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MKTG7966 Applied Market Research

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  • Course Code: MKTG7966
  • University: The University Of Queensland
  • Country: Australia

Question:

Business objective:

To create a PDF document that demonstrates a student’s knowledge of marketing and may form part of a student’s portfolio when applying for a position.

Task: Students are asked to select a product [suggestions will be given] and to create a case study that demonstrates their marketing knowledge relevant to the product. The case study should showcase a student’s knowledge of the principles of the marketing concept and the practice of a marketing philosophy. Discussions should also explain the product through the 3 mega-marketing concepts. Images [photographs and diagrams] are expected, however, absolute care should be taken.

 

Answer:

Introduction

Nike was established in 1962 by Portland coach bill Bowerman and Phil Knight. It was initially known as Blue Ribbon Sports(Berge & Gaede,2017).. These two sports fanatic joined hands to provide low-cost, high-tech running shoes for its audiences (Nisen,2013). The two geniuses decide to import shoes from Japan into the States from the Japanese supplier Onitsuka (now known as the Asics). The brand started off with sportswear, shoes and equipments. However, due to some differences the relationship between the suppliers and Nike withered away (Berge & Gaede,2017). The brand had to start from scratch and pave its way up to where it is today. It had to overcome considerable amount of difficulties from all quarters. Nike’s first office was a tiny room next to a bar (Knight,2016). It got its first ever brand recognition in the year 1972. The brand produces a wide range of sports equipments like sports shoes, running shoes, football, basketball, golf, tennis and more. The brand focuses on the youth of the generation (Berge  & Gaede,2017).

In the early years, Knight and his team had to compromise with the quality of the shoes due to the shortage of funds (Knight,2016). However, the team had an eye for details and came up with the idea of shoes that were full of personality and sophistication (Knight,2016). They paid equal attention to the presentation of the shoes and the boxes. Knight knew that their shoes had to be stylish (Knight,2016). Nike shoes were flashy and came in different colors. The focus was later made on creating lighter shoes for the consumers (Knight,2016). The company was also the first ever company to start a business deal with Japan after its frosty relationship with America after the Second World War. It is shocking that Knight himself never believed in the concept of advertising (Knight,2016). The founder thought of it as a waste of budget (Knight,2016). This changed gradually when Phil began to scale the business and talk to advertising agencies. Weiden and Kennedy Advertising Agency created the famous and inspirational slogan ‘Just Do It’ (Angeles,2014). The slogan became the new anthem for everyone (Brohi et al.,2016). Nike has collaborated with many reputed and renowned brands and faces. Once such hyped collaboration has been with Kendrick Lamar. In the summer of 2013, Nike returned to the SB line with an updated version of the Tennis Classic inspired by the mid-1980s. The Tennis Classic collection had added Zoom Air technology and came in classic colors of black, white, blue and tennis ball style “Volt” yellow.

 

Psychological Marketing Strategy

In order to reach where it is today, Nike has let their ads speak for itself without screaming for brand recognition. Nike has taken up the psychological mega marketing concept when it comes to advertising and branding (Leug,Pedersen&Clemmensen,2016). Their ads rarely mention about their products instead it induces emotions in the customers. This strategy is known as ‘emotional branding’. Their ads are uniquely crafted to evoke specific emotions and feelings in the minds of the consumers (Childs&Jin,2018). Nike uses the concept of hardships and human predicaments to invoke the human heart. Nike believes that humans can overcome any adversity and thus the brand tag says, “Just do it.” Therefore, each ad is designed to motivate and inspire us (Brohi et al.,2016). Nike has used the ‘watercooler moments’ experiences to spread their brand name from door to door. This is something Nike is an expert in doing. They very well understand how people think and act. It is a lot more tougher to create marketing concepts of one does not know the demands and needs of the customers (Kesavan,Bernacchi&Mascarenhas,2013). Therfore, creating compelling content is of significant importance. Having sound knowledge of the key principles of psychology can lead to a good market position for the company (Martínez-Mora&Merino,2014). One of the major game-changing moments for Nike was its collaboration with Google to make ‘Nike Phenomenal Shot’. Whenever a Nike athlete scored a goal, display ads were delivered to all the fans in actual time of the event. The fans could rotate their players around in 3D, use personalized filters, captions and stickers and share the ‘Phenomenal Shot’ on social media (Mahdi et al.,2015). Not less than 500,000 “Phenomenal Moments” were created. Another, mega marketing strategy that Nike implemented was when it created its own YouTube series, ‘Margot Vs Lily’. The best thing about Nike ads is that they team up with world-class athletes like Neymar Jr, Ronaldo and others. Nike’s brand strategy is about the twist in the plot in their ads where ordinary humans are depicted as  both the hero and the villains of their own destiny.

According to Graeme Newell who is an emotional marketing expert, Nike uses the technique of self-pity, loathing and determination to make an impact on its consumers and build loyalty. Thus, customer loyalty is strong in this scenario. Nike’s goal is to build a powerful brand image and inspire its audiences (Cheah,2013). Nike uses the archetype age old tale where the hero has a great enemy or several enemies that he has to fight against. Nike tells its audience that the enemy is the mind. Therefore, the mind needs to be positive and focused. We should not be bogged down by the dirty tricks played by the mind. Nike acts as a guardian angel that is empathetic and supportive towards the humans in their struggle (Davis,2014). The brand knows our internal battles and urges us to overcome them. The battle begins every morning as the alarm goes off and it is still dark outside. Nike understands that every human being can identify with an internal foe. Nike has portrayed us as the hero of our own story. Nike lost to Reebok in 1980s when it lost the remunerative aerobics market to Rebook. From then onwards, Nike has worked itself up to reach where it is today. Nike collaborated with Apple’s iPod to create an activity tracker that tracks the distance and speed of the user throughout a sensor attached inside the sneaker. Thisbground breaking technology has resulted in the rise of Nike’s profit by 81%. Nike, even today leads the industry of sneakers when it comes to wearable technology, design, comfort and more. Another way Nike executes its psychological marketing position is by associating the achievements of the star athletes with the brand. This affirms the position of the sneaker brand in the market.

Nike has always managed to create newsworthy shoes. There has not be one sneaker by the giant brand that has not created enough sensation in the market. Shoes and sneakers by Nike has always been the “next big thing” (Berge&Gaede,2017).. The Hyper Adapt 1.0 by Nike had inbuilt sensors that molded the shoe to the original shape of the foot of the user when they would step in it. Nike is known for making some really fun ads that people find entertaining yet relatable. An ad by the world’s best sneaker brand says “Winner Stays” (Berge&Gaede,2017). This ad by Nike features young teenage boys who transform into Ronaldo, Neymar Jr and other famous footballers. The footballers were once ordinary kids just like us. The brand constantly reminds us that in spite of being ordinary we can do extraordinary things and become unrelenting winners(Berge&Gaede,2017). The fact that we can identify ourselves with the brands is a big bonus for the legendary shoe- making brand. The brand also appeals to the younger generation as it represents itself as cool, stylish and sporty- something that attracts the next generation. Therefore, Nike is not just a brand but it is you and me. The founder of Nike, Phil Knight in his book ‘Shoe Dog’ mentioned that he always believed that shoes were boring (Knight,2016). He knew that the shoes should mean something to the person who purchases it. The buyers should be able to emotionally relate with the shoes. The sneakers should stand for something meaningful (Knight,2016). Therefore, Nike is not just another shoe company. It has been shaping up people’s lives by motivating them and driving away their fears. The brand has been synonymous with names like Kobe Bryant, Tiger Woods, Michael Jordan and many more celebrities.

 

Public Relations Strategy

Public relations is an integrated process which aims to build positive image of the company through media intending to increase the goodwill of the image. It helps to promote and popularize the product among its respective customers (Theaker, 2017). It helps in acquiring new customers, retaining the old ones, regaining the lacklustre market thereby increasing the overall sales of the product. Nike has various ways to increase the sales through a strategic public relations tactics. Writing a press release where the new products being launched or renovated products are promoted. This strategy not only informs the respective customers of the respective product but also helps to increase the customer base of the product. This is the most appropriate way of informing public, however, collaborating with a sports star will increase the visibility of the products(Grunig, 2013). A sports star can be well associated with the Nike shoes as they are the prominent customers of the shoes which adds a goodwill insignia to the product. Media coverage is also more when a celebrity is associated with a product which persuades the customer to purchase the product (Smith, 2013). Nike can associate with a celebrity to launch innovative products which will attract more media coverage by the media persons thus capturing a wider customer base.

Nike can launch an online campaigns on social media where the public is asked to share their best Nike shoe stories. The wining customers can win goodies, gift hampers, coupons, discounts and many other things which will act as a robust feedback mechanism. The feedback can be both positive and negative which will help the company to fix the loopholes if any (Qrunig &Qrunig, 2016). It will add a personal touch with the top ranked customers and add one to one contact with the customers. This will ensure the company to build its reputation in a cost effective way. Further, it is not a time consuming process as the respective customers and the generation of today utilizes and prefers the online medium of communication (Illia, 2013). The youth are proactive users of social media like Facebook, twitter, integral and other mediums. Digital medium in public relations strategy will ensure to cover a larger group of people, thus increasing the public reach and visibility of a particular product. Nike officials need to be more accessible to the media and conducting of interview with the key staff such as CEO, Chairman, director, president, vice president and other key officials will garner more attention by the media personnel thus creating headlines, public. These officials when share there company’s policies, frameworks and other information it creates a keen interest among the public at large (Valentini, 2015). The rivals are also keen about the company’s crucial information to survive in a cut throat competitive market. Nike officials can conduct marathon popularizing the idea of healthy mind and body which can attract the customers who tend to remain physically fit. Marathon attract a larger public and the registration fee earned through the marathon can be contributed to an orphanage or can used as fund to gift Nike shoes to the young children of orphanage. This will inculcate a true spirit of compassion in the public and will have a positive impact on the public. Further, propagating the vibrant idea of fitness is creative approach to reach out the customers (Pavlik & McIntosh, 2013). Growing pattern of obesity in the urban areas is a concern which can be tackled through promotion of the idea of the fitness as core to the strategy. The company officials are mainly confined to the four walls hence participating in the public events like marathon will attract the public to remain in touch thus help in better positioning of the product in the market.

Nike should maintain a proper public relations through its activities of corporate social responsibility. Corporate social responsibility attempts to contribute towards the welfare of the society by contributing its part towards the betterment of the society. This can be major tool to build a positive perception of the company in the minds of the customer. In the current environmental concerns like that of global warming and climate change, company can run initiatives like planting trees in their neighborhood. A plantation drive by the company will enable the company to touch upon the major issues plaguing the people. Air pollution which has been raging and treated as a major killer of the people can be focused through this plantation drive. This shows the company is concerned about the public health. These initiatives helps the company to connect to a larger mass of people thus establishing an understanding and instill a trust and confidence among the public(Ver?i?&Sriramesh, 2015). This is important for the long term sustainability of the company and loyalty of the customers. Maintaining regular contact with the media persons, inviting media persons to the product launches, events, parties of the company enable the company to remain visible in the news.

The company should also collaborate with other fitness products like fitness watch, events conducted by gymnasiums in the heart of the city to promote connect to the people more closely (Olasky, 2013). The youth today is more conscious of its health while a major part of the audience is splurging on junk food thus entrapping themselves in the vicious circle of obesity.The company should adopt innovative means of communication and ideas not only externally but also within the organization to ensure employee satisfaction. The employees are the main proponent of spreading the perception about the company in the external environment. Moreover, employees acts as representatives of the company in the market. Hence, Nike should build efficient channels of communication within the organization. A dedicated team of public relation department can plan out a public relations strategy through pilot projects conducted over a period of time. After the completion of the pilot projects, the loopholes can be assessed and fixed accordingly. The appropriate and relevant strategies and then be integrated thereby eliminating the shortcomings. After a successful rolling out of the project and proper assessment, the company can take execute on pan basis (Grunig, 2013). 

 

Economic Marketing Strategy

The business performance of Nike, depends upon the economic state, where it sells the athletic footwear and the other sports shoes. The economic external factors are also important for determining the Nike’s performance and its pricing strategy. The factors are the stable economic condition of the developed market, the rapid growths in the developed market, this imposes both theats and opportunities of the developing market and the slow down of the Chinese economy also imposes threats on theNike’s business performance. The developed market like the business markets in the United States, are relatively stable for Nike as this market shows the stable growth of the company in these markets. Although, the rapid growth of the developing markets also creates threats upon the business performance as it increases the labor’s cost in the supply chain and the production facility of the company (Linna,  2018). The slow down of the Chinese economy also creates threat for the business performance as the business activities are mostly dependent on the Chinese business market for the sport shoes and other. Therefore, all these external factors creates great impact on Nike’s business performances and also determines the opportunities of the company as well as the threats of the company (Ionela-Carmen, P. I. R. N. E. A, &Raluca-Andreea, 2015).

The price of the shoes are determined by Nike to maximize the profits for attracting the desired share of the international market. In most of the cases, Nike’s investment for technologyremains linked with the strategy of offering the products at a premium. The company still follows and consider the current market while ensuring the price points and the price ranges of the shoes. Based on the product, place and promotions of the product, the pricing strategy are determined and there are two pricing strategies followed by the Nike business that is value-based pricing strategy and the premium pricing strategy (Leroy, 2014). Nike considers the product value perception of the consumers in implanting the value-based pricing strategy. During the marketing mix, this value helps the company to find out and determine the maximum price; the customers are willing to pay specifically for the Nike sport shoes. In the context of the premium pricing strategy, the pricing ranges remains high and it increases the value of the brand and increases the value of the company as well as the quality of the product in the competitive business market (Cotrim, 2015). The premium branding pricing strategy also involves the advertisement of the shoes by involving the famous high profile celebrities. From 2014, the business has successfully increased the price of the product and has also generated the higher sales and revenues. This trend continued as the company enjoys the increasing sales by increasing the product’s prices (Viardot, 2014). Depending on these changes, the company adjusts its price ranging and during the marketing mix, the company successfully implements its pricing strategy for increasing the profit by emphasizing the high value in promoting the shoes and its brands (Teufel & Zimmermann, 2015).

Nike outsources its production to more than 1 million of worker in the factories in China and various countries all over the world. In 2013, the company declared that the retail sales of the Nike branded sneaker has totaled $2.25 billion approximately 30 years after the brand launched. By 2015, the total global sales of Nike brands amounted alone to $50 billion approximately. In 2014, Nike has reported that the general cost of manufacturing one pair of sneakers is $28.50 and then it need to be shipped to various countries (Markham, 2016). The cost breakdown approximately to $27.50 for per pair for the Chinese factory labor and the overhead costs and the shipping cost. The company declared at 2014, that they makes profit of $4.50 on each pair of shoes, the wholesalers pays about $50 for per pair of sneakers and the retailers marks the shoes 100% to recoup cost (Williams, 2015). In recent years, the cost of labor in China, have created great impact on the profit margins. The retail sneaker prices recently reflects the overall increase in both the marketing and the manufacturing cost. The sneaker companies competes to build and maintain the marketing brands and in making it desirable for meeting the target markets. The celebrities and the social marketing cite plays an important role in determining the pricing range of the product and this creates a great impact on the rise of prices at which the sneaker reaches the market (Li,Nukala, & Mohebbi, 2013).

Nike targets its customers those mostly embraces the product intimacy and are not bothered about the product and by this Nike imposes the higher prices of the product for competing and for maintaining its brands value. Mostly, this pricing strategy are used for calling for the higher prices of the product and also for pushing the perceived product value. The company, among the customers, has also established this that the customers considers the product is of the high quality and they are most likely to pay the higher price more often and also consistently. This raised the pricing strategy more and it became most profitable for the company thus they had made those customers as their targeted customers. Whenever the customers are able to develop their product intimacy , then they make more of their known persom associated with the product. This provokes them to pay whatever the price is quoted on the product, the only condition is by seeing the Nike logo on the product, the customers can pay whatever the price may be. While determining the price range of the product, the company focuses on the targetes customers and the proper selection of the targeted customers has made it one of the competing brand in the global market (Kreng & Wang, 2013). The price ranges are also determined by having the information of the same product prices of the close competing brand. This is necessary for the company to determine the price according to the competing brand as it will enable the company to maintain the competence in the global business market.

 

Conclusion

Nike is a well-known brand and it is recognized by its Swoosh as the brand logo. However, in order to achieve its vision Nike should implement the above-mentioned economic, psychological and public relations marketing strategies. Nike can develop its own strategies in such a way that it can also change the lives of millions of women, children and people in general. It should not only aim for personal growth but also for the growth of the human community at large. Nike should take the advantage of the ever- growing technology and expand its business. It should also make it presence feel in under developed and developing countries like Vietnam, Bangladesh, Nairobi, India, Afghanistan and others. Nike can help in the upliftment of these countries and make a positive impact on these countries. If the brand is engaged in any kind of social work, it will create goodwill for the brand and build a positive brand image to its consumers. Innovation plays a major role in the marketing of a product. Nike must understand that the audiences need products that will be different and unique. Hence, innovation has to be updated on a daily basis. Nobody will buy something that is offered by the some other brand or something that is already old. Pricing, as mentioned earlier is also of greater significance. The customers will be attracted to a sneaker brand that is giving the same quality sneaker at a much lower rate. Hence, the sneakers should be made a little more affordable, especially in the third world countries. Nike should manufacture sneakers for all. Nike is often seen as a brand that makes high quality, expensive and luxurious sneakers for the upper class people. This clichéd thought should be done away with. The brand should focus in making affordability its first priority. Everyone, irrespective of their background and income should be able to wear Nike sneakers. Nike is also known for collaborating with FIFA and other world class leagues. It should focus on local matches and for a change sponsor shoes to the players. Nike can help find hidden talents in unknown places all over the world.

Nike can implement many more strategies for the expansion of its business. However,  it should implement strategies retain its loyal customers and increase brand awareness in the places where it is still unknown. Nike should also focus on the young children and older generation. It produces shoes only for sports fanatics and athletes. It is time that Nike starts making shoes for young children. It should start manufacturing affordable, high comfort shoes and sneakers for the old people. This will take the brand to the top notch. Not only the younger generation but the older generation will also love the brand. Hence, Nike should keep in mind about expanding its target audience. When the brand will take care of these factors, it will emerge as one of the world’s most loved brands.

 

References

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Childs, M., & Jin, B. (2018). Nike: An Innovation Journey. In Product Innovation in the Global Fashion Industry (pp. 79-111). Palgrave Pivot, New York.

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Mahdi, H. A. A., Abbas, M., Mazar, T. I., & George, S. (2015). A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment. International Journal of Business Management and Economic Research, 6(3), 167-177.

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