Branding Strategy- Nike Inc.U.K - Essay Example

Marketing Report Branding Strategy- Nike Inc. U.K Introduction The fundamental marketing activity of an organization is to convey a positive and optimistic brand image in the minds of its consumers (Park, Jawarski, Maclnnis 1986: 135-145). Currently, there is an insane proliferation of brands in the marketplace which has created a “do or die” situation for the marketers and brand managers all around the world. Therefore, all the multinational companies are pursuing aggressive marketing and branding strategies; differentiate or die, to distinguish their brands from their competitors so as to grasp maximum market share (Sengupta 2005: 1). This report is about the marketing and branding strategies of Nike Inc., the world’s largest sportswear company, which has led the path of success with the technique of acquiring different companies and brands which all distribute through the Nike Inc group. It is undoubtedly recognized as the world’s leading innovator in athletic footwear, apparel, equipment and accessories. It was founded by two people; Bill Bowerman and Phil Knight in 1964. Their philosophy of bringing inspiration and innovation to every athlete is still inculcated in the mission and vision of Nike Inc. Since, Nike Inc. is a global company, this report primarily takes into account the marketing and branding strategies opted by Nike-United Kingdom so as to get an in-depth understanding of the strategies pursued by only Nike-U.K. 2. Objectives The prime areas under focus for assessing Nike-U.K strategy are as follows: Nike’s image and reputation with its customers. Whether Nike’s sales are growing faster, slower or about the same pace as the market as a whole, thus resulting in rising, eroding or stable market share. How well Nike U.K stacks up against rivals on technology, product innovation, customer service, product quality, and other relevant factors on which buyers base their choice of brands Manufacturing skills and technology in products, strength of patents, economies of scale and application of Information Technology All these areas will be covered in the subsequent sections of the report. 3. Competitive advantage of Nike U.K To succeed, the preliminary step for a company is to position its brand in such a way that makes its company’s brand distinctive and more valuable as compared to its competitor’s brand. To earn a competitive advantage, either a company differentiates its products; differentiation strategy or lowers the cost of its products; cost-effective strategy (Ries, Trout 1986: 34). Nike Inc. U.K is a growth company, possessing enormous competitive advantages. It is the leader in product differentiation thereby lowering its overall portfolio risk. All the competitive advantages have aided Nike Inc. in its sustainable growth and success. 3.1 Strong Branding in the eyes of consumers Nike has been able to develop an emotional connection with its target market in all these passed years which has turned out to be its biggest strength as compared to its competitors. It is evident from the fact; In the Best Global Brands of 2012, Inter-brand has placed Nike on 26th position and Addidas on 60th position (Campos 2013). 3.2 Global Supply Chain Nike has almost 1000 factories worldwide and more than 1 million employees which significantly overshadow its competitor’s supply chains. The company is equipped with all the resources needed to supply its products anywhere in the world without a bit of trouble (Campos 2013). 3.3 Permanent and Sustainable Innovation and diversity Innovation and diversity in products is the real asset of Nike. The company is obsessed with innovation. The employees are always curious about their world and how to make it better. Nike has no finish line and the company always tries to bring in the wow factor within their products. That is why Nike Inc. has been declared as the most innovative company of 2013 by Fast Magazine (Carr 2013). 3.4 Innovative Products Nike is known not only for its design and quality excellence but also for the major cutting-edge products it provides. It has an innovative approach which has led to its high reputation and product differentiation. The product line “Nike-ipod” is a classic example of innovative offerings by Nike and Apple collaboration. The benefits of these new products included proper monitoring of time, distance, pace and reduction in calories through the sensors embedded in the shoe and linked to the ipod device 3.5 Controls on Supply Chain Nike does not use a rigid approach to internally produce products rather than buying them ignoring the costs. Instead, Nike uses a rather flexible approach whereby, it outsources and even offshore its production to countries and regions where cheap labor is available. It has not outsourced the production function in entirety to a single producer or a country but rather is using different skills available in different areas around the globe. The outsourcing strategy of Nike works so well that it has set a standard for others in the industry. Regardless of the dispersed production method, Nike is able to keep a track of its production details which gives it a competitive edge over others (Tate, 2010). 3.6 Patents Since Nike focuses on innovation, the cushioning of footwear is the advancement which overwhelmingly suppresses the market share of others in the market. The advancement deals with the comfort of the customer when wearing a shoe with cushion system in place. The cushion system reduces the chances of bumps, allocate pressure equally through the foot and reduces discomfort. To keep the competitive advantage with itself, Nike has acquired 4 patents fr the cushioning technology named as Nike Air, Nike Zoom, Nike Air Max and Nike Shox. Nike’s competitors have been trying to imitate and produce cushioning systems that equate Nike’s quality and surpass its success, but up till now, none of the competitors could achieve this (Fernino et al, 2009). 3.7 Economies of Scale Larger companies achieve more cost advantage by bulk purchasing, mass production and sales and marketing. Since Nike is a large company and carries ample resources to meet its demand, it easily achieves economies of scale reducing the chances of new entrants and competitors’ rivalry on cost grounds. 3.8 Focus on IT Nike’s supply chain is well equipped with IT and related sources. However, it is an emkbedded risk for Nike as it is fully reliant on these IT systems and any issue with them may create severe difficulties for Nike’s financial and reputational position. All these above mentioned competitive advantages have aided the company in earning twice of what they used to earn ten years before. 4 Strategy Brand Positioning of Nike Inc. U.K The positioning strategy of Nike is; to bring inspiration and innovation to every athlete in the world. This is supplemented by Nikes definition of an athlete as anyone who has a body. Nike’s brand is perceived as a high performance brand in the world. Since its inception, Nike has always listened to its customer’s needs (athletes) and designs its products in such a way that athletes can give their best. Nike has tried to create an image of “innovative product” in the minds of its consumers and earned the reputation of highest quality provider in the sportswear industry of U.K. From the simple Marathon shoes in 1964, to introducing the cushioning technology in running shoes in 70s, to the introduction of air technology and high alpha line products are all the marvelous innovations of Nike (Nike, 2010). 4.6 Brand Associations Nike has made its brand image in the market place by associating its product with high achievers of sports in the European Market. Nike has signed Golf player Tiger Woods, Tennis player Rafael Nadal, European Soccer Players Eric Cantona and Robert Mandeni, Football Player Michael Jordan in the past. All these players endorsed Nike brand and Nike emerged as a high quality, celebrity preferred brand in the marketplace. Further, in 2006, Nike collaborated with Apple which indeed was a clever step to take Nike to the heights of Glory. 4.7 Commitment to Global Social Issues Nike started to involve itself in the social responsibilities when the brand was opposed for child labor practices in Asia. They modified their working conditions, improved their compensation packages and became a charter member of fair labor association. All these initiatives have improved its brand image in the recent years. 4.8 Perceived Quality and Brand Awareness The Nike Swoosh is considered to be one of the most recognized logos of the world. The company has always tried to create its brand awareness by increasing the visibility of its logo and created superior value of its brand by celebrity endorsements.  All these sports celebrities communicate athleticism, creating a strong, healthy and valiant image which attracts and fascinates the customers being targeted. For the value placed by customer to those features and character traits that are shown in the advertisements, the product line under the brasnd name Swoosh becomes financially strengthened (Mcnany 2014). 4.9 Brand loyalty Nike has earned a great deal of brand loyalty due to its skillful emotional branding. Nike advertising deploys emotional branding technique of bravery and Heroic character to attract and allure the customers around the globe (Communications 2013). 5 Conclusion Nike indeed is a killer brand in the U.K sportswear industry in terms of innovation, quality, price and profitability. However, here are some of the recommendations for the company: Nike should now target the emerging economies of the world e.g. eastern Europe, Latin America etc. Nike should deploy more cost effective strategies and endorse more women sports celebrities i.e. unsaturated women athlete segment as Nike is somewhat more associated with male sportsmen. Nike should try more to involve their target market in their product design. References Brenner, B., Schlegelmilch, B. B., & Ambos, B. (2013). Inside the NIKE matrix. WU Case Series, 1. WU Vienna University of Economics and Business, Vienna. Carr, A. (2013), “Nike: The No. 1 Innovative Company of 2013”, Fast Company, Web. 21st March, 2014. Communications 602, (2014), “Nike Brand Strategy: Emotional Branding using the Story of Heroism”, Web. 21st March, 2014. Fernino, J., Hare, B., Hemmati, V., Hollister, L., Kerschen, C., Parasiliti, T. & Ukwu, V. (2009). Nike Competitive analysis. Retrieved from kimboal.ba.ttu.edu/.../094/Nike_Competitive_analysis.ppt‎ Micnany, J. (2014), “How Nike Redefined the Power of Brand Image”, Quick to Launch, Web. 21st March, 2014. Nike (2010). NIKE, Inc. - NIKE, Inc. Introduces 2015 Global Growth Strategy. Retrieved from http://nikeinc.com/news/nike-inc-introduces-2015-global-growth-strategy Park, C. W., Jaworski, B. J. and Maclnnis, D. J. (1986), “Strategic Brand Concept-Image Management”, Journal of Marketing, October, pp. 135-145. Ries, A. and Trout, J. (1986), “Positioning: The Battle for your Mind”, Mc Graw Hill Publishing Limited, pp.34, Web. 21st March, 2014. Sengupta, S. (2005), “Brand Positioning: Strategies for Competitive Advantage”, Tata Mc Graw Hill Publishing Limited, pp.1, Web. 21st March, 2014. Tate, W. L., Ellram, L. M., & Kirchoff, J. F. (2010). Corporate social responsibility reports: a thematic analysis related to supply chain management. Journal of Supply Chain Management, 46(1), 19-44. Read More