The Secret of Nike Success - Case Study Example

CONSUMER DIARY REPORT CASE OF NIKE Name Course Professor University A brand is a customer’s perception about a particular product. Companies should strive to maintain their brand because it is the main defense against competition and price, the brand determines customer loyalty. A brand is a company’s most valued feature because it is like a promise to customers that should always be backed by performance (Chernatony et al 2013). Creating a brand is done in several steps, firstly, selection of a name and symbol is of paramount importance. The name should be appealing and easy to pronounce. Secondly, the company should create awareness about their brand and identity using various forums such as social media, televisions, magazines and radio stations. Thirdly, the brand positioning should be carried out so as to create a brand image and finally creation of trust among the consumers because they are by far the main brand ambassadors and once trust is created, they become returning customers (Chernatony et al 2013). Nike is among the most widely used brands all over the world, it is a corporation operating in almost every part of the world with its headquarters in America. Nike deals with designing, manufacturing, marketing, distribution as well as selling of sports clothing, footwear, accessories and other services. Nike has been sponsoring many athletes, sports teams under their widely known logo, “Just do it” (Katz 1994). The main strategy adopted by Nike in advertising themselves is through sponsorship whereby they pay some of the top athletes in the world to put on apparel that has Nike’s logo on them (Ramaswamy 2008). Nike also recently won the NBA deal of supplying the players with the uniforms beginning the 2017-2018 season taking over from Adidas which was the previous supplier. Over the years, Nike has gained customer loyalty through their brand. However, before a consumer makes a decision of purchasing a product, the customer observes some steps before he or she decides on a particular brand. The Engel-Kollat model (EKB model) describes two steps that include the information processing and the decision making process. The EKB model is comprehensive and shows the components of decision making and the components and relationships among them. The decision making process is distinctively categorized into five parts as follows; input, information processing, a decision process, decision process variables and external influences. In most cases consumers’ decision to make purchases are influenced by the adverts on the televisions. The consumers admire to be like the models used in the advert and expect that they will experience the same outcome as the models which is normally not the case (Solomon et al 2013). However most companies that value their brand ensure that what their customers see is what they get. For example Nike has won several awards as the company with the best adverts. For example Nike won the Emmy Awards in 2000 following their advert on how an athlete would look after a game. The second award was on an advert featuring major athletes on a sport named “move” in 2002. All these adverts triggered purchases from the consumers. (Fig 1 Mo Farah sponsored by Nike) Nike has over the years been faced with several ethical issues related with child labor in Pakistan, sexual harassment of women in Japan as well as poor wage compensation for employees. Basically, Nike aims at minimizing costs so as to increase profits and as such they seek to outsource their production in countries that do not have strict labor laws. However, despite all the accusations and fall outs on the part of Nike, they are working tirelessly to ensure they maintain ethics as well as healthy environment in their production (Cushman 1998). Nike maintains a healthy environment by reducing the amount of carbon released into the atmosphere during production as well as ensuring they use safe chemicals when dyeing fabrics so doing, they ensure that the employees have a safe work environment as well as reduction of global warming. Nike has formulated a plan that will ensure use of renewable energy in all their outsourced companies by the year 2025. So far, the progress is visible because half of the factories use renewable energy that is safe and emits less gas into the atmosphere. Another aspect that makes Nike as a brand to attain customer loyalty is based on the fact that they are transparent and honest regarding their outsourced factories and ensuring that they observe the international standards for production in terms of quality. There are several steps that a customer takes before making a purchase. Firstly, the consumer recognizes the availability of a need. The problem recognition occurs whenever consumers find a notable difference between what the y currently have and what they actually need according to (Wayne 2009). Nike in this case comes in handy to satisfy the needs of their consumers who on a day to day basis require sports equipment, apparel and footwear. As such, the company comes up with products tailored towards the needs of customers. For example the Nike’s invention of footwear with devices to track and record ones exercise calories and distance as well as heart rate. The invention was in collaboration with Apple whereby the data is recorded in their Ipod and came in handy for today’s developed world full of technology and therefore keeping Nike a step ahead from her competitors such as Adidas and Ariva. People love associating themselves with certain superior brands so as to meet their needs as well as fit in a particular group say of friends or family (Babin and Harris 2011). Most people feel that use of Nike products portrays class and as such making it one of the most purchased brands in the world. According to Maslow’s needs are in a hierarchy, there are different categories of needs. Different people use Nike products to fulfill different needs. (Figure 2 Maslow Hierarchy of Needs) According to (Maslow 1968), there are self actualization needs, esteem needs that enable one to feel confident and accepted among friends, family and partners. Safety needs entail security of body, work, resources, family, health and property. Physiological needs are the basic needs required for survival such as breathing, food, water, sex, sleep, homeostasis and excretion. When consumers are making purchases, their aim is to satisfy, either or all of the needs above. After customers have identified a need that should be satisfied, they then search for information regarding the same, they observe their environment for necessary data in order to enable them make an informed decision concerning a particular product. Information about Nike is readily available on their website as well as social media platforms such as facebook, instagram and twitter. These days the internet has eased the process of information gathering because it is possible to even get reviews and testimonies regarding a product from other customers online. It is therefore paramount that companies avail data for their customers so as to enable them make reasonable decisions. The information should be about price, quality, quantity as well as incentives if any. The stage of gathering information involves risk analysis whereby a potential customer does a thorough analysis of the advantages and disadvantages of a product before purchase so as to avoid regretting after purchase. The third stage involved before a consumer buys Nikes products is the evaluation of alternatives. The customers have at their disposal information from other brands such as Adidas and Ariva who have also put their information readily available for consumers. The customers evaluate the different alternatives based on the quality, design, durability as well as price. Most customers who value a brand do not concentrate on the price but rather the prestige that comes with the use of a particular brand. Loyal customers do not shift even if prices go up so long as the companies maintain the quality. Then finally the customer makes the product choice after evaluating all the available alternatives. The product choice is reached upon against compensatory and non-compensatory decision rules. The product is identified to fulfill consumer needs and wants. The customer expects that the product is exactly as they expected. If the product fulfills all the expectations or even supersedes them, then the customers become the main brand ambassadors as well as loyal customers. It is therefore, important that companies are able to meet customers’ needs and expectations and where possible go beyond the expectations. Nike has over time acquired brand loyalty from their customers and this has somehow made them reluctant on their service delivery, when customers are doing their research online, they find several negative reviews from customers who have shopped earlier. Most complains are based on their poor customer service, late deliveries, and delivery of wrong orders whereby customers do not get what they order for. In other words, their online shopping does not have positive reviews and therefore the company should strive at working on their customer relations so as to maintain their brand loyalty. However, despite the negative reviews, many other customers give positive reviews of how they have ordered and received the exact item they ordered at the right time. The Nike brand is unique and most customers are proud to identify with it. The products can be similar with other companies but the brand cannot be copied since it has been built over time to enable it to gain customer loyalty. A brand is a perception that customers have regarding a certain product and they are proud to identify with it. Brand identity is normally a promise by the company to meet or go beyond the customers’ expectations. Most customers expect that a certain brand will glorify their self worth as shown by (Solomon et al 2010). Most Nike stores are well displayed to attract their customers (Fulberg 2003). The shoes, apparel and other sports equipment are well arranged. The store environment is very crucial in driving sales because the customers will be triggered to make purchases if the store image is appealing. The store image refers to the perception that a customer has towards the store arrangement. Also, it is important that the store space be reasonable according to (Solomon et al 2010). The other crucial thing that may drive sales is the interior design of the store which should have enough lighting, clean floors and free flow of air. Another aspect that may lead to increased sales in stores is the movement space which should be adequate to enable customers move freely in the store. Nike stores have discovered the secret and as such use it to drive sales. Their stores are usually spacious with enough space for customers to move around. The items that belong together are neatly arranged in one shelf thereby attracting customers. Basically, most Nike retail stores make use of visual merchandising whereby they make use of colors when displaying their products. The lighting in the stores reflects on the beautifully arranged products of different colors. In most cases they dress dummies to enable them look like real people. As such, the customers who get into the stores can visualize themselves in the products. Normally, the stores are made of glass enabling them to attract even the passersby. The store is the most important communication between the seller and the customer and as such, it must portray a certain image as well as represent the brand and at the same time increase sales according to (Fulberg 2003) . (Figure 3 showing one of Nike stores) (Fig 4 showing shoes on display in a store) Consequently, different products anatomy exist on three distinct levels, firstly, the core which is the underlying need that a consumer seeks to satisfy by using a product (Petzer et al 2006). When customers use Nike’s sportswear, they recognize the need to protect them when exercising or playing games. Nike products are protective thereby preventing customers from hurting themselves. The other anatomy is based on the tangibility of a product which is determined by the packaging, styling, features, brand name and quality level (Solomon et al 2010). Nike in this case has achieved because, their products are of quality and match recent designs. After purchase, the products are always packaged in beautiful boxes and as such making customers loyal to the brand. The last product anatomy is the augmented which are the additional services and benefits that producers attach to their products so as to satisfy additional needs of consumers. The additional services help to further differentiate the brand from the competitors. Some of these additional services include issuance of warranties, after sales services, pre sales services and guarantees (Solomon et al 2010). Nike has not failed on this either because they are always giving discounts on purchases of their products especially during the festive seasons. In conclusion therefore, Nike is and will continue being a trusted brand when it comes to sportswear and equipment because they have overtime achieved trust from their customers who are their main brand ambassadors. Nike creates awareness of its existence by use famous athletes as their models and also sponsorship of sports teams. Before customers make a purchase, they conduct some prior research so as to avoid regretting later. References Babin, B. and Harris, E. 2011. Consumer Behaviour 2nd ed. Mason: Cengage Learning De Chernatony, L. and Mcdonald, M., et al. 2011. Creating powerful brands. Amsterdam: Butterworth-Heinemann. Petzer, D. and Ismail, Z., et al. 2006. Fresh Perspectives: Marketing. Cape Town: Prentice Hall Solomon, M. and Bamossy, G., et al. 2010. Consumer Behaviour a European Perspective. 4th ed. UK: Prentice Hall Europe. Wayne, D. 2009. Consumer Behaviour. 5th ed. Mason: Cengage Learning. Cushman, J.H., 1998. Nike pledges to end child labor and apply US rules abroad. New York Times, 13, p.D1. Ramaswamy, V., 2008. Co-creating value through customers' experiences: the Nike case. Strategy & Leadership, 36(5), pp.9-14. Katz, D.R., 1994. Just do it: The Nike spirit in the corporate world. Random House (NY). Fulberg, P., 2003. Using sonic branding in the retail environment—an easy and effective way to create consumer brand loyalty while enhancing the in‐store experience. 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