NIKE MARKETING ASSIGNMENT
The leading innovator and an American multinational corporation which is engaged in the selling, worldwide marketing, development and design of services, accessories, equipment, apparel and footwear. More than 33,000 people are employed by Nike. In more than 180 countries around the world, it sells products (Ramaswamy, 2008). The company’s headquarter is located in Oregon. It is a major manufacturer of sports equipment and the largest seller of apparel and athletic shoes of the world. More than 47 percent of the athletic shoe market is controlled by this brand. In the future growth plans of Nike; a significant role is played by its wholly-owned affiliates, such as NIKE Golf, Hurley International LLC and Converse, Inc.
With highly trademarks of the Swoosh, and “Just Do it” logo, many sports teams and high-profile athletes around the world are sponsored by Nike. Through wise marketing strategies, quality production and attractive and innovative design, legendary position has been attained by the brand. The global fashion trend is followed by Nike and it is popular and well-known in the hip hop culture and youth culture. To maximize profits, to nurture and establish relevant emotional ties with consumer segments, to provide innovative and quality products and services externally and internally, to identify focused consumer segment opportunities and to provide an environment that develops people to maximize their contribution are the main goals of the company.
This report will address the history, mission and vision of the company. Furthermore, it will address the marketing mix strategy of the along with the gap analysis and five dimensions of service quality.
The Company Nike Inc was started by Phil Knight and Bill Bowerman. In 1964, the original name of Nike was Blue Ribbon Sports, i.e., BRS which was founded by Phil Knight and Bill Bowerman with a collective investment of thousand dollars. The company began with Knight and Bowerman being local distributors for the Onitsuka Tiger footwear brand. In year 1996, the first retail store of BRS got opened in Santa Monica (Frisch, 2008). Consequentially, BRS began to market and create their own line of apparel and footwear and cut ties with Onitsuka. In year 1971, the “Swoosh” logo was designed by Carolyn Davidson who was hired by BRS, the spirit of the winged goddess was embodies by the “Swoosh” logo of Nike.
The revenue of BRS reached 1 million dollars, by the year ended 1971. After the Greek Goddess of Victory, the Nike was founded by BRS in year 1972. Their first foreign market was Canada. BRS officially renamed itself to Nike, Inc in year 1978. The first endorsement deal of the company was signed by IIie Nastase, who was an ATP tennis star. Since then, an essential role was played by endorsements in the marketing growth of Nike. The corporate infrastructure of Nike begins to form, towards the end of the 1970’s. Multiple manufacturing sites were opened, and their foreign marketplace expanded to Asian countries.
The famous Nike Air technology got born in year 1979. Until year 1982, a TV advertisement was not run by Nike it overtook nearly half of the athletic footwear market in year 1980. With the spread of positive reviews by both consumers and athletes, the reputation of Nike grew in the athletic footwear industry. For many athletes around the world, Nike remained the first choice and this are the reason why it’s positive image still exists today. Opening with the sale of two million shares of common stock, Nike became a public traded company in year 1980. The first Nike baseball cleat was debuted by a baseball player, who is known as, Steve Carlton.
In year 1980, around 2700 employees were employed by Nike. In year 1981, around in forty foreign countries Nikes were sold. Through a local advertising agency, known as, Wieden + Kennedy, Nike began its advertising campaign. In year 1988, Nike began with its “Just Do it” slogan and began its reputation for creating inspiring and unique advertisements. The cross-training business of Nike got exploded in year 1989 (Spence, 2008). Nike regained its position as the industry leader, by the end of the decade. By christening its beautiful world headquarters in Oregon, Nike entered the era of 90s by a series of successful marketing campaigns and product launches.
Several individual players from the World Cup-winning Brazilian National Team were signed by Nike in year 1994. The distinctive uniform of the team got designed, and the entire team was signed by Nike in year 1995. Dozens of national teams around the world, as well as, national soccer teams of women, and men of the United States were also signed by Nike. Nike continues to grow at the turn of the new millennium. Hurley, Umbro, Cole-Haan was the subsidiaries bought by it.
“To bring inspiration and innovation to every athlete in the world, If you have a body, you are an athlete”, is the mission statement of Nike. Guiding principles are maintained by Nike additional to its corporate mission statement. These guiding principles are referred to as “The Eleven Maxims of Nike”. As the employees represent the Nike Corporation globally and complete their work at Nike, these guiding principles guide them at all levels. The culture of Nike is shaped and described by these eleven maxims. They are ‘remember the man, i.e., the co-founder of Nike, late Bill Bowerman, master the fundamentals, evolve immediately, the consumer decides, Nike is a brand, it is our nature to innovate, we are on the offense always, do the right things, be a sponge, simplify and go, and Nike is a company. The way managers of Nike lead with excellence is described by its set of core principles, which is known as “Manager Manifesto”. Inspire, coach, lead and drive are the core principles for the management team of Nike.
The current situation of the company is clearly highlighted by its mission statement. The company is bringing creative and new services and products to all athletes around the world. The mission statement of the company is meaningful and simple. To bring fresh ideas to consumers, new innovative products are brought by the company (McClusky, 2009). It is also very inclusive and positive. The mission statement of the company reminds us that athletes are not only those who are born to do sports, but every human being who has a body is an athlete. This mission statement also triggers the salesman in the retail store not to judge and look down upon their consumers based on the fitness of their bodies.
This mission statement carries the company in all levels of production, such as, departments’ production and corporate responsibility and it also for customers to view Nike as a strong creator of business. To bring together to produce the best services and products to the global society is the overall role of the mission statement of the company.
The corporate responsibility function has been transformed by Nike into SB & I, i.e. Sustainable Business and Innovation (Zadek, 2007). To enable Nike to thrive in a sustainable economy is the mission of SB & I. For SB & I, to enable the company and its consumers to thrive in a sustainable economy, where profit, planet and people are in balance, is the vision of Nike. To mobilize key constituents, i.e., industry, government, consumers, employees and civil society to partner in scaling solutions, to integrate sustainability into the heart of the business model of Nike, and to innovate to deliver enterprise-level sustainability solutions are the visionary goals of Nike.
The Objectives of this report are to address the marketing and service quality perspectives of Nike, which is a global shoe giant company. A lion share of thirty percent of the global market is maintained by this company. In almost 200 countries, the company has its operational units, customer service worldwide. In Asia, the company has maintained its production facilities. This report will reflect upon the marketing mix strategies of Nike. A business tool used by marketing professionals and in marketing is known as the marketing mix. In determining the offer of a brand or a product, the marketing mix is often crucial.
The reason why Nike has been selected is due the competitive and strong position maintained by the company in the market. The approach to marketing of Nike evolved along with its products. One of the first global marketing and truly integrated effort of Nike was its campaign in year 2002, that was, “The Secret Tournament”. In support of the World Cup, a multi-faceted consumer experience was created by Nike, departing from the tradition formula, which was, “big product, bid advertisement and big athlete”. To create excitement for athletes and soccer products of Nike, consumer and retail events, public relations, the Internet and advertising were incorporated by the “Secret Tournament”.
For communications and marketing, this new integrated approach became the cornerstone for Nike (Werther Jr & Chandler, 2005). To develop creative methods to directly communicate with consumers and to develop superior products, innovative and new ways are continuously sought by Nike. Involving the deal to become the official sponsor of the NFL and strong growth in China, the company has continued to expand in new ways.
The use of advertising is the most effective promotional tool from the perspective of Nike. During the history of the company, a wide variety of advertising campaigns have been developed. Advertising techniques, which accentuate the functional and quality benefits of the products are primarily used by Nike. To achieve its objectives, emotional appeal has been used by Nike. This can be proved by the below mentioned advertisements, the movements of the focal point are emphasized and emotive, and quite dynamic imagery has been used in the advertisement.
Nike has distinguished itself from its competitors by using these techniques and has reflected itself as a more hardcore sports orientated brand, in comparison to its competitors, who establish a more fashion orientated brand by tailoring their advertising. These advertising techniques are more appropriate as the buying behavior within the fitness, and athletic sector are influenced and characterized by them. During sporting events or within the advertising campaigns, sportspeople endorsement and celebrity are frequently utilized by Nike, which is another very successful promotional technique of the company. Since endorsement create a specific consumer perception and helps in conveying the brand image, therefore, for Nike it is very essential to use the endorsement (Keller, 2009). The Nike Air Jordan trainer endorsement is an example of a very successful endorsement campaign. In year 1985, the Swoosh logo was really starting to take over the world. The same pattern of endorsement was followed by the company with many other successful endorsements with sport personalities, like, Wayne Rooney, Christiano Ronaldo and Tiger Woods.
Public relations are another promotional tool which has had a huge impact upon the operations and brand of Nike. Rather than an effective promotional tool, it has proven to be more detrimental factor to brand image of Nike. Throughout the history of the company, many problems were faced by it relayed to the public relations. By being more environmental friendly, by setting up community programs and investments and by focusing on improvements within the CSR through improving working conditions, the company had made substantial efforts to deal with such issues.
The distribution strategies of Nike are stemmed with its objectives and goals. In comparison to a more fashion oriented market segment, a different distribution strategy is implemented by Nike, looking specifically at the fitness and athletic segment. A selective distribution strategy will help to portray Nike as an elite brand as based on specific benefits of products, like, perceived quality, the fitness and athletic consumers of Nike will make their purchasing decisions (Zentes & Et.al, 2011). The specialist running apparel of Nike is stocked by ninety nine stores throughout the United Kingdom, and this shows the apparent selective distribution of Nike.
The Nike is portrayed as a specialist brand by small retailers who stock the running equipment of Nike and specialize in running equipment. Throughout the distribution channels, legitimate power is exerted by Nike as these retailers are near as powerful and far smaller. Across the United Kingdom, several NikeTown stores have also been developed by Nike.
In order to maintain its high brand equity, it is important for Nike to select an appropriate pricing strategy. Price skimming strategies are primarily used by Nike considering the quality benefits necessary for the consumers. For consumers who have different motivations and perceptions as well as for quality oriented consumers, a price skimming strategy is effective. For instance, for the personal benefits, such as, symbolic consumption and social status, products of Nike may be purchased by consumers and, therefore, an elite brand and up-market is portrayed by a higher price, and for consumers this factor is really important (Erdem & Swait, 2004). However, threats may also be posed to Nike as it uses such pricing strategy.
The impacts of the current economic environment on the consumer spending and the current economic environment itself are the most imminent threats from using this strategy. Price sensitivity has increased due to lack of consumer confidence and the affect of changing personal disposable income levels and due to this the consumers are shopping more at budget price sportswear outlets. It is one of the complex situations for the company, as without comparison its brand equity, it is very difficult for it to compete with lower priced budget stores.
The high brand equity is one of the main attributes of Nike. The marketing strategies of the company are affected by it, and across all aspects of the business it is highly influential. The company is allowed to develop a wide variety of brand extensions by its brand equity. Since there are a wide variety of product categories, like, Nike running and Nike football, the products are simply accessible through the website. Since, brand extensions allow the company to react to any trends that arise from its external environment, and be proactive, therefore, it is important for Nike to develop its brand extensions.
Due to the increase in people taking part in activities, like, running, there is an increasing demand for athletic apparel and the athletic trends are focused more. With the introduction of specialist Nike running products, the company has been quite effective in adapting to this trend. In order to demonstrate a source of differentiation to the customer and to maintain its position, Nike has developed itself as an innovative and cutting edge organization (Miles & Munilla, 2004). Within their product range through technological development and advancement, this innovation has been achieved. From clothing and footwear, like, the new Lunar Glide+running shoes, this product development varies, as an advanced cushioning system is maintained by this product.
Utilizing the horizontal integration, like, iPod+Nike sports kits, this product developed varies to more diversified developments. The company is allowed to gain access to developing or potential markets and offer new products to its existing markets by such product diversification and development.
The brand marketing team of Nike connects with customers through a variety of channels by working with field representatives, regional marketing, event marketing, sports marketing and digital marketing. The global communications team of Nike creates authentic, credible and deep connections with customers through the growth stores of the portfolio of Nike and the brand, innovation and inspiration throughout the world. To design authentic performance products, the design team of Nike works with consumers and athletes. Through events, retails stores and brand communications, they bring stories to life.
The digital brand team of Nike builds on-going relationships with the consumers according to their needs and terms. The products are delivered to the consumers by the logistics and distribution team. For ways to improve lower costs and efficiency, logistics technology is constantly out looked by them to ensure that the consumers are provided with right products at the right time and at the right place. In the first stage of getting the products to the consumers, commercialization and creating new products, the development and production creation team of Nike is involved.
Everything such as product confirmation, product testing, materials sourcing, construction and materials, and idea generation are involved in it. To facilitate garment construction, testing of color fastness and product samples, they work directly with overseas factories. The sales representatives of Nike excel at understanding the Nike product, the marketplace and consumers. For each season, winning sales assortments are created by sales representatives of Nike by working closely with retail accounts, product engine teams, merchandising, and marketing.
Lean manufacturing, manufacturing flow management, and product development are the main key supply chain processes of Nike. The product development process of Nike is different from its competitors since the company aim has always been at continuously improving its design. From the time a product is designed to final distribution to the retailer, 15 to 18 months are taken by the whole process in order to get new shoes to the market by Nike. In order to establish the production volumes, both Nike and projections from merchandisers are also required.
Before the products can be replaced by other models, a market life of between 3 to 6 months is comprised by normal Nike shoes. All the production functions of Nike are outsourced to partners located particularly in China and overseas. With China supplying more than forty percent of US market of Nike, most of the distribution and manufacturing is done in Asia. Selection of the right partners is emphasized by Nike in order to ensure that they selected partners are going to be effective (Laudon & Et.al, 2010, pp. 345). Developed sources, volume producers and developed partners are the three main categories of production system of Nike.
To allow for high fluid and dynamic flexible production system and markets, which allows for transfer of production from one country to another and are demand drive, subcontracting processes are adopted by Nike. To facilitate faster shipment of products to customers in America and Europe, the just-in-time approach is used by the supply chain of Nike. In the success of the company, a significant role is played by the distribution set up. Throughout the year, the in charge of balancing demand and supply is the distribution. Since the company aims to ship large volume of products through the ocean, to protect the operations of the company against any uncertainties, such as, ensuring the use of economies of scale and products that can be kept for some time in the warehouses is the responsibility of the distribution system of the company.
The customers are allowed to design and personalize their own Nike merchandise through NIKEiD, which is a service provided by Nike. In different countries around the world, like, the United States, China, Germany, Spain, France, Italy and the United Kingdom, physical NIKEiD studios and online services are offered by NIKEiD. In United States, China, Main Land Europe, England and France, the physical branches, i.e., the NIKEiD Studios are located. The customization design service can be accessed by customers through 102 stores maintained by NIKEiD. The customers are allowed to customize clothing purchased from Nike through NIKEid.
Some negative implications to the company are also brought by its marketing strategies. These negative implications are its competitors, the influence of spokesperson and high cost incurred. The company has been catapulted to its footwear, apparel, and sports gear marketplace through its marketing strategy. In its marketing arsenal, there are three biggest weapons used by Nike. First is the creation of its ads that leverage the message content and the Nike brand and promote the ad messages for free. Second is the focus on hero athletes, like, Michael Jordan who was a basketball legend. Thirst is the Swoosh logo of the company that appears on the athletic gear of athletes and uniforms. This basic strategy has created great market leadership and riches for Nike. However, in the past few years, the “hero athlete” component has come under fire due to the result of the bad behavior of some of its heroes, such as, Oscar Pistorius, Lance Armstrong, Alex Rodriquez, Marion Jones, Kobe Bryant, Tiger Woods and Michael Vick.
Further investigation the murder charges against Pistorious, Nike has suspended its contract with him and has distanced itself from Lance Armstrong. However, with little negative repercussions for the company, Nike has stood by Kobe and Tiger since they never killed anyone not cheated in their sports. After the dog fighting scandal, Michael Vick was initially dropped by Nike (Money & Et.al, 2006). The inherent problems of closely associating a brand with famous spokespeople and “hero athletes”, are pointed by all these cases. As these athletes become more famous and successful, their transgressions to exponential progressions are accelerated and magnified by the social and traditional media and their public persona grows.
Some percentages of the star athletes will damage their image, get into trouble and will drag Nike along with them if Nike continues to hitch its sails to them. This is the reason mascots are used to be preferred by many brands, instead of heroes, celebrities and spokespeople. When some heroes drag Nike into the muck, it can be increasingly difficult for the company to manage its image.
The company had incurred high costs in promoting and producing its products as it has implemented several marketing strategies. The costs are increasing among production, advertising, designing and handling inventory. The costs of raw materials have been raised by the inflation. The company has reduced its marketing budget and has increased the prices of its products to deal with these problems, which can hurt the long-term growth of the company. To reduce its labor and production costs, child labor has also been employed by the company in Cambodia, which will affect its brand image.
The company is facing intense competition. Puma, Reebok, and Adidas are its competitors. Adidas is one of its major competitors. The product line is slightly different between Adidas and Nike. Adidas specializes in footwear for children, women and men between fifteen to thirty five years old while Nike is mainly focused on footwear for women and men who are between fifteen to thirty five years old. The less diversification of the marketing strategy of Nike is reflected here. To attract more parents to become their potential customers, footwear for children can also be provided by the company. In order to achieve greater reputation and capture more potential customers, Nike must distribute its products to more countries and regions.
A comparison of expectations with performance is referred to as service quality. Economic competitiveness is increased by improved service quality. Loyal customers which result in maximum revenue and which add to repeating purchases are desired by every company owner. Tangibles, empathy, assurance, responsiveness, and reliability are the five service dimensions that customer care about. An extra addition is made to the quality and level of service offered by the company to its customer by each of the five service quality dimensions. It also makes the service far more satisfying and unique.
The way of communication, personnel, equipment and physical facilities and surroundings are referred to as the tangible service quality dimension. Creating first hand impressions is referred to the tangible dimension. The customers are more likely to return in the future if a never forgetting first hand impression and a unique positive experience are provided to the customers by the company (Kang & James, 2004). How the company is completing its promised accuracy, quality and service and performing within the given set requirements between the customer and the company is referred to the reliability service quality dimension.
The willingness of the company to help its customers in providing them with a fast, quality and good service is referred to as the responsiveness service quality dimension. The employees of the company are referred to as the assurance service quality dimension. There are chances that customers will not return to do further business with the company if the customers are not comfortable with the employees. How the company make the customers feel extra special and values and how they give and care individualized attention to its customers is referred to as the empathy service quality dimension. There is a very big chance that customers will return to the company to do business again if they are provided with quality and individualized attention.
Nike has maintained a very high standard of excellence and quality and, therefore, in order to match with the quality it provides to its consumers, it has to seek a reliable solution. At any point in the manufacturing process, the company cannot sacrifice its quality due to the level of competition it receive from its competitors and due to the level of consumer demands. The quality management solution selected by Nike is InfinityQS. With precise specifications, the physical attribute data is reported by InfinityQS due to which it is a perfect match for the manufacturing plant of the company.
Since, the quality of the entire shoe can get affected by the sole specification of Air, therefore, the company must maintain its Air sole specifications. The company is assisted by its SPC software, which provide technical, and solid customer support services to the company and this help the company in targeting the key areas for process improvement and continued success and high quality products are resulted out of it.
It can be concluded that across the aspects of the marketing mix, effective marketing strategies have been developed by Nike. However, threats from aspects which they cannot control are being faced by the company, for example, lack of economic stability and negative publicity. However, the company is in a better position to exploit any emerging opportunities and to withstand any threats through its marketing strategies and high brand equity. Nike has become one of the most recognizable brands in the world through its trademark swoosh, the Nike name and the brand image of Nike. The reason behind its high revenues is its brand power. The shoe empire has become a huge success due to its great marketing techniques, loyal customer base and its quality products.
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