Marketing for Nike Company

Marketing for Nike Company Free Essay

Abstract

The research paper looks at the marketing activities of Nike industry analysing the current opportunities. It discusses the present marketing environment and the factors affecting it. It further explains the primary Nike products, their target market and popularity with different age groups. It also discusses the marketing opportunities that the company currently has. Then it explains the ways in which the company can use the marketing mix concerning products, pricing, appropriate places, and promotion.

 

Part A

Background Information about Nike Running Shoe

Nike is a footwear multinational cooperation company based in the United States of America. It specializes in designing, developing, manufacturing, marketing, and selling the footware, equipment, accessories, and services. It is one of the major world manufacturers of sports equipment that employs more than 44000 people worldwide. It gained the brand name in 1971 and has already achieved a market share of 505 in America by 1980 (Namshi,2016). Their primary target markets are individuals involved in athletics and other games such as cricket and handball. The company has various shops in the UAE with Dubai being its largest market. The city is densely populated, with most people engaged in sports activities.  Its biggest store is in Dubai Marina mall in addition to numerous stores located around the region. Nike's main strength is its ability to make significant sales resulting in high profits. The main weakness is the cost of their products. They are only suitable for high-earning people and are not easily affordable to people of low earning.  

Marketing Environment

One of the macrofactors that has affected the company positively is increased campaign on the benefit of body exercises to people of all ages. The company no longer needs to target only those who do athletics for competitions and as a form of job. At present, many people have made a habit of jogging every morning and evening. Since these people need sports shoes, they go for the product. Another factor is the nature of the company to outsource most of its products. They collaborate well with enterprises in the area making itself more attractive. Outsourcing and merchandising the shops from other firms is also a microfactor affecting the company negatively. As a result, they have little control over the quality of the products they sell. Thus, they can easily get themselves in a situation where they are selling products of very low quality at a high price. Competition is another microfactor ,with Adidas branching out to customize its brand. Other main competitors include LaCross footwear and Puma AG Rudolf Dassler sports among others (Namshi, 2016). One of the major current trends that have made the company reconsider its marketing strategies is the rate at which people are turning to online shopping. Consequently, the company has adjusted accordingly.

Consumer Product

The primary product of Nike Company is sports shoes. It sells sports shoes to people of all ages. The shoes are flexible and do not cause blisters, even when worn for a long time. Most athletes and sports stars use the shoes and are paid to promote the brand. The company advertises the benefits of body exercises and, thus, associates the practices with their products. One weakness of specializing in sports shoewear is that most people nowadays prefer to buy multi-purpose shoes. They want a shoe that they can use for exercise and still go to work in it. Coming up with such a kind of shoe is challenging to the company. Another weakness is the ability to compete by producing high-quality shoes considering that the company has little control over the quality of shoes created. Thus, the only way to overcome these is to set up its production unit.

Market Description and Segmentation

The company targets people between the ages of 10-40 years. However, it is more popular among people of the ages 45-65. The company aims at making their customers look fashionable even as they engage in sports activities. They send adverts to people who have shown an interest in games but make more advertisements aimed at people earning much. Nike has a large market in the UAE. In the present data collection, 60% of individuals who responded said that they engage in more than one sports activity. 13 out of 20 of these people were in Nike shoes while 10 % had another Nike product. They said that one factor they consider when buying their sports shoes is flexibility and lightness which Nike offers. Most of them showed a high level of satisfaction with this brand and said they always buy the same when one of a pair is torn. Most of them reported to have bought their product online and were happy with the delivery which took a short time although it depended on the distance from the store to the client's place. Those who bought from the stores said that the shoe is available in most shops so they did not have to walk for a long time before they got what they wanted. However, the customers, mainly female ones, stated that they would like to have other types of footwear produced by the company, such as office shoes.

Part B

Marketing Opportunities

The four marketing expansion grid used to expand the market includes market penetration, with the company subsequently conducting a study on the possibilities of increasing its market share (Lund&Marinova,2014). A company may also find a way of expanding its market share by producing a new product in the market. Another way is product development whereby the quality of the existing product is improved. With regard to Nike Company, most customers seem satisfied with the quality of the product they are offered. Thus, the only way to expand Nike's market is through coming up with a new product.

The company can invest in another form of footwear such as bathroom wear, office wear, and casual wear. No one can survive on sports shoe only. Hence, most people still need more than one pair of other types of shoes. For games wear, one does not need to match it with other clothing because most people have appropriate clothes of probably the same color that they use for exercise or practice. They, therefore, buy a maximum of one or two pairs of sports shoes per year. One may have more than five of other types of shoewear as they have to match with the clothes on different occasions. For example, shoes worn when attending parties and weddings are different from those worn when one is going to an office or when one is indoors.  This variety gives the company an opportunity to diversify towards other forms of footware. Therefore, it will be able to make more sales, hence making more profit.

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Application of Marketing Mix- Proposed Product

The marketing mix involves different marketing tools that a company uses to achieve its target. The first of the mix is a product. Nike needs to diversify and invest in other types of ladies footwear. The demand for footwear in the UAE is growing at a high rate which is attributed to the growth of the economy. Women contribute more to this requirement.  Most women have as many shoes as there are colors of their clothes. They also have them in different designs which include flat shoes, sharp high heel, high wedge heel, and high block heel shoes. Flat shoes are attractive especially to people who walk to their place of work and those aged above 35 years, while high heels are more popular among those driving to work and aged below 35 years. The research conducted also showed that high heel shoes are more popular in the central cities and big towns than in small ones and areas away from town. The company should first do a market study to identify the market demand of each type of shoes before investing in them. This study will help it to determine the size of each particular design and the desired colors. It should also consider the cost of production or outsourcing as this is their common way of acquiring stock.

Application of Marketing Mix-Proposed Price

The company should consider sourcing the products from the UAE region to realize a maximum profit. Taxation is also much lower than when importing the product from other countries. Out of the 50 ladies we interviewed, 50% stated the price was a factor when buying the shoes. These were among the middle-class earning people. They also considered the quality and durability of the shoe. They preferred to get a shoe of a relatively fair price that would last for a long time. These are the same group which preferred flat shoes to high heels as they walked to and from their working stations. 20 % were willing to spend any amount as long as the shoe was pleasing them and matched well with their clothes. They preferred aesthetic value to durability as they claimed to change their shoes after every six months maximally. Thus, these are the factors to be considered when pricing the product.

With regard to the revealed information, the best strategy in this region is a combination of Premium pricing and pricing psychology. As much as most people consider the price when buying the shoes, they also believe that good shoes are relatively costly; hence, they are prepared to spend more as long as they get an assurance of durability. They do not trust a new product with a very low price as they tend to think the quality is also low. Psychology pricing is a technique of putting a price such as $199 instead of $ 200. Most people will go for the one tagged $199 as they usually concentrate on the first figure. Another example is a soap company claiming to have a promotion of buying four at the price of three while the grams are equivalent. For flat shoes, the customers are willing to spend between 150 -250 AED. For the high heels, they were ready to pay as much as 2000 AED though there are those who were middle-class earners wishing to have them as long as they were affordable. The high heel market's target is those earning much money; hence, the company should import this type to ensure they meet the desired quality and aesthetic value.

Application of Marketing Mix-Proposed Places

 Different product types should use different channels of distribution. The study revealed that the high heels were more popular with those residing in big towns such as Dubai, Abu Dhabi, and Ras Al-Khaimah among others. These groups of women did their shopping either through online platforms or in the one stop big shopping malls. Consequently, the company should ensure placing the products near them by opening stores in major shopping malls as well as advertising the shoes on the internet platforms the customers regularly visit. The flat shoe customers preferred to go to the stores as they believed in bargaining to gain some discounts (Caulkins, et al., 2016). This type will need retail shops with different suppliers. The stores should be placed on the outskirts of the main cities and in smaller towns where the population is dominated by the middle-class earning people. There should always be enough stock put in place to ensure that consumers get the product when they need it. The company should avoid places that attract high taxation and where rent is high unless the sales can sustain them and still make a profit.

Application of Marketing Mix-Proposed Promotion

The most efficient method of advancement in this region is advertising. Advertisements placed on the Internet are reaching out to more people than traditional methods. Middle-class earning people have enough time to use social media. Hence, using platforms such as Facebook, Twitter, and others is an appropriate way of targeting potential customers. At the same time, high-class people making much money do not find enough time to visit social media groups (Kornum, et al., 2016). They, however, carry out their business transactions through the Internet. Therefore, the company has to do a survey to identify the sites they regularly visit so as to advertise products they are targeting towards them. Another kind of effective promotion among the middle-class people is regular discounts. Nike can give discounts during peak seasons when people spend much money, specifically on public and religious holidays. The promotion can also involve accompanying the shoes bought with another relatively cheap product such as a games t-shirt sold by the same firm. 

Conclusion and Recommendations

Nike Company has been doing well in the market for a long time. They have always specialized in sportswear, especially sports shoes as the greatest source of revenue. The company spends much money on promotion, for example, paying sports stars to advertise their wear. Despite all the strategies involved, the company market’s share is gradually reducing due to the stiff competition resulting from the fact that more companies are emerging with better products. In addition, the company outsources its shoes and products from other firms, thereby having less control over the quality of goods it sells. Furthermore, the company has got an association with numerous controversies. It is reported to have contracts with businesses in China that are accused  of employing child labor and mistreating their employees. To solve the existing problems, the company should reconsider its products and start selling ladies' footwear, which is in high demand in the UAE, thereby regaining its market share and making enough profit. This diversification step will ensure that the company will last longer in the market and will restore its glory.


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