Nike Business Marketing - Essay Example

Introduction Today, more than ever, it has become increasingly important for business organizations to have an elaborate marketing system to be able to compete favourable in this era of high competition. With the current cut throat competition in all industries, business organizations with an elaborate distribution channels have high chances of reaching its customers and being able to realize its sales target. Business to business marketing is the selling of goods between one channel members to another one before reaching the final consumer. It blends aspects from psychology, sociology, economics, anthropology and socio-psychology. It tries to comprehend the purchaser decision making process, equally as an individual and also as a group. Company profile Nike is an international company dealing with a range of sports equipment such as shoes, shirts, t-shirts and Jerseys for various sporting activities including, football, athletics, basketball, cricket, tennis, skateboarding and golf. Nike is a premium company that sells well branded and expensive products that are known for their superior quality. Nike is well known for the trademark “just do it” and it relates to the sporting spirit. This company has more than 500 factories in over 45 countries that are contracted to manufacture these products. With this extended production capacity, the company has elaborate marketing strategies that has made it possible for the company to realize its goals and objectives (Nike, 2008) Modern retailers Characteristics of retailers’ behaviour Today, the market is being driven by retailers who are more informed and have more money spend than previous. Retailers currently are shopping for quality and luxuries so that they can enhance their quality of life. With improved purchasing power of consumers, the retailers want to offer them more variety and high quality products. (Loudon, 1988) Experimenting marketing behaviour Currently the society has become more affluent, many consumers have got all the material products and goods they really need. Due to this many retailers who do the retail business are stocking products which the consumers desires to use as, the consumers are purchasing products based on desire to have an experience with the product or a feeling of the product. (Loudon, 1988) Satisfy need and desire Consumers have different needs and desires that they wish to satisfy when buying a product. Many people have different anticipations and dreams when they buy a product. Thus, a person will buy a product so that the product can satisfy his/her needs and wants. The retailers offers a lot of different but similar products to the consumer who ends up not knowing exactly what is perfect for his/her specific needs, it is this availability of varieties that as seen many consumers buying products that at fail to satisfy their needs and desires. (Stern, & El-Ansary, 1992) Why Retail Intermediaries are substantially gaining power With high cost of production on many products companies strive to reduce this cost, one way of reducing the cost is through cutting distribution costs by having intermediaries who can take the products to the customers more effectively. This is the reason why retail chains have become increasingly more important and successful in marketing channels. Some of the reasons as to why retail intermediaries are becoming more important are; Improved trading efficiency There is some costs that are associated by making a purchase, thus companies try to reduce the number transaction so as to reduce this costs. Without a retailer each buyer will have to negotiate with the producer or the wholesaler which becomes costly on the side of the producer and ineffective. Retailers are specialists Retailers are specialized in specific areas and offers access various resources in ensure correct functioning of distribution channel. This have made them to be highly required by customers hence their increased popularity. (Hampy, 2006) How retailers are found Like any other marketing decision, choosing a retailer require a lot of thoughts and vast research in order to determine who can qualify to supply the company’s products more effectively and efficiently in a way that it will meet the company’s production objectives and overall procurement targets. (Hampy, 2006) A company has to consider some major factors before choosing its retailer. Thus we shall examine the key factors that the company will have to put in to consideration which are; Credit & financial condition Financial stability is very important in ensuring success level of any business organization, companies with financial power have an advantage when it comes to supplying because their have ability to expand their volume in relation to increased demands of the Nike or they can easily acquire new technology to and value to their products. Nike looks for a retailer with sound financial and credit management so that they can easily retailer products without financial hindrance. Sound credit management will allow a supplier to receive some credit facilities from different financial institutions which is vital in running retailer enterprise. At the same time shareholders and other stakeholders will only have confidence in a retailer with sound financial and credit management. Production Strength Louis et al (2006) states that a retailer will only be effective if he can easily and effectively supply goods or service to the end consumer consequently, before selecting a retailer, Nike have to ensure that the supplier member can easily and efficiently supplier the required materials to the company without due delays. The level of supplying and coverage of the supplier is considered to know how effective it is. Product Lines, The type of the product will definitely dictate the kind of retailer to recruit. As pertaining the retailer for Nike company, the retailer will have to be able to retail a large number of various products that the company deals in. at the same time, Nike chooses a retailer who has all the relevant certifications of the product safety measures which are required by the different concerned bodies to ensure that it gets what is safe. Retailer distinguishes between the actual number of the customers that the business can serve, and the maximum number of the customers which the business can cope up with. The later is termed as the capacity, this is the number customer that can be effectively be served by the business. (Hampy, 2006) Marketing strategies of Nike in relation to retailer behaviour Nike has adopted marketing mix, which is marketing strategy employs the use of “4 Ps” that is product, promotion price and place. These four aspects are the ones which are used in many companies. Each aspect is important and plays a big role in marketing processes. Marketing is a wide are in the company and Nike has managed to take full advantage of it in as a world number one company in sports wear (Hampy 2006). Product This is an object or service that a company produces or manufactures particularly on large scale with precise amounts (Bakan, 2004). Nike has a large collection of products that it sells to the market, this include shoes, clothes and apparel used for sporting activities. The products cater for different sports like basketball, road running, tennis, soccer, athletics and many more others. Nike products are meant for men, women and children. The company is renowned for its hip hop culture and supplies urban fashions in terms of clothes. In order to improve its products quality, Nike together with Apple Inc. produced the Nike+ line of products that are able to monitor how a runner is performing through a radio device that is place in the shoes which is then linked to the iPod nano. In doing this Nike is able to market its products and retain its market share (Hampy 2006). The products produced by Nike are different as mentioned above. At first, it was just produced shoes alone, but, as technology changed and demand increased, then it was practical for it to expand to other products (Hampy 2006). The characteristics of the company’s products are well defined to meet the needs of the consumers; the packaging of the product is considered attractive to entice the retailers to buy the products. Nike believes the quality of their products is perfect, that is, it is the quality that matches with the prescription of the product in the market so that it can maintain its retailers who are not misled with the misrepresentation of the qualities with its competitors such as Reebok and others (Hampy 2006). Source: Nike Pair of shoes: retrieved from, http://www.nikesky.com/productShow.asp?id=5663, accessed on March, 9, 2008 Promotion Promotion includes all communications that a company uses in marketing its products. We have four different elements in promotion; this includes advertising, point of sale, word of mouth and public relations (Brown 1993). If a company incorporates all the four elements then a certain level of crossover do occur. Nike has greatly used this marketing mix to its full advantage. It has incorporated all the four aspects of promotion which as seen the company capture and retain a big share of the market. As discussed earlier, Nike has entered in sponsorship deals with various celebrity sports personalities and professional teams who are used to bring attention to Nike products. The company has sponsorships agreements with Ronaldhno, Christiano Ronald and Wayne Rooney, in football. In basketball the company has Kobe Bryant and Vince Carter, while it has Lance Armstrong in cycling. In golfer the company has a sponsorship deal with Tiger Woods, while in tennis it has Roger Federer. All this sports personalities and many other are used to market the company products (Hampy 2006). This method of marketing has been very successful to the company has many customers want to be identified by their favourites sports personalities hence buying the company’s products. The company has several adverts that appear in the media and on the internet that are used to advertiser the company products. It should be noted that advertisement is a very powerful marketing tool that is used to create more market for the company. So that, the retailers who deals in the Nike products so that their consumers can easily buy their products from the retail shops. Price The amount that a customer pays for a certain product is its price. This amount is determined by various factors which includes product identity, competition, market share and the perceived worth of the product by the customer (Hampy, 2006). Nike has focused on producing quality products at a premium price. Though, products from the company seem to be having a higher price, this is because the quality of the products is normally high. Premium pricing from the company is also a marketing strategy that is working. Nike has adopted on the following pricing methods to enable product reach its marketing standards. Premium pricing is where the uniqueness of the company product is defined such as a fixed price. For Nike to be able to gain the market share, it begun with the application of the penetration pricing whereby, once the company achieved the market share, it increased the price of its product (Hampy 2006). Nike offers its retailers low prices and also huge discounts in order for them to make good profits. This also enables the retailers to offer discounts to their end customers. Place This stands for, location where the products from a company are found and purchased. This in many cases refers to distribution channels of the company which can be physical stores or even virtual stores found on the internet (Doyle 2000). Nike Company has managed to create a lot of distribution channels that has ensured that its products reach a wide market. Nike has built a large network of selling its products; this has ensured that customers are able to easily get products from the company. The company has independent distributors, subsidiaries and licensees in other countries who sell the company products. In the United States Nike have many outlets to sell its products. Nike channels of distribution are considered to be the best and have played an important role increase of revenue. For example, the “NIKE Towns” which are located in all major cities in America. Nike either uses the direct or the indirect channels that is, supplying to the consumers directly or through retailers. By so doing the retailers of Nike products are able to get the products to the consumers. Nike reaches its retailers wherever they are. (Hampy 2006) Company strategies The company should has a strategy to take create more products and continue improving its technology being used to attain this, Nike company should aims at investing in its products to be able to take a leading position in each category, and consumer event in which the company chose to compete. To drive the growth of the products, the company needs to aim at exploiting all categories, participation and opportunities. Instead of just putting focus on individual products in a categories. The main categories of the company include shoes, shirts, t-shirts and Jerseys. Priority brands A strategy of focusing on priority brands in their specific most lucrative markets assists in driving the growth of the company global trademarks which includes Nike line of sports which include several of different brands. (Chisnall, 1992) Premium products In line with the company strategy of innovative agenda, the company should place an increased effort on its premium brands; it has to strive to produce the highest quality premium brands set in the market. (Chisnall, 1992) Selective acquisitions In order to add support to the company’s brands, creativity and customer focus plans; the company must develop a strategy of adding shareholder value where possible. The recommendations above are aimed at responding to the consumers needs in the market which keeps on changing. (Chisnall, 1992) Appendix Chart 1: The chart below shows Nike Company’s stock growth in percentage compared to is competitors and also the S& P500 index; source http://blogs.indews.com/cgi-bin/bg/mt-tb.cgi/13 From the chart it can be seen the company share are doing w well an indication that the marketing strategies of the company are working for the company. Read More