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Essay: Marketing performance analysation of Nike (draft)

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  • Published: 22 September 2022*
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1.0 Introduction

This marketing report is a marketing performance analysation of the American sport brand Nike. The report will cover Nike’s position in the market, marketing strategy and activities used to achieve its target market, and environment factors affecting Nike’s performance in recent years.

1.1 Brand Background Summary

Nike Inc is an American International company established by Bill Bowerman and Phil Knight in 1964, initially named The Blue Ribbon Sports and sold trainers of a Japanese brand. In 1966, firstly retail outlet is opened in Santa Monica California. Since 1972, the founders started to make and sell their own brand, Nike Trainers, instead of Japanese trainers. In 1978, the company was renamed as Nike, which refers to the Goddess of Victory in Greek. Nike company now has subsidiaries such as Jordan, Hurley International and Converse. However, Nike is still the main brand of the company to market its products including sportwear and equipment. From the beginning of the 21th century, the whole company has employed more than 73,100 people worldwide (Smith, 2018). At the end of 2017, Nike has opened 1172 retail stores in almost 200 countries (Pratap, 2018), and is valued at $27 billion in 2018 (Bhasin, 2018).

2.0 Marketing Environments Analysis

Marketing management is inseparable with the market environment change. In recent years, the Brexit has become a topic in Europe, this political shift has also produced unpredictable variation in the UK. With the instability of the UK government, Nike faces a series of strategy changes as the political, legal and economy changes.

PESTLE Analyse (Li, 2018)

Figure 1. (European Health & Fitness Market Report 2018, 2018)
Top 10 European fitness markets by revenue in million EUR and share of the European market 2017

2.2 SPICC Analyse

3.0 Customer Analyse

3.1 Segmentation, Targeting & Positioning

Demographically, Nike is targeting on people aged between 15 to 40 whose behaviour involves sport without limitation on occupation, education or gender. The company is gradually putting attention on young generation now. Nike uses geographic segmentation to judge the culture difference in varieties of market. Compare with the USA, football is more popular sport in the UK, hence Nike promote football’s peripheral products stronger than the others.

3.2 Pen Portrait

Pen Portrait (Li, 2018)

4.0 Unique Selling Position and Differentiation

As the biggest sport apparel company, Nike is valued at nearly $27 billion, which is around 4 times the value of the second competitor Adidas. It is the evidence that Nike is the dominant of sport market in the world.

Analysation of Competitors (Li, 2018)

Different from the other sport brands in the market, Nike is applicating some unique marketing strategies bravely such as Nike’s customer-value pricing strategy (See more in 5.2 Price Marketing Mix). For some other brands, it is a risky attempt. However, Nike uses this to differentiate itself from others. Its branding advantages from public reputation and product quality offer Nike a unique position and the ability to set their price higher than the market average price.

NikePlus (Nike+) is a club in which Nike provide for customers to communicate and share their experience. By joining Nike’s activities or events such as night run or purchasing specific products, customer can collect rewards in the real world. Additionally, before the new product is released, NikePlus members early access (Oba, 2017). Nike is trying to extend the market, drawing the attention from potential customer by combining the online system with self-created offline activities that other brands do not have, in the meantime, it also made great effort to develop the loyal customers. This system converts sales much effective than traditional outreach (Ponciano, 2017).

Position Map (Li, 2018)

5.0 Marketing Mix & Activities Undertake

5.1 Product

As a sport brand, Nike sales wide range of products for categories of sports. It offers various products from sportwear and footwear for women, men and kids, to sport equipment. (Price range 的图标) The high-quality and specialisation of products have become the icon of the brand.

Sneaker is the star product for the company (See appendix 4.1 for BCG Matrix). Based on the Ansoff’s Growth Strategy, Nike keeps product development on each series of footwear with different version for the existing markets and targeting to new customers. This development includes collaborating with other brands, celebrities or athletic or adding innovation and technology on the products.
In addition, the new service mode NIKEiD provides customized products in which customers can be designer for their own trainers.

5.2 Price

Nike has a wide range of prices for its large variety of products and has its own pricing strategy which is slightly different from its competitors. In 2014, Nike has changed its pricing system from cost-based model into a new mode, a consumer-value model. This new pricing model is based on Nike’s research and analysis of how much a consumer would be willing to pay for each product (Barrie, 2014). This big change Nike has made to maximize profit from each product can also give the customer psychological consumption satisfaction.

Competitors Price Stick Chart (Li, 2018)

The price skimming is another strategy Nike use on some off-trend product, and always follow with the product lifecycle. The price is skimmed on off-trend products after the new products are released, hence to stimulate the sale again until the product is put in the outlet or factory store for the final cleanout.

Nike Price Pyramid (Li, 2018)

5.3 Place

The UK is one of the important markets of Nike in Europe. In the UK, Nike distributes its market with four main channels. It includes directly sale by Nike owned stores, wholesale to licensed retailers or partners, outlet and factory stores and online distribution. Among them, Nike’s direct sale distribution (by Nike owned store and online website) only take up 20% of overall sales accorded by Figure 5, and most of Nike’s revenue comes from its wholesale distribution, which is Nike’s licensed wholesale partners and unlicensed intermediaries.

Figure 5. (Soni, 2015)

At the annual Investor’s Day, Nike CEO Mark Parker emphasize on reducing wholesale partners from 30,000 to around 40 differentiated partners such as Foot Locker (Green, 2017). This strategy is used to integrate its market by reducing retailers with less market influence, hence enhance better market management such as boycotting the circulation of fake products (See PESTLE Analyse ). It can also increase Nike’s direct sale in order to have more primary information of its customers for the further marketing strategy improvement.

5.4 Promotion

The company has use AIDA Framework on its market communication plan. To create awareness and a good public reputation, Nike uses some of the traditional promote methods, sponsorship and specifically advertising. It can be seen on figure 6 that Nike has increased the spending on advertising every year. Social media is a further promotion tool to draw the interest from potential customers. Using celebrities or professional athletics as endorser such as Cristiano Ronaldo and Kobe Bryant, drives customer’s purchasing power and affect consumer’s choice. Collaboration with fashion brands like Off-White turn potential customers’ interest into desires. Finally, Nike’s online or offline activities such as discount facilitate the potential customers to take purchase action.

Figure 6. Nike’s advertising and promotion costs from 2014 to 2018 (in billion U.S. dollars)
(Statista, 2018)

5.5 People

Nike trains its sales assistants to be with a good knowledge with all range products and be ready to sale. In the store, plenty of shop assistants are available. While customers shopping, shop assistants come to customer to help. Nike’s purpose is to build the trust between its customer and the brand by creating a trustworthy relationship.

5.6 Process

Nike is creating a strong customer service group. After each purchase, Nike asks customer for consent for sending newsletters to their email address. If there is a problem with the product, customer can email Nike’s consumer service or return the product within 28 days. All product can be refund with a simple process, same for in-door purchase or online purchase.

5.7 Physical Evidence

Nike attempts to make appropriate atmosphere which fully reveal its company story and match its product. All music Nike play in the store are selected by Nike company, and this is the same in every Nike’s store. Some of the flagship store will have a DJ on the ground floor. The lightning condition is appropriate for customer to see the product detail and fitting. Online shopping website has the same concept as the physical store on designing.

SWOT Analyse

Strength:

– Maintaining of high product quality.
– Nike offers multiple options on product.
– Having best athletics as endorser for promotion.

– Weakness:

– Only sport items, not fashion enough.
– After they changed its pricing strategy, the price goes higher than the market average, which could cause loos of the customer who are sensitive to the price.

Opportunity:

– Catch the fashion market, produce more fashionable appeal for daily wear.
– Develop on the technology, product innovation.
– Keep developing on sustainable products, which will be a trend in the future fashion market. Threats:
– Counterfeit products have been circulated in the market. This could threat Nike’s reputation.
– Nike’s competitors like Adidas is getting stronger. Nike needs more effort as a market leader.

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