NIKE Inc. Marketing Plan
Name
Institution
Course
Instructor
Date
NIKE Inc. Marketing Plan
Organizations never exist or operate in a “Vacuum”. They operate within an environment constituting various factors that influence business operations. Some of these factors affect only the specific company (microenvironment), while other factors affect many companies (macro environment). The forces that form the environment are human factors (actors) and situation dynamics that pull pressure in one way or the other. Businesses must understand their environment and the contributing factors to develop strategies that can address and exploit them for the benefit of the company. This study will use the example of Nike Inc. to discuss the various components of the company environment, among other aspects using various tools, including SWOT, PESTLE, and 4PS Analysis.
Part 1 – General Information and Situational Analysis
Section 1 – Company Background
Nike Inc. is arguably the current leader in the manufacturing and marketing of footwear across the globe with a market share of approximately 37% (References for Business, 2022). Nike is an American multinational corporation headquartered near Beaverton, Oregon, in the Portland metropolitan area and focuses on designing, developing, manufacturing, and marketing footwear, apparel, equipment, accessories, and services (Fortune, 2022). It is one of the most valuable brands in the sporting industry. It focuses on NIKE Brand and Brand Jordan product offerings in seven key categories, including basketball, NIKE sportswear, running, football, men’s training, women’s training, and action sports (Fortune, 2022). Moreover, a good portion of its products is also worn for casual and leisure purposes. Other products include kids’ designs for recreation and athletic use, performance equipment, including bags, sports balls, socks, eyewear, timepieces, and digital devices, and various plastic products produced by NIKE IHM, Inc. (References for Business, 2022).
Nike was founded in 1964 by Bill Bowerman and Phil Knight under the name Blue Ribbon Sports. During this time, it operated as a distributor for Japanese shoe maker, Onitsuka Tiger (now ASICS). It was officially renamed Nike Inc. in 1971 after the Greek goddess of victory, Nike (Νίκη) (Fortune, 2022). It began using the Swoosh design, which was officially registered with the U.S. Patent and Trademark Office in 1974. It gradually expanded its product offering to many regions and sports across the globe. Phil Knight was the first CEO of Nike. Mark Parker succeeded him in 2016 (References for Business, 2022). The current CEO, John Donahoe took over in January 2020.
In 2021 the company announced plans to begin refurbishing returned sneakers to sell at a lower price as part of an attempt to reduce consumer waste and combat climate change. According to Fortune (2022), as of now, Nike has 73,300 employees, $212,779 market value, and $44,538 revenue. Nike directly competes with other brands, including Asics, Puma, Adidas, Reebok, Adidas, New Balance, and Converse. These companies also deal with the manufacturing and marketing of footwear, athleisure, casual wear, sports apparel, and accessories just like Nike thereby making them direct competitors (Fortune, 2022).
Section 2 – SWOT Analysis
SWOT Analysis is important for the company to enable its executive to assess and analyze all the internal and external factors positively and negatively influencing the company. With such knowledge, the company can devise strategies to exploit the positive influencers and address the negative ones. SWOT highlights strengths, weaknesses, opportunities, and threats.
Strengths
Nike has a globally recognized brand with the most recognizable name and logo and a brand value of $42.5 Billion. It has a huge customer base that has seen its market cap rising to $232 billion as of Jan 2022 (BUSINESS SWOT ANALYSIS, 2021). Nike has iconic partnerships with Michael Jordan, “Air Jordan 1 Shoes”, a basketball player that helps with the advertisement and marketing of its products. Its demand creation expense builds a superior marketing capability for the company. Other strengths include Side Brands (converse and Hurley), Low Manufacturing Cost, In-house Professionals, Black Community Support, and a High Market Share of approximately 39% of the global athletic footwear market and 13% of the global athletic apparel market (BUSINESS SWOT ANALYSIS, 2021).
Weaknesses
Nike has poor labor conditions in foreign countries as occasioned by unsafe working conditions, low wages, forced labor, and child labor. Retailers have a stronghold on the company because about 65% of its products are directly sold to retailers or wholesalers. Nike still has pending debts of about $9.4 billion as of FY21. It has a high dependency on the US Market with 39% of its sales coming from North America (BUSINESS SWOT ANALYSIS, 2021). Other weaknesses include lawsuits, lack of diversity, and claims of sexual harassment of employees.
Opportunities
Nike can still expand to emerging markets, including Brazil, China, and India. Nike can innovate new products such as wearable technology and combine technology with athletic wear. Nike can adopt more efficient integration by incorporating some of its independent manufacturers to streamline the supply chain and make it more efficient (BUSINESS SWOT ANALYSIS, 2021). It should cut overreliance on retailers and wholesalers, by releasing Zapoo’s, Fred Meyer, Dillard’s, and Bob’s Stores. Furthermore, Nike can merge with the Metaverse and shift its focus to digital business, while accelerating its consumer-direct strategy (BUSINESS SWOT ANALYSIS, 2021).
Threats
Nike faces threats of Counterfeit Products that tarnish the company’s image. There is increased competitive pressure from emerging brands. It is facing marketing budget pressure from competitors such as Adidas, Lululemon, and Under Armour with high expenditures on marketing and advertising campaigns (Business Strategy Hub, 2022). Other threats include trade tensions, economic uncertainty, patent disputes, and Currency Foreign Exchange Risks. Nike has been accused of accentuating the risk of kangaroo extinction and is also facing patent conflict with Adidas Primeknit Shoes (BUSINESS SWOT ANALYSIS, 2021).
Marketing Plan Air Jordan Sneakers
For this study, I will develop a marketing plan for the Air Jordan sneakers manufactured by Nike. This product has been in the market for decades and is perceived to be the most luxurious and original sneakers in the world (Roman, 2020). It’s popularized by Michael Jordan’s name and authority, which is not enough for the current fashion industry since not everyone identifies with the name or is conversant with it. Consequently, the brand does not fully converse with customers. Moreover, Nike has not fully embraced the use of social media in marketing (Roman, 2020).
The proposed marketing strategy for the Air Jordan sneakers should enhance brand recognition, improve market presence, and expand customer interaction. The company should adopt more consistency in all social media platforms, including Twitter, Facebook, YouTube, Instagram, and blogs. Consistency will also be adopted in terms of new products, special events, and release dates (Roman, 2020). The company should be more efficient in communicating with customers through mobile phones, develop apps, and QR codes for campaigns and advisements, and enhance promotions by implementing giveaways and contest campaigns (Roman, 2020). Google and Facebook Ads can also be used to better Nike’s advertisements.
Section 3 – Macro- and Microenvironment
Both the macro- and microenvironment of Nike are made up of political, economic, social, technological, environmental, and legal (PESTLE) factors. Nike operates in many countries such as the US, China, Vietnam, Indonesia, Thailand, and so on, hence will have to consider tariffs in its operations (going as much as 25% in the US) (Brand Minds, 2021). It also has to adopt a geopolitically diverse supply chain to thrive in the international arena. For instance, choosing a safe manufacturing site in foreign lands. Some of the economic factors that Nike has to consider include economic growth, interest rates, unemployment rates, exchange rates, taxes, and the state of the country’s infrastructure. For instance, the closure of physical stores as occasioned by the COVID-19 pandemic made Nike lose about 38% of its revenue. Nike has since then focused on eCommerce, which has seen its digital sales rise to 30% (Brand Minds, 2021).
Social factors examine customers’ behaviors. Since the late 1970s-early 1980s, there has been a sneakerhead culture owing to the popularity of Michael Jordan in basketballs. Nike has therefore associated its sneakers with sports by partnering with teams and clubs in various games. Technology has seen the company shift to online marketing via the Online Nike store, Amazon, Flipkart, and Myntra. Nike has innovated the Nike Fit to scan customers’ feet and determine the best fit. The current global warming has pushed Nike to limit greenhouse gases emission as a form of remedy (Brand Minds, 2021). The possible depletion of Kangaroos has also forced the company to recycle products for sustainability. Nike is fighting legal battles with Adidas over infringement. It also filed a lawsuit against Skechers for copying its design patents (Brand Minds, 2021).
Part 2 – The Marketing Plan
Section 1 – Segmentation, Targeting, and Positioning (STP)
Segmentation enables Nike to divide the target market for its products into achievable and approachable groups. For the Air Jordan sneakers, these market segments will be created depending on shared interests, priorities, demographics, needs, geography, and behavioral and psychographic criteria. For the demographic segmentation, Nike will consider a vast range of age groups but put a particular focus on the age group 15-55 years old (Edrawsoft, 2022). It will consider all genders and economic classes. The products mostly include men, women, and kids. To offer accessibility and affordability to all economic groups, it gives customers cuts prices, discounts, and promos to lower prices on special occasions (Edrawsoft, 2022). This makes affordable products that were previously not affordable for some customers.
Geographically, Nike has physical stores across the globe as its form of segmentation. Here, Nike takes into consideration the different cultures, habits, and tastes people have across various locations (Edrawsoft, 2022). Promotional campaigns also differ in Europe, Asia, the US, Africa, and Australia. For instance, in Europe, advertisements focus on soccer while in the US focus on basketball and baseball. Cricket is promoted in Delhi, India, and rugby in Sidney and England.
Nike practices psychographic segmentation by tailor-making products for individuals with specific needs and interests (Edrawsoft, 2022). This approach enables Nike to explore individual customers’ preferences.
As for behavioral segmentation, Nike provides benefits to customers through essential sports equipment, comfortable footwear, and clothing. It keeps creating new versions of its products to satisfy the ever-changing customer needs and preferences (Edrawsoft, 2022). The Sneakers have existed for more than 35 years but only survives on remodeling and rebranding. Quality and innovation are Nike’s primary goals. It creates a perception that wearing these sneakers gives the feeling of athletes. It allows customers to share their feelings with family and friends both physically and through social media platforms to increase their purchasing behavior (Edrawsoft, 2022). In its marketing efforts, Nike fosters feelings and lifestyles by targeting sports (both participants and sports lovers) to make a family of customers.
Target Audience
Nike targets men, women, and kids. For men, the sneakers are designed for various sports such as athletics, softball, skateboarding, basketball, baseball, crickets, golf, tennis, football, American football, and other lifestyle activities, including training, gym, and running. It targets women with yoga shoe selection and young athletes in kids’ collections (Edrawsoft, 2022). Nike adopts the use of various colors in its shoe designs because it believes that physical appearance makes the products appealing, more comfortable, and satisfying to customers.
Nike positions its brand in the market alongside those of competitors. Currently, Nike brands are positioned as the leader in providing premium quality and innovative technology in the sports equipment market. The perception of its victory and ambitiousness in the market is communicated through its slogan, “Just Do It”, Swoosh logo, and promotional initiatives (Edrawsoft, 2022). It creates a perception and feeling among its customers that they are special and exceptional from the competition. Nike has a solid position in the fashion industry by defining a specific market’s lifestyle.
Section 2 – The Marketing Mix
Product
Air Jordan sneakers are associated with sports and Nike at the same time vie Nike’s logo, the Swoosh, which is unique and typical for the company (Shastri, 2022). The products are specific for each sport to make it more comfortable and in various colors and designs to meet various tastes, preferences, and purses. The product is sold alongside other accessories, including bags, balls, backpacks, headbands and caps, and many more (Shastri, 2022).
Price
Air Jordan sneakers are marketed using value-based pricing and a premium-based pricing strategy (Shastri, 2022). The company considers the current market price and what consumers are willing to pay and set the most suitable prices which are subject to gradual increment as thing change in the market. It also set prices based on the high quality of this product. Nike offered a discount, “Easter sales” to attract new customers and retain the existing ones (Shastri, 2022).
Place
Nike uses its many shops across the globe (45 countries) to sell its products, mostly in retail stores. It also uses its outlet (Niketown) and customization booth for advising its customers about its products. Nike also places its products on online platforms, including the Online Nike store, Amazon, Flipkart, and Myntra (Shastri, 2022).
Promotion
Nike mostly employs sponsorship and advertisement as means of promotion. Its advertisements feature prominent athletes and celebrities across the globe. Some of these figures include Christiano Ronaldo, Mo Farah, Kunal Rajput, and others. It has sponsored sports teams, including NBA, NFL, and cricket to ppoplarize its brand. It offers discounts, does direct marketing, gives financial support to NGOs, and uses social media platforms, such as Instagram, Twitter, Facebook, and YouTube to reach more customers (Shastri, 2022).
Core Product, Extended Product, and the Product Concept
Nike has four core products, namely, footwear, apparel, equipment, and accessory product. Air Jordan sneakers fall under footwear and apparel brands (Thompsom, 2018). Nike’s brand name is an extended product because it is attached to other products such as sunglasses, golf clothing, and soccer balls for more alignment with sporting goals. The product concept here is to use established brand names to popularize new products. Thompsom (2018) reports that established brand names make consumers accept a new product more easily.
Nike’s Competitive Advantage
Nike has a formidable competitive advantage in the footwear and apparel industry. It is a leading brand of athletic wear trusted by customers for its quality and reputation. Nike invests in research and development to innovate new products and better versions that satisfy consumers’ changing needs and preferences (Pratap, 2018). It has a global presence in 1152 in 45 countries across the globe, that gives it a competitive advantage. The use of celebrities, sponsorship, and social media for marketing gives Nike a competitive advantage (Pratap, 2018). It has a huge base of loyal customers, a wide range of products with appealing colors and packaging, and a well-established supply chain and manufacturing.
Section 3 – Global and Ethical Considerations
Nike grapples with major ethical challenges that should be addressed for better manufacturing and marketing of its products globally. Nike will have to address concerns of forced labor, gender discrimination toward female athletes and parents, and low wages. Nike has had unfavorable ratings by the Tailored Wages UK report, Ethical Consumer, and Fashion Revolution (Ethical Consumer, 2022). Even though Nike joined the Sustainable Apparel Coalition to help it achieve its commitment to decreasing carbon emissions by over 50% by 2025, it should do more to live up to this goal. Nike commits to using organic and recycled cotton and polyester and cutting down on water wastage for better environmental sustainability (Ethical Consumer, 2022). Nike strives to comply with ‘The Fair Labor Association (FLA) Workplace Code of Conduct for better marketing and working conditions.
Conclusion
Nike is a long-standing brand that has mastered the art of success in the market. Most businesses (both new and established ones) can borrow some insights from the company for better success. This comprehensive company analysis has demonstrated both downsides and potential of the company that should be addressed and exploited. Despite the undying success that Nike has gained since its establishment, it must not remain complacent but should work harder to be more competitive and address new challenges.
References
Brand Minds. (2021). Nike — a PESTEL analysis (2021). Medium. https://brand-minds.medium.com/nike-a-pestel-analysis-a213cbc18ad9
BUSINESS SWOT ANALYSIS. (2021). Nike SWOT Analysis 2022 – Nike, Inc. https://bswotanalysis.com/nike-swot-analysis/
Business Strategy Hub. (2022). Top 20 Nike Competitors & Alternatives. https://bstrategyhub.com/top-nike-competitors-alternatives/
Edrawsoft. (2022). Nike Market Segmentation, Targeting, and Positioning. https://www.edrawmind.com/article/nike-market-segmentation-targeting-and-positioning.html
Ethical Consumer. (2022). Nike Inc. https://www.ethicalconsumer.org/company-profile/nike-inc
Fortune. (2022). Nike. https://fortune.com/company/nike/
Pratap, A. (2018). Nike Sources of Competitive Advantage. notesmatic. https://notesmatic.com/nike-sources-of-competitive-advantage/
References for Business. (2022). NIKE, Inc. – Company Profile, Information, Business Description, History, Background Information on NIKE, Inc. https://www.referenceforbusiness.com/history2/99/NIKE-Inc.html
Roman, R. (2020). How Nike Perfected Sports Marketing: The Banned Air Jordan 1. PUSH CONSULTING & MARKETING. https://www.pushcm.com/blog/how-nike-perfected-sports-marketing-with-the-banned-air-jordan-1
Shastri, A. (2022). Researched Marketing Mix of Nike with Complete Explanations for 4Ps. IIDE. https://iide.co/case-studies/marketing-mix-of-nike/
Thompsom, J. (2018). What is Brand Extension? bizfluent. https://bizfluent.com/13709421/what-is-brand-extension