Analysis of Marketing Strategy and Practice of Nike by Snapnut Magoos(MSN)

           

                                                  

BUS 620: TERM PAPER

Submitted to:

Prof. Dr. Md. Mahmodul Hasan

 

Faculty of MBA

GROUP NAME: SNAPNUT MAGOOS

GROUP MEMBERS:

Mohammad Nasir Uddin              ID- 1530814690                     ____________
Sumit Ibne Taher                 ID-1220913090                        ____________
Kazi Mohaimin               ID-  1612273690                 ____________

Date of Submission:

April 1^st, 2016

Introduction

Nike, originally known as Blue Ribbon Sports, was founded by University of Oregon track athlete Philip Knight and his coach Bill Bowerman in January 1964. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger, making most sales at track meets out of Knight's automobile.

Today Nike has become a leading sports brand in manufacturing sports equipment and clothing lines. It is global and can be identified with a number of products that include golf equipment, tennis rackets, skateboards, basketballs, footballs, shoes and athletic equipment. This company has established its name as one of the best in the sports industry. It has a trademark that aims at bringing out the sporting spirit i.e. 'just do it'. It has built about five hundred manufacturing units in different parts of the world. More over the company has gone out of its way to market itself, as it has such a huge production potential and needs to back this up with a wide client base. Nike's marketing mix serves as an example to other dealers in the sports wear industry

Defining Marketing Management Theory (2000 – 2010) & Theory (2011 – 2015) and NIKE’s Marketing-Management

 

Definition of Marketing Management (Theory 2000 – 2011)

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

Definition of Marketing Management (Theory 2012 – 2016 ±)

Marketing management depends on the size of the business and the industry in which the business operates. Effective marketing management will use a company's resources to increase its customer base, improve customer opinions of the company's products and services, and increase the company's perceived value.

How the Definitions are related with Company’s Marketing Management and Nike’s marketing management relates with both the theories of 2000-2011 and 2012-2016:

These theories emphasize on maintaining a sustainable growth by adding value to the customers by delivering and communicating superior customer value.

Marketing

The theme of Nike’s Marketing is to provide best experience for its customers and this responsibility doesn’t lie only on the shoulder of Marketing Department rather all the company’s departments work together to serve the customers’ interests. And by the customers we don’t mean only the external customers, but also the internal customers i.e. our employees. Thus we always thrive to build and maintain an integrated marketing 4 environment within the organization. However, the core marketing job is accomplished by six departments- Product Management, Sales, Distribution, customer services, Sales Training and Market Research.

 Market Research Team (MRT)

The Market Research Team conducts audit throughout the country to find out the behavior of the customers, which acts as the major input for formulating marketing strategies.

Vision, Mission and Corporate Strategy

 

Vision

Their vision is to bring innovative products for the customers by manufacturing & marketing quality at affordable price.

 

Mission

Nike's mission statement is "To bring inspiration and innovation to every athlete in the world." The legendary University of Oregon track and field coach, and Nike co-founder, Bill Bowerman said, "If you have a body, you are an athlete."

 

Corporate Strategy

Nike’s corporate strategies are to conduct transparent business operations within the legal & social framework with aims to attain the mission reflected by their vision.

Nike SWOT Analysis:

PESTEL Analysis
POLITICAL ·   Positive US government policies that foster business growth ·   Political unrest in outsources manufacturers, nations such as Vietnam, Indonesia, and Thailand ·   Potential risk of terrorism ·   Favorable foreign nations’ relationship ·   Risk of diverse tariffs and non-tariffs, law and regulations between countries ·   Adverse Trade Protection in global business affects sales and service ·   Opportunities ·   Macroeconomic stability, low interest rates, stable currency conditions and the international competitiveness of the tax system	ECONOMICAL ·   Global Economic downturn affects consumer purchases ·   Reduced consumer confidence ·   Risk of currency exchange rates, and interest rates ·   Economic benefits from low cost outsources manufactures ·   Increasing material prices and labor costs in the production countries because of gradual increase of living standards ·   International expansion, building upon its strong global brand recognition ·   Strong economic conditions in other countries	SOCIAL ·   Consumers are becoming brand conscious ·   Change in lifestyle – health awareness, sport participation on the rise: higher demand for sport products ·   Consumer conscious in CSR ·   Change in buying habits in youth ·   Increasing market share of female customers ·   Diversity of consumer preferences and demands
TECHNOLOGICAL ·   Lean manufacturing because of technological advances ·   Up-to-date technology adoption ·   Speed of technology transfer, and speed of change of product ·   High rate of technological obsolescence ·   Internet and information technology systems development ·   Innovative and technically superior products ·   Opportunities: Use of IT in marketing information system ·   Scientific research in product quality & innovation	ECOLOGICAL ·   Growing popularity of “green products” ·   Challenges of tackling climate change ·   Waste disposal, recycle and reuse policies adoption ·   Sustainability philosophy by using natural materials ·   Reduce energy consumption	LEGAL ·   Risk of legal violation in terms of human rights, environmental issues ·   Risk of contract manufacturers copying of product (intellectual property rights) ·   Corporate social responsibility beyond legal obligation ·   Trade agreements to safeguard for business operation

                                

Michael Porter’s Five Forces Analysis

The marketing strategy of Nike

The marketing strategy of Nike rested completely upon a product image which is favorable and allowed it to develop into one of the best multinational companies after a while.

Nike’s favorable product icon has been kept optimistic because of the strong relation with the company logo that is quite distinct and unique as well as the product slogan that has been utilized in commercials for a long period of time. The marketing strategy of Nike invests a lot in commercials and product promotion.

Market Segmentation

Sportsmen are the majority consumers of Nike’s products. This is extremely because of the usefulness that goes along with the items. An athlete or sportspersons is more possible to choose shoe designed that is marketed by Company more than an individual who hate sports as well as exercises.

Nike focused on these consumers by means of agreements between the Company and sports team, college athletic for product support and sponsorship as well as eventual endorsement to the team members.

Through this, Nike is capable to reach an extensive number of consumers and clients who are likely to purchase. Even if some are likely to purchase the products, Company pays particular emphatic concentrating to the sportsmen more than some number individuals even if it also targets teenagers who have hold the hip hop customs.

Targeting strategies

Nike Company’s lays a lot of strategies to aim their immediate users, athletes and all sportsmen. These targeting techniques include product sponsorship by professional and well known athletic team, college sports team as well as celebrity athletes. This marketing strategy of Nike is particularly successful as of its capability to reach many athletes. Once the sports team manager lay down a particular kind of track shoes manufactured by Nike, the learner has no choice other than to purchase them as well as sports team can purchase the track shoes in a large number and deliver them to the members of the team.

Another marketing strategy of Nike is the styling of product objective or purpose. Company does this through associating triumph with the apparel. For instance, when a superstar athlete sponsors a particular brand of sports shoes, the shoes will be related with victory. It has psychological effect to the viewers and this is reinforced with promotional which affirm this point.

At last, Nike targets the users who are possible to build up product intimacy, consumers who are after the quality and utility of the items than the cost. Through this, the costing is not pretentious too much in propose to accommodate a lot of consumers.

Pricing Strategies

Since Nike focused on the users who embrace product understanding and closeness and thus heed less regarding the product. This allows the Company to set quite higher cost that its rivalry. This is a marketing strategy of Nike which calls for superior pricing points in order to push the supposed value of the product.

Another significant thing that business must consider if you want to follow the success of the company is that, the truth that Company utilizes the vertical combination pricing technique in that they take participants ownerships at channel levels which differ and the Nike company also engage in diverse channel level functions in a propose to control prices as a result affect pricing function.

Distribution Strategies

The marketing strategy of Nike embraced by many organizations can either provide them a market frame or make them insulate the market frontrunner. The more reliable the distribution of the product is improves the sales and in consequence more profits.

Product delivery at the required time to the users not just effect usefulness however also result to high level of customer’s satisfaction as well as loyalty.

Nike Company distributes its items base on the level or number. The high costs premium items are given to particular distributors while leaving products with low priced to be trade at discounted price at various retail stores including Wal-Mart whereas other company such as Reebok who embraced a restricted distribution technique Nike Company ventured more into a world market capitalization.

Communication and Promotional Marketing Strategy of Nike

Aside from trading quality products that have result to a high number of user loyalty, the promotional and communication utilize by the company are simply outstanding. Nike has hired many professional and well known celebrity sportsmen that have managed to make a considerable interest to their items. Most of the athletes contracted by Nike include soccer superstar Roberto Carlos, Ronaldo and Ronaldinho, basketball legends and superstars such as Lebron James, Jermaine O’ Neal and triathlete superstar Lance Armstrong as well as Tiger Woods a big name in the world of golf. This has developed a fairly high level of Nikes items awareness. Aside from dealing or contracting of celebrity athletes to endorse their products, Nike also used a best deal of ad by means of mass media. The company uses a selective demand ad targets on the higher costs shoes utilized for typical sports. All the marketing strategy by Nike show a competitive marketing management which can hoist company top turn out to be market leaders and making the market leaders company retain their competitive frame market by means of adherence to marketing principles, marketing plans and carefully planned marketing strategies. The marketing strategy of Nike is one of the techniques that many businesses are followed to become successful in the world of business like Nike did.

Marketing Mix

 Product:

Nike offers a wide range of shoe, apparel and equipment products, all of which are currently its top-selling product categories. Nike started selling sports 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 Nike Team manufactures and distributes ice skates, skate blades, in-roller skates, protective gear, hockey sticks and hockey jerseys and accessories.

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.

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

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.

Positioning:

The Positioning statement of Nike is “For serious athletes, Nike gives confidence that provides the perfect shoe for every sport”. In today’s competitive environment, Nike, one of the global leaders in sporting goods industry, has established a strong position for enhancing athletic life style. It’s the number one sports manufacturer in the world design by Nolan Breitbarth in the 1970s with Phil knight founder of Nike Inc. It is the leading sporting goods Company in the United States and hundred and ten countries. However, it has become the passion for everyone to use its brand products that create the
Nike Just Do It feeling for the competition. The consumer’s perception of brand influences their buying decision in sports industry, so Nike always has been able to position to customer’s expectation and athletic fantasy that is endorsed by real athletes. 

Process:

Nike continues to innovate their product development process, combining high-tech robots with old-fashioned customer feedback.

Nike has adopted the da Vinci Surgical System concept using a copper mannequin that they call Hal. But instead of a robot that is designed to facilitate complex surgeries controlled by a surgeon from a console, Hal is built to serve as the human element in tests that incorporate biomechanics, physiology, perception and athletic performance into design. One example is the use of its 139 ports that simulate sweating to check the effectiveness of moisture-wicking materials. Whew! Now that’s what I call breaking a sweat!

The Nike Sport Research Lab in Beaverton, Oregon is charged with driving product innovation to “create footwear and apparel solutions that lower an athlete’s body temperature and reduce his or her energy expenditure, thereby allowing him or her to train longer and harder.”

Leading edge tools like Hal are one of the key enablers for the Lab, but the other is old fashioned customer feedback. The Lab is a favorite stop for athletes when they are visiting Nike’s campus because they are able to be closely involved in the product development. They have the ability to provide direct feedback on product performance through testing and data.

Listening to customers and using advanced technology for product testing has proven to be a winning combination to help Nike scientists not only improve on existing products but also in create innovative products that the company is known for.

Physical Evidence:

It is the physical evidence of a business’ presence and establishment. A concept of this is branding. For example, when you think of sports, the names Nike and Adidas come to mind. You immediately know exactly what their presence is in the marketplace, as they are generally market leaders and have established a physical evidence as well as psychological evidence in their marketing.

They have manipulated their consumer perception so well to the point where their brands appear first in line when an individual is asked to broadly “name a brand” in their niche or industry.

Value Chain Model:

•        IT system across supply chain •        E-commerce infrastructure •        Strong financial position & CSR •        Empowerment of top management	•        Great financial discipline with low debt •        Strong brand, product, marketplace solution, delivery and support •        Effective compliance process through strategic knowledge and verification
•        Strong management team •        Global learning & staff training •        Excellent employee relationship •        Minimum hierarchy concept	•        Great management and efficient corporate strategy globally •        Blend of new hires and promotion •        High ethical values among employees •        Well monitored labor audit add brand audits
•        Research and product dvp: •        leading edge in technology dvpt •        Product improvment •        Ability to change	•        Great product technology like Motion Analysis, metabolic rate, blood work •        Air-sole technology expert
•        Long-term and trusting relationship with suppliers •        Localised and bulk procurement •        Just in time strategy as finished goods are shipped as soon as they are ready for sale •        Buffer and safety stock in hand

·        Low production costs ·        Locally purchase most raw materials in bulk ·        Specialised materials importantion ·        Local logistics providers ·        Inventory control and reduced inventory risk ·        Focus on product design marketing and product technology

·        Outsourcing manufacturing and assembly ·        Design (R&D) ·        Technological innovation ·        Effective supply chain management ·        Heavy investment in R&D ·        Quality control ·        Low and no packing options ·        Nike personals to assist factory management

·        Strong control over global distribution channel ·        Just in time delivery ·        Good supplier relation ·        Ability of forward integration ·        Use of strong servers to support and manage supply chain projects ·

·        High brand recognition and reputation ·        Scale advantage ·        Price leadership and value based pricing strategy ·        First mover advantage in e-commerce in the industry ·        Agressive marketing ·        Celebrety endorsement ·        High allocation on marketing budget

·        Customer care ·        Pre-sales & after ·        sales services ·        Use of IT to improve customer service (touch screen) ·        Increased customer satisfaction ·        Customization ·

The Five 5M’s of Advertising

MISSION 

Marketing manager must be clear on the company’s purpose for advertising. “Increase in sales figure” will be a very broad and to a certain context a vague objective. According to Mr. Philip Kotler, a renowned authority in this field, there can be three possible objectives behind advertising: Information- when a new product is launched, the purpose should only be to inform people about the product Persuasion- Persuading people to actually go out and buy the product. This objective is of paramount importance because of cutthroat competition. Any advertisement must be persuasive in nature, attracting consumers towards the brand Reminder: This objective is relevant for well-established

MONEY 

After the objective has been decided upon, the next step is to decide upon the budget. There are several methods for deciding on the advertising budget. The most common among them is the percentage of sales method. Under this method, a certain percentage of sales are allotted for advertising expenditure. Though this method is used widely, there are some problems with this method. The first issue is what percentage the company should take? Even if a company somehow decides a percentage figure, this would mean increase in advertising expenditure when sales are up and less spending when sales are down. This in some ways is quite paradoxical, because logically the reverse should happen. The company needs to spend more on advertising when sales are down. But this method uses circular reasoning and views sales as cause for promotion. In fact, sales are a result of promotion. Another method suggests that a company should spend as much as its competitors are spending. This method claims that it would prevent promotional wars. But then like each individual each company is also different. It may not make any sense in spending like your competitor because competitor might be on a different footing.

MESSAGE

 As a common experience, we love some advertisements, while the others just irritate us. An appealing advertising will win consumers and will consequently induce them to purchase the product. On the other hand, irritating advertising will create an adverse effect. This is why many companies hand over this task to advertising agencies, which has professionals to make impact -making ads. The message that company wants to convey should be put in a manner that will arouse interest. Moreover, it should convincingly highlight upon the products USP. What is said is definitely important but what is more important is how it is said. The tone should be appealing. Words used should be catchy and retentive. These days both electronic as well as print media are overflowing with ads. People have no time to read or see them, and therefore they have to be attractive enough to target audience’s attention. This is the job of message.

MEDIA 

Selecting the proper media vehicle for communicating the message goes a long way in the success of any kind of advertising2. Each media vehicle has its positive and negative points with a different reach and impact. Therefore, a company has to be very clear about its target audience. Choices available are Internet, TV, newspapers, magazines, direct mails, radio and hoardings. Everyone of this has its advantages and disadvantages. Companies often go in for a media mix, i.e. they select more than one of the available choices. Timing is of great significance here. Many industries face seasonal fluctuations and pass through cycles. Therefore, advertising should be timed that way to take care of these fluctuations. A limited budget should be prudently allotted among these media vehicles.

MEASUREMENT

It is necessary that effectiveness of any advertising be judged. Only on the basis of this measurement, can further decisions regarding continuation or termination of the particular advertising campaign be taken. An ad can be judged on the basis of its reach and impact on sales. Good advertising is one that generates brand awareness and consequently brand preference. How much of sales can be attributed to advertising, is a difficult question to answer. Sales are influenced by many factors besides advertising. It is not easy to isolate the impact of advertising on sales. Nonetheless there are some advanced statistical techniques available that can be used with the help of computer software’s like SPSS. Thus a systematic and balanced understanding of these five Ms of advertising will help in designing better advertising campaigns that create a favorable impact on the target audience.

Nike’s Advertising strategies:

Nike remains the clear leader in the global sportswear market, and has if anything strengthened its position in recent years, especially in the global football (soccer) market, where it had traditionally lagged behind rival Adidas. With general approval of the sportswear market in general and Nike in particular at an all-time high there seems little evidence of any likely future downgrade in performance. The only significant clouds on the horizon could be rising costs of manufacturing or raw materials, and any extraordinary surge in performance by merging competitors.

Nike is the world's #1 manufacturer and marketer of athletic footwear and apparel. The group operates a broad collection of separate divisions, and produces footwear and sportswear for just about every conceivable sport within its main range. Combined sales for the Nike brand were $28.7bn in the year to May 2015, up 10%.

The business is now structured as eight key segments of running, basketball, football (soccer), men's training (including American football), women's training, action sports, general sportswear and golf. It is the clear market leader in running, training and basketball (the latter mostly under the Jordan brand), all of which reflect its powerbase in the US, where it now has around 60% share of the branded athletic footwear market, up from just 36% in 2005. Equivalent wholesale revenues from running were $4.85bn in fiscal 2015, with $3.72bn from basketball, $2.54bn from men's training, $2.25bn from football (soccer) and $1.28bn from women's training. However general sportswear is the brand's biggest category, contributing $6.60bn. The fastest growing segment in both 2014 and 2015 was basketball, up more than 40% in two years, roughly double or more any other segment.

Traditionally Nike was less all-conquering in other sports, but has caught up very quickly indeed with its traditional European rival. In soccer, for example, Nike had traditionally held 2nd place to Adidas, but the Air Zoom Total 90 soccer boot launched in 2003 was extremely successful in Europe's main football markets, giving Nike the edge over its rival in soccer footwear for the first time. It continues to hold onto the leading position in football footwear in Europe, although Adidas has the edge in overall apparel and equipment. Soccer alone contributed revenues of around $1.7bn to Nike in fiscal 2010, compared to just $40m in 1994. In 2008, Nike agreed a stunning deal to replace Adidas as official sponsor of the French national team from 2011 to 2018, offering a total fee of around E320m. (The shine came off that deal somewhat because of France's disastrous performance in the 2010 World Cup).

In 2007, Nike attempted unsuccessfully to wrest the contract to sponsor the kit for German national football team from Adidas (it will try again in 2017), and subsequently announced a $291m takeover of UK-based sportswear manufacturer Umbro, best known as the official manufacturer of the England football team's kit. Umbro retained standalone status within the group as an affiliate brand, generating sales of $262m in 2012. However the group put that business up for sale during the year, and a deal was eventually agreed with Iconix Brand Group to acquire the business for $225m. Nike retains the England football team contract (until 2018). Football remains one of the brand's key segments, although it was also the only one to record a decline at constant exchange rates between 2014 and 2015, falling by 2% from highs encouraged by the build-up to the 2014 World Cup.

German firm PR Marketing estimated that Nike had an overall 36% share of the total football market in 2012, just behind Adidas at 38%. Globally Nike has around 33% share of the athletic footwear market. In the US it is more like 48%.

4C Marketing Mix of NIKE

Customer/Consumer Value

Your marketing campaigns must focus on bringing value to your consumers/customers.  Nike has maintained strong  and unique brand identification. When it comes to athletic or sports wears or gears, Nike become the first one to meet the need and wants of the customer.

Cost

The price of a product or service is the amount you set for the item/s the customers/consumers will get from your business. This is from the business’s point of view.

Shifting to the perspective of your customers/consumers, the price becomes the cost. It represents the amount your customers/consumers will pay for your product(s) or service(s). Nike products are of different price range which match the value expectation of the customer compared to price.

Convenience

These days, people decide in favor of buying based on convenience. Thus, you will notice that practically all businesses have started to create their online presence. In addition to online sales, Nike has maintained strategic alliance with vendors like amazon, Ali Baba to deliver its product to the end customer with utmost convenience.

Communication

The final element in marketing mix 4C’s is communication. With this marketing mix, you do not “promote” your business; rather, you communicate value to your customers/consumers.

You give your customers/consumers meaningful content to engage them.
You do not just make your target audience aware of your business; you build rapport and relationship with them.

Brand & Branding of Nike

Nike invented the concept of brands and brand management. Over the years, Nike has remained consistently on the cutting edge of marketing, always finding innovative and exciting ways to reach consumers.

A Brand is a name, term, design, color, symbol or other feature that distinguishes one seller's product from those of others. Brands are used in business, marketing, and advertising. Nike is made of many individual brands, each serving customers in different ways, but all with a focus on making peoples’ lives a little easier.

Nike’s Logo-

Nike’s Brands

 Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts, base layers etc. for a wide range of sports including track & field, baseball, ice hockey, tennis, Association football, lacrosse, basketball and cricket. The most recent additions to their line are the Nike 6.0 and Nike SB shoes, designed for skateboarding. Nike has recently introduced cricket shoes, called Air Zoom Yorker, designed to be 30% lighter than their competitors'. In 2008, Nike introduced the Air Jordan XX3, a high performance basketball shoe designed with the environment in mind. Nike positions its products in such a way as to try to appeal to a "youthful.... materialistic crowd". It is positioned as a premium performance brand. However, it also engineers shoes and apparel for discount stores like Wal-Mart under the Starter brand. Nike sells an assortment of products, including shoes and a apparel for sports activities like association football, basketball, running, combat sports, tennis, American football, athletics, golf and cross training for men, women, and children. Nike also sells shoes for outdoor activities such as tennis, golf, skateboarding, association football, baseball, American football, cycling, volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and recreational uses. Nike is well known and popular in Youth culture, Chav Culture and Hip hop culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner's performance radio device in the shoe which links to the iPod nano. While the product generates useful statistics, it has been criticized by researchers who were able to identify users 'R F I D devices from 60 feet (18 m) away using small, concealable intelligence motes in a wireless sensor network.

Branding of Nike

The marketing practice of creating a  name,  symbol  or  design  that  identifies  and differentiates a product from other products is called Branding. The process involved in creating a unique name and image for a product in the consumers' mind, mainly through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers is branding. An effective brand strategy gives a major edge in increasingly competitive markets, which we need to do for Nike.

Nike embarked on an ambitious brand consolidation program to revive its waving growth. The strategy is designed to help Nike to focus on its biggest and best performing brands, which have the most growth potential and highest margins. The move has been widely lauded by investors and analysts alike. However, it leaves Nike with a few glaring chinks in its armor.

Nike Value Chain Companies often use the term “value chain” to refer to the actors and stages needed to bring their product or service to market and ultimately to its end of life. At Nike this term is used too, though Nike also find the “chain” metaphor a bit linear and limiting for something that is actually interconnected in multiple ways, like an ecosystem or a web. The connections in this chain drive our decision making. For example, the quality of our planning shapes the choices we make for manufacturing. Efficient manufacturers create little to no scrap and turn what remains back into material inputs for new products. Nearly 85 percent of our footwear manufacturing waste is now diverted from landfill or incineration through recycling and other efforts. Also, insights we gain in the use phase impact how we design our products. Our design decisions, in turn, determine whether a product can be recycled at the end of its life. Design choices can also eliminate the need for toxics in the manufacturing process, and our ability to get toxics out of products determines whether materials can be recycled in a closed loop. Working with the right manufacturers means better insight and control of quality and in performance for the environment and their workers. Choosing the right partners for moving our products around improves our ability to gather and track data on transportation emissions and to get products where they need to be at the right time. Each choice has financial, environmental and social impacts that are intertwined and mutually dependent. These are just a few examples of the interconnections. We invite you to explore Nike’s value chain through the graphic below and online where you will find additional detail about impacts and relevant stories. This value chain outlines each phase, where the greatest impacts occur, and some of the key tools we are using to increase efficiencies, reduce impacts and improve working conditions throughout the system. The marketing mix or the 4 Ps of Marketing are Product, Price, Place (distribution), and Promotion. Nike's 4Ps are the following: PRODUCTS: Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts, base layers etc. for a wide range of sports including track & field, baseball, ice hockey, tennis, Association football, lacrosse, basketball and cricket. Nike Air Max is a line of shoes first released by Nike, Inc. in 1987. The most recent additions to their line are the Nike 6.0, Nike NYX, and Nike SB shoes, designed for Good    

Box Analysis of Brand Elements of Nike

Brand elements are devices that identify and differentiate the brand. Multiple brand elements application may strong the brand equity. The outcome of this activity can be judged by what consumers would think or feel about the product if the brand element were all they knew.

Memorable	Meaningful
Likeability	Transferable
Adaptable	Protectable

Memorable

How easily do consumers recall and recognize the brand element, and when at both purchase and consumption? Short names such as Tide, Crest, and Puffs are memorable brand elements. (NIKE)

Meaningful

Is the brand element credible? Does it suggest the corresponding category and a product ingredient or the type of person who might use the brand? (NIKE)

Likable

How aesthetically appealing is the brand element? A recent trend is for playful names that also offer a readily available URL. (NIKE)

Transferable

Can the brand element introduce new products in the same or different categories? Does it add to brand equity across geographic boundaries and market segments? (NIKE)

Adaptable

How adaptable and updatable is the brand element? (NIKE)

Protect able

How legally protectable is the brand element? How competitively protectable? Names those become synonymous with product categories. (NIKE)

Brand Dynamics Pyramid

When we shop in our local super store, there may be some brands that we don't feel any connection with. On the other hand, we might be really passionate about other brands.  It is important that our brand speaks to our customers on an emotional level. When someone feels a strong positive emotional tie with a product, that emotion creates brand loyalty, and this inspires repeat purchase. The "Brand Pyramid" is a useful tool that can help us identify where our customers are on this journey to loyalty.

In over decades NIKE has continued to be a source of success of building loyalty. While they have been modified and informed by changing technologies and economics, the fundamentals remain essentially true.

A brand is about so much more than just a name, a logo, and a design. A Brand is established at each and every point of contact, and most companies do not really follow through on that consistently. So while much effort goes into building a brand by one part of the company, another may be undermining those efforts. NIKE has a strong relation with its customers, so it stands in the Bonding stage in brand dynamics pyramid.

Mass communication

Advertising Budget & Campaign Cost

Advertising is the best way to communicate to the target customers. There is a real need to let people know about the brands available in the market. Advertising tells the world that you are in business. Advertising is for everybody including kids, young and old. When people see the name of your business over and over again they will remember.  As a famous brand NIKE always considering following for its advertising campaign:

Message generation and evaluation

Creative development and execution

Legal and social issues

To set an advertising Budget Nike consider following factors

Stage in the product life cycle

Market share and consumer base

Competition and clutter

Advertising frequency

Product substitutability

Sales Promotion & Budget

Sales are the lifeblood of a business. Sales promotion is an important component of NIKE’S marketing communication strategy. Sales promotion is a marketing activity that adds to the basic value proposition behind a product for a limited time in order to stimulate consumer purchasing.

To implement a sales promotion event Nike considering following

Establish objectives > Select tools > Develop program > Pretest > Implement and control  > Evaluate > results

Events & Experiences/Sponsors

Everything matters to touch point with your audience. The connection between brand and consumer will continue to increase by organizing events. It is helping to create brand awareness and perceive unforgettable experience. Nike always set following before organize an event:

Identity with a particular target market or life style

Increase brand awareness

Create or reinforce consumer perceptions of key image association

Enhance corporate image

Create experiences and evoke feelings

Express commitment to community

Entertain key clients or reward employees

Permit merchandising or promotional opportunities

Public Relation/Government Lobbying

Public relation team works like as the voice of the company. It is maintained by public relation officer’s. Public relation has become the most effective way to build a brand. They maintain strong relationship with companies, government, dealer, retailer and distributors. They also arrange different kind of training and seminar to reach their target audience. Nike always organizing PR program which includes following function:

Press Release

Product publicity

Corporate communications

Lobbying

Counseling

Launching new products

Repositioning a mature product

Building interest in a product category

Influencing specific target groups

Corporate Social Responsibility

Nike is committed to creating positive social change around the world. They help kids get active, so they can have healthier, happier and more successful lives. Corporate social responsibility very important for a brand. Nike always conducting various kinds of program which helping people.  Below are the reason why it is important

Corporate benefits

Better public image

Better and more media coverage

Boosts employee engagement

Attract and retain investors.

Marketing Budget & Expenditure

Nike spending huge in marketing. They declared marketing budget 6.2B usd for 2015. Nike’s commitments look to grow even more for 2016. Some large deals agreed to in the last two years include renewing with the US Olympic Committee through 2020. A 23 year contract extension with USA Track and Field. Renewing its NFL on field rights and an extension with U.S Soccer.

In the year end May 31, 2015 Nike’s revenue was $30.6 billion and expenses were $9.8 billion.

Nike typically uses about 1 in 10 if its revenue dollars on endorsement cost.

Pricing Strategies

One of the major components of the ‘’4P’s’’ of marketing is price. Setting a price point is one of the biggest decisions a business. Nike always aware of their target market, cost of goods, competitors pricing as well as many other things when deciding on a price point.

Nike had originally used a ‘’cost-plus’’ model. In this model you have to calculate cost of goods and then markeup the products selling price in order to achieve your desired profit.

 

Breakeven Analysis

A break even situation of a firm is observed at the point where total revenue equals total cost. The factors of breakeven analysis are:

1. Total fixed costs:  The sum of all costs required to produce the first unit of a product. This amount does not change with the change in production amount until new capital is added.

2.  Variable  unit cost:         cost that varies with the production of additional unit

3. Total   variable cost:        The product of unit sales expected and variable unit cost

4.  Total cost: The sum of the fixed cost and total variable cost of any given level of production

5. Selling price per unit:      The amount of money charged to the customers for each unit of a product or service.

6. Total revenue:      The product of forecasted unit sales and unit price.

Breakeven Analysis of NIKE’S

Breakeven sales, Q = Fixed Cost/ (Unit price- Variable cost)

Suppose,

Fixed cost for producing the product = $ 20,000,000

Per unit production cost (Variable cost) is = $ 40

Per unit selling price = $ 60

 Breakeven sales = 20,000,000/ (60-40)

= 1,000,000 units

Breakeven price = 1000000*60

= $ 60,000,000

Which signifies that the company must sale 1,000,000 units to be in a marginal position and below this amount of sell will incur loss and sell above this amount will generate profit.

RECOMMENDATION & SUGGESTION

Nike should focus on emergence country like Africa, Asia to generate more revnue.

Nike shall focus on more segment not only stay in athletes/sports

They should come up with affordable price it will help them to have more consumers.

Innovation, quality, size, color shall have to modify as per market demand.

Nike should spent more in corporate social responsibilities.

CONCLUSION

Nike, Inc. an American multinational corporation engaged in design, development, manufacturing and worldwide marketing and sales of footwear, apparel, equipment and services. This is one of the largest suppliers of athletic shoes and apparel. In 2014 the brand alone was valued at 19 billion. Nike sponsors many high profile athletes and sports teams around the world, with the highly recognized trademarks of ‘’Just Do It’’. We believe Nike will keep their successful journey forever.

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Appendix