Nike's Global Marketing Strategy - Term Paper Example

? Nike's global marketing strategy Table of Contents Table of Contents 2 Company Analysis 3 Strategic Analysis of the Past 4 Competitor Analysis 6 Analysis of Growth Opportunity or Threat 7 Recommendations 9 Reference 12 Company Analysis The world of 21st century is a world of zero geographical barriers. The evolution and speedy emergence of high speed internet connectivity has played a major role in the process of eliminating the physical challenges related to the existence of physical barriers among the countries, which previously played a major role in the process of gaining information and other access from countries around the world. It can be said that the rise of internet and high speed data connectivity and transmission services in various parts of the world has led to the rise of multinational corporations, who achieve significant rate of growth in the business by entering new and foreign markets in emerging as well as established economies around the world. Talking in these lines, it can be said that the rise of connectivity power has led to the significant amount of power transfer to consumers around the world, who increasingly look for high product quality as well as the ability to purchase highly branded products. This provided a significant amount of opportunity for Nike, a company with global presence and a series of branded product categories, whose demands are felt all over the world from various emerging as well as well developed markets. Nike, Inc. which has a significant number of business subsidiaries in various parts of the world is engaged in the processes of designing, development, marketing as well as sales of the product. The product portfolio of the company comprises of shoes, apparels, accessories and gear, as well as a host of highly innovative products which are mainly aimed at increasing the level of physical activity of human being, while providing the motivation to compete with others on the basis of their levels of activity. The product portfolio is targeted towards the individuals of various age groups and hence, the products are catered to the multiple segments comprising of men, women and kids. The product portfolio also serves the needs and demands of sports, clothing and gear related accessories for a variety of sports comprising of basketball, football, soccer. The product offerings of the company also include the requirements of running and training activities and requirements separately for both men’s and women’s (Nike.com, 2012). The company because of its apparel and footwear related accessories, falls under the sector of consumer goods. Talking in terms of global presence of the company, it can be said that the company has presence in all major markets around the world that comprises of the markets like Asia, American, Europe, Africa, etc. On an overall note, it can be said that the company has footprints in 170 countries, around the world (Investorguide.com, 2011) Talking about the market dominance, it can be said that the company is the largest manufacturers of sports goods, and accessories around the world. The company is also the one of the major sponsors for various sporting tournaments around the world. It can also be highlighted that the brand has multiple associations with various reputed sporting agencies around the world and because of that are often recognized as the official sponsors of advertising for various large scale major tournaments. It also needs to be mentioned that in the most recent times, the company’s brand image Nike is ranked at number 44, as per a study conducted WPP, which aimed to identify the top 100 brands of 2012 all over the world (WPP, 2012). Strategic Analysis of the Past Strategies are outlined by the companies of all sizes and dimensions in an attempt to cater to their target market as well as the target audience by the process of offering of their customized or specific products and services through effective segmentation, targeting and positioning of the consumers as well as designing a highly effective marketing plan. Designing an effective strategy helps a company to respond to the various competitive and market related challenges and pressures that keep on emerging from time to time. In an attempt to better identify the strengths of the company as well as to get to accustomed with the company’s business processes, a strategic analysis of the past is highly needed. The past strategic analysis of the company reveals that the company is highly focused and dedicated towards introducing innovation and highly advanced techniques in an attempt to optimize the level of performance for its original group of customers, which largely comprises of the athletes and sports persons around the world. The previously executed successful strategies have enabled the global company to achieve significant growth in revenues even in the period of downturn as well as review its focus on markets like Japan and China, which promoted a significant amount of future growth opportunities. The company’s strategy was highly focused on the process of implementing innovation in an effort to make its products environment friendly in nature. As a part of its previous long term strategy, the company was highly successful in eradicating environmentally harmful manufacturing from a highly popular product line, thereby making significant contributions towards the sustenance of the global environment. Also, the company has previously focused on integrating technology in its product as a part of its strategy for product developments, which significantly led to the process of the designing of a new line up of accessories and footwear products which has technology embedded in an attempt to motivate the user to participate in fitness and health activities (McGirt, 2010). Competitor Analysis It can be said that though the company Nike is a highly branded company, which is focused on the process of the delivering high quality products to consumers around the world. Yet, it has to be said that the brand has significant number of international and domestic, local competitors in various local and international markets worldwide. Talking in line of doing a competitor analysis for the globally present and highly popular brand, it can be said that the company’s closest competitor is the US market is Adidas, who competes significantly in terms of revenue earned by the sale of various products and accessories from multiple stores located all around the world. Apart from that , the globally recognized brands also faces a tremendous amount of competition from various other well known and globally present brands like Puma, New Balance Athletic Shoes, Inc., etc. talking in these lines, it can be said that the (Yahoo, 2012) The company also faces tremendous level of direct and indirect competition from various emerging markets around the world, where the company has entered in the recent times, in an attempt to secure growth of the future by catering to the needs and demands arising out of the population with rising disposable incomes of the emerging economies. It can be said in these regards, that apart from the direct competition coming from the well established national level brands in these economies, indirect competition is also coming from various other replicate and low cost shoe manufacturers, who focus on providing duplicate branded footwear accessories at low costs. On a summary note about the level of competition existing in the footwear market, it can be said that the congestion and crowding of various well known brands like Adidas, Reebok, Puma, Crocs etc in the footwear markets in the developing and developed markets around the world is resulting in the tremendous increase of competition in this particular segment on a regular basis. Talking from the aspects of the role that are often played by the government, it can be said that the government by the process of developing suitable frameworks and policies can significantly help or create barriers in the process of creating significant and suitably profitable business transactions. With the rising number of scandals that are taking place in the business world in various developed as well as emerging economies, it can be said that the government all over the world are focusing on the development of frameworks to promote transparency, accountability as well as public confidence in the business world. In a response to a similar kind of government activity promoted by the European Union, Nike has played a positive step forward in the process of participating in the formation and establishment of frameworks. Also, in the US region, Nike has formed a strong collaboration with various tiers of the government agencies like the federal, state as well as local level and has made significant contributions (Nikebiz.com, 2012 ). Apart from the above mentioned significant political contribution of the global sports footwear and accessories brand in the US and European region, the brand has also formed a significant contribution and collaboration with the UK government for the process of improving the level of sustenance as well as increasing the level of social impact in the clothing supply chain of UK (nikebiz.com, ). Analysis of Growth Opportunity or Threat It can be said that though Nike is a globally reputed brand, with presence in multiple countries around the world, yet in the recent years, the company is facing a lot of problems which varies and ranges from being macro as well as micro in nature. Talking about the macro factors, that are affecting the business scenario of Nike, it can be said that the rising amount of input prices in the form of rising transportation charges because of fluctuations in fuel prices is playing a major role in impacting the business. Also, apart from that, it can also be said that the rising level of inflation in various developing economies like Bangladesh, China etc are putting an upward inch in the labor costs ( Investorguide.com, 2011) Talking in terms of micro level challenges faced by the global brand, it can be said that as a result of its advertising fiasco during the Olympics in 2012, the company received significant amount of flak from the general masses as well as the Olympic committees of London 2012 (Guardian.co.uk, 2012). Also, in recent past, the company has faced significant amount of troubles from the manufacturing units located in the Chinese markets, which comprised falsification of documents, usage of underage workers as well as nonpayment issues of employees. However, in spite of several drawbacks that the company has faced in the developing as well as developed markets, it has managed to manage its leadership role in the global footwear industry which is catering the various sports category all over the world (Reuters, 2008). Now talking in terms of possible opportunities, it can be highlighted that the closest arch rival of the company, Adidas has run into significant troubles with its Reebok brand in the Indian market, which is recognized as one of the most important and fast emerging markets in the recent times (Prabhakar & Chakraborty, 2012). Talking in more details about the problem faced by the international brand in the Indian market, it can be said that the international brand Adidas has been a victim of fraud case which has been effectively and wittingly carried out by top level former executives of the Indian division of the global brand. The fraud case involved falsification of receipts and other important business and commercial documents, illegal movement of company owned goods to secret warehouses as well as distribution of goods to nonexistent distributors of the company. As a matter of fact, this resulted in the estimated loss of around 125 million euro from the global profit of the company (Khan, Shivakumar and Wilson, 2012). Also, in an attempt to restructure the company’s already existent mode and structure of operations, the internationally acclaimed brand has focused on the process of revamping the entire business model of the company that is existent in the Indian region by shutting 300 of its total of 900 stores all over India (IndiaToday.in, 2012). In an attempt to capitalize on the market opportunity provided by the globally present rival brand Adidas in one of the fast emerging market economies, the globally acknowledged market leader in the sport accessories segment should focus on the process of gaining and increasing the market share of the brand in the Indian market by entering in the void region created in the Indian market in the arena related to sports footwear and apparel in the absence and closing of outlets by Adidas. Recommendations It can be said that the opportunity arising out of the possible closing of retail outlets by Adidas in the Indian market as an effort to restructure the brand’s India related business operations has provided Nike with a significant amount of scope to expand the brand in the Indian market, which has been widely recognized as a fast emerging economy due to the tremendous amount of economic growth as well as rising purchasing power parity and disposable income of the masses. It can be said that the opportunity for the global leader to expand its business in the Indian market can be matched with the company’s long term plans, which increasingly focuses on going for deeper territory expansion by the process of opening of around 250 to 300 outlets in the developing and developed markets by the year 2015. Hence, in order to design a suitable strategy that will help the global market leader to align the expansion and growth strategy with its long term strategic plan, it can be recommended that the brand Nike should focus on increasing the foothold and market share in the Indian markets. In an attempt to provide a more detailed recommendation, it can be said that the first step, Nike should focus on, is the process of studying the Indian market in a more detailed manner before deciding on potential territories and regions to expand in. In order to do that, the company should focus on commissioning a market research study to a highly popular market research company in India, who has significant experience in conducting market research in the field of retail, luxury and sports market. The second step of Nike is to decide on possible budget that will be needed for the purpose of investing in opening of the retail outlets in the Indian region. The third step that Nike should focus on is to identify and decide on possible regions for the purpose of opening new outlets within India while studying the consumer mindset, behavior as well as disposable income and purchasing power parity of the consumers, which will be highlighted in the market research report commissioned by the company. The next step is to decide on the number of outlets to be opened in various geographical regions, as well as deciding on their individual target market, extent of market coverage as well as their customized sales target. While outlining the plan for the purpose of deciding on the number of outlets that needs to be opened to cover a specific region, attention has to be provided to the fact of possible prioritizing of the regions on the basis of high population as well as a higher consumption power and disposable income, since these highly important economic factors will contribute in a very effective manner towards the higher and faster sales of the products of the global brand. The final step is to proceed with the implementation phase by concentrating on the opening of stores in various locations in the country in a step by step manner. Reference IndiaToday.in, 2012. Adidas to shut 1/3rd Reebok India stores. [Online] Available at: http://indiatoday.intoday.in/story/three-hundred-reebok-india-stores-to-be-shut/1/187211.html [Accessed 3 Dec. 2012] Khan, J.F., Shivakumar, G. and Wilson, J., 2012. Adidas files fraud complaint in India [Online] Available at: http://www.ft.com/cms/s/0/05ca9a24-a4e9-11e1-b421-00144feabdc0.html#axzz2Dxuc9DLY [Accessed 3 Dec. 2012] Prabhakar, B. & Chakraborty, C., 2012. How global brand Adidas slipped in India [Online] Available at: http://articles.economictimes.indiatimes.com/2012-05-13/news/31680810_1_subhinder-singh-prem-reebok-india-adidas [Accessed 3 Dec. 2012] Reuters, 2008. Nike Reports Persistent Problems at China Factories. [Online] Available at: http://www.baselinemag.com/c/a/Government/Nike-Reports-Persistent-Problems-at-China-Factories/ [Accessed 3 Dec. 2012] Guardain.co.uk, 2012. London 2012 Olympics will not take legal action over Nike ad campaign. [Online] Available at: http://www.guardian.co.uk/media/2012/jul/27/london-olympics-legal-action-nike [Accessed 3 Dec. 2012] Investorguide.com, 2011. Nike (NKE) Just Didn’t Do It. [Online] Available at: http://www.investorguide.com/article/8126/nike-nke-just-didnt-do-it/ [Accessed 3 Dec. 2012] Nikebiz.com,2012. Public Policy [Online] Available at:http://www.nikebiz.com/crreport/content/public-policy-and-advocacy/7-2-5-sustainability.php?cat=public-policy[Accessed 3 Dec. 2012] Yahoo, 2012. Nike Inc. (NKE). [Online] Available at: http://in.finance.yahoo.com/q/co?s=NKE [Accessed 3 Dec. 2012] McGirt, E., 2010. How Nike's CEO Shook Up the Shoe Industry. [Online] Available at: http://www.fastcompany.com/1676902/how-nikes-ceo-shook-shoe-industry [Accessed 3 Dec. 2012] Nike.com, 2012. Men’s Gear. [Online] Available at: http://store.nike.com/us/en_us/?l=shop,men_gear [Accessed 3 Dec. 2012] WPP , 2012. Top 100 brands 2012.[Online] Available at: http://www.millwardbrown.com/brandz/Top_100_Global_Brands.aspx [Accessed 3 Dec. 2012] Read More