Direct Marketing project for Nike Inc - Case Study Example

Direct Marketing project for Nike Inc. Executive Summary Nike Inc is a multinational corporation that majors on the production of sportswear apparels such as footwears, shirts, headgears, golfing equipment, and many more sports products. It has retail stores widely spread across the world and its operations are categorized into geographyical regions such as Western Europe, Central and Eastern Europe, North America, China, Japan, and emerging markets. On the competitive aspects the company is one of the leading providers of sportswear in the industry with the share value in the retail sector being approximately 21%. In the US, the company is increasingly focusing on soccer due to the increasing momentum of soccer activities. Several trends are being witnessed in the industry with the most notable trend being the desire to sportswear apparels which are perceived to be not only athletically leisure but also appealing to the sports lovers. However, an end to the above trend is likely to slow down sales of these products hence causing the prospects of the industry to be minimally bleak. The company has employed the use of 4Ps (pricing, product, place, and promotion) as part of its marketing strategies. In addition, the use of social media which has not only been rampant in the current era but also significant channel of direct marketing has been employed by the company. Some of the sites that it utilizes are Facebook, Twitter, Nike Plus, Google +, and Pinterest. However, the company faces competition from other companies that offer similar products such as Adidas, Puma, TaylorMade et cetera. Adidas having merged with Reebok has significantly provided competition to Nike Company. The company can include the use of other direct marketing methods such as the use of postcards for offers with the aim of increasing the customer funnel. The use of these methods must entail the consideration of the target market, the offer strategies, and that the company seeks to infiltrate. However, the company is committed to provision of quality customer service through the production of quality goods that consumers love and trust. Besides, it also also incorporated programs geared towards social responsibility. This approach is attributed to the previous boycott in 1990 of the products of the company. Section 1: Introduction The products that Nike are mainly sportswear ranging from shoes, sweaters, shirts, gear which includes sport watches embedded with sensors and GPS socks, and back pads among others. The gears that the company sells incorporate all the different types of sporting activities. The company’s most famous brand is the sports footwear. It has retail stores across the world, retail accounts, and a site for e-commerce, licensees, and independent distributors. In addition, the company’s operations are faceted into 6 geographical locations which are Western Europe, North America, Central and Eastern Europe, Japan, China, and markets that are emerging (Soni Para 4). Overview of the competitive environment (size, market trends, forecasts, etc) Competitive landscape and market size In 2014, the company remained one of the leading players in sportswear industries. It has a share value in the retail sector is 21%. Moreover, the legacy of Nike Inc is often related to the traditional sports in America such as basket ball and baseball. However, the company is focusing much of its attention on soccer which is gradually gaining momentum in US (Moth Para 5). Since the inception of the company into soccer arena, the football business has tremendously grown to approximately $ 2 billion. Nike benefited massively from the last football world cup through its online and offline stores, wholesales partners, and football shops. Nike’s main competitors are VF Corps, and Adidas (Moth Para 3). Trends Since 2014, the popularity of sportswear has been progressively and continuously growing in the US inclusive of the value of the sports apparel. In fact, the value sports footwear has grown by 9%. Moreover, since 2010, the sportswear current growth value has been positive hence several retailers have been motivated to venture into the category. In addition, the trend in athletic leisure has consequently resulted into increase in sales of apparels that are sports inspired. This phenomenon is attributed to the desire of the consumers to have a desired look with low price tags. It is also associated with the increase in performance of the sportswear. Consumers have inculcated a culture of being value oriented since the last economic crisis. Sportswear category is promising in terms of sales performance especially for the new entrants characterized by low prices (Euromonitor Para 4). Prospects The end of trend in athletic leisure in sportswear is one of the major trends of the industry. The end of this trend has the potential of slowing and reducing the growth of sportswear sales. The athletic apparel for women in terms of sportswear has been so dynamic. The driving factor of this trend is the apparels of sports inspired and the adoption of the performance of apparel in reference to daily women casual wear. It is anticipated that the increase in the interest of women in the athletic events is unlikely to drop. Trends in fashion tend to be fickle and retailers in footwear that focus on female may encounter the problem of failure on demand in future (Euromonitor Para 6). Marketing mix (product, price, place, & promotion) The marketing mix strategy that Nike Company has been incorporating is one of the strongest. Product The company offers a range of apparel, shoe, and equipment which are the products that sell the most. Cole Haan as their brand entails a line of casual footwear, dress, and women, men and children accessories. The head gears are marketed under sports specialty. They are marketed through distributor iceskates, and Nike manufacturer team (Marketing91 Para 2). Price The pricing of the products that the firm offers is competitive to other retailers in the shoe fashion. The targeted customers are the determinants of pricing techniques. Moreover, the strategy used in marketing encompasses vertical integration. Through this technique, they own at various different channels besides taking part in several operational channel levels. This enables control of the costs, as well as influencing the pricing of the products (Marketing 91 Para 3. Place The multi-brand stores and exclusive store of Nike across the entire world carry or rather place Nike shoes. Its products are sold to approximately 20,000 accounts of retail and 200 countries in the US and countries respectively across the world. The Nike products are sold through distributors that are independent subsidiaries, and licenses. Its facilities for production are in Asia inclusive of customer service, as well as units of operations worldwide (Markeing91 Para 4). Promotion Promotions are geared towards locations of stores that are accessible. The promotional strategies entail creation alliances that are strategic and targeting through newspaper adverts. It also uses celebrities as brand ambassadors. Some of the renowned celebrities who are ambassadors of the Nike brand are Ronaldo and Roberto Carlos among others. It also sponsors several events and the image of Nike, its name and trademark swoosh have made it one of the most brands that are recognizable in the world. The high revenues of the company are attributed to the power of its brand. Due to the quality of its products, it has built a loyal customer base. In addition, it has strategic marketing techniques that contribute to ensuring that the shoe empire is a success (Marketing91 Para 5). Previous direct marketing campaigns Nike is currently employing the use of social media and digital data marketing techniques seriously. Since it had established digital sports, it launched a global sports firm to enhance the development of new technologies and devices that provide the users with the leverage of tracking data in any sporting activity they participate in. These are part of the efforts of marketing approach that understands the influence of technology, social media, and big data marketing. Nike+ running sensors is a product of the digital sports division that is performing averagely well (Dehlen 408). It is a blockbuster performance tool for tracking that Apple developed. Moreover, runners are able to sign in to Nike to check the level of their performance. The digital sports also provide a wristband for tracking the output energy which is referred to as fuelband. The digital sports venture is a strategy that is applicable globally as it enables the comprehension of the business intelligence and digital strategy needs. The division is not only for the advocating for individuals to posses sports gadgets but also part of the efforts of moving sport lovers and customers across the globe. The implication of these moves is that Nike can closely follow their customers; users build a communal online platform for them forge relationships that are tighter, and engage on long term basis. In addition, for the company to gain deeper relations and comprehension of its fans, the sports brand has heavily invested on in-house social media. The strategy is aimed at obtaining deeper comprehension of the consumer interaction with the Nike brands on its own social media platforms such as Nike Plus inclusive of other platforms. Competitor Profiles (revenues, products sold, etc.) The business faces major competition from other companies that offer sportswear apparels such as Adidas, VG corp, Reebok, Puma, and TalylorMade among others. Adidas Addidas is a German global multinational corporation that deals with sportswear apparels such as footwear, shirts, shorts, jackets et cetera. Just like Nike, the Adidas brand has manage to infiltrate various global market segments and also establish a brand name and image that has consequently lead to the establishment of a loyal consumer base. The biggest scheme of marketing that Adidas Company employed was its merging with the rebook with the aim of providing competition to Nike. Through the $ 3.8 billion deal in the purchase of Canton which was a mass base Reebok, it united two of the most aggressive sports companies. Ultimately, this has created a strong challenge to Nike Company especially on the home turf (North American market). This market segment accounts for approximately half of the sales categories across the entire planet. In addition, Adidas has several league sponsorships. For an instant, the deal between Reebok and NFL where Reebok designs, sells, and markets all the uniforms used in the field and consumer apparels that are licensed. Besides, Reebok has had lucrative long term deals with outfits such as WNBA, NBA, and NBA Development League. The Addidas advertising strategies usually employ the use of motivational approach. For example, its current theme is “Impossible is nothing.” It has also dominated in soccer events where soccer celebrities are employed as brand ambassadors and they also sponsor events such as FIFA World Cups. Section 2: Direct Mail/Email Campaign Campaign strategy & rational To incorporate the use of direct mail and email as strategies for campaigning, the firm can opt to the target market through mailing the consumers through postcards that contain the products present in their physical stores as well as online platform inclusive of other channels. Customers who will receive the postcards will 30% on purchase of the Nike products and for additional prizes, some of the postcards presented will be incorporated into sweepstake drawings. Similar postcards will be emailed to some exclusive customers who will print them out and bring them to the various points of purchase at various outlets or store. They will have similar effects to those mailed postcards. Despite Nike employing the use of various direct marketing methods, the techniques employed have not been aggressively enough to suffocate the sportswear market in a bid to gain competitive leverage in the market. Target market considerations / RFM factors There are several diversified target markets that the company aims at infiltrating to maximize not only its influence in the competitive market but also to optimize its bottom line. One of such targeted market segments that the company seeks to reach out to is mainly sports personalities such as athletes. However, it also targets sporting bodies or clubs through by providing them with sports merchandise. The main brand that targets the athletes through the sales of products such as sporting equipment, shoes, and clothes is Nike. It also markets casual goods which are referred to as target premium customers by the Inc brand. The other premium brand is Jordan Brand which also targets athletes. The brand referred to as the Hurley International LLC also targets the athletes though it emphasis are laid on activities related to young person’s such as surfing and skateboarding. On the other hand, the golf bran targets golfers. The market segments that have not been aggressively exploited are female consumers, consumers in Western Europe and consumers in China. These market segments are targeted due to the anticipation that there are higher potential chances of success. Consumers are spending more on sports apparel due to the need or desire to be classy while athletes want apparels that maximize their output in the sporting activities that they take part in. Besides, events such as soccer are gaining momentum in the US and other nations, as well and consumers who are soccer lovers have the prospects of purchasing Nike products. List strategy For the targeted market to be reached, focus will be on utilizing information obtained from customers who will be obtained from the Nike’s digital sporting data and social media platform. The information on consumers will be demographically faceted is such as a way that the dynamics and differences of consumer behavior are incorporated into provisions of the brand to the different countries. The lifestyle of the consumers will be utilized. It will allow identification of consumers in the targeted market regions by age and the specific interests of these consumers. Offer strategy The type of offer strategy especially in the company’s physical store will include provision of incentives that are aimed at increasing traffic into the stores inclusive of the Nike’s website. AS illuminated earlier, postcards will be mailed and emailed. These postcards will contain information concerning the products of the company. The eligibility of taking part in sweepstake drawing will solely depend on the possession of the postcards where the eventual winners at the end of various campaigns that the company will hold in attempts of marketing its sport apparels and accessories. Section 3: Direct Response in Social Media The use of social media has significantly increased over the past few years and it has emerged as not only a popular direct marketing platform but also useful and important element in the contemporary marketing campaigns. This is driven by the fact that the utilization of these sites with the aim of promoting products has a higher probability of success. In fact, the spending on social media all over the world for the purpose of advertisement was approximately $ 24 billion in 2014. Evidently, this platform has proved to be not only fruitful but also successful. Today, instagram and twitter are among the most popular sites of social media that are available today. Therefore, intensive use of these sites is likely to maximize the success of Nike Company. These channels will be employed to create and increase awareness of the products of the company as well as products that will be launched into the market in future. Some of these channels will be the use of Nike plus platform, twitter, and instagram, facebook, google +, and Pinterest. In addition, sports tends to be an inherent social activity hence brands such as Nike is a perfect fit especially in the social media market. Social Media Circulation As noted above, Nike employs the use of Pinterest, facebook, google, and twitter. Nike has a distinct Facebook page for every category of its products. It encompasses snowboarding, golf, and Fuelbrand. It has two football pages where one version is for the American sport while the other one encompasses every individual in the world. The latter version has the most fans (17.2 million) in comparison to other Nike pages. However, its main corporate account has a following of approximately 12.3 million while the American Football has 2.4 million fans on the Facebook page. The majority of these pages are updated on daily basis though for the corporate page, updates are made on a weekly basis. Currently, a lot of emphasis is geared towards the “Be Mercurial campaign” which is aimed at promoting the Mercurial Vapour IX boots, as well as videos of boots that are personalized which the customers have purchased online through NIKED. Contents related to the products are getting relatively more interactions as opposed to posts the feature players (Guarda Para 4). Twitter Just like Facebook, subsidiary brands for Nike such as basketball, golf, football, and Nike.com have individual feeds. The focus on the feeds on twitter sites is on responding to comments instead of marketing messages. The rates of responses towards the comments are astonishing. For an instant, Nike.com responds to approximately 100 tweets on daily basis in relation to enquiries concerning orders, details of products, and stock information. Pinterest Nike has a well defined demographic profile that is appropriately researched for the Pinterest users deemed average. It is the only account that has been preserved for Nike Women. The site provides the opportunity for the development of the identity of the brand and the creation of pinboards that reflect the value of the company. Google + The company has only one official page for Google +that gives it little attention. The updates on the platform are on weekly basis and are often reposted from Facebook. Nike+ Nike has also established its own unique social platform for marketing itself called the Nike+. Currently, the site has roughly 6 million members that utilize the site approximately thrice in a week. Moreover, Nike has ranges of developed training products digitally associated with the Nike plus Fuelbrand. Its impact has been significantly huge as it tends to tap into the social aspects of sports since the users have the leverage of tracking their progress using various devices and the progress are shared online. Target market considerations The target market is focused on the followers of Facebook, Google +, Twitter, and Pinterest inclusive of the followers of the accounts of competitors. In addition, the accounts are also targeted by the geographic regions. For an instant, the facebook account for the American Sports is distinctly for the Americans. The considerations entailed in these social media platforms are for the purpose of promoting the product of Nike as a brand, as well as offer strategies through their various accounts (Guarda Para 4). Offer Strategy Creative / Copy & Offer Strategy The copy strategy is mainly on the postcard advertising. The postcard’s back will have the logo of the company and will include the date of offers and draws of sweepstakes inclusive of the details of the products that the company offers. The sites for campaign are also embedded in the postcards in an attempt of creating traffic at the physical stores of Nike. Kevin………. Participate in the promotional offers of Nike by presenting this postcards at Nike store and get 40% offer on any desired product The products offered are: All sportswear and Accessories for all different types of sporting activities Nike Inc Timing and frequency of ads The company intends to 150,000 directed mail offers mainly in the US market for one week before the promotion will commence in August this year. These directed mails will be followed up by emailed postcards to the exclusive customers. Geographic Location and Coverage The initial campaign will be in North of US states after which it will later be spread across other regions and the world as a whole. This will encompass the populated cities in the North of US. Section 4: Addendum: Customer Service/Fulfillment Goals / Strategy Nike aims at providing its customers with quality, long lasting sportswear products through the creation of products that consumers not only love but also trust. They encourage their clients to give their opinion their products through the social media sites (Torossian 209). This is anticipated to help in the creation and increase in consumer base, as well as retention of the already existing consumers. In addition, it will serve as a proof that the company is willing to listen and hear the feelings of the consumers. The social media platform allows consumers to voice their opinions and thoughts negatively or positively by logging into the different sites that the company uses. It builds the relationship between the company and consumers besides the creation of the brand awareness and loyalty of the customers (Birch Para 6). Social Responsibility & Ethical Considerations of overall campaign Social responsibility is a principle that stipulates the need for companies or firms to make contributions that are positive to the society. In 1990, there was global boycott of campaign against Nike which was successful. The boycott was attributed to the company denying responsibility for the various malpractices in its sub contract outlets (Birch Para 5). Due to the impact of the boycott, the company has continued to operate with transparency and openness. Nike Inc and other sportswear companies such as Adidas have often strived to stop their suppliers from dumping chemicals that are toxic into water bodies across the world. Nike had announced its plans by the year 2020 to go toxic free. The ethical principle that dictate the operation of Nike provision of quality products to consumers, as well as pricing of the products in a manner that commensurate the quality and expectations of the consumers (Birch Para 7). Conclusion Direct marketing has often proved to be a temporary and long term strategy of building the image of brands in the competitive business environment. Social media platforms are emerging as ideal avenues in which companies can directly market their products as well as create relationship with their consumers. Moreover, the sites provide companies with the leverage of comprehending the consumers and their expectations besides the creation of loyalty base in the market segment. The use of postcards and provision of offers to consumers are also vital in the direct marketing strategies. Work Cited: Soni, Phalguni. Traditionally Innovative: The History of Nike.2014. Web on 21st May 2015 < http://marketrealist.com/2014/12/traditionally-innovative-the-history-of-nike/> Euromonitor International. Sportswear in the US. 2015. Web on 21st May 2015 http://www.euromonitor.com/sportswear-in-the-us/report Markeing 91. Marketing Mix of Nike. 2015. Web on 21st May 2015< http://www.marketing91.com/marketing-mix-nike/> Guarda, Dinis. Nike Takes Digital Data and Social Media Marketing Seriously. 2013. Web on 21st May 2015 < http://www.intelligenthq.com/social-media-business/nike-takes-digital-data-and-social-media-marketing-seriously/> Moth, David. 10 awesome digital marketing campaigns from Nike. 2013. Web on 21st May 2015< https://econsultancy.com/blog/63129-10-awesome-digital-marketing-campaigns-from-nike/> Birch, Simon. How activism forced Nike to change its ethical game. 2012. Web 21st May 2015< http://www.theguardian.com/environment/green-living-blog/2012/jul/06/activism-nike> Torossian, Ronn. For Immediate Release: Shape Minds, Build Brands, and Deliver Results with Game-Changing Public Relations. New York: BenBella Books, Inc, 2011. Internet resource. Dahlen, Micael, and Fredrik Lange. Marketing Communications. Hoboken, N.J: Wiley, 2008. Print. Read More