SECTION A: Organizational Information
Nike Inc. is a multinational corporation involved in design, development and supplying of sportswear, equipment and services. It is based in headquarters in Oregon near Beaverton in Portland metropolitan in the United States. It is one of the only two Fortune 500 companies based in Oregon, the other one being Precision Castparts (Nike Inc, N.P).
The company was established on 25[th] January 1964 as Blue Ribbon Sports (BRS) by two gentlemen Phil Knight a University of Oregon athlete and Bill Bowerman his coach . BRS started by selling shoes for Onitsuka Tiger, a Japanese shoe maker. Profits grew rapidly and the company opened its first retail shop in Santa Monica, California. By 1971 the association between BRS and Onitsuka Tiger was about to be terminated as BRS was scheduled to launch its own footwear design Swoosh by Carolyn Davidson. On 30[th] May 1971, the company officially became Nike a name derived from Greek meaning the Greek goddess of victory and started selling its own line of products. The first shoe sold to public with the Swoosh design was a soccer shoe that was named `Nike` (Nike Inc, N.P).
In 10 years period, Nike`s market share in the United States reached 50 percent in the athletic shoe market, which led the company to go public in December 1980. The spur in growth was largely due to `word-of-foot` advertising as opposed to television ads. In fact, its first TV commercial was run in October 1982, at the time New York Marathon was being broadcast. Throughout the 1980`s, the company expanded its line of products to accommodate several other sports other than soccer and athletics (Nike Inc, N.P).
Nike enjoys revenue of more than $24.1 billion as per 31[st] may 2012 fiscal year. Its employee base is more than 44,000 globally. Nike markets its merchandise under the brand Nike as well as Nike-Pro, Nike Golf, Nike Jordan, Nike+, Nike Skateboarding and through subsidiaries including Hurley International, Cole Haan, Converse and Umbro. Nike also acquired Bauer Hockey, which was later branded Nike Bauer. The Nike brand is valued at $10.7 billion which is the most valuable brand in the sports business (Schwartz N.P). Nike runs several retail stores under the name Niketown in about 200 countries, with production facilities in Asia. It enjoys a 33 percent global market share. The company sponsors several elite athletes and sports teams around the globe with the popular trademarks of the “Swoosh” and “Just Do It” logos (Logos that became legends N.P).
SECTION B: Products Marketed
Product is the core items developed and delivered to the target client with the intent of satisfying the customers` needs and expectations. An organization must offer value for its customer`s money. Besides being cost effective, the delivered product must be competitive in nature (Cant 56). This is made possible through development of new products or making improvements to the already existing products, a concept that Nike has intensively invested in.
Nike produces a variety of sports products. Track running shoes were the initial product marketed by the company although the company later ventured in making shoes, shorts, jerseys, baselayers, caps, and other apparel. In addition, the company engages in making sports such as track and field, ice hockey, baseball, Association football, tennis, basketball, cricket and lacrosse. In 1987 Nike Inc. launched Nike Air Max. The latest releases among Nike`s products include Nike SB shoes, Nike NYX, and Nike 6.0 designed for skateboarding. Air Zoom Yorker is also a recent design for cricket which is 30 percent lighter as compared to competitor`s design. Air Jordan XX3, introduced in 2008 is a high performance baseball shoe which is environmental friendly (Nike Inc. N.P).
Nike sells a variety of products ranging from shoes and apparel for sporting activities basketball, association football, combat sports, running, tennis, golf, athletics, American football, and to cross training for children, men and women. Performance equipment retailed by Nike includes eyewear, gloves, bags, caps, socks, electronic devices, sport balls etc. In addition, the company the company markets shoes for outdoor activities including skateboarding, golf, tennis, baseball, cycling, American football, wrestling, cheerleading, volleyball, auto racing, aquatic sports, among other sporting and recreational utilities. The company also introduced the SPARQ Training Division. Some of the latest shoe designs by Nike contain Lunarlite Foam and Flywire, which help minimize the weight of most types of shoes. Nike also sells small quantities of plastic merchandize to other manufacturers. Bauer Nike Hockey Inc. designs and markets skate blades, ice skates, protective gear, in-roller skates, hockey sticks, hockey jerseys and accessories (The Canadian Press N.P).
SECTION C: Place (Channel of Distribution)
In marketing, place refers to the locale where existing and likely customers can buy the product being offered (Cant 56). It is the way a product reaches to the client effectively and efficiently. Systems that represent place in marketing include retail and wholesale stores as well as internet, places that Nike has made use of in marketing its merchandize.
Nike shoes and products are distributed by multi-brand stores and exclusive Nike stores globally. The company sells its merchandize to almost 20,000 retailers in the United States alone and in over 200 states globally. In the global market, Nike`s products are sold through independent licensees, distributors and subsidiaries. The four major subsidiaries of Nike are Cole Haan Holdings, Converse, Hurley International and Nike Bauer Hockey Inc. Nike has also contracted with over 700 stores in the world, has offices in 45 countries besides the United States (Nike Inc. N.P). In addition, Nike sells its products globally through its website nikestore.com (Nike Inc. N.P). Majority of Nikes manufacturing plants are in Asia mainly China, India, Taiwan, Vietnam, Thailand, Philippines, Malaysia, and Pakistan. Although Nike did not originally disclose information regarding its contract companies, intense criticism from certain organizations such as CorpWatch forced Nike to disclose information regarding its contract manufacturing plants in its corporate Governance Report (Nike Inc. N.P).
SECTION D: Promotion
Promotion means the various forms of communication applied to connect to the customer regarding what the organization has to offer. Promotion is usually used to inform and enlighten the customer on the added advantage of using its products or services over that of competitors. Promotion influences the purchasing decision of a potential client and thus is significant during market positioning, creating brand recognition and awareness. Potential customers can take advantage of promotion to assess the quality of products offered by an organization over substitutes (Cant 143).
Nike`s promotion strategy is among its strongest points. Nike advertises in virtually every medium that exists. Besides, their advertisement is done with great precision. One of the ways that Nike has capitalized to promote its products is through sponsorship. Since it makes a wide range of products, for various sporting and recreational activities, Nike has been able to sponsor elite athletes including boxers, footballers, volleyballers, skaters, cyclists, autoracers, etc. Among Nike`s sponsored athletes include Didier Drogba, Ronaldinho, Mario Balotelli, Wayne Rooney (footballers) In addition, it sponsors professional teams including India Cricket Team, Arsenal FC, Manchester United, among others as well as college sports teams including Penn State University athletic program to promote its products. In media advertisement, no one comes close to Nike. Through Weiden + Kennedy, an agency that Nike started using for advertisement in its first television ad during the New York Marathon, Nike has done tremendous adverting in print, television and the internet (Cant 148). Its slogan `Just Do It` is very unique and has remained a catch phrase for years.
SECTION E: Price
The price of a product or a service plays a key role in influencing the satisfaction level of customers. Besides prices being competitive, they should be able to make a profit for the company. The company must set its prices in a manner that they are not extremely high, such that no body or just a few can afford, or too low that lead the company to incur losses. Nike pricing strategy is well calculated to satisfy this phenomenon.
Pricing depend on the type of products the company is dealing with. Nike utilizes vertical integration in pricing. This is where the company owns participants at various distribution levels or participates in more than a single channel level operation. This strategy is also in an attempt to regulate costs and influence pricing methods. Nike`s pricing is positioned to be competitive to other shoe retailers. Mainly the pricing of Nike`s products is based on premium segment as the target market. The high prices are as a result of the quality of the products Nike offers and its strong brand name. As a strong brand, Nike commands high premiums (Cant 149). The vertical integration pricing used by Nike is useful in regulating prices and influence pricing of the products. The prices of Nikes products is widely varied depending on the type of product say sporting equipment or apparel, shoes etc as well as the size. A good average size pair of shoes normally costs between $70 and $150 (Cant 172).
SECTION F: Target Market
Target market entails sifting the potential users of a product or service by profiling a probable consumer. Markets can be locally, regionally or globally analyzed. Various factors need to be considered by an organization before determining its geographic market.
Nike Inc. operates in the local, national and global market. It is target geographic region depends on the level economic development of the country. For instance in the more affluent United States and European markets, Nike markets premium products and accessories (Cant 164). Nike has stores in over 200 countries including the developing countries of Asia and Africa. Nike`s products are accepted globally because they are used in a variety of sporting activities practiced in almost every region of the world. Hence, Nike has a global geographic market.
Also known as socioeconomic target market focuses on particular characteristics of the population including age, gender, education level or income level. Nike demographic target market is diverse. The company target all ages of the population as it markets apparels and shoes of various sizes to suit the diversified ages. In addition Nike`s products are targeted to both male and female (Cant 145). For recreational or sporting activities, Nike has created a wide range of products for women, men as well as children. Since Nike has a global presence, it products are targeted to both middle and higher income earners. At Nike`s shop, there is something for everyone.
Psychographics classify lifestyle choices that can determine whether individuals are likely users of your product or service. It seeks to identify a market with similar values, attitudes and lifestyles. Nike identifies with the youths through its slogan “Just Do It”. This slogan is associated with youth cultures of hip-hop. It entails adventure, being daring and opens to new things. In addition, Nike sponsorship of major celebrities in the sports world such as Wayne Rooney, Mario Balotelli among others helps in selling the idea of being victorious an aspect that is identifiable with most athletes, regardless of their age, socio economic status, education levels, and gender or physical conditions (Cant 177). This has seen Nike capture a great psychographic market.
Nike is a global leader in manufacture and marketing of sports shoes, apparel and sports equipment. It has a global market share of about 33 percent. It is widespread in over 200 countries, with its headquarters being in Oregon in the United States. Its manufacturing factories are located in Asia region. The company has a good marketing mix as looked through the 4Ps of marketing product, price, promotion and place. Its strong marketing mix gives Nike leverage over its competitor, and therefore the company is likely to continue scaling the heights in manufacture and sale of sports and recreational merchandize.
Cant, M. C. Marketing Management. Cape Town, South Africa: Juta, 2006. Print.
Nike Inc. Nikebiz: Company Overview : History: 1960s, Nike, Inc., Nike.com. Web. 3/12/13.
The Canadian Press. Nike sells Bauer Hockey for $200 million. 21/2/2008. Web.
Logos that became legends: Icons from the world of advertising. The Independent (London). 1/4/2008. Web. Retrieved 3/12/13.
Schwartz, Peter. The World`s Top Sports Brands. 3/2/2010. Web. Forbes. 3/12/13.