Kshitiz Marketing 4

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Assignment No. 4COURSE TITLE: Marketing Management

Topic: Nike Sportswear

Submitted to: - Submitted by:-

Krishan Gopal Sir Kshitiz Rajanwal

Registration No.11002576

Roll No. B 33

Introduction



Nike, Inc. (pronounced /ˈnaɪkiː/) (NYSE: NKE) is a major publicly traded

sportswear and equipment supplier based in the United States. The company

is headquartered near Beaverton, Oregon, which is part of the Portland

metropolitan area. It is the world's leading supplier of athletic shoes and

apparel and a major manufacturer of sports equipment with revenue in

excess of US$18.6 billion in its fiscal year 2008 (ending May 31, 2008). As of

2008, it employed more than 30,000 people worldwide. Nike and Precision

Castparts are the only Fortune 500 companies headquartered in the state of

Oregon, according to The Oregonian.

Nike markets its products under its own brand as well as Nike Golf, Nike Pro,

Nike+, Air Jordan, Nike Skateboarding and subsidiaries including Cole Haan,

Hurley International, Umbro and Converse. In addition to manufacturing

sportswear and equipment, the company operates retail stores under the

Niketown name. Nike sponsors many high profile athletes and sports teams

around the world, with the highly recognized trademarks of "Just do it" and

the Swoosh logo.

Nike is one of the pioneers in marketing and has one of the strongest

marketing mix. Depending mainly on pull strategy, it has established its holdin face of major competitors like Adidas and Reebok. Read on for its product

marketing mix.

Marketing Mix of Nike:

1. Product:Nike offers a wide range of shoe, apparel and equipment products, all of

which are currently its top-selling product categories. Nike started sellingsports apparel, athletic bags and accessory items in 1979. Their brand Cole

Haan carries a line of dress and casual footwear and accessories for men,

women and children.

They also market head gear under the brand name Sports Specialties,



through NikeTeam manufactures and distributes ice skates, skate blades, in-

roller skates, protective gear, hockey sticks and hockey jerseys and

accessories.

2. Price:Nike’s pricing is designed to be competitive to the other fashion Shoe

retailer. The pricing is based on the basis of premium segment as target

customers. Nike as a brand commands high premiums. Nike’s pricing

strategy makes use of vertical integration in pricing wherein they own

participants at differing channel levels or take part in more than one channel

level operations. This can control costs and influence product pricing.

3. Place:Nike shoes are carried by multi-brand stores and the exclusive Nike stores

across the globe. Nike sells its product to about 20,000 retail accounts in the

U.S. and in almost 200 countries around the world. In the international

markets, Nike sells its products through independent distributors, licensees

and subsidiaries. The company has production facilities in Asia and customer

service and other operational units worldwide

4. Promotion : Promotion is largely dependent on finding accessible store locations. It also

avails of targeted advertising in the newspaper and creating strategic

alliances. Nike has a number of famous athletes that serve as brand

ambassadors such as the Brazilian Soccer Team (especially Ronaldo,

Renaldo, and Roberto Carlos), Lebron James and Jermane O’Neal for

basketball, Lance Armstrong for cycling, and Tiger Woods for Golf.

Nike also sponsors events such as Hoop It Up and The Golden West

Invitational. Nike’s brand images, the Nike name and the trademark swoosh;



make it one of the most recognizable brands in the world. Nike’s brand

power is one reason for its high revenues. Nike’s quality products, loyal

customer base and its great marketing techniques all contribute to make the

shoe empire a huge success.

Advertising done by NIKE Sportswear to do its Promotion

1. Price promotion

NIKE do Price promotions also known as" Price discounting". These can bedone in two ways:

(1) A discount to the normal selling price of a product, or

(2) More of the product at the normal price.

Price promotions however can also have a negative effect by spoiling thebrand reputation or just a temporary sales boost (during the discounts)followed by a lull when the discount would be called off.

2. Coupons

NIKE also give coupons because they are another, very versatile, way of offering a discount. Consider the following examples of the use of coupons:

- On a pack to encourage repeat purchase- In coupon books sent out in newspapers allowing customers to redeem thecoupon at a retailer- A cut-out coupon as part of an advert- On the back of till receipts

The key objective with a coupon promotion is to maximize the redemptionrate – this is the proportion of customers actually using the coupon.

It must be ensured when a company uses coupons that the retailers musthold sufficient stock to avoid customer disappointment.



Use of coupon promotions is often best for new products or perhaps toencourage sales of existing products that are slowing down.

3. Gift with purchase

NIKE also gives "gift with every purchase" because it is a very commonpromotional technique. In this scheme, the customer gets something extraalong with the normal good purchased. It works best for

- Subscription-based products (e.g. magazines)- Consumer luxuries (e.g. perfumes)

4. Competitions and prizes

To increase brand awareness amongst the target consumer, NIKE has startedlaunching competitions for their customers though it can be used to boost upsales for temporary period and ensure usage amongst first time users.

5. Money refunds

NIKE also helps the customer in the way of refunds if the customer do notlike the product he/she can exchange the product. Here, a customer receivesa money refund after submitting a proof of purchase to the manufacturer.Customers often view these schemes with some suspicion – particularly if themethod of obtaining a refund looks unusual or onerous.

6. Frequent user / loyalty incentives

NIKE also gives loyalty incentives to the customers who are frequent user of their product.

Analysis of marketing mix of NIKE Sports wears

Product analysis:

Product- Strength



Though Nike sports appareal leads the apparel division among industry

competitors, Nike has not claimed to be leading the race among the apparel

industry as a whole. Due to increased emphasis by consumers on fashion in

relation to sportswear, we have had to make strides to appeal to a fashion

savvy market. Our apparel line is not only being challenged by our typical

industry competitors such as Adidas and Reebok, but also by clothing and

accessories retailers such as Old Navy and Abercrombie & Fitch. Continuous

marketing research could prove to be key in assessing the market. Nike is

planning on initiating five structures within the apparel division to focus on

the following areas:

o Womeno Men

o Kids

o sports graphics and caps

o strategic response independently

They are also spending more time on continuing to support and develop

programs to gain a better understanding what our customers would like to

see in the market.

Product- Weakness

Nike has had much success as a result of collaborating with other companies

within the sports and fitness industry. However, at times we expanded into

markets for which we were not strategically suited. An example is the

decrease in brands made available due to declining sales of in-line skating

and roller hockey products at Bauer Nike Hockey. As a result, they had to

exit two manufacturing operations at our Bauer Nike subsidiary. The desire

to prevent situations such as these from continuing to occur, they have

initiated a more aggressive program to review product collaborations that

are outside of our core basis of products.



Price Analysis:

Price- Strength

Nike’s brand images, including the Nike name and the trademark Swoosh,

are considered to represent one of the most recognizable brands in the

world. This brand power translates into bottom-line revenues. The Nike name

and associated trademarks have appeared everywhere from players' shirts,

pants, and hats to stadium banners and walls. Aggressive advertising

campaigns, celebrity endorsements, and quality products enhance the

brand. Nike demonstrated an example of Nike’s brand presence at the 1999

NCAA Basketball tournament when 42 of the 64 teams participating woreshoes provided. Nike's most recent brand-building endeavors are focused on

strengthening our association with women’s sports. Some examples are our

sponsorship of the 1999 Women's World Cup Soccer Tournament and our

sponsorship of the U.S. Speed skating team in the upcoming 2002 Winter

Olympics.

Price – Weakness

The Retail segment is increasingly becoming more price competitive, this

eventually implies that consumers are looking about for the best deal. Thus if

one store is charging a certain price for a particular pair of sports shoe, the

consumer might go to counter check the price of that particular pair of sports

shoe in another store down the street and compare the prices, and purchase

the store offering that pair cheaply. This kind of buyer price sensitivity

definitely is a prospective external threat to the company. In general, Nike’sproducts are considered to be of higher quality and as a result have higher

prices relative to our competitors. While the prices are realistic given the

nature of the products we offer to our consumers, at times our consumers

may not agree. This presents a weakness. To mitigate any future problems in

our high quality/high price lines, we are placing a renewed emphasis on



emerging technology and innovation towards the development of new

products, specifically the Nike Alpha Project, a revolutionary new line of

athletic shoes. Despite the fact that in the past we may have overlooked the

mid- to lower-price-point products, presenting another weakness with room

for improvement, we are dedicating our time and money to better develop

our competitive position at all price points to build strengths at each of these

levels. We see much potential in the lower price points and plan to meet the

needs of those markets.

Place

Location of Facilities - Strength

Nike’s facilities are located throughout Asia and South America. The locations

are geographically dispersed which works well in our mission to be a truly

global company. The production facilities are located close to raw materialsand cheap labor sources. They have been strategically placed in their

locations for just this purpose. In general, the facilities are located further

from most customers, resulting in higher distribution costs. However, the

cost savings due to the placement of our production facilities allows for

cheaper production of our products despite the higher costs of transporting

our products. As Nike continues to expand in the global economy and

increase its market throughout the world, these dispersed facilities will prove

to be beneficial.

Newness of Facilities - Weakness



The facilities abroad have attracted bad publicity in recent years. Though

their facilities comply with local labor standards, generally, they have not

met U.S. standards. They want to be a leader and set a responsible corporate

example for other businesses to follow. As part of Nike’s new labor initiative,

we commit to:

o Expanding the current independent monitoring programs to

include non-governmental organizations, foundations and

educational institutions. We want to make summaries of their

findings public;

o Adopting U.S. Occupational Safety and Health Administration

(OSHA) indoor air quality standards for all footwear factories;o Funding university research and open forums to explore issues

related to global manufacturing and responsible business

practices such as independent monitoring and air quality

standards.

While establishing these policies is a step in the right direction for Nike, the

difficult task at hand will be the implementation of the aforementioned goals

to ensure the success of the program.

Promotion Analysis of NIKE Sportswear

Strength

Nike has taken the lead in e-commerce by being the first to market with its

e-commerce web-site. Nike launched its e-commerce site in April 1999 by

offering 65 styles of shoes to the U.S. market for purchase. Nike increased its

e-commerce presence by launching NIKEiD in November 1999. NIKEiD

enables online consumers to design key elements of the shoes they

purchase. The program represents the first time a company has offered

mass customization of footwear. Nike’s future plans include opening an



online shop for the Japanese market next year followed by global rollout. By

being the first to market, Nike enables itself to become established while

competitors rush to join us.

Weakness

The key weakness of Nike, Inc. is to recognize that strengthening the

financial well being of the company can only assist our company in the short-

and long-run. They have many areas challenging our continued success such

as increasing our profitability and bettering our management of cash,

accounts receivable, and debt. Nike suffered a blow to sales and revenue

sparked by bad publicity. Since then, they have attempted to overcome thebad press by raising and enforcing minimum age requirements for

employees in overseas factories. Nike attempted to regain its mid-90's

momentum as shown in 1998’s recovery, but the loss of Michael Jordan as

our spokesman and the Asian financial crisis put a damper on gains that

year. During 1999, the company made some changes in its products and

deeply cut costs. These initiatives, in addition to the stabilization in the Asian

financial picture, will combine to fuel the recovery that Nike expects in the

near future. Nike's recent alliance with Fogdog Sports, an Internet sporting

goods retailer, and our presence in the 2000 Sydney Olympic games will also

aid in sales growth. Nike’s failure to foresee problems in relation to labor and

factory conditions at production locations has resulted in bad publicity and

declining sales as society and consumers call for more "socially responsible"

companies.

RECOMMENDATION

ProductNike Air Jordan falls under shopping goods because it represents more of arisk to consumers. Therefore we have decided to manufacture it in highquality inclusive of air bubble and breathable materials which will provide



better jumping, running and less ankle injuries. Moreover due to technologyused our product guarantee durability because it has been produced to beused in all kind of weather. Furthermore we have decided to call our productAir Jordan 09 as the way of communicating features of it such as better

jumping which is represented by word Air. Moreover we used Jordan’s nameto create interest and characters to our product.

Price There are internal and external factors which are influencing price decision.Internal ones are those which are within the organization such as firm’sobjectives, marketing objectives and cost. External ones are those which areoutside the firm’s control such as competition, demand and price elasticity,

consumers and customers, legal and regulatory and channel of distribution.We decided to look on both of them in order to have effective price for ourproduct Air Jordan 09. The objective of the company is to increase marketshare by stimulating and increasing the demand for our product. Thereforewe will charge a relative low luxury price on our product but not below cost(production cost plus marketing cost) in order to increase demand since theprice elasticity of our product is relatively elastic, therefore the small changein price leads to relatively high change in quantity demanded. Moreover wewill charge low price by ignoring long channel of distribution by opening ourown Nike shops.

Place

The aim of every marketer is to deliver the product to the consumer at theright time. According to Brassington and Pettitt, (2003) explain four differenttypes of channel of distribution which are used by different organization. Wehave decided to use one stage channel in order to be able to deliver ourproduct to consumer on time. Moreover, we will use one stage channel inorder to control increase in price because if we use four stages channel ineach stage there is commission added by the middlemen and the wholeburden will fall to our consumer. Therefore we will open our Nike shops inorder to have direct selling and ignore those middlemen.



PromotionIt is the way of communicating with the target market. According to

Brassington and Pettitt (2003) promotion mix includes advertisement whichis non personal, personal selling which is face to face communication, salespromotion which aims to encourage buyers to buy the product and publicrelation.Basketball playersIn this segment we will use personal selling because we believe it will be

suitable for professional basketball players. This is because it has higherimpact than advertisement by being able to engage buyer’s attention

(Brassington and Pettitt, 2003). Therefore, we will face them face to face andgive them description of our product and its advantages such as provision of suitable running, jumping and durability due to its materials and technologyused. Moreover we will ask them to wear it freely as part of advertisement toother players’ especially local ones. For local basket players we will useadvertisement on sports channel such as sky sports and Setanta to persuadethem to buy it. This is because Advertisement is used to compare brands incompetition, inform, persuade, remind buyers and build the image of thecompany (Brassington and Pettitt, 2003).Furthermore we will use Michael

Jordan who is a basketball legend in our advertisement in order to attractthose local players. Fashion conscious buyersIn this segment we will use advertisement on television and sports magazineto advertise our product. We will use both sports and normal channelsbecause our prospected buyers should not only be basketball fans, thereforewe will use sports channels such sky sports and Setanta sports and normalchannels such BBC to inform and persuade both basketball and nonbasketball fans who will buy due to either aspiration to look like Michael

Jordan because we will use Michael Jordan in our advertisements or fashion.Moreover the purpose of using Jordan in our advert is to show elders thateven old people can wear Jordan Air 09 because Jordan is old as they are andhe is still wearing Jordan Air 09 why not them.



CONCLUSION

Nike sportswear is the Brand rooted in competition. From equipping athletes

with the finest sports equipment in the world to continuously improving our

own financial performance, Nike dominates its competitors. Phil Knight and

Bill Bowerman probably could not have imagined in 1962 to what degree

their $500 investments would yield in 2000. They did know that product

quality and innovation would help athletes to achieve greater goals. Nike still

operates on this philosophy today. It is one that has helped athletes and

stakeholders alike to realize athletic and financial greatness. Despite a

changing marketplace for athletic footwear, we will continue to expand our

product lines and marketing reach to become a more powerful global brand.

Documents

Kshitiz Marketing 4