Nike Company Overview
Strategic marketing management executes the mission of the company with the help of concentrated procedure in order to receive maximum results from the existing executed marketing plan (Varadarajan, 2010). It involves classification of the target market or customers. This type of management might support in identifying other opportunities for marketing. A strategic and strong marketing plan might be created by this management style (Hill & Jones, 2011). Most prominently, it supports company in transforming planned strategies into reality. The report is being prepared in order to analyze the strategic marketing management strategies of Nike Company with the help of case study. It will provide the discussion of the complete case and the segmentation strategy of Nike for its sports shoes brand. Along with this, it will highlight the marketing strategies of Nike which are implemented by the company in the market to increase the awareness among people and market share. Further, segmentation strategy of the sports shoes in the whole market will be explained along with competitive analysis for the international or global market.
Nike is famous Multinational Corporation of America which is involved in the expansion, creation, and designing of the global marketing and trading of equipment, footwear, services, apparel, and accessories (Mahdi, Abbas & Mazar, 2015). Headquarter of the company is in Beaverton, Oregon. The company is known as the largest supplier of the athletic apparel and shoes in the world and one of the key manufacturers of equipment of sports. In 1964, it was established as Blue Ribbon Sports, by Phil Knight, and Bill Bowerman. The name of the company changed to Nike in 1971 which was taken from the Goddess of Victory of Greek. The marketing of Nike’s products is performed under the own brand along with Nike Golf, Air Force 1, Nike Pro, Nike Stake boarding, Air Max, Nike+, Nike Dunk, Nike Blazer, Air Jordan, Foamposite (Nike, 2018).
The mission of the company is to increase the human potential by creating products more sustainably, by making diverse and creative international team worldwide and by a positive influence on the society where they operate.
The case study of Nike talks about its gradual growth in the market and its success that has made it one of the top brands of sportswear. Marketing campaigns of Nike have always presented talented athletes. For instance, runner Steve Prefontaine was the first spokesperson for the company, had a bold attitude that was well-matched with the spirit of Nike. The first advertising campaign of Nike was of worth $20 million with the tagline “Just Do It”. Mostly company targets young and talented athletes who can effectively represent the brand. One of the big breaks for Nike was in 2008 in the Olympics in which it gives strong competition to Adidas.
Case Study of Nike
Market segmentation is said to be a procedure of distributing a wide-ranging customer market or business market, generally involving potential and existing consumers depending on few types of common characteristics (McDonald, 2012). While dividing the market or segmenting, experts generally search for shared characteristics like common interests, similar demographic profiles, and similar lifestyle and shared needs. The aim of segmentation is to recognize high-income segment which involves those segments that are profitable and have the potential for growth such that they can be chosen for special attention (Wedel & Kamakura, 2012). Some of the basis of the market segmentation is:
Gender- The marketers of the company separates the market into very small segments depending on the gender. Both women and men possess diverse interests and choices; therefore there is a requirement of segmentation (Weinstein, 2013).
Age Group- Dividing the target market depending on the age group is one of the methods of market segmentation (Bose, 2012).
Income- The income is another basis on which market is divided into different parts. People are divided based on their monthly earnings (Gichuru, 2017).
Nike is a very unique brand as they have a commonly targeted segment of demographic and their selected target market includes all the athletes. Though, this does not show that Nike does not make use of segmentation strategy to precisely explain different market segments.
Demographic segmentation is one of the factors that are utilized by Nike Company in order to target people as per their life-cycle, occupation, age, generation, and gender. Though with sports and apparel the target market is very wide for most of the part Nike Company mainly targets customers who are of the age group of 15-40. Nike offer services to both athletes women and men equally, and increasing its major focus on the teens and tweens in order to create long-term loyalty of brand (Bhasin, 2018). Nike focuses this segment by developing marketing campaigns which represent young adults who are determined to become same as their idol athlete. For instance, in 2014’s world cup Nike Company created a video reflecting essential sponsored athletes of Soccer of Nike with the young players of soccer.
In recent years Nike Company has established a variety of women offerings in order to knock into a quickly growing segment of women. Presently, Nike’s 20% revenue is dependent on the sales of the targeted women products, however, it is expected that the revenue will increase significantly in the coming future.
Market Segmentation
Nike utilizes geographic segmentation in order to target the areas, density of population, nations, and cities, contrarily. For example, in US Nike Company concentrate on the American players who play football and baseball and makes and organizes various marketing and advertisements campaigns about baseball and football products by representing particular sports athletes. North America is the biggest market of Nike Company followed by China and Western Europe. In all these areas the marketing of Nike is concentrated in the urban areas with high densities of the market.
The targeting grounded on this type of attribute is performing excellently for Nike. While company sometimes focuses on praising specific product qualities, the company majorly emphases on how customers feel about the products of the company. The expectations of the customers are fulfilled by this brand as it clearly defines: You are an athlete. Nike products make you feel athletic!
Furthermore, with such segmentation strategy, Nike looks for creating customer loyalty. When consumers generate loyal behavior for a particular company, the company gains reward in the form of increased market share and sales. In such high competitive market in which Nike participates for that, it is very essential to earn and retain customer’s loyalty by offering customers good quality, innovative products and variety of choices.
Nike Company also makes use of Psychographic segmentation strategy in order to target people with particular personalities and lifestyles. In order to utilize this variable effectively, Nike Company should target people who love playing sports and enjoy it. Whether it is about watching, talking or playing, these type of activities forms lifestyle and personalities. Marketing efforts of Nike Company are targeted at generating feelings among customers that exceeds the product. Nike raises an attitude, it grows a lifestyle. Nike events like Sports Improvement clinics, and Run with me, contest on social media and non-athletic and athletic endorsements go a long way in order to make the community and a belongingness feeling to the family of Nike (My Mission, 2018).
Nike Company majorly relies on its mix of marketing in order to increase its market share, growth and profits. The marketing mix is said to be the mixture of the tactics and strategies a business make use of to implement its marketing plan, which involves various variables product, price, place, and promotion. The marketing mix of Nike focuses on the target market worldwide.
Products of Nike
The growth of Nike arises with the variations in the product mix. This marketing mix element numbered the output of the organization offered to target customers. The wide category of the product mix involves:
- Equipment and accessories
- Shoes
- Apparel
Marketing Mix of Nike
Sports shoes of Nike are well-known products in the market. From last many years, Company has added various products in its product line of this category. For instance, today Nike Company provides tennis shoes, running shoes, and other shoes for various sports, comprising cricket (Islam, 2017). The company also deals in the trading of apparel, like shorts, and jerseys, etc. Additionally, the product mix of Nike now comprises equipment and accessories like golf clubs. Every product of Nike is accessible under various brands, comprising Hurley, Nike, Converse, and Nike+. Nike Company has adopted various technologies in order to be the leader and create the brand equity such as Air cushion technology and Fly knit technology.
Besides this these technology helped company in reducing 60% of waste in the process of manufacturing which in turn helped it in earning more profit and improving market share (Refer to Appendix 2). The innovative products offered by Nike make it different from other brands in the market. Further, company not just only offer innovative and high quality products but it also make an emotional attachment which helps it in adding depth and richness to the brand (Yang, 2017). Due to above strategies the market share of the company has also increased. Today Nike possesses 51.01% of market share among all the big brands. (Refer to Appendix 1)
Increasing number of products in the product line also helps in increasing the market share of the company. Depending on this marketing mix element, Nike Company has got success in expanding the product mix and highlight requirements of different market segments.
Place Strategy of Nike
Nike Company trades its apparel, equipment, and sports shoe products with the help of worldwide outlets. This marketing mix element highlights the locations where the offering of the business are sold, distributed, and accessed. Some of the places which make Nike’s strategy of distribution are:
- Retailers of Nike
- Official online stores of Nike
- Nike town retail outlets
Retailers of Nike are one of the significant places where the products of Nike are sold in large number. These retailers are comprised of big firms such as Walmart. Consumers can also buy equipment, apparel, and sports shoes of Nike through the online store of the company. The firm also has Nike town retail outlets. Depending on this marketing mix element Nike has control on sales and distribution of the products, particularly by the official online store of the company and Nike town retail outlets.
Promotion of Nike
Nike majorly depends on the effective advertisement of the offerings to keep the strong brand image. Some of the elements of promotional activities of Nike are a Public relation, sales promotion, advertisement, personal selling, and direct marketing.
The advertisement is the largest contributor to the ability of Nike to appeal to the customers. Nike majorly depends on the advertisements, particularly those promotions that are comprised of famous celebrities like sports teams, and professional athletes (Ros, 2011). Besides this, personal selling is also utilized by the company which is done by sales officer who encourages target customers to purchase its products to the Nike town retail outlets and retailers. The direct marketing of the company is comprised of directly influencing local sports team, and college teams. Sometimes, Nike Company offers special offers and discounts to make additional sales and attract customers.
Prices of Nike
Value-based pricing strategy is used by Nike Company in order to confirm an increase in its profits and sales. While using this strategy of pricing Nike Company thinks of the perception of the customers for the value of the product. This value is utilized to define the highest price that customers are ready to pay for purchasing the sports shoes, equipment, and apparel of Nike (Gregory, 2017).
The market segment of sports shoe market involves customers who are actively involved in the sports or fitness activities on daily basis. They normally search for sports shoes which are of good quality and that accelerate their performance while playing in their particular sports. Many of these customers go to the gym or perform some fitness activities regularly or take part in some organized sports. This target market is very much interested in the famous and known brands as it provides the high quality of shoes. They get ready to pay a higher amount if the brand suits them (Market Segmentation, 2017).
The apparel and footwear industry is at the nature phase with violent competition for attaining increased customer and market share. Nike Company values nearly around 14 billion dollars. Nike is the market leader in the industry and is followed by Reebok and Adidas combined at the value of 12 billion dollars. Ordinarily, companies compete on the basis of service, brand image, advertising, web site designs, celebrity endorsements, and innovation. Nike Company had a slight advantage over its rival’s from the day it established its products because it has significantly invested in the research and development and designs made with advanced technologies. However, Adidas has put its efforts to decrease this gap majorly in recent years.
The companies in the industry majorly concentrate on maintaining brand image. The example of this is Nike. It selects to trade its consistent variety by only high-end retailers. The company has many times rejected the offers to trade its products by Sears post the Sears.
The industry is technology focused. Nike concentrate on the performance of their products along with its style, Adidas has been seen as the shoe of the high-performance end and therefore it is the market leader in the industry of soccer shoes. Reebok is considered the health and fitness conscious brand. New Balanced only considered the performance and is not considered to be a good brand in the eyes of the customers. Crocs have placed itself as a brand for outdoor wears and are mainly utilized for the purpose of boating. Puma is a brand offers stylish products both for apparels and footwear, it has never offered high-end sports performance and therefore it is successfully positioned in the segment of lifestyle. Henceforth, it is authoritative that every participant in the industry has positioned itself thriving and pleasures the consumers in that particular segment in place of playing in all the fields.
Conclusion
Nike has put its maximum efforts on the market strategy; therefore, it is the leader in the sports shoe segment and offers stylish as well as comfortable shoes. It is a brand which is focused towards the athletes who are focused and aggressive towards their success. Therefore company makes use of advanced technology for its designs that can help athletes in increasing their performance. However, other players in the market have also gained a special position for themselves in separate segments such as Adidas, Reebok, Puma, etc. Nike has gained a respectable position in the market but it has not gained it in one single night, it has worked hard to be here where it is as reflected by the case study of Nike’s excellence. The above report has highlighted important aspects of Nike such as its market segment. Besides this, a report has discussed the marketing strategies of Nike involves its product, price, place and promotion strategies that have helped it in getting success in the market. Further, an overview of market segment of the global sports shoes is been presented. In the end, competitive analysis of the global market has been performed to provide the idea of the market share of every player.
References
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