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Nike Inc. and its market position

Marketing is the procedure of promoting and the advertising a particular product in the target market. In this report, marketing strategies will be used in order to enhance the demand of the Nike running shoes in the target market. They are known for producing athletic shoes and the sportswear apparels. The company was founded in 1964 in the name of Blue Ribbon Sports. From the company’s annual report, it was observed that Nike shoes’ demand has been decreasing continuously and the major reason behind this is the introduction of various major brands in the same industry. This report will cover the strategies such as marketing mix, segmentation, SWOT analysis, etc. will be included in the marketing plan for the Nike running Shoes in order to enhance the market share as well as to gain adequate competitive advantage.

Nike is an American multinational corporation engaged in the production, designing, distributing sportswear, apparels, footwear, etc. in the international market. The company’s headquarter is in Portland Metropolitan area. Primary activity of the organization is manufacturing of athletic footwear and apparels. Various countries’ national and international sports teams wear the apparels and the footwear made by Nike. They are also known for delivering adequate qualitative products to its consumers and their quality remains same irrespective of the area. Under this report, Nike’s shoes’ market will be analysed through various strategies. Nike produces various types of shoes and the distribution of these products is mainly done through its authorised stores. Distribution of products through authorized stores is beneficial for the organization as it helps the audience to get the original product. For distributing purpose, Nike uses their own sources of distribution which helps them to avoid the chances of theft and development of plagiarised products. Consumers can get these products from the authorised stores of Nike Inc. as well as through various online shopping websites (Armstrong, et. al., 2012).

Strengths

· Nike is known for producing varieties of sports shoes used in baseball, football, cricket, etc.

· Nike is on the peak position across the globe in terms of producing sports shoes.

· They sell their products in the USA as well as in more than 180 countries across the globe (Brohi, et. al., 2016).

· They have developed a strong goodwill in the competitive international market.

Weaknesses

· Primary activity of Nike is producing shoes and this is the only major source of income for them.

· Due to expensive products, their target market audience is limited.

· Huge competition is available in the production and distribution of sports shoes in the global market.

Opportunities

· They have the opportunity to build their name in the fashion industry because their products are very much trending in the youth.

· In order to expand their market share in the global market, Nike has the opportunity to get involved in the eyewear industry (Buil, De Chernatony & Martínez, 2013).

· Expanding their business in more places of the world with the help of franchising mode of market entry strategy.

Threats

· Being a global brand, buying and selling currencies differs and it leads to the reduction in the profit margins.

· Aggressive marketing strategies used by its competitors as well as its competitors are also developing sports shoes in order to overtake the Nike’s market share.  

It is the process through which organization could determine its potential market segments in order to enhance the demand of the particular product in the target market. The primary target market for Nike running shoes will be sports industry as their shoes are mainly used by the various sports teams. Nike has adopted various strategies in order to develop their product qualitative as well as innovative through which their market share could be enhanced and the organization could adequate competitive advantage. Nike Inc. is also focusing on women customers and to develop adequate image in the women segment, they have started developing various types of products for them. They have started promoting and sponsoring young athletics for attaining adequate future growth in the competitive business environment (Cwinkler, 2013).

Strengths and weaknesses of Nike

This is the process through which organization could divide consumer market in accordance with their needs. This process has various crucial aspects which are implemented as per the requirement of the organization (Essmat, 2014).

  • Geographic: This is the type of segmentation process under which target market is being divided as per their locality, area, city, country, etc. As Nike is present in almost every part of the world, they need to focus on the markets in which they are not able to establish their presence yet. Demographic: This type of segmentation defines the targeting audience on the basis of audience’s age, income, occupation, marital status, etc.
  • Psychographic: This type of segmentation includes the understating of the consumer’s lifestyle their opinions, consumer’s interests, etc. There are various types of people and all have different opinions, preferences, etc.
  • Behavioural: This segmentation approach defines the selection of the market through various bases such as consumer’s preferences for the branded shoes, loyal consumers towards the brand, etc. (Fleming & Mixon, 2011).

From the analysis of the segmentation strategies, it was observed that all the approaches are result oriented but from the perceptive of the Nike Inc., the best approach for targeting the adequate market will be Psychographic and the behavioural approach of the segmentation. Both of these approaches are capable enough to generate adequate results for the organization in terms of enhancing the demand of their shoes in the target market.

Nike is the most reputed brand in the athletic apparel market and in terms of expanding their market; they are using various strategies in terms of identifying new markets for the organization. In these scenarios, organization’s typical consumers are known as young athletes, women sportspersons, and the runners. They are the primary target markets for this brand (Freeman, 2010).

  • Product: Under this aspect, Nike shoes’ features will be promoted in the target market with the objective of enhancing the demand of the product in the target market (Gordon, 2012).
  • Three layers of product: Every product has three layers i.e. the core product, actual product and the augmented product. Core product is the layer which is not a tangible product, it is the value generated from the consumption of the product. For instance, the level of comfort and ease obtained from the usage of Nike running shoes. Next layer of the product is actual product, it is the layer which can be seeing and touched as well. For instance, before buying a running shoe, consumer tries the shoe in order to determine the comfort level, etc. The last layer of the product is augmented product and this product is also a non-tangible product. These are the added values which comes with the product i.e. after sale service provided by the company (Gregory, 2017).
  • Class of product: Shoes are included in the shopping class of goods and the reason behind this is the consumer has the option to choose certain brand, product on the basis of price, quality and the value.
  • Lifecycle stage of product:Every product needs to suffer from four stages i.e. product development, growth stage, maturity stage and the decline stage. As Nike has developed their brand image in the global market they are improving the quality of their shoes continuously in order to provide adequate qualitative products. Nike running shoes have suffered from all these stages and to maintain the consistency in the demand of the product, they try to update their shoes with innovative features and designs.
  • Branding: Nike Inc. has impressive goodwill in the target market so they does not need to spent much on development of brand. Appropriate communication and the distribution channels will be effective enough in order to enhance the demand of the product (Hollensen, 2015).
  • Price: Nike is used to set the price of its products by considering the other shoe brands available in the target market. Generally, they use vertical integration process for setting the price of their new launched products. This helps the company to reduce unnecessary costs and apart from this, organization could also use the value based pricing strategy. Under this strategy, price of the products are kept as per the worth of the consumers places. Nike has various categories of shoe products and their range starts from $80 and it reaches to $400.

Internal factors- These are the factors which affect the price of the product internally. When the product is in growth stage, its demand in the market continuously rises and with the increase in the demand, its prices also increase. With the effect of change in the customer’s tastes or preferences, product’s demand will be decreased and with the decrease in the demand of the product, price of the product also decreases and it is also known as the decline stage of the product. Increase or decrease in the demand of the product affects the price of the product which is also known as the price elasticity of the demand (Keller, 2010).

External factor- These are the factors which affects the organization’s performance from external sources. These are government regulations, competitor’s strategies, etc. With the change in the competitor’s pricing strategies, Nike also needs to amend its pricing strategies.

There are numbers of price adjustment strategies is available and these are quite crucial in terms of smooth performance of the organization. Approximately seven approaches are available under price adjustment strategies and under this scenario, discount and allowance price adjustment approach will be used. In terms of launching a new product in the market, providing discount attracts the consumers and the allowance approach provides the adequate reward points on the every purchase made by the consumers (Kotler, et. al., 2015).

  • Promotion: It helps the organization to promote the existing or newly launched products in the market and this strategy also used to spread appropriate awareness in the targeted audience. In order to promote the new running shoes in the target market, organization’s marketing team has invented certain promotional messages through adequate amount of demand could be enhanced. These shoes are especially designed for the runners for upcoming marathon race. These shoes will enhance the productivity of the runners and it will provide them a pleasured experience (Larson, 2011).

Hierarchy of effects model: In terms of the promotion of the product, hierarchy of effects model analyses the effectiveness of the promotional strategy used. In this model, 6 steps are involved i.e. awareness, knowledge, liking, preference, conviction, purchase. The first step awareness defines that organization needs to adopt and implement those strategies through which organization could spread awareness regarding the newly launched shoes in the market. The advertisement must be strong enough so that consumers could gain adequate knowledge in relevance with the product so that they could compare them with the competitor’s products. The next step is liking under which is made up from the effective advertisement campaign only. After comparing and analysing the outcomes of the Nike’s shoes and the competitor’s shoes, consumers will reach to a stage in which liking for a particular product will be builds up. Then, preference step comes when consumer gets convinced to get the product. But there doubt still rotates in the consumer’s mind in relation with the product and this comes in the fifth step of hierarchy effects model. This is the last stage in which consumer purchases the product and after purchasing the product; it is duty of organization to satisfy the consumer’s needs so that above stages does not affect the consumer’s decision (Lefebvre, 2011).  

Opportunities and threats faced by Nike

IMC: Integrated marketing communication channels are used to communicate with the target audience in relevance with the product. These are the steps which are quite crucial in terms of enhancing the demand of the product. Promotion of the product through social media, print mediums, etc. could be used. Apart from this, there are numerous strategies such as personal selling, sales and promotion activities (Sharma & Lambert, 2013).

All the promotional and the advertisement strategies used in this situation for enhancing the demand of the Nike running shoes in the target market are quite impressive and effective and with these strategies organization will be able to attain its desired objectives and the goals.

  • Placement: Availability of the Nike’s stores in Australia is huge and along with its availability in the Australia, their stores are present in various parts of the globe. Their products could be purchased from the online stores as well as the physical authorised stores. As retailers are the quite crucial segment for distributing the shoes to the consumers, Nike has concentrated on its retail outlets and they have made them effective (Lovelock, 2011).

Distribution Channel: This is the process through which organization delivers the product to the final consumer. One level, two level and three level distribution channels are available in the business environment but in this scenario, Nike Inc. will require three level distribution channels (Moore & Doyle, 2010).

The channel of distribution selected by the Nike is three levels and under this, manufacturer, agents, wholesalers, retail outlets are involved till the product reaches to the final consumer. Organization needs to consider verification procedures for verifying the agents, wholesalers and retail outlets engaged in the procedure of distribution the product till the consumers. This is crucial because false representatives can decrease the goodwill of the organization and consumers may get the duplicate products (Park & Kincade, 2010).

Departmental store: In this type of store, Nike will distribute its products to the consumers directly and this will also reduce the cost of the intermediaries which will reduce the price of the product. Under this store, wide range of variety will be offered to the consumers under one roof (Rosenbloom, 2012).

  • It has been recommended that Nike can utilise their Research and Development team in an appropriate manner in order to build the effective products from its competitors. They could add more innovative features such as sole of the shoes could be innovated so that the comfort level could be enhanced. Apart from this, organization could also implement the feedbacks from athletes to make their shoes and other apparels effective and appropriate.
  • In terms of enhancing the corporate social responsibility, organization could use the ethical raw material for producing shoes. For manufacturing of sole of the shoes, plastic materials are being used which is unethical item from the perceptive of the environment. It affects the environment and its disposition also takes more than the sufficient period of time for getting disposed without affecting environment. Nike needs to invent unique type of raw material through which performance of their products could be enhanced from the perspective of the consumers as well as from the environment.

Conclusion

After discussing the marketing strategies of the Nike running shoes, it has been concluded that organization has developed their unique image in the sportswear, footwear, etc. apparels. They had planned to introduce a new product in the Australian market and to introduce this in the target market successfully; organization has included effective marketing strategies in order to make the marketing plan effective. SWOT analysis of the company, target market, segmentation and marketing mix are the crucial components for introducing the Nike’s new shoes in the target market. Apart from this, innovative recommendations have also been given in order to make the product unique and more effective for consumers as well as for the society.

References 

Armstrong, G., Kotler, P., Harker, M., & Brennan, R., 2012, Marketing: an introduction, Pearson Prentice-Hall, London.

Brohi, H., Prithiani, J., Abbas, Z., Bhutto, A. H., & Chawla, S. K., 2016). Strategic Marketing Plan of Nike.

Buil, I., De Chernatony, L., & Martínez, E., 2013, Examining the role of advertising and sales promotions in brand equity creation, Journal of Business Research, 66(1), 115-122.

CBSE, S., 2015, Business studies class 12 revision notes chapter 11 marketing, Retrieved on 24th October 2017 from https://www.learncbse.in/business-studies-class-12-revision-notes-chapter-11-marketing/

Cwinkler., 2013, Nike vs. Adidas: Competitive Advantage, Retrieved on 24th October 2017 form https://storify.com/cwinkler/nike-vs-adidas-competitive-advantage

Essmat, M., 2014, Nike case study analysis, Retrieved on 24rd October 2017 from https://www.slideshare.net/MagdyEssmatMBA/nike-case-study-analysis

Fleming, J. C., & Mixon, T. D., 2011, U.S. Patent No. 8,078,478, Washington, DC: U.S. Patent and Trademark Office.

Freeman, R. E., 2010, Strategic management: A stakeholder approach, Cambridge University Press.

Gordon, R., 2012, Re-thinking and re-tooling the social marketing mix, Australasian Marketing Journal (AMJ), 20(2), 122-126.

Gregory, L., 2017, Nike Inc. Marketing Mix (4Ps/Product, Place, Promotion, Price) Analysis, Retrieved on 24th October 2017 from https://panmore.com/nike-inc-marketing-mix-4ps-product-place-promotion-price-analysis

Hollensen, S., 2015, Marketing management: A relationship approach, Pearson Education.

Keller, K. L., 2010, Brand equity management in a multichannel, multimedia retail environment, Journal of Interactive Marketing, 24(2), 58-70.

Kotler, P., Keller, K. L., Manceau, D., & Hémonnet-Goujot, A., 2015, Marketing management (Vol. 14), Englewood Cliffs, NJ: Prentice Hall.

Larson, D., 2011, Global Brand Management-Nike's Global Brand, The ISM Journal of International Business, 1(3), 1D.

Lefebvre, R. C., 2011, An integrative model for social marketing, Journal of Social Marketing, 1(1), 54-72.

Lovelock, C., 2011, Services Marketing, 7/e, Pearson Education India.

Moore, C. M., & Doyle, S. A., 2010, The evolution of a luxury brand: the case of Prada, International Journal of Retail & Distribution Management, 38(11/12), 915-927.

Park, H., & Kincade, D. H., 2010, Historical analysis of apparel marketer’s strategies: Evidence from a Nike case. Journal of Global Fashion Marketing, 1(3), 182-193.

Rosenbloom, B., 2012, Marketing channels, Cengage Learning.

Sharma, A., & Lambert, D. M., 2013, Segmentation of markets based on customer service, International Journal of Physical Distribution & Logistics Management.

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