Assignment
Assignment
Assignment
I. Introduction....................................................................................................................... 4
1. History........................................................................................................................... 4
2. Missions........................................................................................................................ 4
3. Target............................................................................................................................ 4
4. Product lines.................................................................................................................5
5. Revenue......................................................................................................................... 5
a. By regions..................................................................................................................5
b. By categories..............................................................................................................6
II. Analysis of two international markets.............................................................................7
1. Market selection criteria and review............................................................................7
a. Demographic.............................................................................................................. 7
b. Technology.................................................................................................................7
c. Consumer spending power.........................................................................................8
d. Lifestyle......................................................................................................................9
e. Review of the selected criteria....................................................................................9
2. Comparison of two markets..........................................................................................9
3. Evaluate the market selection.....................................................................................12
III. Marketing entry method that Nike uses in China.......................................................13
1. Entry method............................................................................................................... 13
a. Production................................................................................................................ 13
b. Consultant................................................................................................................13
c. Marketing - Sponsor sports teams and sports events................................................13
2. What do Nike have achieved in China.......................................................................14
a. Low production costs................................................................................................14
b. Maximize their presence...........................................................................................14
3. What do they need to improve.....................................................................................14
a. Low quality product..................................................................................................14
4. Evaluation of Nike’s entry method.............................................................................15
IV. Nike Marketing Mix......................................................................................................15
1. Nike’s Products...........................................................................................................16
Product Recommendations..................................................................................................16
2. Nike’s Prices and Pricing Strategies..........................................................................17
Pricing Recommendation....................................................................................................18
3. Nike’s Place/Distribution............................................................................................18
Place/Distribution Recommendations.................................................................................20
4. Nike Inc.’s Promotion.................................................................................................20
Promotion Recommendation...............................................................................................21
V. Company failure’s and analyze possible causes............................................................21
REFERENCES:....................................................................................................................... 24
I. Introduction
Nike, Inc. is an American multinational association that is involved in the design, development,
manufacturing and worldwide marketing and sales of apparel, footwear, accessories, equipment
and services.
1. History
Nike was founded in 1964 as Blue Ribbon Sports by Bill Bowerman, a track-and-field coach at
the University of Oregon, and his former student Phil Knight. They opened their first retail
outlet in 1966 and launched the Nike brand shoe in 1972. The company was renamed Nike,
Inc., in 1978 and went public two years later.
By the early 21st century, Nike had retail outlets and distributors in more than 170 countries,
and its logo—a curved check mark called the “swoosh”—was recognized throughout the world.
2. Missions
The mission of Nike Inc. is to drive product innovation for athletes everywhere. Countless
ideas are tested in pursuit of aiding performance, injury risk reduction, enhancing perception
and feel, and delivery of innovative products to athletes. With this in mind, Nike manufactures
sports apparel, shoes, and equipment meant for a diverse market.
Nike's slogan “Just Do It” embodies this component perfectly. With this very simple
catchphrase, the company is able to inspire and motivate athletes of all levels to push
themselves beyond their limits and achieve their bodies' maximum potential.
3. Target
Nike has three classifications of its target customers, including men, women, and kids.
For men, Nike designs shoes for running, lifestyle, gym and training, American football,
football, tennis, golf, crickets, baseball, basketball, skateboarding, softball, and athletics.
Nike includes yoga in its shoe selection for women. Meanwhile, the company targets young
athletes in its kids' classification. Besides providing quality shoes, Nike offers various colors
for its products since the company believes that comfort and the products' physical appearance
can give satisfaction and enjoyment to customers. (Nike Market Segmentation, Targeting, and
Positioning, 2022)
4. Product lines
The company has organized its operations into six product categories: Sportswear, Jordan
brand, Running, Training, Basketball, Football and Others. (Pratap, 2022)
However, the company has provided a break-up of revenues by product categories: Footwear,
Apparel, Equipment and Other.
Footwear is the largest category of products by Nike includes: Boot for strikers, Mid
fielders, Defenders and Sneakers.
Apparel is the second category of products: Headwear, Tops/Polo, Jerseys, Jackets,
Shorts and Shocks.
Equipment includes: Balls, Bags and Watches.
Other categories include National Team Gear and Club Gear.
5. Revenue
a. By regions
NIKE recorded revenues of $42.29 million in 2021, an increase of 21.05% over 2020. For
2021, North America, the company's largest geographic market, accounted for 40.62% of the
total revenues. The second is Europe, Middle East and Africa with 27.09% and third is China
with 19.6%. (Nike's global revenue, by region 2022 | Statista, 2022)
b. By categories
In 2021, NIKE generated revenues through six product categories: sportswear (15.05M),
Jordan brand (4.71M), Running (5.3M), Training (3.99M), Basketball (1.69M), Football
(1.68M) and Others. (Pratap, 2022)
II. Analysis of two international markets
This part of the report contains three main parts, which are to provide criteria that the company
uses when deciding whether to enter a market, to apply these criteria to the two selected
markets, and to give reasons why the company entered the market and evaluate this decision.
1. Market selection criteria and review
Our team believes that when entering a market, Nike should consider four main factors, which
are demographics, technology, consumer spending power, and lifestyle.
a. Demographic
Demographics is a basis for segmentation. It is necessary for each firm when deciding to enter
a market to pick its target consumers and whether it can develop in the market. For Nike
Incorporate, with a wide range of products in different age groups, the company mostly focuses
on the age between 15 to 45 years old. This means Nike can not only taps middle-aged
consumers who have disposable income but also develops its relationship with younger
audiences to ensure future growth and build life-long brand enthusiasts (Start.io | Nike Target
Market Segmentation & Brand Analysis, 2022)
b. Technology
Technology is also a crucial factor that Nike needs to focus on when choosing a market to
enter. Social media is a powerful tool to spread news and influence people’s tastes and interests
these days. Since the beginning when Nike was first established, the company has realized the
potential that these platforms could bring, so the company was an early adopter of email
marketing, internet marketing, and broadcast communication. Now, when having over 40
million followers on Facebook and 234 million on Instagram. It uses its social media to share
its newest products and campaigns to consumers globally. For this, a country with a high
presence of social media such as Facebook, Instagram, or twitter would be necessary for Nike
to thrive in. (Nike's Global Expansion - Global Marketing Professor, 2022)
c. Consumer spending power
Starting a business in a foreign market requires managers to know if consumers have
disposable income and if they can afford the company’s products as this can have a direct
impact on the success of the company. The higher-income socio-economic group is Nike’s
target audience, reflected in the premium brand image and pricing of Nike products. The
average Nike customer is a sports enthusiast, interested in leading an active and healthy
lifestyle, and looking to be ahead of the trends and up-to-date with the latest in fitness fashion
and footwear technology. This could be seen when comparing Nike with its biggest competitor
Adidas. (Start.io | Nike Target Market Segmentation & Brand Analysis, 2022)
From the MRP (Maximum Retail Price) graph, from 0 to 8000 rupees (from 0 USD - 100
USD), Adidas outshines Nike in the number of products that they offer to the public. However,
from beyond 8000 rupees (100 USD +) an opposite trend has clearly been seen with Nike
having an overwhelming number of products over Adidas.
d. Lifestyle
Nike have their positioning statement: “For serious athletes, Nike gives confidence that
provides the perfect shoe for every sport”. Although Nike has widened its target market from
time to time, the company’s essence is to maintain the best product for their athletes. This
could be seen when Nike is currently sponsoring many big athletes such as Cristiano Ronaldo,
Neymar, Tiger Woods or big sports clubs such as Liverpool or Chelsea. By signing with these
big names in the sports industry, small sports clubs or future athletes may buy Nike’s products
to better their performance. As a result, countries that produce a large number of professional
athletes or have many people that take sports seriously have always been Nike’s potential
market to commercialize their image. (Nike's Global Expansion - Global Marketing Professor,
2022)
Demographic - China currently has a population - The United Kingdom currently has a
of approximately 1.5 billion people population of around 68 million
with 25% of the population is at the people with 22.3% of the population
age from 15 to 45 with a median is at the age from 15 to 45 with a
age of 38.4 years. (population of median age of 40.5 years.
China, 2022) - The United Kingdom has a
- Despite China reportedly having population from 0 -10 takes up 10%
an aging population since the of the population, providing evidence
influence of the one-child policy in that the country has a sustainable
the past, in 2021, the country has growth in the future. (population of
implemented the three-child policy the United Kingdom, 2022)
and it is set to improve the
country’s current population. (From
One Child to Three: How China’s
Family Planning Policies Have
Evolved
Technology - China has around 930 million - The UK has 57.6 million social
social media users with two most media users, which accounts for
common social media sites are 84.3% of the UK population. Five
Wechat, and Weibo which stands at most common social sites are We
450 million and 230 million active chat, Facebook, Facebook messenger,
users daily. (2022 Top Chinese Twitter and Instagram. (UK: leading
Social Media Platforms You Need social networks by usage reach 2021 |
To Know, 2022) Statista, 2022)
- In 2020, the added value of the - According to Ecommerce Europe,
digital economy accounted for in the UK, an estimated 93% of the
more than 38 percent of the UK population shopped for products
country’s GDP. In the same year, or services online in 2021. (Topic: E-
nearly a quarter of China’s physical commerce in the United Kingdom
goods retail sales were sold online, (UK), 2022)
far above the global average of 18
percent. (Topic: E-Commerce in
China, 2022)
Consumer - In 2021, the per capita - In 2021, the per capita consumption
spending consumption expenditure of expenditure of national residents was
power national residents was 24,100 yuan roughly 14.6 thousand USD, with
(3500 USD), according to World roughly 120 USD being spent on
Bank, with 5.9% used for clothing shoes. (Topic: Footwear industry in
expenditure (1419 yuan = 202 the United Kingdom (UK), 2022)
USD) (Households' Income and - In the footwear industry, trainers are
Consumption Expenditure in 2021, the most popular kind of shoes in this
2022) country. (Trainers rated the most
- In the footwear industry popular type of shoe in the UK,
specifically, footwear made out of claims poll, 2022)
textile is the most popular in this
country (accounting for almost
50%), followed by sneakers and
athletic shoes. (Footwear - China |
Statista Market Forecast, 2022)
Lifestyle - With over 400 athletes in the - The UK is currently hosting one of
previous Olympics, which ranked the biggest football leagues in the
fifth in the number of participants world which is the Premier League
by country, and with a culture that where many well-known football
regards physical fitness as an players and coaches are gathered. The
important characteristic, China is league is reported to make a revenue
seen to have an active lifestyle. of 5.9 billion USD in the previous
(RANKED: Every nation at the season. Thanks to this
Tokyo Olympics by the number of accomplishment, thousands of
athletes they have taken to Japan, unprofessional teams spread across
2022) different age groups have been
- China is also home to many formed in the country. (Study:
professional leagues such as the Premier League revenues projected to
Chinese Super League (CSL) and pass US$7bn for 2022/23, 2022)
countless sports associations.
(Football in China - boom or bust?,
2022)
b. Consultant
Nike engaged a consultant to help negotiate an agreement between them and the government in
order to enter the difficult country (Austin 34). The consultant was knowledgeable about the
language, customs, and expertise needed to produce a good agreement. Writing a proposal
describing their goals and the benefits their joint venture would provide to China was the first
thing they set out to do.
3. Nike’s Place/Distribution
The following places or venues form Nike’s distribution strategy, arranged according to
significance in the company’s marketing strategy and performance:
Retail stores
Nike Online Store
Nike town retail outlets (company-owned)
Retail stores are the most significant places where Nike products are sold because these venues
are strategically located and easily accessible in various markets around the world. These
retailers include small local and regional stores, as well as large retailers
Nike’s strong sales growth was largely thanks to its digital strategy in China. In 2012, Nike
started its online journey in China by opening its first flagship store on T-mall, one of China’s
largest e-commerce shopping platforms. Nike also launched its official website store, the
SNKRS app, and its WeChat Store over the next several years.
In November 2019, Nike
launched its flagship app in
China, a one- stop shop
delivering exclusive
content, events, and
personalized services while
collecting consumer data
to inform its products and
marketing initiatives.
(Nike in China:
building an omnichannel experience) (Nike Marketing Mix (4Ps) Analysis)
Place/Distribution Recommendations
Make products more accessible by establishing third-party venues, such as TikTok and
affiliates.
Promotion Recommendation
Nike should increase personal selling through sales personnel who persuade target
consumers to buy the company’s sporting goods. For example, sales personnel at Nike
town retail outlets are trained to use such persuasion tactics.
The company’s direct marketing activities involve promoting its products through direct
communications with colleges, local sports teams, and other organizations.