Marketing Plan for Nike Company - Report Example

Marketing Plan for Nike Company Marketing Plan for Nike Company Executive summary Bill Bowerman and Phil Knight founder of Nike Inc. a heavy weight company in designing, distribution and manufacturer of sports shoes and appeal worldwide in 1964. Since its establishment, the company has grown diversifying its brand in the market that has warden the gap among its competitors such as Addidas, Reebok and Puma, causing it to earn remarkable profit every year. The company has retained its originality increasing its popularity among customers and investors, who have been instrumental in its success forcing the management in adopting strategies to improve service delivery and customers’ satisfaction, love the company. In the evident for the company to streamline its business in the recent years, it has concentrated of its initial goal and objective of designing and marketing its sportswear. This has lead Nike’s expand its market scope because of its outsourcing nature covering the need of emerging market in countries around the world. The advancement of technology resulted in influencing trends in the market and people’s lifestyle heighten challenges among tradition business. However, Nike Inc. set strategies to overcome the problem and retain its position in the market producing innovative and environment friendly products such as NIKE FLYKNIT defeating local market of shoes as it increase casual wear. The company further proposes to pioneer measures and strategies that will facilitate the creation of a sustainable business culture to ensure a holistic growth of the company. This is important because it caters for the need of all, customers, employees as well as the future of the company. Moreover, the company has employed popular stars in sports such as Michel Jordan to advertise its products as people get impressed viewing the company’s product as the driving force behind the celebrity achievements. The strategies have enabled the company stay fresh as a brand and at the top of market. Introduction Nike Company is an international business founded by Bill Bowerman and Phil Knight who worked as partners under the Blue Ribbon sports. Since 1962, Nike international has become a vibrant venture that is a worldwide leader in the design, marketing and distribution of athletic and sports-inspired footwear, apparel, equipment and accessories. It has grown with the company products sold in most countries making it a world’s number one shoemaker. The company has established its root and for ages, it has expanded its branches resulting in the birth of Nike subsidiaries including Cole Haan that designs, markets and distributes dress and casual shoes, handbags, accessories and coats. Converse Inc on the other hand, designs markets and distributes athletic and casual footwear, apparel, accessories while Hurley International LLC designs, markets and distribute action sports and youth lifestyle footwear, apparel, and accessories and Umbro Ltd designs, distributes and licenses athletic as well as casual footwear and apparel. The company has revealed its strategies to bid the stiff competition and achieve sustainable, long-term growth. The paper illustrates a comprehensive market plan for Nike Company. The company Current Marketing Strategy In today’s economy and competition, Nike Inc. has stilled initiatives and strategies to ensure it remains relevant in its global collection of brands. The company has set a revenue target of $ 27 billion by the end of financial year, attributed from major sales expected from the branded products. Moreover, the company has an overview of generating over $ 21 billion of cumulative free cash flow from the usual business operation in the course of the year, 2015. The company’s driving force is their innovative and compelling products, well known to the customers as well as provides satisfaction among the athletes and sports individual that are the company’s greatest consumers (Baker, 2014) The Nike brand is the popularized asset of the company, generating an estimate of about 85% of the total revenue. The recent launch of Umbro, the company has expanded its clients covering the football sector that has increased the business overall growth as Nike Inc. has risen to being the biggest football company in the world (Shank & Lyberger, 2014). The main secret of the company is its focus on consumer, has been instrumental in penetrating the competitive market place. Charlie Denson, Nike brand president during a marketing meeting in the New York, illustrated why the company is a voice to reckon with in the market, “Nike is the most connected, authentic and distinctive brand in the industry”. This has enable the company to constantly deliver quality products, elevating consumers experience in return acting as a strategy to grow the brand and making greater sales by the end of fiscal 2015. Expansion of the Nike brand is yet another strategy for the company to expand its geographical boundaries. The company aims at increasing the availability of its products in the market within North America, Western Europe and Japan because it’s the main market as well as invest largely in greater China, Central and Eastern Europe among other emerging markets as a target to developing markets and consumers. The Company outlined plans to open approximately 250-300 new NIKE-branded stores worldwide over the next five years to elevate the consumer experience and position the brand in the world’s premium shopping locations, as well as drive accelerated growth in digital commerce, leveraging the explosive growth of NIKEiD (Wahlem et al, 2015). The advancement in technology has given rise to new consumers who are young and vibrant with a great sense of fashion. Strategies to work with retail partners will enable the creation of more elevated and differentiate consumer experience not forgetting the inclusion of execution of category-segmented concepts within the key market. The company has a unique wholesale business model whose intention is to be a driving force towards long-term growth with an expectation to make great sales from the retail outlets with an estimate of over 80 percent by the end of the financial year (Shank & Lyberger, 2014). Nike Inc. is working towards strengthening its global retail network with plans to invest around $ 500- 600 million in capital over the coming years to develop the direct to consumer businesses and create streamline to support both owned and wholesale retail productivity and performances. Company current situation and its strategic assessment using the SWOT analysis Nike as a company has grown into an iconic institution with great production from a domestic footwear distributor to a nearly unrivaled international marketer of athletic footwear, apparel, and equipment. The company has great frameworks to ensure that its products reach the consumer directly with little hustle and lately it is developing strategies to boost its market in developing countries that has made it easy to follow and get feedbacks necessary in evaluating variable strengths, weaknesses, threats and opportunities. The company is among the leading designer, marketer and distributor of footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities in the world. In 1968, the company incorporated its ventures, establishing it’s headquarter near Beaverton, Oregon. Over the years, Nike Inc. has grown, offering employment opportunity to around 48,000 people worldwide donating huge revenue exceeding $ 25 billion. Strengths Nike as a company has a tradition of staying on top of the production sector compete ting with Adidas and Puma because of its innovative product manufacture strategy. Advancement of technology and the use of internet website have been instrumental in attracting loyal followers and influential endorsements from elite professional athletes, from Michael Jordan to Tiger Woods. The company is not relenting as just the other day, it launch a new brand called NIKE FLYKNIT, a unique footwear with lots of creative ideas because it uses yarns and fabrics to make a featherweight and seamless upper wear. The brand is suit the running athletes and basketball players as the company aims at offering specific product suitable for each sport thus capitalizing on the growing trend towards minimalist footwear. Strong cash flow is yet strength for the company as Nike generates a lot of free cash flow that is used to boosting its value of shareholders. The president of sales suggests that the company utilizes most of its cash to fund an aggressive buyback program beside a modest dividends payout (Baker, 2014). Moreover, the company stock repurchases is appropriately $ 2 billion annually and it is a continuous activity that to offer support to the share net. The company has formulated the strategy to stay at bay with both new and old rivals that extends beyond 2015. Weaknesses Nike Inc. faces high advertising costs owning to the factor that the company has huge marketing platform battling with other elite companies. This is a great challenge as the demand is large covering total advertising and promotion expenses that tend to grow as the competition from new companies increases for example during the 2013 financial year, about $ 2.7 billion translating to about 11% of sales was allocated to cater for advertising expenses (Carbasho, 2010). The company has invested billions of dollars in building its image that customers recognize and capture their loyalty. The company’s large investment is aimed at sustaining it number one position in the market place. However, the revenue of the business is heavily dependent on its net share of the footwear market. This may allow room for competitors such as those multi-dimensional companies to select market niches under price Nike and to focus their marketing and advertisement. Leading fashion firms in same competition for the similar fame as Nike owning a limited amount of success from sportswear. According to Baker (2014), Nikes advertising expenses escalated to 39% in 2009 because of the higher marketing efforts surrounding the Olympics. Nike’s sport marketing will continue to be its major marketing strategy and for the selection of accessories and souvenirs of Olympics brings in revenue of appeals. Opportunities The company is strategic located and its choice of products is widely used making it stay in the market even with emerging of other products. The following are favorable opportunities for Nike Inc; Favorable industry trends among the company have been essential in its growing popularity not only among the sporting fraternity but worldwide. Nike’s production in minimalist footwear has increased its consumer widening the market scope with latest outfit. In the current market, fashion is important, as production of stylist footwear has assisted Nike’s footwear creating major appeal among its users. In addition, Nike’s products are universally available for wearing as casual because of its comfortable feel and not only during sporting activities. Direct link to consumers: The company has formulated an eCommerce that cover a larger part of the company. Nike Inc. has expanded its base in retail shops and factory stores enabling the company to control its brands in the market as the company manage its inventory and win new wholesales accounts. The company has established many retail shops around the world with multiple stores and online sales. has helped in creating a long-range opportunity for the company targeting the middle class that has an increased desire in participating in sport activity as evident by multiple sponsoring and hosting of the World Cup soccer tournaments in the recent years (Carbasho, 2010). Threats The company faces serious competition from rivals such as V. F Corporation (VFC) that markets its products under the North Face and Timberland labels forcing the company to instill strategies to assisting Nike to stay at the edge of upcoming competitors. Other companies heightening the competition include Sketcher USA and Under Armour that are growing at a rapid pace threatening Nike as it targets young consumers. Nikes competes with many companies that seem to grow each day with an interest to knock out the leading company and take the place. The market place for sports shoes and garments faces huge competitive and the traditional view of Nike to produce a high value branded product manufactured at a low cost at the moment is commonly used and to an extent is no longer a basis for sustainable competitive advantage. Competitors companies are developing alternative brands to take away Nikes market share. The competitive environment and factors influencing the future of Nike In the current era of technology, creativity in product construction is the newest aspect in the market that does not only dwell on improving the goods but also inventing better ones all together. The company has implemented ways to work with other companies, organizations as it develops a market that values and encourage creation of new and sustainable products, processes improving lives by leveraging sustainability as the world’s greatest innovation opportunity. Nike Inc. as a company has continued to be vocal in sportswear that has enabled the company’s growth to new heights raising the bar in the sport industry. The world is facing unprecedented changes, Nike Inc. as a company is not left behind because of several factors such as increased population growth that has escalated product demands leading into formation of the continuous production of inspiration and innovative goods staying at bar with the world infinite competition. Current challenges in the market requires breakthrough innovations to match the desires and growth in the modern wave, for instance in 2012, the company introduced the first footwear made using creative materials called the NIKE FLYKNIT under the new technology and manufacturing process (Baker, 2010). The latest manufacture is great compared to the traditional production methods because the new product is waste less acting as the company’s game changer. Manufacturing is among the core factor influencing the company’s future. The estimation of Nike’s Inc. workforce is more than 2.5 million people that work at various stages throughout our supply chain, including more than 1 million work in the factories that contract directly with the company. This has made the company become a leading manufacturing industry with huge impact on people. Nike Inc. has been in the recent years work towards raising the bar in provision of suitable working conditions, to not only benefit the institution but improve the industry. Developing and communicating the Code of Conduct and Code Leadership Standards, as well as assessing suppliers’ compliance with variable requirements and legal standards. The company has also worked with suppliers to help them develop their human resources management capacity so they can proactively manage and engage their workforce.  Nike has secured the market leadership by spending more on endorsements and innovative product development. The company’s brand equity has increased across its portfolio, but above all the Nike brand itself is exceptional, owning to the underpinning high levels of consumer loyalty. Nike has cemented its relationship with its consumers via social media, and has put measures to push establishment in retail promoting the product awareness and highlight new products that resist the large counterfeit brands market in the emerging countries in which it is seeking to drive growth. Major strategic marketing issues related to the company’s overall goals One of Nike’s main objective statements is to be the world leading sports and fitness Company. The statement describes the sector in which the business belongs to namely sports and fitness industry. However, the statement is not detailed as it fails to mention the products and services the company is specialized in producing. The company’s main agenda such as designing, marketing, distribution and target customers are not captured in the statement. The objective only focuses on the company’s ambition to remain a leading institution in provision of sports and fitness gears. Nike’s future is based on issues that will help streamline its position as number one company because poor labor and unqualified staffing. The problems tarnishes Nike’s image thus misrepresents an iconic company. The company has outlined measures to prevent future obstacles as it works at studying its competitors to ensure that their rivals do not steal their market share. Other important objective includes provision of an environment that influences people to maximize their contribution to Nike and identify focused consumer segment opportunities in the market. The company has put measures to meet the needs of its clients as well as provide quality and innovative services and products internally and externally, growing with technology advancement. Viable strategic alternatives for the company related to strategic marketing The company’s marketing strategies is merely associated to the product image that is favorable allowing it to develop into the largest company dealing with sportswear. Nike’s brand has grown thanks to the company’s logo that is distinct and unique that has been enhanced by commercials for a long period. Nikes as a company has invested heavily in commercials and product production. Market segmentation The company’s major consumers are sport individuals because of the usefulness associated with the products. Athletes are particular when it comes to choosing their gears unlike people who are disinterested in sports. Nike’s focus is on consumers by signing agreements by sportspeople and the company that assist in creating membership and sponsoring clients from college teams. The endorsements made to the company are capable in widening consumers that are number one purchasing clients. However, the company has special attention among athletes more than individuals who have developed interest in the products. Targeting strategies Several strategies have been put in place to cater for the needs of the company’s immediate users, athletes and sportspeople. Product sponsorship by professionals and famous athletes is among techniques used to aim at growing sports individual in colleges and high school who are tomorrow players in winning competitions. Nike’s marketing strategies are well thought through bringing success to the company ensuring that any new product launched by the company is irritable and athletes have no choice but purchase them as well as established sports team buy in bulk for the entire members. Alternatives of Each Issue The company has adopted business models that only suit in the market but rather has remain thriving in the midst of constraints in the world market causing it to attain growth. Challenges are common in any venture and Nike Inc. has been facing transition challenges to widener the consumers’ scope. Nike’s is increasing its physical sells of products and strong ambition to provide quality goods to all its consumers. Transformation of Nike as a company is taking root as it focuses on long-term commitment. The wave is vibrant as it touches every aspect of the business, from the design and brands of the products to how the company engages employees and other businesses in value chain. The future opportunities are available in the market within not only the Sports and Clothing industries; Nike has put attempt joint ventures and acquisitions with companies to expand the product portfolio. The takeover of Converse has proved amount able success; however, new firms in the emerging economies has been targets as a growth strategy for Nike, forcing it to venture in new and alternative products such as jumpers resulting in up fashionable brands to take over the traditional goods. This has increased benefits ranging from economies scales, whilst the company remains a driving force in the market. Relevant marketing-mix strategy to support the alternative The company invested in huge billboards advertisement capturing the public attention and publication in the print media has be essential in forming a strong and powerful advertisement network. The birth of technology has improved services delivery such as the making sales through the internet, E-commerce and globalization influencing NIKE’s brand overcoming all the boundaries in the market. Supported advertisement is another strategy Nike’s Inc. has invested heavily. The company focuses on supported advertisement aiming at elite sport individuals during the excellent sport campaigns such as basketball, football, tennis and golf. Players wearing Nikes products in the field are enough adverts to the entire world and fans increasing the company’s reputations. Brand Identification: The company has specialized in consumer’s choice improving purchase of the product by creating identification to the brand. The consumers and potential buyers rely on the representation value of this brand, and believe it will keep its (good or better) quality in the long-term. This makes its product or service outstanding from an intense competition. NIKE create brand identification, apply sports stars to endorse the its products and seasonal campaign, and develop multiple product lines to announce in many activities and sales promotion. A Plan to Implement the Strategy In the midst of the struggles to become the world’s leading designer, marketer and distributor of athletic footwear, apparel and accessories, Nike has implemented strategies to adhere to outlined procedures. According to Shank & Lyberger (2014), the focus is on innovative sector with a great emphasis based on result from the research done in the marketplace and in development department that aims at creating profitable interest in the end and as the company do the best to produce footwear, apparel and athletic equipment. The goods are comfortable and tend to reduce or eliminate injury, help in athletic performance and maximize comfort. The company has continued to expand its operation in the USA, Asia Pacific, Europe, Middle East, Africa and the American regions trying to reach as many customers as possible. The business level strategy is a combination of the best cost provider and broad differentiation strategy, but more emphasis is attributed on the best cost provider strategy. Nike relies heavily on strategic outsourcing and most of the products are popular outside United States because of the emerging trend in soccer tournament in middle class countries. One of the main reasons behind the success is because of the cost leadership strategy in the extensive network structure that allows them to cancel their alliance with any company that fails to maintain the standards. Nike Inc. works very closely with the suppliers allowing them to produce goods at a very low price and of superior quality with the newest technology that makes them the market leader and the rest have to struggle producing similar goods close to their standard in order to survive in the market. The company works very hard in their marketing strategies, which is one of the primary reasons behind its future success and popularity. In addition, Nike has hired famous basketball player Michael Jordan, tennis player Serena Williams and Tiger Woods who signed a seven-year contract in order to be the spokesperson of Nike (Baker, 2014). During the sport campaigns in 2003, the company spent around US$32.4 million on Net TV commercials while another US $ 39.8 catered for magazine advertisements. The pressure for the company to become the market leader, has forced other companies to follow a rigid and innovative strategy but in order to remain the market leader to sustainable to give raise to a long-term influence. Nike has planned five major programs in order to keep their corporate level strategy sustainable. In order to sustain in the end Nike is now emphasizing more on the concerns about global warming and the environment. The company had to decide to focus more on innovative products that are designed to eliminate toxics and wastes wherever possible. The implementation of a GreenXchange web marketplace has been in instrumental in sharing intellectual property that has been designed to act as a catalyst in the green development, establishing a lean manufacturing and human resource management in order to acquire a more equitable supply chain establish a social program which combines education and sports programs (Wahlen et al, 2015). This is essential in the third world countries as it establishes a new group call for the Business for Innovative Climate and Energy Policy. The ever-changing behavior of the consumer in athletic industry and fitness sector has resulted in the evolution of sportswear into fashionable sportswear. It is unfortunate that Nike Inc. is still using the endorser that is not fashionable, even though they are the champion in sportswear. References Baker, M. (2014). Marketing strategy and management. Oxford: Palgrave Macmillan Carbasho,T. (2010). Nike corporations that changed the world. New York: ABC-CLIO. Lee, M &Johnson, C. (2013). Principles of advertising: a global perspective, 2rd edition. coursebook. New York: Routledge. https://books.google.co.ke/books?id=K1reoWkYLpoC&printsec=frontcover&dq=Principles+of+advertising:+a+global+perspective&hl=en&sa=X&ei=S-tAVanFLc7qaPWagNAJ&ved=0CB0Q6wEwAA#v=onepage&q=Principles%20of%20advertising%3A%20a%20global%20perspective&f=false Shank, M & Lyberger, M. (2014). Sports marketing a strategic perspective, 5th edition. New York: Routledge. Wahlem, J. , Jefferson, J & Pagach, D. (2015) .Intermediate accounting: reporting and analysis. Oxford: Cengage Learning. https://books.google.co.ke/books?id=dNcsBgAAQBAJ&pg=PR2&dq=Intermediate+accounting:+reporting+and+analysis.&hl=en&sa=X&ei=vepAVcb5LsXtaoi3gdgH&redir_esc=y#v=onepage&q=Intermediate%20accounting%3A%20reporting%20and%20analysis.&f=false Nike, Inc. (2014). Our sustainability Strategy. Retrieved on April 24, 2015 from http://www.nikeresponsibility.com/report/content/chapter/our-sustainability-strategy#sthash.fx5cPi8z.dpuf. Appendix Read More