policy: Inspire, focus, innovate, connect
and care.
1.0 Introduction
This report focuses mainly on Nikes athletic sportswear. We will look into how Nike has
used its marketing strategies to lead the market and compete with its competitors grabbing
market share and reaching out to customers worldwide to be a stellar brand choice.

1.1 The Company Background


Nike is deemed to be the winged Goddess of Victory commonly known in Greek
mythology. (Nike consumer affair, 1996) Founded in 1978 Nike has exceptionally grown
according to Von Borries adopting different advertising strategies whilst attempting to reach a
globally known brand identity. Nike, Inc now is one of the largest shoe distributer and producer
of athletic footwear, equipment, and apparel globally, with sales reaching up to 25.1 billion in
revenues.(trefis Nike Over view, 2014) Nike marketed its products under several different
brands such as Converse, Nike golf and Hurley. Nike routinely outsources product
manufacturing to Asian regions whilst focusing on product innovation and designing. Previously
Nike had extended its line of products through brand namely Umbro and Cole Haan which were
later sold by Nike as they were taking away the companies brand image. Nikes headquarters is
distinctively located in Beaverton, Oregon. (Nike Inc 10K, 2014)

2.0 Nikes Geographical Environment


Nike's geographical business comprises of significant markets such as United States and
Europe. By late 2009 Nike published its desire to recontruct its brand through 6 geographical
sectors, this was due to increase the companys focus core marketing areas thus catalyzing its
efficiency and creating secure customer relations. The new reorganized model consists of 4
regions namely the US, EMEA, Asia Pacific. (Nike News, 2009)

2.1 Primary Business


Nikes primary products range from accessories, foot wear to clothing for sport wear. At
the beginning Nike only targeted sports people, but later revised their strategy plan to enter
different market segments.

2.2 PEST-G Analysis

2.2.1 Political
It is the main responsibility of every government to influence macro economical and
micro economic conditions that guarantee to impact on the growth and development of a
business or organization. The US is aware of this and has greatly empowered Nike by its
marketing policies, thereby allowing them to develop and innovate their products greatly
(Robert, et all 1988) The support provided to Nike by the governments, notably are in the
macroeconomic regions with consistent currency conditions coupled with low-investment
rates, and international tax systems; structure the establishment that is basic to Nike's
development. Nike's main manufacturing facilities lie in the Asian regions such as Thailand and
Vietnam where increasing amount political distresses exist. The constant uncertainty of these
political systems ends up in a disruption of distributing channels, offshore direct investors and a
higher tax on import and fare. This political unrest in the Asian region may influence Nike
growth. Another political factor is the utilization of under aged workers in the manufacturing
plant. (Saleem, 2010)

2.2.2 Economic
The greatest risk for Nike is the financial downturn, which will bring about a downfall in
consumer sale, thus influencing the product development of Nike and ultimately its growth as
an organization. Increasing cost of labor work force and raw materials add up to the expenses
resulting in a hard hit profit margin reducing overall net revenue of the organization. Nike being
an international company is exposed to the global nature of exchange. Purchases and sales are
made in distinctive currency, this subsequently also increases expenses due to the
unsusceptible currency rates (Forbes, 2012).

2.2.3 Social
In recent societies the general population today is conscious of brands; consumers
would want to purchase products that have value attached to them. Fortunately, this poses an
advantage to Nike as it is the most prominent sports mark worldwide. In the surge of present
day youth esteemed needs, most would now want more designer based products for
recreational use rather than fitness needs.
Nike additionally confronts another issue with their manufacturing plant conditions that
the labors face in the Asian region. This resulted in tarnishing Nikes reputation, which in turn
decrease sales as people became more socially aware of the preceding situation faced by the
workers. Lifestyle trends have newly led Nike to a new market largely consisting of women
shoppers (Great speculations, 2013).

2.2.4 Technology
Nike has incorporated an innovation based strategy to create its items quickly. Since
Nike is a designer brand, its designs must continue evolving to keep up to date with the ongoing
trends otherwise products could grow to be out of fashion before customers replace their
shoes. Nike makes sure it has the latest manufacturing technology for its product development.
2.2.5 Environment/Green
Nike makes an organizational goal to lessen the effect of each of its items on the
environment from designing to assembling, and disposal. Nike shoe engineers designed an
innovative approach to maintaining of their robust waste left from other shoes by converting it
to outsoles referred as REGRIND, which are accessible to everyone.

3.0 The competition


Nike is a sports giant among other dominant competitors in the athletic footwear market.
Nikes global share has grown in the past 4 years to about 18.6% at an above average industry
pace. This result can be linked with Nikes innovation and production line. Some of its key
competitors are Adidas, Puma, Skechers and Under Armour which has shown to be a future
competitor (deng, 2009)

3.1 Competitive Company Matrix

Source: (trefis, 2013).


The main competitors that Nike encounters in the market Are Adidas, Reebok.
Among the these, Nike has a .10% overall higher rating when compared to Addias and
rebook
4.0 The company
4.1 Sale and Profit Trend

Profit trends of Nike had declined to 43.2% in 2012; this was mainly due to higher cost
prices in developing the most sought over foot wear. This figure would then gradually increase
to 44.4% by 2014. Source : (Refis analysis 2014)

There is a recent increase in the demand for foot wear that is not designed for athletic
needs in Europe and the U.S; this poses great competition to Nike due to the low cost
producers entering the local and international markets. As a result Nike has focused on its low-
end footwear Converse
4.2 Market Shares

Market Share

Nike
28%
Others
41%

Adidas
20%

Under armour Skechers


7% 4%
Source: (Nike Inc, 2009).

Prior to Nike's ascent to predominance in the mid-90s, the market had been controlled
by Adidas footwear. While Reebok claimed 31.1% of the footwear market compared to Nike's
19.1% market share. Reebok's industry strength was an aftereffect of Nike's inability to foresee
the emergence of ladies sports apparel. Nike later had the capacity to recover its position in the
athletic footwear industry in the early '90's with the presentation of its "Air Jordan" shoes.
(Forbes, 2014)

(Source : Statista 2014)


4.3 SWOT analysis of Nike
Strengths Weaknesses
Brand Recognition High product prices
Effective marketing strategy Skiw response in the asian dustribution region
Superior product quality Price sensitive retail sector
Strong customer relation Business is seasionly oriented
Ability to innovate

SWOT

Opoutrunities
Threats
Further product development
Exposed to intertional trade
Internation reach
Exchange tends to be unstable over long time
New female segment
High competitive market
Mix of lifestyle and sports
Failiure to enforce property rights

(Nike, Inc 2014)

5.0 The Companys Marketing Strategy


5.1 Segmentation & Targeting
There are numerous points to examine when determining on how to sell a product and
whom to sell to. Nikes demographics are men and women aged 13 to 35, segmenting its
markets based on geographic locations, benefits wanted, gender and age.

On the account of age, Nike targets young teenagers to young adults. Nike
independently has a distinctive promotion strategy for the male and female segment with
relation to their culture and nationality. Furthermore Nike has started to target the women
segment. Nike also focuses on groups of different sports, whether big or small. Nike's goal is to
push its items in different nations that play specific sports. Case in point, Rugby promoted
goods are advertised more in Europe when contrasted with America, thus selling nation specific
products. Nike advertises a productive attitude and confidence towards its products, there by
targeting customers whom follow a fitness orientation. It likewise offers items to numerous
distinctive individuals who have diverse tastes, hobbies, and needs.

Most of Nikes customers are sportsmen giving the brand a distinctive, accessible,
measurable and profitable market segment to focus on. (Chris Fill, 2011, pg 230) Nike uses a
theory called 80/20 principle (Michael R. Et Al., 2001 pg 201) this theory derives that when a
company makes revenue of 80%, it has to consist from 20% of its regular customers who
purchase the brand. On this basis Nike keeps its constancy of product purchase. Nike attempts
to keep up these loyal clients who are brand dedicated by continually innovating products
(Beech, 2007).

5.2 Marketing Strategy and Positioning


Nike positioning products are shown off as a lifestyle along with a branding that
promotes self-confidence and attitude. This can be clearly seen in Nikes well known phrase
Just Do It. Nike, being a worldwide pioneer in the branding products industry, has created a
solid position for improving the physical way of life. Its Products offer an extensive variety of
decisions for everyone ranging from sport equipments, garments and athletic shoes (Deng,
2009).

5.3 Differentiation Strategy


Nikes main differentiation power lies on branding, its well-known performance centered shoes
and the relationship it has with leading athletes. Nike offers a wide range of products besides foot wear
and when it comes to sporting accessories customers see Nike being on the top spectrum of the
competition. This in turn creates a form of superior value in the eyes of the customers. This branding
tactic coupled with higher premium prices pertain a value added product that fans willingly pay more
for. Another form of differentiation Nike uses is where customers can design their own shoes on their
website and thus adding a touch of personal identity to their products.
The organization has likewise separated itself by collaborating with super star athletes,
whom play the recognition part of the branding and as a result empowering the organization to
achieve its target market, such as the famous basketball player Michael Jordan with the
branding Air Jordans Diversification too has played a role in leading Nike to create value to its
consumers.

5.4 Growth Strategy


Nike presently sees itself as a growth company; it has long been familiarized as a
performer. On its recent investor meeting, they unraveled their 2015 growth strategy. With a
revenue goal of 27 billion by the end of the year, Nike is grateful to their expansion into more
developed and aggressive market borders. Nike also looks onto their other acquired brands
such as Umbro to reach company targets, thus extending its reach in the world. Nike also
focuses on more direct customer relation by opening around 250-300 stores in the next 5 years
to accommodate the customer experience whilst positioning itself in premium shopping
locations (NKE: Charts, News)

5.5 Perpetual Map


Perceptual Map of Nike Foot Wear
HIGH PRICE

ADDIDAS NIKE

Skechers

PUMA
QUALITY

QUALITY
LOW

HIGH
LOW PRICE

Vertical
Horizontal Attribute
Attribute
1= LOW QUALITY 1= LOW PRICE
Equal mix of
5= Equal mix of both 5=
both
9= HIGH QUALITY 9= HIGH PRICE
NIKE 9 9
ADDIDAS 8 9
SKECHERS 7 8
PUMA 5 7

6.0 The marketing mix


6.1 Product Life Cycle
Nike

The sports footwear sector is in the growth phase of the cycle. As indicated by the
above diagram, Nike's income and net salary has been continually expanding at practically the
same pace throughout the previous five years. The rate of development in income and net
wage has diminished because of immersion and high rivalry in the business. Nike can keep up
its income by venturing into new market segments and with the use broad advertising.

6.2 Product Mix


Nike, Inc. is the worlds largest leading distributer of athletic shoes, equipment
accessories and finds itself to be a designer expert among the industry. The Nike brand offers 8
categories consisting of running, football, basketball, Mens training, Womens training, lifestyle
sportswear, action sports and golf. The basketball category includes Nikes brand Jordans and
mens training which include of baseball and US football products which lead the market sale.
Nike also markets products designed specifically for children and other athletic accessories for
leisure use such as tennis, cricket, walking, wrestling and other out-door activities. Nike also
sells performance product accessories which include bags, watches, socks, golfing clubs,
swimming goggles, bats, gloves and other equipments developed for sports activities. (Nike
10K, 2014)

6.3 Price Mix


The goods marketed will impact the price of the product. Nike utilizes a vertical
integrated pricing product technique; where by the organization tries to influence market price
and restrict costs. Using a premium based pricing product Nike attempts set a high-quality high-
standard product thus competitive in nature whilst targeting middle-class and top-class
consumers.

6.4 Place Mix


Nike has expanded worldwide to about 200 and more countries and around 20,000
retail stores in the United States itself. They also have factory outlets alongside Nike-Town
stores. Furthermore Nike uses its online official website to reach out to large communities
around to world to sell its products. Nike obtains profits through distributers and licensees
contracting with over 700 local multi-brand stores worldwide.

6.4 Promotion Mix


About 12 % of Nikes net profits are invested back to endorsing emerging products,
sponsorship deals and advertising. Most of Nikes advertisements are done through media,
billboards, posters and TV. Nike has sponsored numerous athletes in different sport activities,
such as the Brazilian football team and Tiger Woods for golfing.
In addition Nike sponsors a large number of events worldwide bring awareness to its
products even in the most remote of locations, events such as the Hoop It Up. Nike also
creates websites exclusive for different sports. www.nikefootball.com is one of them

6.5 The BCG Matrix

(Source: Adrienne, 2012)

Nike has secured its footwear in the market, establishing itself well into the diverse
segments. That being said Nike has a concentrated amount of competition in the market. Nike
must continually sustain its sales and improve its product line, thus placing them in the cash
cow category.

7.0 Evaluation of the companys Strategies and Tactics


7.1 Brand Positioning
Nikes current brand state is strong, this due to its strong customer communication. To
further understand this, the BrandDynamics will be used. It consists of 5 levels: presence,
relevance, performance, advantage and bonding (Hollis 2008)

Starting with presence, customer brand awareness through the use of Nikes products is
a standing point contributing to the recognition of its brand. Furthermore athletes support the
product by designing and actively using the brand; there by positively influencing customer
perception of high quality and performance which are associated with Nike.

Secondly relevance, consumers believe that Nike as a brand adds value based on the use
of products by athletes. Thirdly performance, consumers believe that the product will deliver
value to them this is re enforced by Nikes development by taking into consideration the inputs
of its customers and athletes. Fourthly advantage, customers in general feel the product
provides them with high performance and high quality. This comes from the first two levels of
BrandDynamic and lastly bonding, where Nike as a brand is viewed as the best option, this is a
result of Nikes focus on consumer behavior (Nike, Investor Relation 2010)

7.2 Recommendation
Formula One attracts a large number of viewers estimated around 6 billion every season
as compared to the Olympic Games drawing only 4.7 billion. According to a research group
(Mentil 2009), Over 55% of women watch races when compared to men which ranged to 75%
allowing access to a vast platform of audience targeting a variety of mixed population.
Furthermore china has become the largest viewer of Formula One totaling its spectators to 119
million during peak season following under china is Russia and India. Thus spreading to these
countries would amplify its market share.

7.3 Ansoff Matrix


The Ansoff Matrix (1979) is a marketing tool that aids in analyzing future growth areas
for Nikes strategic and product direction.
Existing Products New Products
Existing Market Market penetration Product Development
Increase of revenue in New product
the existing market innovation.
Penetrate extensively Better Understand
into existing market customers (Deng
Nikes Advertising 2009)
Campaign
Customer
satisfaction(Mullin,
2007)
New Market Market Development Diversification
Brazil Expansion to Products sold in
China emerging areas in the different market
Russia(AR 2008) sports industry segments
Formula One Strategic Growth
(Thompson, 2001,
pg569)

The athletic footwear is a competitive market; this reduces the capacity to grow in the
footwear segment. Therefore Nike can choose between diversification and market
development in the ansoff matrix. If Nike chooses market development, Nike can focus on
Formula One there by increase its recognition in China, Russia and other potential billion dollar
market (AR 2008). On the other hand if Nike decides to use the diversification path; the
organization would focus on innovating newer products or entering new markets. This requires
a high quality research to successfully enter them according to Shank (2009)

8.0 Conclusion
Nike has matured into an iconic brand (Holt, 2003) and has manifested itself into a
successful entity comprising of strong market strategies and branding. Looking ahead Nike
would need to increase its presence through social media and upcoming trending technology.
However Nike over exposure may lead to a repercussion due to their factory labor conditions.
The opportunities of growth in the future are is eminent for Nike. As indicated by Philip Knights
we invent markets (AR 2001)
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