Marketing Plan Nike - Essay Example

? Marketing Plan Nike Inserts His/Her Inserts Grade Inserts (23, January, Table of Contents1- Executive Summary 3 2- Introduction and Market Overview (LO1, 1.1) 4 3- SWOT Analysis (LO 3.1, 1.3) 5 4- Marketing Objectives (LO 1.1, 3.1) 7 5- Market Segment (LO 1.1) 7 6- New Marketing Mix (LO 1.3, 2.1, 2.2, 3.1) 8 7- Resource Allocation (LO 3.2, 3.1, 1.3, 1.1, 2.2) 10 8- Budget and Forecasts (LO 3.1, 2.1, 2.2) 12 9- Marketing Plan Implementation (LO 2.1, 2.2, 3.2) 12 10- Review of Plan and Monitoring (LO 3.3, 1.1) 13 11- Conclusion 14 12- Bibliography 15 13- Reflective Statement 17 Executive Summary In this report a new marketing plan has been proposed for the footwear giant Nike. The company performed sluggishly in 2010 and therefore this new marketing plan will help the company reclaim its growth for the next few years. The objective of the proposed plan is to increase the sales by 20 percent globally and to position Nike as a premium brand in the developing world. Systematic implementation plan will be followed to achieve this goal. Meeting on a regular interval will be used as monitoring and controlling for the proposed plan. Introduction and Market Overview The global financial meltdown of 2008 has negatively affected retail business because it reduced the purchasing power of consumers and destroyed consumer confidence (Finch & Wood, 2009). Businesses have shrunk drastically all over the world due to the integration of global financial markets. Firms are finding it difficult to sell their products to consumers in these tough times. Even big names like Nike are worried about their sales and purchasing power of their clientele, although it did well as compared to others in the recession. The company was founded back in 1964 and since then it has grown tremendously. The company is the leading seller of athletic shoes and apparel in the world (Sage, 2008). In 2010 the company reported a profit of $1.9 billion and an operating income of $2.5 billion, but revenues have fallen to $19 billion (Nike Annual Report, 2010). This is a point of concern for the company because it means that sales are declining due to some reasons. Fall in sales can be because of the tough economic conditions of European and American markets. This downward trend can cause many problems for the company in future because competitors can take market share from the company. The main competitors of the company are Rebook, Puma, and Addidas. Nike sells sports equipment, apparel and footwear. The company alongside with its competitors uses celebrity endorsement and other marketing strategies to attract customers. The client base of Nike and all its competitors are more or less similar. Nike targets young people who are interested in sports. Competitors of Nike are also targeting the same population set. This is why marketing is used as a tool for differentiation by companies in the industry. The vision of the company is to produce equipment for athletes therefore aims of the marketing plan will compliment the overall strategy of the company. The aim of Nike should be to improve its sales in the next year by attracting more and more customers. Improvement of sales by 20 percent is the objective of the firm. The focus of the company will also be on the developing countries as it will attempt to position itself as a premium brand in the developing world. In this report we will design a marketing plan for Nike so that the above mentioned aims and objectives can be achieved. We will conduct a SWOT analysis for the company and will also include marketing objectives and market segment in the plan. We will also elaborate how the plan will complement the overall strategic objectives of the company. Risk issues within the marketing plan will also be discussed alongside with the mitigations strategies. SWOT Analysis Strengths Nike is the number one footwear brand of the world therefore it enjoys a strong position in the market. The company use marketing constantly to remain the market leader and this has established barriers to entry in the industry. The brand power of Nike is making it possible for the company to reap consistent profits (Reuters, 2011). The main strength of the company is the brand perception that they have created in the eyes of consumers. With constant marketing through sports celebrities and events Nike has built a great brand. The manufacturing units of Nike are in the developing world and this lowers costs to a great degree. Weaknesses The main weakness of the company at present is its sales. The 2010 figure of revenues shows that the sales are declining. This can lead to problems in future and therefore Nike has to look into the matter. The company also operates in a highly competitive environment where there are lot of competitors like Puma, Adidas, and Rebook. These competitors are always trying to take away the market share of the company. Also manufacturing units of the company are located in the developing countries therefore they are susceptible to the political and legal environment of the company. Opportunities There is a lot of opportunity in coming years for the company because US economy is starting to show signs of revival. Other countries are also slowly coming out of recession. This means that purchasing power of consumers is increasing and this is a good opportunity for the company. There is also a huge market of the developing countries that the company can capture. Due to rapid growth in telecommunications developing countries are increasingly becoming aware of the sporting events that take place in the western world. This can give a huge boost to the sales of the company in future. Threats Nike produces its products in developing countries and then sells it in United States and Europe. This means that it buys raw materials in one currency and then sells in another currency. This makes the company exposed to exchange rate risk at all times (Murphy, 2011). Another threat for the company is the competition between the leaders of the industry. Reebok and Adidas are always trying to take the market share of the company. Although Adidas has bought Rebook in 2005, still the two brands are considered a great threat for Nike. Marketing Objective The main objective of marketing department should be to make sure that Nike stays on the top among other competitors. The main objective of the firm should be to retain its position and at the same time increase its sales. The data of 2010 is not good and in coming years Nike needs to increase its sales by 20 percent. The strategy of the company has been to target youth. This marketing plan will help complement this strategy of the company. This will be done by targeting the younger generation who are the main consumers of the Nike brand. At the same time marketing should also be made economical. It is tough to market heavily in an environment where costs are rising. This is why internet marketing should be used and social marketing websites should be targeted. Customers should be told about new products and pictures of Messi and Ronaldo (and other famous football stars) wearing new Nike footwear should be released on the internet. This can play a huge role in promoting the brand among the main target market of the company. Another marketing objective of the company is to increase its presence in the developing countries. Here Nike should be positioned as an international premium brand. It is not possible for the company to take part in price competition therefore company should use its brand power to sell its product in the developing world. Market Segment The market segment that Nike usually targets is young athletic people. This is the main target market of the company. The company’s vision is to provide footwear and equipment to all athletes’ therefore older people may also be included in the market of Nike. It can be said that the age group Nike targets is between 12 and 40. People of this age group are athletic in nature and they love to play games. This is why this market segment is strategically targeted by the company. Nike should not focus on any other market segment at this point. Rather the company should use marketing as a tool to attract more customers of the similar age group. Especially in the developing countries people are watching sports with keen interests. Also young people constitute a major portion of the population of the developing world. This is why this market segment is far from being saturated in near future. In the developed world Nike should try to market its brand more in order to increase its sales. The purchasing power of consumers is becoming stronger once again therefore the company should make sure that customers return to buy Nike products when they start shopping. Sports event and internet should be used alongside with celebrity endorsement to target the young target market. New Marketing Mix Source: Clarke & Rowley (1995) The new marketing mix of Nike should help the company achieve its goals and objectives in coming years. Changes in product, placement, and promotion will be required in order to achieve the objectives. Product The products of Nike are of three kinds. There are footwear, sports equipment, and apparel. There is a need to make them newer and better as the customers wants. Innovation is required and it is also a part of the vision of the company. Products for the developing countries should also be made keeping in mind the environment in those countries. Needs of developing country consumers should be kept in mind when selling Nike products in Asian and Middle Eastern markets. This should be done in the short term so that developing markets can be captured by the company. Pricing Special products are often subjected to premium pricing (McDougall et al. 1994). Nike is also producing value added goods for customers as it is leading the footwear industry. This is why the pricing strategy of the company should be that of premium pricing. Especially in developing countries Nike should charge premium prices from customers. This is important because in developing countries many cheap substitutes will be available and Nike will not be able to compete with local manufacturers. This is why it will be better for the company to charge premium prices and cash in the brand image of Nike. Placement The placement of Nike stores is already in good location in the west. This is why the company was able to grow so much in past years. Placement in the developing world should be in high end malls only. This is because the company is advised to use premium pricing policy in the developing world. Customer who can give high prices will only come at high end shopping malls. This is why Nike stores should open in posh areas in developing countries. In Europe and United States stores should be located near famous locations and malls so that everyone can have access to them. Promotion For promotion activities the company should use celebrities of the sporting world. This can make the company famous among its target market. The company usually uses celebrities for marketing therefore no change is required in that area. However Nike should invest more in internet marketing. Social networking websites should be used alongside with forums to start the buzz about upcoming products. This can attract youngsters towards new products of the company. Moreover advertisements should also be propagated using internet and social media. The cost of internet marketing is less compared to other mediums therefore it will help the company in both ways. Resource Allocation Efficient allocation of resources can lead to sustainable competitive advantage (Lado &Wilson, 1994). The company should use all resources at its disposal to achieve its objective. The aims of this marketing plan are in line with the overall strategic objectives of the firm therefore it is vital that these objectives are met. The risk of the marketing plan should also be kept in mind. All plans do not work and this should be kept at the back of the mind. Risk issues are related to the increase in budget of marketing and moving into new markets. Firstly Nike should hire marketing specialists in developing countries like India and China, and also in the Middle East. Nike should develop local advertisements in which local celebrities should be used. These advertisements should be used in developing world to make people aware that Nike is also targeting the developing countries. Right now only international advertisements are being used. This is not enough if Nike wants to tap in the potential market that exists in the developing world. Sports like football are watched all over the globe and therefore people are aware of the brand. However in order to create more awareness Nike should start lunching products especially for the developing countries so that brand recognition increases even more. Marketing budget should also be give to managers responsible for the developing world. There is no need to open offices everywhere. The company can open one office in India and from there whole Asian markets can be overlooked. At first a few countries should be targeted so that risk of new strategy is decreased. In United States and Europe Nike should start to advertise more and more budget should be allocated for marketing activities. This will create brand awareness among the masses and in turn will result in profit maximization. Marketing is essential in order to remain in the minds of the customers. Internet marketing should play a huge role in advertisement. Budget and Forecasts In 2010 Nike reduced its marketing budget (Nike Annual Report, 2010) and this will increase in coming years. Marketing budget will be set at a level of $4 billion. From this amount $3.5 billion will be spent in the developed world while $500 million will be used in the developing countries. Budget for developing countries will ensure the presence of company in regions where population is growing and majority of the population comprises of young people. In future developing world will be the market for Nike and this is why marketing budget should be set for India and China. The advertisement budget of Nike will be broken into three parts. First part will be the print media, second part will be of digital media and the third part will be reserved for sponsorships. Print media will get 10 percent of the budget, digital media will get 50 percent of the budget and the rest will be reserved for sponsorships and celebrity endorsements. These percentages will be applicable for both the budgets of developed and the developing world. It is expected that Nike will grow it sales about 20 percent per annum in coming years. This will make the company more profitable because in the next two years the company, according to the forecast, will grow by around 50 percent from its 2010 size. This is some audacious forecast but Nike can achieve this if the company follows the suggested marketing plan. Marketing Plan and Implementation The implementation of the marketing plan will be done keeping in mind the overall objectives of the company. The strategy of the company is to target athletes all over the world and help them play sports better. This will act as a guideline when following the overall implementation of the proposed marketing plan. Table no. 1 Implementation plan details Target Date Who is Responsible At first, that is in February top management of Nike has to sit with the marketing people to set strategic goals for the company for the next 2 years. Details about the new marketing plan will be discussed and debated and budget for departments will be decided. The top management will agree on a blue print strategy for the next two years. Feb-2012 Senior management with marketing department Local offices in the developing world will be planned. Countries will be chosen in which offices will be built and initial planning as to where to start first in the developing world. Targets will be set in the developing world in this phase. Mar-2012 Senior Management and Manager of Global operations In this phase the HR department will sit and hire people for the offices in the developing countries. Also advertisement agencies will be selected that will be used in the developing world. Advertisements for US and European markets will also be decided. Mar-2011 Manager of HR department and Marketing Here R&D department will sit and decide regarding products for the coming year. Mar-2011 R&D Department Marketing and Sales department will set and make their own plans for achieving the target. Specific tactical goals will be set. Apr- 2012 Manager of marketing and sales Advertisements will be run on different mediums in US and European markets as well as in the developing world. Apr-2012 Advertisements manager and media manager Review of Plan and Monitoring It is advised by experts that meetings should be held on a regular basis in order to effectively review and monitor any implementation plan (Johnson et.al, 2005). This is why regular meetings will be held to ensure that the company is going on the right track. Also evaluations will be made after every two months so that effects of the plan can be monitored. It is important for the company not to become obsessed with the new marketing plan. If things will be not work then small changes will be made according to the situation. This is why monitoring is important for implementation of new marketing plan. All layers of employees should meet regularly so that everyone in the organisation is in the right frame of mind when approaching the new marketing strategy. When all layers of employees will meet regularly, information will flow throughout the organisation. This is why it is vital that monitoring is done through meetings. Also top management should also sit after short intervals to see whether the advertisement is working or not. Conclusion The new marketing plan will help the company achieve its strategic goals. It is vital for the firm to increase sales and start localised operations in the developing world. Economies are reviving all over the world therefore company can make profit in the next few years and this is why goals that are set are not unachievable. With proper implementation plan and monitoring of the new marketing plan objectives can be achieved. Bibliography Annual Report Nike. 2010, viewed on 23 January 2012, < http://investors.nikeinc.com/Theme/Nike/files/doc_financials/AnnualReports/2010/docs/NIKE_2010_10-K.pdf> Bhattacharjee, N. 2011, UPDATE 3-Brand power helps Nike beat estimates, Reuters, viewed on 23 January 2012, < http://www.reuters.com/article/2011/12/20/nike-idUSL3E7NK5ZT20111220> Clarke & Rowley. 1995, A case for spatial decision-support systems in retail location planning, International Journal of Retail & Distribution Management, vol. 23, no. 3, pp. 4-10 Finch & Wood. 2009, Strong Christmas spending gives the retail industry a season to be jolly, Guardian UK, viewed on 23 January 2012, Johnson, G., Scholes, K. & Whittington, R. 2005, Exporting Corporate Strategy, 8th Edition, New York, Pearson Education Lado & Wilson. 1994, Human Resource Systems and Sustained Competitive Advantage: A Competency-Based Perspective, The Academy of Management Review, vol. 19, no. 4, pp. 699-727 McDougall, P. P., Covin, J. G., Robinson, R. B. and Herron, L. 1994, The effects of industry growth and strategic breadth on new venture performance and strategy content, Strategic Management Journal, vol. 15, pp. 537–554 Murphy, M. 2011, Nike soars on upbeat outlook, The Australian, viewed on 23 January 2012, < http://www.theaustralian.com.au/business/profit-loss/nike-soars-on-upbeat-outlook/story-fn91vch7-1226144261388> Sage, A. 2008, Nike profit up but shares tumble on U.S. concerns, Reuters, viewed on 23 January 2012, < http://uk.reuters.com/article/2008/06/26/business-nike-results-dc-idUKWNAS924120080626> US SEC. 2010, Nike Annual Report, viewed on 23 January 2012, Reflective Statement The experience of this course was great as I got to learn many new things regarding marketing strategies. I got to learn to develop a marketing plan which was something I didn’t previously know. In this course I also came across a lot of academic literature that increased my knowledge base and made me aware of the theoretical work that is done in the field of strategic marketing. The course helped me realize the importance of marketing and how it can complement the overall strategic vision of the company both in the short term and in the long run. I also learned to use tools like SWOT analysis which can help me a lot in future managerial work. It is often needed to analyze a particular company and SWOT analysis can help greatly in telling important things about a firm. It was also worthwhile to learn how to screen the environment particular to an industry. By learning how to develop a marketing plan I can make more informed future managerial decisions. Marketing plans are an important part of every organisation and knowing how to design it can be helpful. I also learned a lot about differing pricing and marketing strategies. This has added greatly to my knowledge base as I came to know how different companies use pricing and marketing together to create value for their brand. I also learnt about celebrity endorsement as a marketing strategy. All in all, this course will help me make more informed decisions as a manager in future. Read More