Marketing Management of Nike Inc.

The theoretical framework is based on Kotler and Keller’s definitions of marketing and consumer marketing behavior. At the same time, in the course of the research, Hollensen’s global marketing ideas were considered, which helped to analyze external factors influencing Nike’s Inc. (PESTEL). Primary data were collected by means of desktop research, and the main source of information was nike.com.

First of all, the segmentation of the market is analysed as well as targeting strategy of the corporation. Another important subject discussed in the section is marketing positioning where it is identified, which place the company’s products occupy in segmented consumers’ minds.

The section Buying Behaviour addresses a number of issues related to evaluation of alternatives, purchase decision and post purchase evaluation or impulse buying. The notion of buying behaviour is determined through Kotler and Keller’s (2009) definition. One of the market segments is chosen, which is Nike’s shoes, in order to understand consumer buying behaviour, In addition, external factors that influence or may influence in future consumers’ patterns of behaviour are discussed.

Product Life Cycle Analysis section investigates and concentrates also on Nike’s shoes. The whole process from the idea that enters research and development department up to the point when the product becomes obsolete is observed with the aim of identifying, which decisions were effective and which ones were not. This is done in order to evaluate the need for both product innovation and reduction of hazardous impact from manufacturing on the environment.

The section titled Marketing Plan is devoted to the investigation of the consumer experience with the aim of determining weaknesses in the process and making suggestions as to the improvement of the whole consumer experience. The definition of marketing plan is discussed, and the form as well as the sections of the marketing plan are defined within the framework suggested by Woods (2007).

Finally, conclusions are made, which summarize the report as well as present the expected results from the proposed changes into the marketing strategy of Nike Inc.

Segmentation, Targeting and Positioning

This section focuses on the description of the place the company currently occupies in the market of sports shoes and apparel. Here, detailed information on the segmentation (geographic, psychographic etc.) is presented. In addition, targeting strategy Nike that uses today to address their customers’ needs is discussed. Finally, positioning is covered in the section.

Among the products of the corporation, there are certain groups such as athletes’ footwear, apparels, garments, sports gears, and equipment. Currently, the market segmentation at Nike is based on geographic location, demographic criteria, and physiographic characteristics of consumers; furthermore, the criteria are often interconnected to create customized orders. All of the company’s segments are covered in details further.

Geographic segmentation: Africa, Americas (United States, Argentina, Canada, Mexico, Brazil, Chile, Uruguay), Asia (Australia, India, Malaysia, Philippines, Hong Kong, Indonesia, New Zealand, Singapore etc.), Europe (Belgium, Czech Republic, Germany, Spain, France, Ireland, Italy, Netherland, Portugal, Slovakia, Sweden, Turkey, Croatia, Denmark, Greece, Finland, Hungary, Israel, Luxembourg, Norway, Poland, Russia, Slovenia, Switzerland, United Kingdom), Middle East (United Arab Emirates, Saudi Arabia). It should be noted that the countries with the highest football interest have the bigger presence (Nike n.d.).

Demographic segmentation: Age, Gender, Income. According to the research conducted by Nike Inc. the consumers are professionals from various field (they constitute 38% of all the customers), whereas the students constitute 36% of customers. It is also evident from the research results that such groups as designers and athletes constitute the rest of the consumers of the company’s products.

Physiographic segmentation: personality and lifestyle. Personality traits are often overlooked in the research due to the fact that traits are difficult to identify. However, it was discovered that some of consumers easily accept new products, whereas others tend to stick to their initial choice. It is also obvious that people’s lifestyle and buying behaviour are interconnected factors influencing consumers’ choice. Thus, people with similar lifestyle tend to choose the same products. The research results indicate that people such as athletes or those who are active in sports buy Nike products because they believe that these products were designed for sports. At the same time, there is another group of consumers who purchase the products purely for the purpose of following famous athletes’ example or who follow fashion and have no relevance to sports.

Since Nike is a mature company, the research and development department together with the marketing department have developed an elaborated strategy and addressed most of the known segments in the industry. Nevertheless, it has been found that the company overlooked such variables as culturally based and benefits based segments. Therefore, it is advised to investigate these areas and include these variables in order to create multi-variable account segmentation.

It is obvious that a successful targeting is dependent on how effectively a company segmented the market. As it can be seen, Nike identified a number of customer groups using a great number of variables. Every geographic area where the company is present is divided into the segments based on age and gender. Every demographic segment is represented by a set of products, which are targeted at a specific consumer group or even individuals. Thus, Americas are represented by such sections as men, women, boys, girls; further, the section men consists of groups of products (shoes, clothing, shop by sport and shop by brand), which makes the choice easier. In this way, the company targets the needs of the consumers based on the demographic group they belong to, their lifestyle or personality as well as their geographic location. In addition, the company targets other identifiable groups of customers. For instance, they have sections of products such as running, training and gym, sunglasses, accessories, etc. Since Nike Inc. is a global company, and they target globally as well; therefore, they run probability surveys. Nike gives priority and targets the segments, which are relatively stable according to demographic variables.

The company targets the market as per brand image in a variety of markets. So far, Nike has been targeting high-income level consumers whose age is around 16-55. This significantly differentiates Nike from its major competitors: Adidas, Reebok, Puma, etc. “The Nike sportswear business wants to produce high quality shoes, clothing and related equipment, but it also aims to build its profits and increase its share price and net worth” (Smith & Stewart 2014, 35).

“Marketing strategy summarizes the overall strategy for achieving objectives by creating communicating, and delivering value to the target markets. It also indicates any possible effects that marketing could have on the stakeholders” (Whang 2015,). Along with the targeting strategies that Nike uses nowadays (custom micro-segmentation, look-alike targeting and geography), the company should also utilize third-party retargeting data, which means that the company is to place tags on both advertiser’s and publisher’s sites and even link them to enhance ads visibility.

Another aspect, which is worth mentioning and which plays a crucial role in enhancing product’s competitive advantage, is positioning. Nike Inc. builds its positioning strategy around three core factors: trendy, healthy and safe (Smith & Stewart 2014). Nike mostly uses push strategy to promote such products as sneakers and pull strategy when selling customized products. In general, the position of the brand in the consumers’ minds is associated with a high-end product, which is rather costly, but the customers believe that the products price is aligned with the quality, design as well as the services the company provides.

“Nike’s amazing growth came from its business model, which from the beginning was based on the differentiation; its strategy was to innovate state-of-the-art athletic shoes and then to publicize the quality of the shoes through dramatic “guerrilla” marketing” (Hill 2009, 200). Nike’s marketing aims to convince consumers that Nike’s products are not only superior but also fashionable and they are an integral part of a lifestyle based on specific athletic interests.

It is worth noting that Nike’s brand is most favourably positioned in the market; hence, it is not advised to make changes into the sphere except for the increasing awareness of their current sustainability program within environmentally concerned communities.

Buying Behaviour

First, it is important to define the notion of consumer buying behavior. According to Kotler and Keller, “consumer buying behavior is the study of the ways of buying and disposing of goods, services, ideas or experiences by the individuals, groups and organizations in order to satisfy their needs and wants” (Kotler 2009). Kotler (2009) believes that consumer buying behavior can be predicted once such factors as how, what, when and why people buy products or services are discovered.

There are a number of models or patterns of behavior that people adopt when making decision whether to buy a product. Here, fife steps model will be used: problem recognition, information search, alternative evaluation, purchase decision and post-purchase behavior. In addition, a number of external factors influence consumer buying behavior. Macro environmental factors discussed further are politics, economics, society and technology.

Political factor influencing business is clearly associated with the policies a government regulates in order to promote local and international business. It is obvious that Nike Inc. benefits from the fact that its headquarter is located in the U.S. since the U.S. dollar is considered to be the most stable currency; this in turn diminishes economic risk the company might face. Another advantage of the government policies that Nike had used were low interest rates along with the favorable tax system.

Among the economic factors, which influenced the company’s performance in the past and which continue or may influence it in future, are such phenomena as recession or economic crisis. From the history of Nike Inc., it is known that the recession in the U. S. had a great impact on the sales, which fell not only in America but also in Asia and Europe. However, today, the company experiences increase in sales, which is achieved not only due to relatively stable economic environment but also due to some internal factors and successful strategic decisions of the company’s executive management. For instance, “Nike took its design and marketing competencies and began to craft new lines of shoes for new market segments” (Hill & Jones 2011, 143).

Social factor include the reasons why consumers chose a certain product as well as the attitude towards the company itself and how environmentally conscious their corporate culture is. Today, the major share of global society realizes the importance of fitness, which contributes to human health. This is the reason why so many people engage in sports activities. Another factor is worldwide popularity of Olympic Games and FIFA. For Nike Inc., it means more and more customers in future since doing sports requires the right outfit and equipment. Along with that, it is well known that Nike has always been the first choice of consumers. However, the company’s reputation was tarnished in the past because of the working conditions in Asia regions. On the other hand, nowadays, the company has a solid sustainability program, which includes support to different communities. The only problem the program has is the lack of public awareness. This is explained by the fact that “many organizations, which are professing green marketing, are not profound about it” (Management Association, Information Resources 2014, 67.).

The next external or micro environmental factor is technology. As it has been mentioned above, Nike Inc. has an incredible research lab, which was established with the aim of keeping up with technological advances. Along with that, the very mission of the company states: “Bring inspiration and innovation to every athlete in the world” (Nike n.d.), which implies that the core company’s values lie within the innovation and technological progress. It is also worth mentioning that Nike successfully applies marketing information system to both innovate and successfully segment the intended customers.

The last factor concerns legal issues. “Depending on where the organization is based and where it does business political-legal factors can lead to profitable opportunities or potential threats” (Wood 2007, 33). Since Nike Inc. is a multinational corporation, it has always been concerned with ethical issues. The company has also paid attention to staying environmentally friendly. No matter where the company’s facilities are located or what markets the company enters, it always aligns the strategies with the local or international laws.

Even though a single company has no resources, which would enable it to exert influence on macro environment, there are some things Nike should do as a part of their risk management program. First, the company could join associations aimed at promotion of free market. Another measure would be close collaboration with different governments with the aim of developing communities. As a multinational corporation, Nike should also influence economy (providing people with jobs). Finally, it should avoid transferring their incomes to the countries with low tax rates as Apple does. The suggested changes into Nike’s marketing strategies will influence consumer buying behavior. In such a way, Nike Inc. will significantly increase the sales once the sustainability program is communicated to the wide range of consumers since society becomes more and more environmentally conscious. It is also clear that the suggested steps will demonstrate that the company has high ethical standards and the five steps model will work in favor of Nike’s brand.

How It Works

Product Life Cycle Analysis

The company has conducted a research in order to assess the product life cycle of such shoes as Pegasus 25 (2008), Pegasus 30 (2014), and Flyknit Lunar 2 (2014). The analysis includes five environmental factors: energy, use, greenhouse gas emissions, waste, water use and chemistry. Nike shoes product life cycle consists of a number of stages. The first stage is planning (energy, water and wastes impact of Nike, Inc. corporate offices). The second stage is designing materials (material production from raw material extraction and processing to final finished material production). The next stage is making (finished product manufacturing and assembly at factory including transportation of finished materials to the factory). Then, the stage of moving (transport of finished goods to the distribution centers; distribution center impacts; transport to the retail stores) follows. The next stage is selling (energy, water and wastes impacts of retail stores). The stage of using is characterized by taking into account packaging wastes. The final stage is called reuse or end of life (disposal of used shoes as a household waste) (Nike, Inc. 2014).

The marketing mix and mainly 4Ps (Product, Price, Place and Promotion) should be considered since Nike, Inc. has been developing their strategy around four Ps. “Marketing mix is a set of marketing tools companies use to implement their marketing strategy” (Kangasniemi 2015, 10). Nike takes into account different factors influencing their product as well as the product characteristics themselves as it is in product or consumer market. Therefore, the company needs to have a variety of products to gain or, in Nike’s case, maintain the competitive advantage in the sports apparel and shoes market. Nike has various products as well as value added services, which are targeted at different segments. As it was mentioned in the previous section, there are products for men, women, boys, and girls; moreover, there are specific products: for instance, African, women, tennis players or European men, football players and so on. In addition, the company provides customization of their shoes range on the site Nike.com. The design of the products changes on a regular basis; despite the fact that the company is already over fifty years on the market, the patterns and designs do not repeat. The company also sells packaging. For instance, they sell i-pods with the jogging shoes.

In the course of the company’s development, price policy naturally changed. Today, Nike firmly stands on the ground and is in fact the leading company in the industry. At the time when other companies reduce their price margins, Nike increases the price of the products, which in fact leads to more profits; at least, the financial report of the first quarter of 2015 indicates so (Nike n.d.). The company has a high-end consumer market with a high available income. The consumer in the market wants a high quality service and satisfaction. Therefore, the pricing strategy that Nike adopted can be described as providing the best possible quality at relatively high cost with maximum cost-effectiveness. Despite the fact that the company has high margins, it may be explained by the high cost of innovation, research and development. An integral part of the pricing strategy is also provision of discounts during certain seasons depending on the geographical location of the retail stores.

Another constituent of the four Ps is Place. Nike is a cross continental corporation, and it is obvious that developing a distribution channel, which can efficiently serve the retail stores, is a crucial aspect of the business administration. Taking into consideration the importance of various channels, through which the company reaches its consumer, Nike developed the following distribution places: retail (stores, brand outlets, mega markets, and showrooms), online shopping, and factory outlets (where the company sells its products with the discounts) (Kotler & Armstrong 2010, 360).

The last component of Nike’s marketing mix is Promotion. Nike, Inc. pays special attention to promotion. Their advertising slogan “Just do it” is probably known by the majority of people living on the earth. Among the promotion tools, there are advertising, advertisement campaigns, sales promotion, and public relations strategies. In addition, the company uses celebrity endorsements (Michael Jordon, Maria Sharapova, Tiger Woods, Ronaldo, Roger Federer, and Ronaldinho etc.) (Nike n.d.). Along with individual athletes, Nike also uses product placement in movies and endorses teams such as Barcelona. Other ways of advertising is sponsorship of a variety of sports events, building of a stadium and many others. Thus, it can be seen that Nike uses all the possible ways to promote its products and the amount of money they spend on the advertising and promotion is huge.

There are a number of steps that Nike should take in order to retain competitive advantage. First, the company may find it useful to even enlarge their product range to embrace the whole activities associated with sports. For instance, they might start producing bikes and bouts or fishing equipment. The price policies seem to be effective since people tolerate the increase in price and favor Nike’s products for its innovative ideas and the quality. Therefore, it is suggested that the company should maintain the current pricing policies. The same concerns the place of distribution because it seems that the channels are extremely well developed. In addition, the actual physical facilities are present in every continent of the world. However, increasing presence in Europe will enable many countries to enjoy the ability to buy Nike’s products in retail stores. Finally, Nike’s promotion, while being the focus of the company, should also address alternative advertising channels. The suggestion is to promote the company’s sustainability program and mainly the programs, through which they try to make a difference in the world by helping communities. Probably, such strategy will appeal to a great number of customers and improve the company’s image.

Finally, fife steps model presented in the previous section should be utilized to persuade consumers to choose Nike’s products. Problem recognition: athletes realize that they need sports shoes and apparel. Information search: at the stage, the athletes investigate the market and find different options. Alternative evaluation is the stage characterized by comparison of competing products or substitutes. Purchase decision stage is related to making a decision in favor of Nike’s product, and post-purchase behavior is the evaluation of the adequacy of the need and how Nike was successful to address it. It is believed that the number of people going up to the fifth stage will increase once the suggested amendments into four Ps are adopted,

Marketing Plan

Marketing plan is defined as a structured process of identifying the steps and tools, which enable a company to provide value to the consumers, company and other important stakeholders. A marketing plan is created by means of investigating of the company’s present situation in the market, the market itself and the intended customers; “developing and documenting marketing’s objectives, strategies, and programs; and lastly implementing, evaluating, and controlling marketing activities to achieve the set objectives” (Wood 2007, 4.).

There are a number of formats of marketing plan. One of the creative and innovative ways to develop and present marketing ideas belongs to the sphere of service design thinking. In order to spot the weaknesses in the overall customer experience and ideate over the possible decisions, customer journey mapping tool has been used. The customer journey is divided into a number of segments or stages: pre-purchase, purchase and post-purchase.

At the pre-purchase stage, Nike uses different marketing channels to create favorable conditions in the industry. For instance, the company often uses social media to promote certain sports events and attract the wide audience to the sports in general. Based on the analysis of customer behavior as well as the four Ps, it is suggested that the company should first use different channels of communication such as scientific articles to attract professionals from various fields, TV and radio ads – to attract elder generation. In addition, the company might promote not purely sports but the benefits it brings. Nike might also appeal to potential consumers of age over fifty five. They should emphasize the shoes’ design, which is not only compostable to wear but also healthy. In this way, it is believed that the consumers over fifty-five years will likely opt for the Nike’s product.

Purchase stage is characterized by the company’s active encouragement of customers to choose customized products at their website. For instance, any customer may design the shoes in terms of color range. While the Nike’s strategy seems advanced and the service is highly demanded, seeding up delivery time is what the customers are looking for. The evidence is supported by the fact that a great number of consumers were complaining about the issue.

Post-purchase stage is related to engaging the customers and involving them into design of the future products as well as various digital services, which are aimed at building brand loyalty. It is expected, personal communication during the process of co-creation will even enhance customers’ engagement and loyalty towards Nike’s products.

Therefore, customer acquisition and, most importantly, retention can be achieved with the help of improving segmentation and targeting at the pre-purchase stage, the actual services at the purchase stage and verification of the communications channel at the last stage.

Conclusion

The multinational corporation Nike that operates already over fifty years, is an example of a successful business, which can be inferred from their current financial situation as well as their reputation and relationships with the key stakeholders. Based on the research that has been conducted by means of observing and gathering insights it can be stated that minor changes into the existing Nike’s marketing plan can be brought in. Examples of such changes are increasing product range, increasing presence in Europe and promoting the sustainability program they are currently running in order to attract potential consumers who are environmentally aware.These are the results of the qualitative research conducted by means of gathering insights and netnography (analysis of the feedback the customers gave to Nike’s products.) The presented above marketing plan is designed to reach the set objectives, both financial and social, and the expected outcome of the marketing plan. The suggested changes include improving customer experience, brand loyalty, customer engagement, and maintaining competitive advantage in the industry.