Competitive Analysis
Marketing refers to the actions or activities which are taken by the companies to sell their offerings in the market for the motive of profit maximisation and customer satisfaction. It is the coordination of many elements like purchasing, production, development, packaging and selling of product. Marketing helps in positioning a product or service in a product in a way which helps the company in earning maximum profits. Marketing has become an integral part of every business. The companies perform marketing audit in order to know how well the marketing mix is performing for the company. Marketing audit can be known as the scanning of the organisations, their strategies, environment or activities so develop plans for the future of the business. The brands and companies relies on marketing mix to maximise their profits and the combination of these elements of marketing mix are used to make a marketing plan for different products of the brand. It helps in addressing the important concerns in the target markets which the company might have to face and suggests how it can find success in the competitive market.
This report consists of the discussion about marketing mix concepts related to Nike, a global footwear brand. Marketing Mix is the evaluation of elements of the business like Product, Price, promotion, and place, Physical Evidence, Partnerships, People and Processes. These elements will be explained in relevance to Nike and the overall evaluation of its marketing strategies will be discussed. The project will be completed in a format in which a brief overview will be provided about the brand position in the market and how does it position itself. Then the discussion about marketing mix and other strategies will be done. At last, recommendations will be provided on the basis of analysis and the project will be completed with a conclusion.
The competition in the industry of footwear is high. It competes on the basis of designs, technologies, cost, etc. from the brands like Adidas, Puma, Sketchers, Vans, Converse, etc. The PESTEL analysis of Nike shows that The Company is getting sufficient support from the US government to run its business. The company also get an advantage of high purchasing power in USA which results in good amount of sales. Nike is involved in social clubs which increases its sales. The brand is also high on technology and innovation. It has maintained business ethics and is the strong believer of green environment which keeps it a legally sound company.
Market Segmentation of Nike
Every brand has its own strengths and weaknesses which have to be dealt accordingly in order to achieve the goals and objectives of the business. The main competitor of the company is Adidas which is very effective in marketing strategies and have strong online presence. The weakness of the brand is that it has high costs and has limited product range. Nike could take this as an opportunity and can develop a good product range so that it can cover most of the share of the market. Nike should also learn from Adidas to develop a strong marketing presence in the markets.
The market segmentation of Nike shows that it segments its markets on the basis of demographics, geography, psychographics and behaviours. The company serves the age groups of customers from 15-55 which are focussed for men and women. The brand is more popular in urban areas of the country rather than rural areas. The people focussing on lifestyle and personalities buy the products of Nike even at higher prices. The target market of the company is the one which can pay premium prices for its products. Most of the target customers are athletes and sportspersons who need quality footwear to run or play.
Four P’s of marketing can be understood as a model of analysing the position of a brand in the market and these ingredients of the model are Price, Promotion, Place and Product which are analysed (Goi, 2009). The combination of these ingredients shows that how a brand can be promoted or sold in the market in the most efficient manner. It shows the unique selling points and how a brand it differentiated from its competitors. This concept was given by Neil Borden and these elements are together called Marketing Mix (Ivy, 2008).
Nike, being the leader in the footwear industry of world has one of the strongest marketing mixes. The brand competes against the other top brands like Adidas, Puma and more. A strong marketing mix has its impact on the brand. It helps in better positioning and also in making the further marketing plans for the company which helps in getting success for the company (Mahdi, Abbas & Mazar, 2015). Below given marketing mix of Nike will clear it further:
Product: Nike is a global brand and offers wide range of products. The main product of the brand is its footwear lines. The footwear range of Nike is wide. It includes sport shoes, casual shoes, flats, and running shoes, Gym and training shoes, Golf shoes and more. The products of Nike are designed as per the needs of the customers (Solomon, 2014). Like its shoes are specially designed for every sport. It offers separate shoes for cricket, golf, basketball and for every other sport. It is one of the pioneers in this industry and competes with other brands like Adidas, Puma, Reebok and more. The company has strong product image and customers trust the brand because of the quality and variety of its products. The company also conducts research in the market to know the needs and requirements of the customers so that it can manufacture the products to fulfil their demands and gain their loyalty (Wood, 2008). The footwear of Nike is its Unique Selling proposition. They have such a good image in the market because the customers have used them and have good reviews about it. The products and their unique design for every sport is the factor which differentiates it with every other brand (Peter & Donnelly, 2011).
4 P’s of Marketing- Product, Price, Promotion and Place
Through the years, the company has added more range of shoes and footwear in the bucket and it continuously strives to bring more range of footwear in order to complete with the other leading brands. For this, the company follows innovation and development strategies so that the consumers can get new and better every time they need to purchase footwear (Pride, 2008).
Price: The pricing strategies of Nike are designed keeping in view the prices of its competitors in the market. The company falls in the premium segment and they target sportspersons, athletes and the ones who need comfort with style in footwear. Premium prices are charged for its products and people pay for it because the brand has value and reputation in the market (Hollensen, 2015). The customers are ready to pay such higher prices because they get quality and value in return. Also, the customers of the brand are those who afford to pay premium prices for these products. Without high brand equity, it would have been impossible for Nike to charge premium prices for its products. The pricing strategy of the brand is value based pricing to ensure that the company get higher sales and growth. This element of the marketing mix helps the company in identifying the prices at which the company can maximise its profits and attract the desired share of the market (Graham, 2008). While adopting pricing strategy for its products, the company also has to consider the perception of its customers that what do they think about the value of the products of the brand. It helps the company in determining that what price the customers are willing to pay for its products. In the year 2014, the company has raised the prices of its products and the result was higher sales and profits. This shows that people will buy the products of Nike, no matter if its prices increase (Alex, 2012).
Place: Place refers to the element of marketing mix which tells about the distribution strategies of the company. Nike sells its footwear through different channels like exclusive outlets, supermarkets, online channels and more. The company has large number of stores across the world from where the products are sold to the ultimate consumer. Nike has a good control over the distribution of its products and has designed its distribution strategies in a way which makes it easily accessible for the customers to buy the products (Westjohn, Singh & Magnusson, 2012). There are more than 2000 retail outlets of the company in more than 200 countries which shows that the distribution network of the brand is so wide. In global markets, the company sell its products through independent distributors, subsidies, exclusive stores, multibrand stores or through online platforms. The company also has its manufacturing facilities in many countries which makes easy for it to make products easily accessible for its customers. The simpler distribution strategies also lower down the costs of the company (Peter & Donnelly, 2011).
The company plans to open more outlets as the demand of its footwear is high. It wants to create an amazing experience for its customers. The brand keeps on planning to make it even better for the customers every time they purchase the footwear products of Nike.
Promotion: Nike, being a global leader of footwear products has effective promotional strategies which helps it in attracting huge number of customers across the world. The brand use different tactics to communicate with its customers. For e.g. Advertisement on televisions, sports channels, magazines, online advertisements and social media. The brand is also engaged in sponsorships at world class events like World cup championship and other sport competitions to increase its visibility among the target market (Sia, 2013). The company hires sports personalities as its brand ambassadors so that they can attract the target customers. Personal selling is also adopted by the company. At the retail outlets of Nike, the salesperson tries to influence the buyer to purchase its products. It also adopts sales promotions where it offers discounts or free accessories with the footwear so that the customers can be attracted and buy the product. It increases the sales of the company (Nezamabad, 2011).
Nike does its best to increase the awareness of its brand among the target market. It also enters into a deal or contract with the world famous sports teams and provides them its products so that they can wear it while playing the sport (Huang & Sarigöllü, 2014). It is a kind of advertisement which is getting increased number of customers for Nike. The company nowadays using social media to create a buzz among the customers. Online campaigns are getting a good response and the company is getting popular in different countries. The company develops an integrated communication plan for getting increased market share and for having a competitive edge over the competitors. The marketing strategy of the company helps the company to retain its market share and acquire the untapped share of the market (Kunz, et al., 2011).
These are the additional or secondary marketing P’s which contributes in the positioning of the product offering and differentiating. These P’s involve People, Processes, Physical evidence and Partnerships. As per the American Camp association (ACA), 8 P’s are important to reach the goals of future of the company. Marketing has become much more sophisticated with the emergence of the internet, mobile marketing and innovations in technology. These 8 P’s have to be incorporated in the marketing efforts of the company in order to provide satisfaction to the customers (Anderberg, 2014).
In the case of Nike footwear, 8 P’s are explained below:
People: The companies run on the efforts of the people. If right people are employed in the business, the business can do wonders. Nike has to take care while recruiting right people for right job. This is how, right services will be provided to the consumers and the customer ratings will prove the quality of the services. There are many departments in Nike like production, research and development, customer service, etc. Every employee should fulfil the services and duties assigned to them (Hollensen, 2015).
Processes: Process can be understood as the standard procedure for developing and delivering the products and services. This happens efficiently when proper planning is done to maintain the flow of services. The processes help in maintaining the consistent service delivery and experience for the customer. Nike requires a proper procedure in order to derive excellence in its services provided to the customers (Ahmed, 2016). When the customers pay premium prices for the products, they require efficient processes. The marketing team of Nike must consider the processes of the manufacturing and delivery of the products of the company to the consumers, so that they can design their marketing strategies accordingly (Kotler, et al., 2015).
Physical evidence: In the companies, there are physical evidences that the product is being manufactured and delivered to the customers. It also shows how a product is perceived by the customers in the market (Neisser, 2016). This shows Branding concept. Like when someone thinks of fast food, they think McDonalds. Similarly, when someone thinks of sport shoes, they think Nike. This shows the physical evidence of the brand in the market. Nike is one of the leaders in this field of sports footwear and they have the strength to manipulate the perceptions of the customers of the target market. The physical presentation of the product also shows physical evidence of the brand. It has to be trendy, smart, new in design and everything else a customer desires as per the requirement (Ros, 2011).
Partnerships: Marketers recommend an eighth P to the organisations to gain more reach to the customers. The company forms partnerships with major media companies like Facebook, twitter and many more local partners to expand its operations and to promote its products. This helps the company in making its positioning better. With the help of developing partnerships the company could establish its brand equity and distribution strength. It also helps in providing more exposure to the companies and then ultimately gaining new customers for the company (Fathian, Slambolchi & Hamidi, 2015). It also results in meeting the tough competition in the market by delivering the full potential. Partnership element of marketing helps in creating joint sales and also creates opportunities for the business for distribution in wider markets. It broadens the reach of the business, increases the budget of the marketing function which helps in gaining new customers in new and untapped markets (Rambin, 2011)
After the analysis of 8 P’s of marketing which has been discussed in the report for Nike, many problems have been identified which the company is facing. Nike is facing challenges in training the team and managing the customers. It is recommended to Nike that being a leader in the sport footwear industry, the company should use its strengths against the other giant manufacturers of footwear like Adidas (Kolowich, 2016). The analysis of 8 P’s of marketing shows that the company needs support of different global partners in order to maintain its leadership in the industry. The company, in USA should follow the required practices of labour, patent protection, etc. so that their operations can run smoothly.
In case of products, the company have to bring constant innovation to provide new and innovative to the customers. Innovation can be the key to success and to gain more customers. The company already work on technology by building up partnerships with engineers of NASA so that it can create interest in the minds of consumers and its sales could increase. It is recommended that the company should manufacture the product of different range so that everyone could afford them and not only the premium class. The brand has been creative from the beginning but to differentiate itself, it needs to bring innovation time to time. The company should develop new target markets so that it can sell more products and not only in the single target market i.e. people involved in sports or athletics. The company is recommended to seize the opportunity create by social media s that a wide customer base can be created. With the help of social media and market research, the company could collect the information about customer’s choices and the preferences so that appropriate marketing strategies and other strategies can be developed. The company should focus on positioning its brand in USA because lot of competitors are emerging to give tough competition to the company.
The company’s women products are facing tough competition due to local competitors which is to be handled and it has to make certain initiatives to survive the global environment of the business. The company should continuously innovate and invest in the business. A strong financial position is needed. In processes from acquiring raw materials to the delivery of goods and after sales services, should be made easier and simpler in order to reduce complexities and to provide ease to the customer.
Conclusion
It can be concluded that Nike is already a leader in the footwear industry of USA and also globally. Nike is analysed and evaluated here on the basis of 8 basic elements of marketing mix which are Products, Price, promotion, Place, people, process, physical evidence and partnerships. It can be said that Nike has good variety of products but it is recommended to bring continuous innovation in them in order to maintain the interest of the customers. Nike keeps its prices at premium because people are ready to pay that price but the company should offer the products of every range so that the people who cannot afford to pay premium prices for the products of Nike can also pay for them.
The company should make effective use of social media and should form partnerships with government, other businesses and customers so that the goods can be distributed easily. The people hired should be trained so that they can make effective contributions. The company has a good brand positioning and it shows its physical evidence in the market. Nike is doing well in the markets of USA but it need to capture untapped markets so that it can have more market share and more profitability.
References
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