Marketing Strategies for Nike - Essay Example

Number Due Executive summary Nike is a multinational corporation based in the United s and engaged in the design, development and supply of sports apparels, footwear, equipment and other sports accessories. Headquartered in Beaverton Oregon, Nike has been a major player in this industry for a long time and is presently a fortune 500 company. In any case, Nike is known worldwide as a major supplier of athletic apparels and shoes. In the same way the company manufactures a large amount of sports equipment. In the 2012 fiscal year, the revenue base of the organization was $24.1 billion and it presently employs over 44, 000 people across the world. Nike was founded on January 25th 1964 by Bill Bowerman and Phil Knight as Blue Ribbon Sports. The company adopted the name Nike on May 30, 1978 and began marketing its products and services under its own brand. Today, the company operates retail stores under the Niketown name. In addition, the company is known worldwide for sponsoring a great deal of sports activities and supporting many sports teams. The Nike brand is presently found in many countries across the world notably in the United States, Europe, Asia Pacific and the Americas (Esty & Winston, 2009). Courtesy of its innovative design and effective marketing strategies, the company has obtained a very huge position in the sports markets in these regions. More importantly, Nike’s products are usually associated with high quality and this has been a major boost for the company over the years. Situation analysis Company mission and objectives Nike has always been focused to the realization of its goals, mission and objectives. More importantly, the organization has a strong sense of values which have created a kind of organizational culture often admired by many organizations. The mission of the organization is “to bring inspiration and innovation to every athlete in the world” (Esty & Winston, 2009) In this regard, it is seen that Nike actually exists in order to ensure that the world is well supplied with quality equipment, shoes, apparels and other quality products. The focus of Nike is to bring a new reality to the world of athletics. In the same way, Nike’s vision stresses on the aspect of people and profit and the need to implement sustainable principles within the market. The organization greatly appreciates the dynamic nature of the market and is therefore at the forefront in instituting the very changes that are almost imperative for its continued success. One major goal of the organization is always the creation of partnerships in the hope of adding value. In this regard, Nike UK has been a strong force in creating valuable partnerships with other organizations and the social media which has seen the creation of such brands like Nike. A combination of these vision, values and goals have been the core marketing formula for the organization. In this regard, the organization has seen much progress and success (Rigsby & Greco, 2003). Products Nike engages in the production of various types of sports equipment. The initial products were track running shoes. However, the company has greatly diversified its product line and manufactures shoes, shorts, jerseys and base layers for various types of sporting activities. The Nike Air Max was the initial shoe line introduced by the company back in 1987 and has remained popular for a long time. Some of the recent products introduced include Nike NYX, Nike SB and Nike 6.0 Shoes all for skateboarding. Similarly, the company launched a type of cricked shoes known as Air Zoom Yorker which are designed to be very effective and are actually 30% lighter than the competitors in the market (Katz, 2012). While Nike is majorly known for athletics products, it should be noted that the organization actually produces an assortment of products for basketball, combat sports, golf, football and many other sporting activities. In addition, the Nike brand has been very popular across the world in youth, hip hop and Chav cultures. Recently, the organization partnered with Apple Corporation and launched Nike + a product designed to monitor the performance of a runner through a radio device placed in the shoe. The device links to the iPod Nano and thereby generates very useful statistics about the performance of the runner (Katz, 2012). With respect to the product life cycle theory, it can be seen that most of the products manufactured by Nike have actually attained the maturity stage. Competitive situation Indeed, Nike operates in a highly competitive market environment which creates the need for effective marketing strategies. The market for sports shoes and apparels is very competitive and every player is researching on new products to take away part of the large market share currently enjoyed by Nike. Some of the major competitors who have been posing a great challenge to Nike include Adidas and Puma which have also established worldwide operations. The intense competition is further fueled by globalization and the advancement in technology which has made it possible for organizations to compete aggressively in any part of the world and venture into new markets (Rigsby & Greco, 2003). In this regard, leisure footwear and athletic equipment are some of the divisions within Nike which face very stiff competition from other companies across the world. Indeed, Nike is the largest supplier of athletics footwear and apparels in the whole world. Reliability and performance of the products is a very important step in ensuring the organization survives the intense competition in the market. In any case, the organization strives to be very competitive in all aspects such as support and service, price, product identity and product development. It is basically through these areas that the organization has managed to remain competitive in the market (Kahle & Riley, 2004). The figure below indicates the present position in the industry. From the figure, it is seen that Nike still controls the largest market share despite the stiff competition from other companies. Environmental analysis Like any other major corporations across the world, Nike is faced with both an internal and external environment which normally influences the manner of operations within the organization. The management of the organization will usually analyze these situations and make decisions that can improve the challenges realized. A recent marketing research conducted revealed a very dynamic apparel industry and this forced the organization to revamp its apparel division in order to reflect the changes dictated by the market (Rigsby & Greco, 2003). People are becoming very fashion savvy and even sports products have to reflect these fashions. In the same way, such changes in products design to suite the customer always come with financial commitments which should further be addressed in light of the fact that competition is very stiff in the market. In this regard, Nike has been focusing on the high end market by producing very quality footwear and apparels which are sold at slightly higher prices than the market average in order to attract this market segment (Kahle & Riley, 2004). In the same way, the organization seeks to broaden its product spectrum by reaching both the high end, middle and low end market segments. On the external front, the organization currently faces issues related to labour and factory conditions. It should be realized that publicity is very important to an organization such as Nike and anything that can affect the name of the organization should largely be avoided. The organization has somewhat faced bad publicity on the account of poor working conditions in its production facilities. In a world where social responsibility has become a center stage in the corporate world, the company has seen a reduction in sales especially in the United States as many consumers shun the products due to the problems in labour and factory conditions which are said to be poor. Pricing Considering the important role of pricing in an organization, Nike has designed a pricing structure that enables its products to stay competitive in the market. The prices of the products usually vary depending on the season of the year, the types and sizes of the products and quality. It should be realized that at the formation of the company, the focus was to eliminate the dominance of German companies in the market by providing quality athletic products at low prices. The pricing structure has always been a major strength in most situations but also a weakness in certain instances (Rigsby & Greco, 2003). The products manufactured by Nike are generally considered to be of very sound quality as compared to their competitors in the market. As such, most of them sell at higher prices which are normally realistic on the account of their quality. This has been a major concern to some consumers who opt for other products which can be cheaper. In addressing the pricing challenge, the company has placed much focus on innovation and technology in developing new products. Such projects include the Nike Alpha project. The aim is to make the production process much efficient and cheaper so as to sell the products at the market average. Indeed, there is much potential to be harnessed in the lower end market segments and this has made the organization to focus on improving its pricing strategies. Financial analysis Nike present current ratio stands at 2:26 which is slightly below the average seen in the industry which is 2:28. While this ratio might not really be a major strength for the company, it certainly indicates the ease with which the company can convert its assets to cash in order to meet its short term financial obligations. In the same way, with a quick ratio of 1:43 at an industry average of 1:17, the company is not badly positioned in the market since it can sell fewer inventories than its competitors in the market to meet its financial obligations (Kerin, 2012). The current sports industry inventory turnover stands at 4:34 while Nike has a ratio of 7:32. The organization has greatly been focusing to reduce the inventory levels in order to benefit from increased cash lows and less spoilage. The reduction in inventory benefits the organization through a reduction in warehousing costs, insurance and price fluctuations realized in the market. In order to facilitate this reduction, the organization has established many retail stores which sell its products directly to the customers (Kerin, 2012). In managing its accounts receivable, Nike does not permit the sale of its products in cash equivalents or on credit. The company is less leveraged compered to its competitors and it uses less debt financing to meet its financial objectives. However, considering its liquid position, it is always better placed in addressing most of these situations. The company’s profit margin has been wavering in the past as compared to the industry average (Kerin, 2012). However, the profit margin keeps rising from 6.58% in 2005 to 7.96% in the 2012 financial year. However the ROE has been much lower and this is partly explained by the dropping stock price which as a result of stockholder confidence in the organization. Objectives Like any other organization, Nike has a range of marketing objectives which it normally strives to achieve in the market. These objectives arise from the current situation realized within the organization and in the external environment. The company seeks to employ a wide range of communication tools and strategies in order to meet the challenges of communicating with its stakeholders across the world. This objective arises because there has been a limited interaction between the organization and the customers for a long time. As such, the organization seeks to create a very active community through which it can gain valuable information regarding the state of the organization and how to improve different aspects. In this regard, one major objective is to effectively exploit the opportunities realized through the social media (Kerin, 2012). Indeed, Nike has been an active organization in the social media and has benefited greatly from this association. However, it is realized that a huge potential still exists in the social media which can be further exploited to the benefits of the organization. This is because many people and organizations are currently engaged in the social media and it therefore provides a good platform for marketing, promotion and source of information. One major objective that defines the marketing strategy of Nike is the imperative need to maintain and improve its product quality throughout the world. Nike athletic products have been associated with good quality for a long time and this has been a major strength for the organization. It therefore seeks to maintain this reputation. In addition, the organization seeks to make an entry into some emerging markets across the world (Kerin, 2012). The operations of the company have mostly been concentrated in North America and Europe with low presence in other regions. In this regard, the organization seeks to explore other markets especially the emerging economies and markets in South America, Asia and Africa. There is a very large potential in these markets and Nike is therefore focused on harnessing this potential. In the same vein, Nike seeks to meet the sporting requirement of all people in the society as a way of expanding its market share. In this case, the organization seeks to avail products for men, women, and children, young and old people in the society. The focus here is to ensure that everybody is captured within the products of the organization so that the retail outlets become one stop shop for athletic products. The organization wants to promote sustainable development by creating quality products that can meet the changing demands in the market. One of the major objectives the organization seeks to realize relates to young people. Considering that it is mostly young people who exercise, there has been a growing need to cash on this potential by developing shoe designs that can enable the young people to realize maximum output from their exercises. In the same way, the organization has been facing some challenges relating to its corporate social responsibilities (Holt & Cameron, 2010). These challenges are some of the objectives which the organization is focused on addressing through its marketing strategies. Climate change has become a major concern in the world and many organizations wish to create a good name by maintaining climate neutrality. In light of these objectives, marketing has become a very expensive affair for most organizations. In this regard, Nike further seeks to ensure that its marketing budget remains within reasonable range while also maximizing on the returns from these campaigns (Carbasho & Westport, 2010). Strategy For a long time, Nike’s marketing strategy has rested upon the favorable brand image and this has enabled the organization to transform into a successful multinational corporation with a strong presence across the world. With its “Just Do It” slogan, the brand image is a proper marketing strategy that continues to be used by Nike in venturing further into the market and ensuring success. The slogan has remained in the adverts for a long time and this is a form of creating an identity which can easily be identified across the world. More importantly, Nike has invested heavily in quality and effective advertisements and will continue to ensure that such a process continues (Hartley, 2004). Market segmentation Considering the utility coming with the products of Nike, most of the customers of the organization are sportsmen. In this regard, Nike continues to establish strong partnerships with sporting organizations and teams. This has seen the organization partner with college teams and other athletic teams by sponsoring events and promoting individual members within these teams. Presently, the organization sponsors many athletic programs at Penn State University. In this regard, the organization can easily reach a great deal of consumers or people who can buy the products in future. Nike has been focused on targeting the athletics sector more than any other market segment. This is because the segment provides much of the sales realized by the organization (Goldman & Papson, 2005). Promotion and communication The promotional strategies employed by the organization are always top of the range and very superb. In this regard, the organization has contracted some international celebrities and professional athletes in order to create attention and draw much focus on its products (Goldman & Papson, 2005). Some of the sportsmen who have brought considerable success to the organization in terms of promotion include Ronaldo, Ronaldinho, Lance Armstrong, and Tiger Woods. In addition the organization greatly uses the mass media in promoting its products through advertisements. One important sector the organization has been focusing upon in the recent past includes the social media. Indeed, Nike has a very strong presence in Facebook and Twitter where it interacts with thousands of its consumers. One important advantage associated with the social media is actually the fact that the consumers will always promote Nike’s products on their own with little effort from the organization. As such, the organization is fully committed to creating a strong online presence in order to reach as many people as possible across the world (Carbash & Westport, 2010). Distribution Indeed the mode of distribution used by an organization can greatly determine its success. Nike’s distribution channel has been very effective for a long time. The organization ensures that the retail outlets are always served with products at the right time. In addition, the organization has created many retail outlets in many parts of the world which are meant to ensure that products are available to the consumers at the right time and in the right amounts (Hartley, 2004). The distribution is done on level basis where the high end products are supplied to certain distributers while the low end products are supplied to retail stores like Wal-Mart. More importantly, unlike its major competitors, Nike has launched a global market capitalization strategy which ensures that every market within the world is always served with the right products even in situations where capital might be a challenge. References Carbasho, T., & Westport, C. (2010). Nike. Santa Barbara, Calif.: Greenwood. Esty, D. C., & Winston, A. S. (2009). Green to gold: how smart companies use environmental strategy to innovate, create value, and build competitive advantage (Rev. & updated [ed.] ed.). Hoboken, N.J.: Wiley. Goldman, R., & Papson, S. (2005). Nike culture: the sign of the swoosh. London: Sage Publications. Hartley, R. F. (2004). Marketing mistakes and successes (7th ed.). New York: J. Wiley & Sons. Holt, D. B., & Cameron, D. (2010). Cultural strategy: using innovative ideologies to build breakthrough brands. Oxford: Oxford University Press. Kahle, L. R., & Riley, C. (2004). Sports marketing and the psychology of marketing communication. Mahwah, N.J.: L. Erlbaum Associates. Katz, D. R. (2012) Just do it: the Nike spirit in the corporate world. New York: Random House. Kerin, R. A. (2012). Marketing (9/e [9th ed.). Boston: McGraw-Hill/Irwin. Rigsby, J. A., & Greco, G. (2003). Mastering strategy: insights from the world's greatest leaders and thinkers. New York: McGraw-Hill. Reflective diary The module has greatly been illuminative for me. I have leant very important aspects concerning the concept of marketing. I certainly believe that I can make a good marketer now. I have further realized that marketing is not simply a process of promoting products and looking for a market. It involves much more. It is about conducting research and learning more about the market. I feel more of a better marketer now than ever. I have seen that marketing is a field in business which has its own share of challenges. As such, I am prepared to be a batter marketer and well equipped to handle all important issues I shall encounter in the field. The assignment on Nike has given me the opportunity to view marketing from Fortune 500 perspective. Indeed, I have discovered a lot about the marketing strategies at Nike and how the organization manages to stay ahead in the market despite the stiff competition seen in the industry. It certainly boils down to proper marketing strategies which always have been at the forefront in the management of the organization. I felt very much motivated as a marketer and it has certainly injected a new sense of purpose in me as a marketer. Read More