Marketing for the Information Age - Report Example

Marketing for the Information Age Project Plan essay    Product – The selling of T shirts has become an enormous business today and with the growing technology like the internet, companies are keener to provide the customers with easier and more convenient means to buy online. However, the online shopping of T shirts has created havoc by creating an extremely competitive atmosphere for all the T shirt shop/website owners Customers Over the past few years, particularly the last decade, there has been a difference in the trends of the buyers of T shirts. One change has been the increase in the purchase of the T shirts by women, as a consequence of the proliferated enthusiasm towards football among all genders. Meanwhile, since Nike’s market approach is generally consumer oriented, it has to depend mostly on the fame of numerous fitness activities. As a result, the company usually adapts its product mix so as to be in a better position to meet high demands. Carefully managing its business, the company introduces new products and marketing styles. The target age groups of the products are the customers from ages 15 to 40. For many, the fact that Nike targets a younger generation is the reason why it is one of the most widely acclaimed T shirt companies. Market segmentation Market segmentation in Nike is more diverse because of the widespread network of the company. Although the general focus of the company is on athletes, the main target is male athletes of the ages 15 to 35 as Saloner et al. (2000) states. Also, because of the fact that young people are usually more eager to buy athletic wear, Nike is prospering. It is obviously true that the younger generations are very important for the success of Nike. However, it is also essential to realize that the older generations too hold a great potential for growth. A reason for this is the increasing importance of individual health in the lives of the people and the need for exercise. Niche The market segment of Nike that pertains to the professional soccer players do not just include famous and popular football celebrities, but also the ones who are not that renowned. These players are the ones that have the highest demand for soccer T shirts. The need for T shirts that are both strong in material and at the same time comfortable to wear drives them to Nike. Price is generally not a deterrent for these players as they are either well paid or are sponsored by clubs that meet their financial needs. In fact Nike has many products that are very expensive which means that the target market for the company is generally high income people. Therefore, the key customer value tables have the highest ranking for the soccer players, be they professionals or less renowned. Other people, particularly the young ones who chose brands, are also very likely to choose Nike. Demographics Presently Nike has contracted with more than 700 shops worldwide. Also, it has offices in numerous countries outside the US that total to be 45. The Nike factories are abundantly located in various parts and countries of Asia, namely Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. Further the company enjoys a network of retailers in 200 countries globally. Meanwhile, the number of retailers present in the United States alone account to approximately 18000. One of the competitive advantages experienced by the company in the words of Nike President and CEO Mark Parker is the fact that the company has a diverse network. This means that it is not just restricted to one particular country or a group of countries but operates in various different parts of the globe. The widespread and diverse business portfolio of the company thus helps it to generate huge revenues. This fact is crucial for the business of T shirts because the diverse markets worldwide would help make it a success. More than a year ago, the company decided to set a goal of $23billion of revenue by 2011 and also states that it would give more attention to the realignment of the business categories such that the efficiency is increased, according to Yarrow (2007). Market share owned by each competitor – (Clients) Nike no doubt is one of the best brands of the world. But the truth is that Adidas and Reebok pose a tough competition to Nike. Reebok is usually sponsored by different sports celebrities as it provides a range of choices for the customers. Adidas, on the other hand, after its recovery, has proved to provide the customers with a great range of sports related products. When it comes to e business, the competitors of Nike are keener to use the internet as a means of buying products. Currently, Nike enjoys 47% of the US footwear industry that amounts to annual sales of $3.77 billion as Dusen (1998) relates. Nike has also been allocating resources in most of Asia for almost twenty five years, as mentioned before. The result is that around 500,000 people are directly engaged to the process of production in many regions of Asia. Hence, Nike makes use of an outsourcing strategy in order to enhance production and revenues. A similar strategy is adopted by Reebok. The second leading manufacturer of footwear, Reebok enjoys 16% of the market share in the US with sales that total approximately $1.28 billion. Although Reebok has tried to implement a set code of conduct for its manufacturers, it still lacks the infrastructure possessed by Nike. Adidas has proved to be a tough competitor because right now it is enjoying the fastest growth domestically. It enjoys 6% of the market share with sales accumulating to $500million. Adidas has adjusted its manufacturing strategy by advancing to Asia rather than just being limited to Germany as was the case in the 60s and 70s. Evaluation of the current marketing strategies of the company (including technological) – (Clients) A strategy that causes a great deal of influence on the customers regarding brand loyalty is called corporate responsibility. This is the strategy that is widely exercised by Nike. Nike realizes the fact that it is important to sustain natural resources and also recognizes that it is essential to move to a low carbon economy. For this reason, it has set up a goal that aims to achieve zero waste in the production of products. As a result, it does not just pose to be a company that discourages child labor but also helps in this regard. Dr. Kelly Acton, director of the national diabetes program for Indian Health Services, states that initially she was not so keen to work with this corporation but later the strategy adopted by Nike pleased her. This is because Nike “bent over backwards” in the process of creating a shoe and at the same time respecting the needs of the public. Around 11% of the revenues of Nike, in the year 1999, were spent on advertising and marketing. The fiscal 2007 to 2009 corporate responsibility reports outline that there would be a change in the strategy of Nike in order to prepare the company to operate in the long term rather than just focusing on risk management in the short run. It is important that Nike focuses on the average consumer if it has to achieve success. In the past the company focused on innovations and R&D. Now, however, the company just emphasizes on style and brand appeal. Nike needs to trim some of its corporate endorsement contracts. Also it needs to sign people who share the values and ideals of the majority of the people rather than focusing on higher income earners. People like Latrelle Sprewell, Dennis Rodman, and Roberto Aolomar are some of the athletes who advertise Nike products. The personal and professional lives of athletes may also project a negative impact on the company when the proposed image should be that of a company with a conscience. Conclusion Over the past few years, the manufacturing in the footwear industry has evolved considerably. Also, as the economies in the US and the developed countries have grown, resources are slowly being forced to the developing regions of the world. Nike, Adidas and Reebok are examples of this fact. The reason behind the dominance of these companies is the focus on the skills that they perform better than anyone else. Exhibit 1 NIKE Financial Results, 1997-1999 (in million) YEAR ENDED MAY 199 3 1, 1999 1998 1997199 Revenues $8,776 $9,553 $9,186 Costs and expenses: Costs of sales 5,493 6,065 5,503 Selling and administrative 2,426 2,623 2,303 Interest expense 44 60 52 Other income/expense, net 21 21 32 Restructuring charge, net 45 130 - Total Expenses 8,031 8,900 7,891 Income before income taxes 746 653 1,295 Income taxes 295 253 499 Net income $451 $400 $795 Source: NIKE Annual Reports References Dusen, S. (1998). The Manufacturing Practices of Nike and Its Competitors. North Carolina: The University of North Carolina. Nike. (2007). Corporate Responsibility Report. US: Nike, INC. Saloner, G. Spence, M. Mclntyre, M. and Perlman, E. (2000). Nike – channel conflict. US: Graduate School of Business Stanford University. Yarrow, J. (2007). Nike Finds Another Niche Market. Institute at New York University.Retrieved from < http://journalism.nyu.edu/pubzone/theoryb/node/1365> (Accessed 24 August 2010) Read More