Marketing Principles of Nike - Essay Example

The report sought to evaluate the significance of marketing when selling a particular product to the s. It has been observed that marketing is not only about selling the products but fulfilling the needs of the customers as well. The evidence drawn from the case study of Nike has shown that the company’s success can be attributed to its strong brand name. The company uses different marketing strategies to market its products to different people. Elements of the marketing mix such as price, place, promotion and product are very important when marketing a particular product. These aspects shape the people’s perceptions towards a certain product. As noted in the report, when intending to launch a new product, market research should be carried out first in order to establish the needs of the people. Marketing messages should be tailored in such a way that the product is presented as better than other similar products offered in the market. The message should also be designed in such a way that it can positively change the behaviour and attitude of people. Table of contents 1.0 Introduction 3 1.1 Task1 3 1.2 How Nike increases customer satisfaction 5 2.1 Task 2 6 2.2 Segmentation criteria used by Nike 7 2.3 Market targeting used by Nike 8 2.4 Consumer behaviour 9 2.5 Perception maps 9 2.6 B2B marketing strategy used by Nike 12 2.7 International marketing 13 3.0 Task 3: Nike introducing new jersey 13 3.1 Marketing mix for the new jersey 14 3.2 Place 14 3.3 Price 14 3.4 Promotion 14 3.5 Extended marketing mi 15 3.6 Conclusion 17 References 19 1.0 Introduction This case study based essay seeks to evaluate and explain the marketing concepts that can be implemented by Nike in order to operate viably. The report is divided into three sections which deal with different marketing concepts and how they can be implemented by Nike group in order for it to achieve merit/distinction criteria in its operations. The first task deals with explaining the meaning of marketing as well as carrying out a SWOT analysis for Nike. The second task is particularly concerned with explaining different marketing concepts such as positioning, targeting as well as micro and macro economic factors and how they are impacting on Nike. The third task is an individual report about designing a marketing plan for a new Nike product as well as outlining the marketing strategy that can be used to present the product to the market. The last part of the report gives recommendations that can be adopted by Nike in order to operate effectively so that it can gain a large market share. 1.1 Task I Nike Inc. uses various elements of the marketing process to develop and promote their product as well as to market them so that they can satisfy the needs and wants of the customers. In order to understand how these marketing elements are utilised by Nike, it is imperative to begin by explaining the meaning of the term marketing. a. Strydom (2004, p. 2) define marketing as “a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” On the other hand, the Chartered Institute of Marketing (CIM) define marketing as “the management process that responsible for identifying, anticipating and satisfying customer requirements profitably.” From these two definitions, it can be seen that marketing is a managerial function that is concerned with satisfying the needs of the customers as well as the organization profitably. According to Reuters (2013), NIKE, Inc. “is engaged in the design, development and worldwide marketing and selling of footwear, apparel, equipment, accessories and services.” No doubt Nike embraces the basic tenets of marketing in its operations in a bid to satisfy the needs of the customers profitably. The company harnesses the strategy of brand equity to gain a competitive advantage given that its products are valued and treated with great esteem by the customers since they are different from other similar products in the market. b. Marketing concept is a business philosophy that is concerned with mapping the strategies that can be implemented by the organization in order to achieve its set goals and perspectives. Nike sells its products through own retail stores, internet marketing as well as distributors and licensees (Reuters 2013). This business philosophy is known as retail marketing. According to Kotler & Armstrong (2010, p. 396), “national brand manufacturers, in their drive for volume, have placed their branded goods everywhere.” Nike has also adopted this strategy so that it can gain a large market share through offering its products via many channels. The company is present in different parts of the globe and it employees different marketing tactics to attract customers to buy its products. c. A SWOT analysis is a useful instrument for helping managers to identify internal strengths and weaknesses of a business and external opportunities and threats facing it (Strydom, 2004). This section outlines the SWOT analysis for Nike product Jordan shoes. SWOT analysis for Nike Jordan shoes Strengths Jordan shoe is a popular brand It is a strong shoe It is beautifully designed Weakness The price of the product is higher than other products found in the market Threat The market is characterised by competition from players like Adidas and Puma Emergency of copycats Opportunities The product has an opportunity of further development. According to Strydom (2004), brand equity is the positive differential effect that knowing a brand name has on the customer in terms of response to the service or product. The strengths of Nike highlighted above represent brand equity for Nike. This gives it a competitive advantage over other players since it has a strong brand that appeals to the interests of different customers from various segments. However, the aspect of pricing can determine the level of customer response to a market offering. In some cases, high prices can deter the customers from buying the product but in some instances, the customers may attach value to high prices (Kotler & Armstrong, 2010). In the case of Nike Jordan shoe, it can be seen that the price is too high which is a weakness for the company since the customers can switch to the other competitors in the industry. In order to plan effective marketing strategies, the firm needs to find out all about its competitors (Kotler & Armstrong, 2010). Though competition is health in the business environment, it always poses a threat to the organization. As shown above, the aspect of competition is one major threat to the operations of Nike. Nike is competing for customers with other players such as Adidas and Fubu which also offer similar products used for various sporting activities. 1.2 How Nike increases customer satisfaction The Consumer Affairs Mission for Nike is “To represent the highest service standard within and beyond our industry, building loyal consumer relationships around the world,” (NIKE Inc, 2013). The company uses concerted efforts to create value among the customers and it tries to create loyalty among them so that they can come for repeat purchases as well. The company uses benefits of marketing orientation in order to gain a competitive advantage over the other players through designing marketing strategies in such a way that the customers are likely to identify with the products it offers. This refers to brand loyalty. Basically, loyalty refers to the situation where a segment of the customers develop positive identity towards a certain product or brand in the market (Berry & Wilson, 2001). When loyalty among the customers is created, this helps the company to retain them and this can significantly contribute to the viability of the organization. In this case, consumers attach value on the products offered by Nike compared to the products offered by the other competitors in the same industry. This also helps it to create a large market share which gives it a competitive advantage over other rival players as a result of the fact that it is comprised of many buyers who are loyal to the company. 2.1 Task 2: Micro and macro environmental factors for NIKE The micro environmental factors for NIKE are those variables it can control such as its mission and marketing objectives. In order to fulfil its mission of becoming the best marketer and distributor of sporting apparel, NIKE has adopted various marketing strategies that are designed to present the brand as the best compared to other similar products in the market. The other micro environmental factor that should be considered by Nike is related to its operational capital. Effort will be made to ensure that this new product does not destabilise the financial position of the company. The macro environment is comprised of external factors that Nike cannot control. These factors include the following: political, economic, social and technological (Strydom, 2004). This is known as a PEST analysis and it helps the managers of different companies to take into consideration the risks and opportunities that can be found in a certain business environment. Political factors: The general stability in the political environment in UK has helped Nike to operate viably. This means that its operations are not destabilised by political instability. Economic Factors: A weak Euro can negatively impact on the performance of Nike since this entails that it will record weak sales (Cuizon, nd). Therefore, it can be seen that fluctuations of the currency values has an impact on the operations of Nike Company in the UK. Social factors: People are now conscious about their health and fitness and they often need to jog in order to exercise. According to Cuizon (nd), this entails that they require sporting shoes and NIKE is at the forefront of marketing and distributing sports shoes, apparels and equipment. It can also be seen that people belong to different cultural groups and this shapes their behaviour towards certain products. Technological: Nike uses new information and communication technology to market its products to different customers in different parts of the globe. Nike uses the internet to market various products and it also conducts its transactions online. Customers can purchase any product from NIKE from any part of the world using the internet. The internet is an effective medium of communication as a result of the fact that it can instantly reach a wide range of people in different parts of the globe. Apart from these factors, aspects such as customers and suppliers also constitute the macroeconomic environment for Nike. The company will ensure that suppliers are identified and they have the capacity to fulfil the needs of the customers 2.2 Segmentation criteria used by Nike Basically, marketing strategy outlines the logic by which the firm hopes to achieve its objectives (Kotler & Armstrong, 2010). The firm decides which customers it will serve (segmentation and targeting) and how it will serve them (differentiation and positioning). As such, this part of the report outlines the segmentation strategy used by Nike to identify its customers. Market segmentation deals with an aggregated process that clusters people with similar needs into a market segment (Strydom, 2004). There are different forms of segmentation which involve the following: demographic, psychographic, benefit as well as market based segmentation among other factors. Demographic segmentation involves aspects such as age, level of income gender as well as societal class. On the other hand, psychographic segmentation is comprised of factors such as behaviour and general perceptions of people about a particular product. The two basic criteria used by NIKE include demographic and psychographic segmentation (Mills, 2006). Demographic factors that are considered by Nike when segmenting the market include household income that is further divided into three market segments namely: high, low and middle income segments. For example, Nike uses psychographic segmentation to target the youths and sportsmen in particular with its popular Nike Jordan shoe. Basketball fans are the major targeted customers by Nike company in as far as the mentioned product is concerned. Nike seeks to fulfil different needs of customers regardless of their level of income. Nike has products that are designed to meet the needs of people from different societal classes. Even those people belonging to lower classes can afford to buy the products that are offered by Nike. Products such as Air Jordan 1 Men’s shoes are specifically targeted at middle income to low income earners given that the price of this product is $105. On the other hand, it can be noted that Nike also offers prestigious products that are highly priced since these are associated with high quality. The main segment for this category comprises of the affluent people. A good example is Jordan CP3, men’s basketball shoes that is priced at $170 and the market segment for this product are the rich and affluent males who are active in sports. The main objective of Nike Group is to fulfil the needs of all customers across the board. In theory and practice, it can be seen that the philosophy of high price is very effective given that people associate quality with high prices. 2.3 Market targeting used by Nike Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter (Kotler & Armstrong, 2010). Guided by the marketing strategy, the firm then designs an integrated marketing mix comprised of product, price, place and promotion. In this case, NIKE particularly targets at children when advertising some of its products. According to Mills (2006), prominent people like Michael Jordan are portrayed as heroes and these are often featured in Nike’s advertisements. This person is a star in American basketball and he is admired by many people. Through the use of personalities such as Michael Jordan in its advertising, children are easily persuaded to buy the products since they also aspire to become stars in basketball like Jordan. As such, the message is tailored in such a way that it will appear to the interests of the targeted group. This type of marketing has also changed the behaviour of the parents who are compelled to buy the products offered by Nike for their children. The other product that is targeted at middle class consumers is Nike Flash Pack Shoe which is an all weather shoe, beautifully designed and light and can be worn on different occasions. The approach going to be adopted in this case is undifferentiated targeting strategy. This is where the company decides to ignore market segment differences and target the whole market with one offer (Kotler & Armstrong, 2010). The advantage of this strategy is that it will focus on the common needs of the consumers and it will be advantageous to Nike since the targeted consumers belong to the same bracket in terms of social class. The targeted consumers are not gainfully employed so it has been assumed that they possess the same characteristics. The children constitute a large group of potential buyers of different products. The other reason is that children are involved in different sporting activities at school and this is the reason why they may need to buy shoes used for sports. This target group can also be easily motivated by the marketers through their advertisements. Just like any other group of consumers, the children are motivated by particular products if they associate them with quality. Nike offers products that are associated with prestige and the children in turn buy the products so that they can also compete with their peers in terms of quality shoes. Basically, it can be noted that the children constitute the largest group of buyers of sport shoes and this is the reason why Nike targets them. 2.4 Consumer behaviour The buying behaviour of a certain product by the customers is determined by various factors such as durability of the product as well as its quality (Strydom, 2004). The consumers are mainly influenced by these factors and Nike specifically targets different types of consumers by presenting its products as durable. One of the major factors that influence the customers to buy from Nike is that it offers quality products. If the customers are assured of getting benefits from using a particular product, they are likely to buy that good. The behaviour of the consumers is also shaped by the aspect of price. Fairly priced products are in demand since different people can afford them regardless of their level of income. In some cases, products that have premium prices are often purchased by people who have money. People associate high prices with quality and this significantly impacts on their perceptions of a particular product. The behaviour of the consumers is also shaped by the knowledge they have about a particular product. They usually gain this knowledge from the advertisements and in some cases they may gain this knowledge from their peers. If people speak nicely about a particular product, then the other potential buyers are likely to be inspired to buy them. As noted above, Nike uses different types of advertisements to appeal to the interests of the buyers. The internet is another medium of communication that is used by Nike to advertise its products to different people. Beautiful pictures of various products are presented in different advertisements. The company also uses the strategy of involving celebrities and opinion leaders in marketing its products. This helps the consumers to associate the product with high quality. This can also help the firm to retain its customers and also attract new buyers. 2.5 Perceptual maps Firms often use perceptual or positioning maps to develop a market positioning strategy of their product or service. The aspect of positioning of a product is very important in as far as marketing is concerned. Basically, positioning is arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers (Kotler & Armstrong, 2010, p. 63). It focuses on differentiation which is more about differentiating a market offering to create superior customer value. Nike uses this strategy to differentiate its products from the other goods and services offered by other players in the market. The products offered by Nike are sold through different channels and this helps the company to position its goods in such a way that they are easily accessed by the consumers who may be interested in buying them. The other important aspect about product positioning is that it helps the consumers to access the products with relative easy. Through its own retail stores, Nike is in a position to fulfil the needs of different people since they can easily buy the products of their choice. The other issue is that sporting is regarded as a very popular activity in different parts of the globe. As such, perceptual maps are used by the marketers of Nike products to establish the perceptions of people towards certain products. Positioning is more of how a product is perceived by the people in the market and this helps the company to design its marketing campaigns to different customers. 2.6 B2B marketing strategy used by Nike B2B is a marketing concept that involves different companies engaging in business. In this case, Nike can sell its products to other companies which in turn will market these products. The main difference from business to consumer marketing strategy is that companies often buy products in bulk. When the products are sold in bulk, their price is likely to be lowered. The products can also be sold to businesses that specialise in sporting activities. These companies may include sporting organizations as well as other companies that specialise in marketing shoes that are used for sports. Licensees as well as other franchises are other examples of companies that can buy products for Nike for resale. 2.7 International marketing International marketing differs from domestic marketing in that it targets people from different cultural backgrounds. These people have different perceptions about different products and the marketers ought to take into consideration these factors. Nike uses international media to advertise its products and these advertisements can reach a large number of people. Satellite broadcasting is also used by Nike to advertise its products since this type of media can be accessed from different parts of the globe. When targeting international markets, Nike uses different types of language so as to be in a position to appeal to the interests of different people. The company also uses local media in different countries to market its products. The marketers of the product make an effort to establish the cultural values of different people in different areas since these shape their behaviour and attitude towards a particular product. Opinion leaders in different countries are also used by the company to market its products. Nike continues to flourish in the area of international marketing because its products are presented in such a way that they appeal to the interests of many people. The other reason why Nike thrives in international markets is that it has a strong brand name. Basically, branding is related to the way a product is presented to the customers. Key product features are presented and the customers are also informed about the benefits that can be derived from purchasing a particular good or service. The aspect of pricing also has a bearing on the performance of the product in different countries across the globe. Currencies of different countries fluctuate and this has an impact on the level of prices for different products. However, the most important aspect is that Nike is viewed as a quality brand across the globe. It is a leader in marketing and distributing sporting shoes. 3.0 Task 3: Nike introducing a new jersey Nike will be launching a new jersey for children under the age of 15 years as well as college students. The Chief Executive Officer of Nike Company has said that the jersey is specially designed to reflect the true experience of the company. “We are introducing this new product during the first season to honour a group of loyal customers who have always supported the company. This jersey is specially designed such that it will give the company a competitive advantage over other rival players in the industry,” Said the CEO. The new Nike jersey suits all types of weather and it has a round collar. The product is made of silk material which is light. The material is also easy to wash and the jersey does not take a long period to dry. UK has been targeted for this product because it is popular in different sports and the targeted customers are conscious about fashion. This strategy is intended to help the organization to gain a large market share in the area of designer fashion in sport. The CEO of Nike said that UK has been targeted for this new product launch because it has a stable market. The other major feature of the jersey is that it is emblazoned with a Nike sign at the back. The jersey comes in different colors and it can be worn on any occasion other than sporting activities. The jersey is also in the form of short and long sleeves. The main aim of introducing this product is that the company wishes to promote sporting activities among the children as well as college students. These groups are very active in sporting activities and the company intends to create identity among them so that it can build a strong customer base. The company intends to generate a lot of money from selling this product which will be fairly priced. The company will also channel part of the money generated from the sale of this new product to charity organizations. “We are socially responsible company and we are not only interested in generating profits from our operations. We also realise the needs of the children in particular who come from less disadvantaged backgrounds” said the CEO. The new product will be launched during the beginning of December and the product will be sold in different retail outlets apart from the company operated retail shops. Effort will be made to ensure that the jersey comes in different sizes that fit all the targeted customers. 3.1 Marketing mix for NIKE Jersey This section of the report outlines the marketing mix going to be used by Nike to market its new product. Aspects such as place, price, promotion and product are going to be discussed below. 3.2 Place The new Nike jersey will be distributed through different retail outlets that specialise in selling clothes. The product will also be distributed through company owned retail outlets across the whole of UK. Companies that sell educational products such as stationary will also be targeted for distributing this product since it is targeted at school going children. Large chain supermarkets will also be used to distribute this product to different customers. Campus shops at different institutions will also be used for distributing this product since the targeted customers are students. 3.3 Price The price of the new product will be determined by market factors such as cost of production. It is anticipated that the new product will cost ?10 pounds taking into consideration that our targeted customers are dependents who get money from their parents. The prices are subject to changes in response to currency fluctuations in the UK. During the preliminary days of the introduction of the product, the prices will be determined by the response of the customers to this new product offering. The company will review the prices on a quarterly basis, that is after every three months after the product has been launched. This will help the marketers to make meaningful decisions in terms of adjusting the prices to desired levels. 3.4 Promotion This is a very important aspect of marketing for this product. Price discounts will be offered to clients who buy two or more jerseys at one period. This strategy is meant to attract more buyers as well as to retain existing customers for the company. People are mainly interested in buying prices that have fair prices since they can manage to buy the product without difficulties. Gift vouchers will also be used for the customers who buy this product such that they can also purchase any Nike product at discounted prices. This is intended to appeal to the interests of many people who can be compelled to buy the product. The other method that will be used to promote this new product is advertising. Both print and electronic media will be used to perform this task. The internet in particular will be used to promote the new Nike jersey. Online marketing will be used to reach large audiences of targeted customers. Social media such as Facebook and twitter will be used to promote the product since these communication vehicles are very popular among the targeted customers. Public relations will also be used to portray the image of Nike in a positive light so that more customers can be attracted to purchase the new product offering. 3.5 Extended marketing mix Elements such as process management will be taken into account when marketing this new product. Marketing is a process that requires constant monitoring so that changes can be made in order to ensure that the needs of the customers are fulfilled. The marketers will carry out research in order to establish the needs of the customers from different places. The messages for the advertisements will be tailored in such a way that they will appeal to the interests of many people. The marketers should be in control of the whole process so as to be in a better position to realise the desired goals for marketing this new product. Where there is need for change, the marketers should communicate these changes to the targeted people so that they are not taken by surprise. Physical evidence involves aspects such as the actual appearance of the product to different consumers. Buyers are often attracted to purchase a product as a result of the outstanding features that characterise it. People are also very important to consider when marketing this particular product to the targeted consumers. The ideas from different targeted customers will be taken into account since these can help to improve the performance of the product in the market. The buyers significantly contribute to the performance of the product if their views are considered by the marketers. The people will also be involved in selecting the distribution channels for the product. These people know places that are convenient for them hence they should be consulted before launching the product in the market. People can also be used as vehicles to market the product to other potential buyers. They can influence their peers to buy the products offered by the company to different people. 3.6 Conclusion Over and above, it can be seen that marketing is a process that is mainly concerned with satisfying the needs of the customers and the firm in a profitable way. Marketers use different tools to market their products to different people. Elements such as price, product, place and promotion are very important to take into consideration when marketing a particular product. People usually want to buy product that have fair prices. Promotion is another important strategy that ought to be taken into consideration by the marketers since this helps to attract many buyers. As illustrated in the case of Nike discussed above, it can be seen that the company has managed to attain its goals as a result of the fact that it has a strong brand. The products offered by Nike are very popular in different parts of the globe and they are held with great esteem by different people. When introducing a new product in the market, it is important to take into account the needs of the targeted customers since they are the ones who can determine the success or failure of the product. Apart from factors such as competition in the market, it can be noted that Nike has managed to gain a large market share in the sale of sporting shoes, apparels and equipment as a result of the effective marketing strategies it use. When launching a new product in the UK, it is imperative for NIKE to carry out market research in order to establish the needs of the targeted customers. The success of the product mainly depends on the perceptions held by the targeted customers about that particular product. People are interested in the features of the product as well as the benefits they are likely to derive from using that particular good. The value of the product is also comprised of factors such as price and these influence people to purchase the goods. The marketing tools used by the company to market its product also determine the success or failure of the offering. References Berry, T & Wilson, D 2001, On Target: The Book of Marketing plans. How to develop and implement a successful marketing Plan. Palo Alto Software: New York. CIM, 2013, CIM’s definition of marketing. Viewed 02 November, 2013. From: . Cuizon, G, ND, Marketing Audit of Nike's Strategies. Viewed 02 November 2013, from: . Mills, M 2006, Reebok and Nike use market segmentation to sell to children. Viewed 02 November, 2013 from: . NIKE Inc. 2013, Consumer Affairs. Viewed 02 November, 2013. From: . Kotler, P & Armstrong, G 2010, Principles of Marketing. Pearson Education. Cape Town. Reuters, 2013, Nike Ink (NKE). Viewed 02 November, 2013, from: . Strydom, J 2004, Marketing. JUTA, Cape Town. Read More