Marketing Planning Management and Control - Assignment Example

Marketing Planning Management and Control Table of Contents Table of Contents 2 Question 3 Reason for changes for the last ten years 3 PESTLE factors 3 Question 2 5 Boston Consulting Group’s Product Portfolio Analysis 5 Ansoff’s Growth Matrix 8 Question 3 9 Advantages and disadvantages of geo-demographic segmentation 9 Reference List 10 Question 1 Before launching a product, it is very important to properly judge the market. Hence, being a Marketing Assistant of Nike, U.K., it is vital to judge the sportswear market for the last 10 years in order to get an idea about strengths and weaknesses of the company as compared to the competitors and the ways to overcome these weaknesses. This will enable a successful launch of the new product, which can be then sold with positive results. Reason for changes for the last ten years There were a number of phases that the sportswear market had witnessed globally. While the period from 2003-2007 was the booming phase, the recession phase of 2007-2009 experienced a fall in the demand for sportswear, which resulted in global decline of this market and finally, the recovery phase resulted in growth of this sector again. Summing it all, the result that is obtained is an upward trend in the global sportswear market. The sportswear has a huge market worldwide and is a profit making sector, where any new developments will always be fruitful in terms of sale and profitability. The demand for various sportswear and especially, footwear related to this market has shown an increasing trend, since the last ten years. The reason for changes in the global sports market can be attributed to product innovation and proper marketing. In a mature industry, both these activities are essential to cater to the changing demand and needs of consumers. Without proper innovation and marketing, athletics sportswear market could have never emerged as a profit making business, since the last ten years. The changes in sportswear were gradually made according to the demand and choices of the athletes. Therefore, there is proper marketing and innovation in the sportswear sector (Douglas, 2004). PESTLE factors PESTEL acts as a tool or framework based on which marketers monitor and analyse the macro environmental factors that can affect an organisation. The term PESTEL stands for Political, Economic, Social, Technological, Environmental and Legal. Through usage of this tool, analysis of the strengths and weaknesses of any organisation can be done in an efficient and adequate manner (R. Kinney, D. Kinney and M. Kinney, 2013). The PESTEL factors that might have affected changes in the market for sportswear in the past ten years can be described as follows: Political Factors- The political factors which have brought changes in the sportswear market were policies made by leading companies. The top companies started to monitor and control the hazardous substances with a motive to protect environment and human health. For this purpose, they eliminated the usage of PVC and introduced substitutes like, ethyl vinyl, polyurethane and silicone thermoplastic rubber, in manufacturing footwear (Douglas, 2004). Many companies were aided by the government to modernise their products. There were also other forms of support provided by the government time and again in form of low rates of interest, competitiveness in the system of tax and strong currency conditions, thereby leading to the growth of various sportswear companies. Economic Factors- The leading sportswear companies helped different countries to lower their rate of unemployment by increasing the intake of employees every year and they still continue doing so. Besides that, there were high rate of sales from 2003 to 2007 and again from 2009 to 2013. The combined market in this historic phase grew from $132.50 billion to $144.91billion, which indicated a rise of almost 9.4% (Lussier and Kimball, 2009). Then again, combined market of the footwear and sportswear grew from $144.91billion in 2007 to $142.13billion in 2009 (Lussier and Kimball, 2009). The 2012 Olympic game was also responsible for increase in the sales of various companies. Many companies started to import sportswear, which helped to lower the labour cost and heighten the profit margin. In between these two phases were those of recession prevalent in the economy, which always created adverse effects on advancement and growth of these companies. During this period of downturn, rate of purchase by the consumers had also fallen. Besides United States, many companies were also affected by the economic downfall in Asia as their products were manufactured there as well. The economic condition of the sportswear and especially the athletic footwear market was found to be sound after a period of recession during 2007-2009 as indicated by the details provided in this section (Rao, 2006). Social factors- With rise in the number of health conscious people, sale of sportswear and particularly the sports shoes increased gradually. Therefore, sports companies like, Nike, Adidas and many other topmost sportswear brands helped to cater to needs of the society. On the other hand, there were certain sportswear companies who failed to address the problems faced by various labourers working in their factories at different locations. This created negative impacts on these companies. Technological factors- There were many top brands who incorporated a range of technological inventions in their sportswear. There were different technological innovations brought in by the sportswear companies in their products since the last few years (Connor and Dent, 2006). The changes were made to the shoes as well as new adaptations were invited in form of Marketing Information Systems. These had helped to bring in the required innovation, differentiation and segmentation in the products. Environmental factors- The sportswear market has included various changes in the overall economy as well as in their micro and macro environmental factors surrounding the business. Many sportswear companies have cleared ISO certification regarding pollution, global environment as well as carbon footprints (Bradley, 2002). For the last few years, there have been great transformations brought in by this industry, suited to the needs of customers and for creating an environment friendly atmosphere. Legal factors- Most of the top sportswear companies maintained their business ethics. These sportswear companies abided by policies framed by the government with a motive to avoid any sort of problems that might occur later. The companies gained understanding of the local laws before starting business in any new country. Question 2 Boston Consulting Group’s Product Portfolio Analysis The BCG matrix is a popular method for analysis of corporate business portfolios. The BCG matrix can efficiently be used by Nike to develop marketing objectives and strategies for the company. BCG matrix for Nike High Low High Low (Source: Author’s Creation) Cash cows: These generate a lot of revenue for the company. They have low growth, but high market share. They typically use the strategy of stability and do not undertake much risk. The same can be related to the athletic footwear business of Nike. They generate a lot of revenue for the company; but, their rate of growth is low, yet stable (R. Kinney, D. Kinney and M. Kinney, 2013). Therefore, in order to increase sale of its products, it is important for Nike to continue the process of innovations and suit the products as per needs and choices of the customer of the particular country (Douglas, 2004.). The price of the product should also be controlled as per the economic conditions of various countries in which it is operating or selling its products, so as to keep the rate of sales stable, especially in the athletic footwear sector. So, after the BCG analysis, Nike would be able to determine the amount of investment that it needs to carry on and maintain stability of the footwear business. Stars- These refer to the business that is emerging and showing a rapid growth in the market share. Organisations plough their profits back into the products, which fall in the stars category of the BCG matrix with a hope that the star will eventually turn into cash cow, after gaining enough market share. For Nike, the golf equipments and apparels sold by it are the stars of the company (Rao, 2006). Thus, it should invest as much as it can in form of innovations, advertisements by celebrities and marketing of these products. This will help to strengthen the market for these products. The profit margin would rise gradually. Therefore, BCG matrix can help Nike to enjoy growth in sales of all their sportswear products. It can also decide on objectives and strategies more vividly. Question marks- These refer to the business that is operating in a market with high growth, but has a considerably low market share. They are the starting point for most of the businesses. The Question marks bear the potential to attain the required market share to become stars and later turn into cash cows, when the rate of market growth decelerates. They might even degenerate into dogs after years of excess cash consumption, when growth of the market declines and eventually fail to be a market leader (Connor and Dent, 2006). As a result, proper analysis of the question mark is needed to determine whether they are worthy of the investment for increasing the market share. Nike electronic products and watches are two such question marks of the company. Dogs- These are referred to units with low market share in a slow-growing and mature industry. They are typically break–even units from which enough cash is not generated to maintain market share of the business. Although such units provide social benefits in the form of synergies and jobs that assist various other business units, but from the accounting point of view, these units are worthless and do not help in generating cash for the company. They lower the Return on Assets (ROA) ratio and more precisely, profit of the company. Hence, these should always be sold off. There were various retrenchments done by Nike (Bradley, 2002). There was one sports agency, which was sold off by Nike in the past. Demerits of BCG matrix are: 1. It might be too simple for Nike. 2. Due to the failure of strong link between market share and profitability, Nike might suffer if they solely follow this model for forming a judgment of the rate of growth. Ansoff’s Growth Matrix “The purpose of this matrix is to help managers consider how to grow their business through existing or new products or in existing or new markets” (Business Case Studies LLP, 2014). Ansoff’s Growth Matrix Present New Present New (Source: Author’s Creation) Market Penetration- This activity takes place when any company enters new markets and introduces new products. The best way to achieve this purpose is by gaining customers of the competitors or by transforming the non-users into users of the company’s product. Nike in the past had introduced new products and took away the customers of topmost companies, such as, Adidas. Product Development- Product development is the strategy where an established current product is modified into an innovative version and is targeted towards the same market (Wilke, 2001). Nike in the past was involved in product development and should continue doing so by introducing their new range of casual footwear coupled with proper promotion and advertisements, thereby attracting new as well as existing customers. This will help the company to stay more competitive and strong in the market. Market Development- Any existing product of Nike can be used by the company to target new customers. Market Development is a strategy that can be used by the company to stay competitive. The market should be new to the company, which will help it to garner new customers and more profits (Business Case Studies LLP, 2014). Diversification- This term refers to new product development in a new market by any company. Diversification has always helped Nike to expand their business into unexplored or emerging markets and introduce fresh products. It will be fruitful for Nike to produce new product and sell them into these new, unreached markets. The demerits of Ansoff’s Growth Matrix for Nike can be stated as follows: While starting a new business in a new or existing market, usage of Ansoff’s Growth Matrix by Nike would not help it to take into consideration the profitability conditions that the company will encounter, the competitors’ position in the market where it plans to enter as well as the type of customers (24.com, 2014). Question 3 Advantages and disadvantages of geo-demographic segmentation The benefits of segmentation are immense for Nike. The mission of the company is to bring in innovation and inspiration for each and every athlete in the world (24.com, 2014). For this purpose, Nike might segment the consumers in terms of their loyalty (Lussier and Kimball, 2009). The market might also be divided based on customers’ needs of the particular country where it is operating. The company continues to segment the international markets by their geographic location. The examples can be markets of Europe, United States of America, Asia Pacific, Africa and Middle East (Wilke, 2001). Hence, Nike can apply the segmentation approach for successful business in U.K. and gain higher profitability. Nevertheless, disadvantages of the segmentation approach might be the fact that this will be a time consuming process for the company and would involve excessive wastage of money, in terms of research and development. Reference List 24.com., 2014. Nike overtakes Adidas at SWC. Available at: [Accessed 7 March, 2014]. Bradley, Q., 2002. Techno fashion. Oxford: Berg Publishers. Business Case Studies LLP., 2014. Achieving growth through product development. Available at: [Accessed 7 March, 2014]. Connor, T. and Dent, K., 2006. Offside!: Labour rights and sportswear production in Asia. Oxford: Oxfam International. Douglas, L., 2004. Looking behind the logo: The global supply chain in the sportswear industry. Oxford: Oxfam International. Kinney, R., Kinney, D. and Kinney, M., 2013. Trends 2: Business and culture reports: Global edition. Arizona: Kinney Brothers Publishing. Lussier, R.N. and Kimball, D.C., 2009. Applied sport management skills. Champaign: Human Kinetics. Rao, V. R., 2006. Analysis for strategic marketing. New Delhi: Pearson Education India. Wilke, I., 2001. Lets trade fair in the textiles and sportswear industry. Hamburg: Diplomarbeiten Agentur. Read More