NIKE SCENARIO TO ANSWER THE QUESTION/TASK - Essay Example

? Nike Scenario to answer the question/task Table of contents Introduction 3 2. Marketing decisions of Nike Inc. – analysis 3 2 Macro and micro environmental factors 3 2.2 Criteria for market segmentation 4 2.3 Consumer wants 4 2.3.1 Targeting strategy for a selected product 4 2.4 Buyer behaviour and marketing activities in Nike Inc. 4 2.5 Nike positioning strategy 5 2.6 B2B strategies and B2C strategies in Nike Inc 5 2.7 International marketing vs. domestic marketing 5 3. New product for Nike 6 3.1 Product description and advantages 6 3.2 Customer convenience 6 3.3 Price of the product 7 3.4 Promotional activities 7 3.5 Additional elements of marketing mix 7 4. Conclusion 8 References 9 Appendix 10 1. Introduction The structure of marketing plans used by companies worldwide is not standardized. Different criteria are likely to be used by each firm when designing its marketing strategy; the availability of resources and the firm’s mission/ objectives are critical factors that influence a firm’s decision in regard to the promotion of its products/ services. Current paper explores a series of marketing issues related to Nike, Inc. a firm quite popular in the global sports industry. The review of the relevant literature has proved that the success of Nike in the international market is not achieved by chance; rather, it is the result of a carefully designed and closely monitored marketing strategy which is characterized by the emphasis to customer needs rather than to the firm’s profitability. 2. Marketing decisions of Nike Inc. – analysis 2.1 Macro and micro environmental factors The marketing decisions of Nike Inc. are influenced by a series of macro and micro environmental factors. These factors could be described as follows: 1a. Macro environmental factors (Petzer et al. 2006): a) political; the political environment of UK is stable; Nike would have no pressure to face from unexpected changes in the country’s political environment (Stewart 2013); b) economic; the economy of UK shows signs of recovery, after 5 years of severe financial turbulences (Stewart 2013); c) social; in UK the social environment can be characterized as quite stable; no conflicts are likely to appear between social groups, or, at least, such conflicts have occurred decades earlier, d) technological; in UK technological advances are highly appreciated by consumers; products that are based on the use of advanced technology are expected to be welcome; and e) legal; the country’s rules on company taxation are considered as the most favourable in Europe; corporate activities are highly supported in UK, a fact that keeps the country’s performance in regard to FDI quite high. 1b. Micro environmental factors (Petzer et al. 2006): a) mission and objectives: the firm’s mission has been described as “To bring inspiration and innovation to every athlete in the world” (Nike Inc corporate website 2013); b) organizational departments: In Nike Inc. operational activities are distributed among departments with different responsibilities; in this way, customer services are kept at high levels since the firm is able to respond successfully to its obligations towards its customers (Nike Inc corporate website); c) resources; in Nike emphasis is given to R&D; there is no barriers in regard to resources required for securing quality of products and on-time delivery (Nike Inc corporate website); d) processes; Nike emphasizes on the high performance of its supply chain management so that products meet customers’ needs in terms of time and in terms of quality (Hutt and Speh 2009); and e) culture; the firm’s products have been related not just to specific daily needs but also to specific lifestyle (Van Tulder and Zwart 2005); thus, the firm’s culture has incorporated the firm’s willingness to inspire athletes with the consumers’ needs for a unique lifestyle, as presented in the firm’s campaigns (Van Tulder and Zwart 2005). 2.2 Criteria for market segmentation In Nike specific segmentation criteria are used for the firm’s products worldwide. These segmentation criteria are (Pride and Ferrell 2011): a) gender; the firm has developed separate products for addressing the needs of men, women and children, b) level of involvement in sports; the company has developed products that address specifically the needs of athletes and other products that address the needs of people who are not engaged to sports; c) price; the firm has developed products of different prices, so that these products are affordable to people of different financial status. 2.3 Consumer wants 2.3.1 Targeting strategy for a selected product One of the products included in the company’s running shoes, the ‘Free Flyknit’ has been chosen for suggesting a targeting strategy. The specific product addresses women, preferably those who have incorporated running in their daily activities. In regard to the specific product a concentrated targeting strategy (Lamb et al. 2010) should be preferred. The specific targeting strategy would be most appropriate as it would focus on a specific group: i.e. women who like running, as part of their daily life. Such targeting strategy would have the advantage of ‘strong positioning and of concentration of resources’ (Lamb et al. 2010, p.275). The practice of the firm to employ a unique method for securing maximum flexibility in the particular product can be considered as part of its efforts to address the needs of a particular group of consumers, as described above. 2.4 Buyer behaviour and marketing activities in Nike Inc. The marketing activities of Nike are highly influenced by buyers’ behaviours. Reference should be made to the following examples: a) in regard to product availability; it has been proved that ‘a consumer who tries to find a pair of black Nikes and cannot find them he is likely to buy a pair of black Reebok’ (Pride and Ferrell 2011, p.149); b) in regard to brand loyalty; the customers of Nike tend to be loyal to the firm (Berger 2008), a fact that it is emphasized in the company’s marketing messages and c) reference groups; those groups that are able to influence the buying behaviour of people (Lamb et al. 2009); for example, Nike has signed a contract with ‘the basketball star LeBron James’ (Lamb et al. 2009, p.157) since the latter has been found to be quite popular to young people. 2.5 Nike positioning strategy Nike has developed a positioning strategy through which it managed to delete the limits in regard to the average age of its customers; reference is made to the Airwalk products that attracted the interest of consumers of all ages and made the firm quite popular to people of different financial status and age (Michman et al. 2003). Through the years the firm’s positioning strategy has led to the transformation of its symbol to a symbol of a particular lifestyle (Michman et al. 2003); such achievement offered to the firm the chance to acquire its unique identity in the global sports industry (Michman et al. 2003). 2.6 B2B strategies and B2C strategies in Nike Inc Nike focuses on the needs of athletes; then, the needs of other consumers have been addressed through products developed gradually (Procopio et al. 2012). One of the key characteristics of Nike’s B2B strategy is its excellent performance in regard to supply chain management (Hutt and Speh 2009). In this way the firm is able to meet customer demand, within the time set and at the quality standards expected by customer (Hutt and Speh 2009). As for the B2C strategy of Nike, this would be described as follows: emphasis is given to ‘marketing campaigns focusing on lifestyle – complete with a philosophy of life and key target group’ (Van Tulder and Zwart 2005, p.378). 2.7 International marketing vs. domestic marketing The key difference between international marketing and domestic marketing seems to be the ‘multidimensionality and complexity of markets in which a company operates’ (Doole and Lowe 2008, p.7). From another point of view, it has been noted that in domestic marketing the marketer has to study the characteristics only of his domestic market, a task that is quite easier from developing a market research in regard to the global market (Onkvisit and Shaw 2008). Nike’s international strategy can be characterized as a differentiation strategy, being based on the participation in all major athletic events, such as Olympics and the employment of different marketing strategies among the firm’s divisions (Li et al. 2011). Another characteristic of Nike’s international marketing strategy is its extremely high cost: the firm’s annual spending on advertising can reach ‘billions of dollars’ (Thornson and Duffy 2011, p.70). It is quite difficult, if not impossible, for the firm’s rivals to develop an international marketing strategy of similar cost. 3. New product for Nike In UK Nike Inc could introduce a new product, based on the following two criteria of market segmentation (Pride and Ferrell 2011): a) Customer size: the new product will address Individuals across UK who are interested in Sports and b) Product use: the new product could support daily needs of people who like to be engaged to sport activities and who also prefer to wear athletic shoes in their daily activities. 3.1 Product description and advantages The new product could have the name ‘EveryRunner’ and would have the following features: a) its design will be similar with that of the firm’s running shoes, especially with the ‘Nike Free 5.0+shield’ (Nike corporate website, Running 2013); it would be differentiated from the shoe mentioned above as of the following point: it would be more flexible, using technology similar to ‘Free Flyknit’ so that it can be used a lot of hours daily. On the other hand, having the structure/ material of the ‘Nike Free 5.0+shield’ would make the shoe stronger towards climate changes allowing its daily use even during the winter. The key advantages of the specific product would be the following two: a) it would address people of all ages, including young and elderly; b) it could be used for several hours daily no matter the climate conditions. The shoe would address the needs of people living both in rural and in urban areas of UK. The specific product would be ideal for people in UK where walking for a long time is an indispensable part of daily life, either for professional purposes or for entertainment. 3.2 Customer convenience In order to secure customer convenience the firm should change its existing distribution strategy. Indeed, ‘EveryRunner’ should be available not only by the firm’s authorized distributors in UK but also by large retailers, such as ‘Marks and Spencer’ and ‘John Lewis’. 3.3 Price of the product The price of the product would be lower than that of the firm’s running shoes. More specifically, the ‘Free Flyknit’, a running shoe for women, has a cost of 160 euro while the price of ‘Nike Free 5.0+shield’, a men’s running shoe, is estimated to 120 euro. The price of ‘EveryRunner’ would be no more than 70 euro, so that it is accessible to people of different financial status. A product addressing the needs of people of all ages should be of average to low cost otherwise it would be unable to reach its target market. In addition, in the last five years, i.e. since the beginning of the recession of 2008 UK economy had to face strong pressures (Stewart 2013); signs for recovery have appeared but doubts seem to exist in regard to the end of crisis for the UK economy (Stewart 2013). Moreover, between 2008 and 2012 the average income of people in UK has been reduced by 3.8%, with signs for further decrease, as made clear through the graph in Figure 1, Appendix. Therefore, the high majority of consumers in UK would not be expected to spend more than 70 to 80 euro for buying a product of such characteristics. 3.4 Promotional activities The new product would be promoted through the following promotional plan: a) a series of events would be arranged in London’s larger shopping centres, as described in Table 1 in Appendix; b) the entrance to these events would be free for the shopping centres’ visitors; c) the events would be arranged for days with high number of visitors, such as Friday/ Saturday; d) during the events promotional leaflets would be distributed to visitors of the shopping centres; e) also, contests would be arranged through which participants could have the chance to win for free the ‘EveryRunner’ shoe; f) in the events people would be also informed on the advantages/ benefits of the specific product; g) the potential to buy the product at lower price could be offered to people participating in these events, aiming to attract visitors to the sites of the events and to increase the awareness of people in regard to the firm’s new product. Popular British athletes could be asked to participate in the event and to state their view in regard to the qualities/ benefits of the new product. At the next level, the new product should be marketed through the firm’s existing marketing channels, such as its accounts in social media sites and the media. 3.5 Additional elements of marketing mix The marketing plan of the new product should take into consideration three elements, which are part of the extended marketing mix. Reference is made to: ‘people, physical evidence and processes’ (Rao 2011, p.162). In regard to the specific product these elements would be analyzed as follows (Rao 2011): a) people: the potentials of the firm’s employees to participate in the promotion of the new product should be taken into consideration; training sessions could be possibly arranged for the staff participated in the firm’s marketing events but also for the staff working in the sales department of the organization; b) physical evidence; people across UK would have the chance to see the product in the marketing events incorporated in the product’s marketing plan; in this way, potential customers would have the chance to develop a view on the product’s characteristics and quality, not just by leaflets but also by personal experience and c) processes; the availability of the product for customers around UK should be secured; an effective mechanism should be developed so that products would be available either immediately or within 1-2 days, maximum, from their order. 4. Conclusion The development of an effective marketing plan related to a new product is a challenging task. In regard to such task, a series of issues have to be taken into consideration: by ensuring that consumers have the chance to develop a personal view, usually by checking the product themselves, marketers can increase the chances for the welcoming of a product in the target market. The new product of Nike should be promoted to consumers across UK using a specific promotional plan, as suggested above. Emphasis should be given not only in product’s quality but also in product’s availability since failures in product’s delivery would destroy the product’s image in the particular market. The general rules of marketing would be particularly helpful at this point for minimizing risks and for increasing the chances for the product’s success. References Berger, C., 2008. Strategic Sports Marketing - the Impact of Sport Advertising Upon Consumers: Adidas - a Case Stude. Norderstedt: GRIN Verlag Doole, I. and Lowe, R., 2008. International Marketing Strategy: Analysis, Development and Implementation. Belmont: Cengage Learning EMEA. Hutt, M. and Speh, T., 2009. Business Marketing Management: B2B. Belmont: Cengage Learning. Lamb, C., Hair, J. and McDaniel, C., 2010. Essentials of Marketing. Belmont: Cengage Learning Lamb, C., Hair, J. and McDaniel, C., 2009. Essentials of Marketing. Belmont: Cengage Learning Li, M., Macintosh, E. and Bravo, G., 2011. International Sport Management. London: Human Kinetics. Michman, R., Mazze, E. and Greco, A., 2003. Lifestyle Marketing: Reaching the New American Consumer. Westport: Greenwood Publishing Group Office for National Statistics, 2013. “Median household income fell 3.8% between 2007/08 and 2011/12” Available at http://www.ons.gov.uk/ons/rel/household-income/middle-income-households/1977---2011-12/sty-middle-income-households.html [Accessed at 11/12/2013] Onkvisit, S. and Shaw, J., 2008. International Marketing: Strategy and Theory. London: Routledge Petzer, I., Hern, L., Klopper, H., Subramani, D., Wakeham, M., Chipp, K. and A. Berndt, 2006. Fresh Perspectives: Marketing. Cape Town: Pearson South Africa. Pride, W. and Ferrell, O., 2011. Marketing. Belmont: Cengage Learning Procopio, M., Spielvogel, P. and Thomson, N., 2012. 42 Rules for B2B Social Media Marketing: Learn Proven Strategies and Field-Tested Tactics Through Real World Success. Cupertino: Happy About. Rao, R., 2011. Services Marketing. New Delhi: Pearson Education India Stewart, H., 2013. “Is Britain's economy really on the path to prosperity?” The Guardian. November 30, 2013. Available at http://www.theguardian.com/uk-news/2013/nov/30/economy-osborne-autumn-statement-prosperity [Accessed at 11/12/2013] Thornson, E. and Duffy, M., 2011. Advertising Age: The Principles of Advertising and Marketing Communication at Work, 1st ed.: The Principles of Advertising and Marketing Communication at Work. Belmont: Cengage Learning. Van Tulder, R. and Zwart, A., 2005. International Business-Society Management: Linking Corporate Responsibility and Globalization. London: Routledge. Appendix Figure 1 – Average National Income in UK, from 1977 to 2012 (source: Office for National Statistics 2013) London the Brent Cross Shopping centre the Covent Garden Market the Westfield Stratford City the Mall Shopping City the Southside the Westfield Liverpool the Liverpool One Brighton the Churchill Square Manchester the Intu Trafford Dudley the Merry Hill Shopping Centre Gateshead the Intu Metrocentre Table 1 – Certain of UK’s major shopping centres (source: http://www.bcsc.org.uk/centrelist_100.asp) Read More