Marketing Analysis of Nike Incorporation

Marketing Analysis of Nike Incorporation | Marketing Management

Marketing Analysis of Nike Incorporation | Marketing Management | Management Notes

Background of Nike

Marketing Analysis of Nike Incorporation: Nike is regarded as one of the most leading American Multinational Company which was founded in 1964 on January 25 by Phil Knight and Bill Bowerman. Nike has business activities like designing, developing, manufacturing, sales, and marketing around the globe. Nike Inc. is a public limited company and its stock is traded on the New York Stock Exchange. Nike Incorporation has the largest market share as the footwear industry (Britannica, 2019). The capitalization of Nike is around $115.19 Billion which was the data of around 2018. Nike covers the worldwide area and has a wonderful global presence.

Nike mission statement


Nike mission statement

“Bring Inspiration and Innovation to Every Athlete in the world”.


Nike vision statement

“To remain the most authentic, connected, and distinctive brand”.


Major Categories of Products and their contribution to Total profit

Data for the year 2018
Categories of Product Profit(in Billion $)
1. Footwear = 22.27
2. Apparel  = 10.73
3. Equipment =  1.4


Nike Incorporation is involved in design, development, manufacturing, and sales but still, most of its manufacturing operations are outsourced to many independent contractors around the world for the purpose of getting a competitive advantage and minimize the production cost.


Nike PESTLE Analysis

Nike PESTLE Analysis


PESTEL Analysis is one of the very important tools that is used for analyzing macro-environmental factors that has an impact on the Company. PESTEL Analysis includes factors like Political, Economic, Socio-cultural, Technological, Environmental, and Legal.


Nike Political Factors


Political factors affect every business organization and Nike Incorporation is also affected by political factors. Nike Incorporation being a multinational Company has got many tax benefits from the US government. The rules of the US government were favorable and the government is stable as well that is supporting the Company.


Nike Incorporation has its Production processes all over the world, especially in emerging Asian countries. These countries like Vietnam, China, Thailand, Indonesia, etc can suffer from political stress, instability, a strike that directly impacts the supply chain of Nike Incorporation (Nave, 2015). Also, the change in international law also affects the company. Some of the countries prohibit the sale of foods from other countries in order to protect their local products.


Nike Economic Factors


Nike Incorporation has set most of the production plants in Asian countries because of the low labor cost as compared to the United States. But after the boom of the economy, the living standards of the people also increased which directly impacted the rise of production cost as the labor started a strike for very low wages. China is the country with minimum wages and the strike by Chinese workers in around 2014 affected the Company.


Nike Incorporation has been affected by the Global economic crisis of 2007-2009 which led its customers to shift to another brand of low cost and the company has been affected by it a lot. The company might face this kind of Recession in the future as well for which the Company must be prepared from every point of view. With the acquisition of different footwear brands, the company has been able to strengthen its base around the globe.


Nike Socio-Economic Factors


The needs and demands of people are changing day by day as the consumers are becoming more brand conscious. Because of brand awareness, it has supported the growth of the Company. Since Nike Incorporation is the first company that has brought innovation in the footwear industry it has got the first-mover advantage. Nike has most of its production plants in Asian countries has been accused of having hazardous working conditions that directly affect the brand image of the company.


Nike Technological Factors


In the field of the footwear industry, Nike Incorporation is regarded as the Apple Incorporation which has introduced innovative products. The company has adopted the latest technology in order to cope with the growing competition placing it ahead of its competitors. The Company has been trying to cut the use of chemicals with the use of advanced technology.
Since this is the era of the 21st century, the company has made some changes in its marketing techniques by going digital in order to a large group of consumers. Nike being a global brand uses online media to reach a large group of people around the world which has helped ditto increase the sales of the product in recent years.


Nike Environmental Factors


The rise in concern for global warming has led the Company to reduce the waste and the chemicals that are harmful to the environment. Nike Incorporation must be abiding with a certain kind of environmental law in order to carry out its production process in different countries. The company has been using the latest innovative technology to reduce manufacturing waste. China is the most polluted country in the world. As we know most of the Production of Nike Incorporation is in China and in the recent few years the government of China is being more concerned about the pollution issues in the country for which it had made it mandatory for the company to use the resources in a proper way ultimately increasing the production cost.


Nike Legal Factors


Nike had a legal battle with its main competitor in the market “Adidas” for taking its product designs, marketing plans after they hired the former employees of Nike. Nike has filed a case of around $10 million. This type of legal battle directly affects the image of the company in general. Nike has been accused of Child Labor usage at various Production processes in different countries like Pakistan and Cambodia. It has been said that for the purpose of preparing Soccer balls they are using child labor. The company had lots of efforts to minimize these practice but still, it is facing many legal issues worldwide.

Nike has faced the allegations of minimum wages as the laborers in Indonesia claimed that they are receiving minimum wages than the standard. In California, Nike Incorporation has been sued for this illegal practice.


Around the world, Nike is the most counterfeited brand which affects the profitability of the company directly impacting its revenue. In some of the countries, there are contract manufacturers who manufacture and sell Nike Products. This affects the market share of its brand in that country. The counterfeited products are low in quality which impacts the brand image of the Company as a whole.


Nike SWOT Analysis

Nike SWOT Analysis

Nike strengths

Nike weaknesses

  • Brand Awareness is strong: It has alone covered around 31 % of the footwear industry around the globe.
  • Customer Base is Huge: There huge customers of Nike who are loyal to the brand and participate in everything related to this brand.
  • Concerned for Environment: Nike has been very much toward the protection of the environment.
  • Low Manufacturing Costs: Nike manufactures most of its products in foreign countries to enjoy low labor costs which decrease its production cost.

 

  • Controversies Related with Labor: Nike has been dealing with the cases of child labor abuse and the allegations of minimum wages in different nations affecting the brand image.
  • Too much Dependency on the US market: Although being a global brand still a maximum amount of revenue comes from the US market alone which is about 42% of the sales in the US in around 2018 (Grill, 2019).
  • Poor Working Environment: The female workers of the company were sexually harassed and mistreated.  

Nike opportunities

Nike threats

  • Opportunities in Emerging Market: Nike has the opportunity to expand its market base in countries like China, India, etc.
  • Expansion of Product Mix: Nike should focus on other product as well as the footwear products have been dominant over all the Nike Products.
  • Competition is tough: The other competitor brands of Nike Incorporation are spending a huge amount of money on advertisement and marketing.
  • Imitation: Many of the manufacturers around the world are imitating Nike products and selling them.

 

Nike market segmentation, Nike target market, and Nike positioning
Nike market segmentation

Nike Demographic Segmentation


Nike uses demographic factors like age, gender, occupation in order to target the market to sell their products. The Company generally targets the age group of around 15-40 to market their Products. Nike targets both gender male and female equally to position its brand. Among these Nike targets on the basis of the occupation like people involved in sports. Nike is more concerned with the athletes for its product positioning. Nike does not target people on the basis of race and religion.


Behavioral Segmentation


Nike targets people on the basis of behavioral attributes focusing on the way its products make consumers feel. With the aspect of behavioral segmentation, Nike seeks to build customer loyalty among its customers.


Nike Geographic Segmentation


Nike Incorporation uses geographic segmentation which is the segmentation based on the country, region, population, density. Nike uses it as a powerful tool to position its products worldwide. Nike adopts different forms of advertising campaigns to different countries even in different cities as per their interest and trends.


For example, In the US the advertisement campaign for Nike is more related to football and baseball whereas in Europe the advertising campaign is more related to Soccer. Likewise, in Asian countries, there are different advertising campaigns.


Nike Psychographic Segmentation


Based on the personality, lifestyle, interests, and activities the Company Nike Incorporation targets different customers. Nike adopts different forms of sports-centric strategy to motivate people to buy the products of Nike.


Nike competitors: Adidas Vs Nike

Nike

Adidas

  • Nike Concentrates in the US Market.
  • Nike uses both the Premium pricing strategy and Competitive pricing strategy.
  • Nike was founded in around 1964.
  • Nike does not have its own production plant as they outsource almost everything.

Nike Vs Adidas

  • Adidas concentrates on the European Market.
  • Adidas uses Premium Pricing Strategy.
  • It is much older which was founded around 1948.
  • Adidas have their own production plant in Germany.

Adidas Vs Nike

Nike Marketing Mix

Nike Marketing Mix
Nike Product Mix


• Nike’s Footwear
• Nike’s Apparel
• Nike’s Equipment
Among the entire product, the footwear of Nike is the most popular one and contributes the maximum to the profitability of the company.


Nike Price Mix


The pricing strategy adopted by the Nike Incorporation is both Premium pricing strategy and Competitive Pricing Strategy/Value-based Pricing Strategy (Pratap, 2018). The brand image of the company and because of the loyalty of the customers charging premium prices do not have any kind of effect on the sales of the products.


Nike Place Mix


Nike Incorporation had made its product available at different places to its end users around the globe through various channels like:
• Retail Store
• Nike Outlets
• Online Outlets
Nike sells its product to the wholesalers of both markets of the United States and Global Arena.


Nike Promotion Mix


The different forms of Promotional techniques used by Nike to sell its products and reach maximum customers are:
• Advertising, Personal selling, Direct marketing, Sales promotions, Public relations. 


Nike’s Distribution Plan

 Nike’s Distribution Plan


Nike Incorporation mainly distributes its products through three major Channels. The three major channels are:

Retailer distribution


In the retail distribution channel, the products of Nike are distributed to the retailer partner which is then forwarded to Nike town to Nike stores to multiband stores and finally reaches the department stores from where it end customers get the Nike products. The retailer distribution network is followed in the countries of Europe.


Wholesaler distribution


In the Wholesaler distribution channel, the products of Nike have been provided to the wholesale distributors which directly go to the department store and finally reach the end consumers. The wholesaler distribution network is followed in Countries of the US.


Licensee distribution


In the License Distribution Channel, the products of Nike are delivered to the licensed distributors of various countries which are forwarded to the Nike store to multi-brand stores and then to departmental stores and finally reach the end customers. The License distribution network is followed in the Asian Countries.


The rapid advancement in technology had led the companies to have online distributions channels which include various e-commerce platforms through which customers can access the products of Nike. 


Nike media plan

 Nike media plan


Nike Media Objectives


• To reach a target audience of forty percent at least four times a month through different mobile, TV, and Internet Campaign.
• Increase Advertising Budget.
• To reach around ten percent of Nike’s customers through traditional advertising and public relations.
• Increase hits on Nike’s Website.

Different Medias Used By Nike Inc.

Interactive Media
  • Social networking

  • Blogs, Website

  • Mobile

  • Email

Customers can use these media in order to get notified about the products of Nike and the company creates an environment of interaction with its customers to make them feel they are valuable.

Broadcasting Medias
  • Digital television

  • Cable television

The broadcasting media like Digital and cable television is used to embed various commercials with some sorts of interactive materials.

Print Medias
  • Newspaper
  • Magazines

These print media like newspapers and magazines are a tool to promote the products regionally on the basis of the individual’s taste and preferences.

Other Medias
  • Sponsorships
  • Spectaculars

Other Forms like sponsoring in various events are carried out by Nike. And putting big and interactive Spectaculars in the crowded areas helps in promoting the brand (C, 2008).


Conclusion


Nike is regarded as one of the most leading American Multinational Company which was founded in 1964 on January 25 by Phil Knight and Bill Bowerman. Nike has business activities like designing, developing, manufacturing, sales, and marketing around the globe. Nike Incorporation is involved in design, development, manufacturing, and sales but still, most of its manufacturing operations are outsourced to many independent contractors around the world for the purpose of getting a competitive advantage and minimize the production cost.


The various macro-environmental factors positively and negatively impact the company. Nike has identified the target market and positioned the products with the help of market segmentation. Nike Incorporation mainly distributes its products through three major Channels which include retailer distribution, wholesaler distribution, and license distribution. The Company uses various Media to promote its product in order to reach the end customers.


References


Britannica, T. E. (2019, July 2). Nike, Inc. Retrieved from Encyclopaedia Britannica: https://www.britannica.com/topic/Nike-Inc
C, M. (2008, August 18). Media Planning. Retrieved from eCampus: Assignments & Lessons website: https://ecampus.wvu.edu/webct/urw/lc5116001.tp0/cobaltMainFrame.dowebct
Design your way. (2019, May 11). Nike Print Magazine Ads That Boosted The Brand’s Popularity. Retrieved from https://www.desdesignyourway.net/blog/inspiration/35-nike-print-advertisements-that-boosted-the-companys-income/
Gregory, L. (2018, August 21). Nike’s Promotional Mix. Retrieved from http://panmore.com/nike-marketing-communications-mix
Grill, S. (2019, March 30). Nike SWOT Analysis 2019. Retrieved from Business Strategies Hub: https://bstrategyhub.com/swot-analysis-of-nike-nike-swot-analysis/
Nave, P. (2015, September 24). SWOT And PESTLE Analysis Of Nike. Retrieved from My Assignment Help: https://myassignmenthelp.com/case-study/nike-swot-pest-analysis-case-study.html
Pratap, A. (2018, December 10). NIKE MARKETING MIX. Retrieved from notesmatic: https://notesmatic.com/nike-marketing-mix/
Soni, P. (2014, December 4). NIKE’s Distribution Channels:. Retrieved from https://finance.yahoo.com/news/nike-distribution-channels-products-reach-170108274.html

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