Professional Documents
Culture Documents
Executive Summary....................................................................................................................................... 3
7.3 Recommendation.............................................................................................................................. 14
References .................................................................................................................................................. 16
Executive Summary
Nike leads the market in the footwear and sports apparel. Since its establishment Nike has
grown to be a marketing force, sustaining its revenues till date. Although it started as a shoe
company, Nike as a company diversified itself along the its journey and took over many brands
which supported Nike in the relentless shoe market. Nike as a brand is loved by all of its
consumers, whom drive the company profits annually and by the investors whom have led
Nikes stocks to a high price of $90
Nike decided to focus on its marketing strategies, strengths and design by outsourcing product
development. This raised issue to human right activists by highlighting Nikes contracted
employees conditions in lieu to be resolved.
Nike shows devotion to its products, company and athletes by providing its customers with
promise and comfort whilst finding innovative ways to create and connect themselves as a
company to its consumers. They follow their branding policy: Inspire, focus, innovate, connect
and care.
1.0 Introduction
This report focuses mainly on Nikes athletic sportswear. We will look into how Nike has
used its marketing strategies to lead the market and compete with its competitors grabbing
market share and reaching out to customers worldwide to be a stellar brand choice.
2.2.1 Political
It is the main responsibility of every government to influence macro economical and
micro economic conditions that guarantee to impact on the growth and development of a
business or organization. The US is aware of this and has greatly empowered Nike by its
marketing policies, thereby allowing them to develop and innovate their products greatly
(Robert, et all 1988) The support provided to Nike by the governments, notably are in the
macroeconomic regions with consistent currency conditions coupled with low-investment
rates, and international tax systems; structure the establishment that is basic to Nike's
development. Nike's main manufacturing facilities lie in the Asian regions such as Thailand and
Vietnam where increasing amount political distresses exist. The constant uncertainty of these
political systems ends up in a disruption of distributing channels, offshore direct investors and a
higher tax on import and fare. This political unrest in the Asian region may influence Nike
growth. Another political factor is the utilization of under aged workers in the manufacturing
plant. (Saleem, 2010)
2.2.2 Economic
The greatest risk for Nike is the financial downturn, which will bring about a downfall in
consumer sale, thus influencing the product development of Nike and ultimately its growth as
an organization. Increasing cost of labor work force and raw materials add up to the expenses
resulting in a hard hit profit margin reducing overall net revenue of the organization. Nike being
an international company is exposed to the global nature of exchange. Purchases and sales are
made in distinctive currency, this subsequently also increases expenses due to the
unsusceptible currency rates (Forbes, 2012).
2.2.3 Social
In recent societies the general population today is conscious of brands; consumers
would want to purchase products that have value attached to them. Fortunately, this poses an
advantage to Nike as it is the most prominent sports mark worldwide. In the surge of present
day youth esteemed needs, most would now want more designer based products for
recreational use rather than fitness needs.
Nike additionally confronts another issue with their manufacturing plant conditions that
the labors face in the Asian region. This resulted in tarnishing Nikes reputation, which in turn
decrease sales as people became more socially aware of the preceding situation faced by the
workers. Lifestyle trends have newly led Nike to a new market largely consisting of women
shoppers (Great speculations, 2013).
2.2.4 Technology
Nike has incorporated an innovation based strategy to create its items quickly. Since
Nike is a designer brand, its designs must continue evolving to keep up to date with the ongoing
trends otherwise products could grow to be out of fashion before customers replace their
shoes. Nike makes sure it has the latest manufacturing technology for its product development.
2.2.5 Environment/Green
Nike makes an organizational goal to lessen the effect of each of its items on the
environment from designing to assembling, and disposal. Nike shoe engineers designed an
innovative approach to maintaining of their robust waste left from other shoes by converting it
to outsoles referred as REGRIND, which are accessible to everyone.
Profit trends of Nike had declined to 43.2% in 2012; this was mainly due to higher cost
prices in developing the most sought over foot wear. This figure would then gradually increase
to 44.4% by 2014. Source : (Refis analysis 2014)
There is a recent increase in the demand for foot wear that is not designed for athletic
needs in Europe and the U.S; this poses great competition to Nike due to the low cost
producers entering the local and international markets. As a result Nike has focused on its low-
end footwear Converse
4.2 Market Shares
Market Share
Nike
28%
Others
41%
Adidas
20%
Prior to Nike's ascent to predominance in the mid-90s, the market had been controlled
by Adidas footwear. While Reebok claimed 31.1% of the footwear market compared to Nike's
19.1% market share. Reebok's industry strength was an aftereffect of Nike's inability to foresee
the emergence of ladies sports apparel. Nike later had the capacity to recover its position in the
athletic footwear industry in the early '90's with the presentation of its "Air Jordan" shoes.
(Forbes, 2014)
SWOT
Opoutrunities
Threats
Further product development
Exposed to intertional trade
Internation reach
Exchange tends to be unstable over long time
New female segment
High competitive market
Mix of lifestyle and sports
Failiure to enforce property rights
On the account of age, Nike targets young teenagers to young adults. Nike
independently has a distinctive promotion strategy for the male and female segment with
relation to their culture and nationality. Furthermore Nike has started to target the women
segment. Nike also focuses on groups of different sports, whether big or small. Nike's goal is to
push its items in different nations that play specific sports. Case in point, Rugby promoted
goods are advertised more in Europe when contrasted with America, thus selling nation specific
products. Nike advertises a productive attitude and confidence towards its products, there by
targeting customers whom follow a fitness orientation. It likewise offers items to numerous
distinctive individuals who have diverse tastes, hobbies, and needs.
Most of Nikes customers are sportsmen giving the brand a distinctive, accessible,
measurable and profitable market segment to focus on. (Chris Fill, 2011, pg 230) Nike uses a
theory called 80/20 principle (Michael R. Et Al., 2001 pg 201) this theory derives that when a
company makes revenue of 80%, it has to consist from 20% of its regular customers who
purchase the brand. On this basis Nike keeps its constancy of product purchase. Nike attempts
to keep up these loyal clients who are brand dedicated by continually innovating products
(Beech, 2007).
ADDIDAS NIKE
Skechers
PUMA
QUALITY
QUALITY
LOW
HIGH
LOW PRICE
Vertical
Horizontal Attribute
Attribute
1= LOW QUALITY 1= LOW PRICE
Equal mix of
5= Equal mix of both 5=
both
9= HIGH QUALITY 9= HIGH PRICE
NIKE 9 9
ADDIDAS 8 9
SKECHERS 7 8
PUMA 5 7
The sports footwear sector is in the growth phase of the cycle. As indicated by the
above diagram, Nike's income and net salary has been continually expanding at practically the
same pace throughout the previous five years. The rate of development in income and net
wage has diminished because of immersion and high rivalry in the business. Nike can keep up
its income by venturing into new market segments and with the use broad advertising.
Nike has secured its footwear in the market, establishing itself well into the diverse
segments. That being said Nike has a concentrated amount of competition in the market. Nike
must continually sustain its sales and improve its product line, thus placing them in the cash
cow category.
Starting with presence, customer brand awareness through the use of Nikes products is
a standing point contributing to the recognition of its brand. Furthermore athletes support the
product by designing and actively using the brand; there by positively influencing customer
perception of high quality and performance which are associated with Nike.
Secondly relevance, consumers believe that Nike as a brand adds value based on the use
of products by athletes. Thirdly performance, consumers believe that the product will deliver
value to them this is re enforced by Nikes development by taking into consideration the inputs
of its customers and athletes. Fourthly advantage, customers in general feel the product
provides them with high performance and high quality. This comes from the first two levels of
BrandDynamic and lastly bonding, where Nike as a brand is viewed as the best option, this is a
result of Nikes focus on consumer behavior (Nike, Investor Relation 2010)
7.2 Recommendation
Formula One attracts a large number of viewers estimated around 6 billion every season
as compared to the Olympic Games drawing only 4.7 billion. According to a research group
(Mentil 2009), Over 55% of women watch races when compared to men which ranged to 75%
allowing access to a vast platform of audience targeting a variety of mixed population.
Furthermore china has become the largest viewer of Formula One totaling its spectators to 119
million during peak season following under china is Russia and India. Thus spreading to these
countries would amplify its market share.
The athletic footwear is a competitive market; this reduces the capacity to grow in the
footwear segment. Therefore Nike can choose between diversification and market
development in the ansoff matrix. If Nike chooses market development, Nike can focus on
Formula One there by increase its recognition in China, Russia and other potential billion dollar
market (AR 2008). On the other hand if Nike decides to use the diversification path; the
organization would focus on innovating newer products or entering new markets. This requires
a high quality research to successfully enter them according to Shank (2009)
8.0 Conclusion
Nike has matured into an iconic brand (Holt, 2003) and has manifested itself into a
successful entity comprising of strong market strategies and branding. Looking ahead Nike
would need to increase its presence through social media and upcoming trending technology.
However Nike over exposure may lead to a repercussion due to their factory labor conditions.
The opportunities of growth in the future are is eminent for Nike. As indicated by Philip Knights
we invent markets (AR 2001)
References
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Available at:http://www.forbes.com/sites/greatspeculations/2013/05/13/why-nikes-growth-
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Nike Inc, (2014). ANNUAL REPORT ON FORM 10-K. Form 10k. [online] Washington: nike, pp.47 -
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Nike Inc, (2014). Comparative Product Life cycle. FY13. [online] Washington: Nike Inc, p.8.
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Deng, (2009) Just Done It NIKES NEW ADVERTISING PLAN FACING ECONOMIC CRISIS.
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https://www.trefis.com/stock/NKE/model/trefis?freeAccessToken=PROVIDER_649d6ec3ff8c75
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Baines, P., Fill, C. and Page, K. (2011). Marketing. Oxford: Oxford University Press.