Marketing Research Paper Example: NIKE Market Strategy

2021-08-11 10:49:29
5 pages
1281 words
University/College: 
Vanderbilt University
Type of paper: 
Research paper
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NIKE, Inc. is a leading apparel industry that deals with sports footwear that primarily targets professional athletes. NIKE was started by Bill Bowerman and Phil Knight, track athletes in University of Oregon in 1964. The companys original name was Blue Ribbon Sports (BRS) and it initially functioned as a distributor for Automobile and Japanese shoemaker Onitsuka (Nike Inc., 2016). The first retail shop of BRS was located in Carlifrnia and later expanded to regions around the East Coast, in Wellesley. In 1971 the relationship between Onitsuka Tiger and BRS ended and changed it changed its line to footwear and registered with the Trademark Office and U.S. Patent. The products, services and innovations of the company aim to develop athletic potential. Nike designs manufacture and sells many products and services to help in running, playing soccer and playing basketball, and other action sports. Today, Nike is one of the leading brands in the United States athletic market, with a market share of about 35%. However, the global market share in sports apparels is estimated to increase by 17% by 2024. As a specialty and an online store, the company, the distribution channel of the company include e-commerce sales through www.nike.com, selling products to wholesalers both internationally nd locally, and selling directly to customers, which involves using factory outlets. Adidas, Puma, Rebook, Fila and Under Armour are the primary competitors of Nike in the Apparel industry while Jordan, Vans and Brooks are the secondary competitors of Nike. Therefore, Nikes spot at the top of the apparel industry look more perilous because of the stiff completion from its primary competitors. To ensure future growth, Nike continues to include women and young athletes as part of its sales strategy particularly in running, basketball, and soccer.

Target Market

The section of customers the company plans to sell its products and services is called target market. The success and performance of the company's products are based on price, place, promotion, and product. The target market can be grouped into customer attitudes, customer behavior, geography, demography, and product. Nike target customers of all ages, male and female, from urban and rural areas and international and regional markets. Besides individuals from both the middle class and low-income households are the major target customers. Thus, the company stocks its outlets and stores to meet the tastes of its customers based on their, ages, class, education, income occupation and lifestyle. The people the company does not target are the wealthy because they do not sell products that such customer can consider high-end. Although the company is growing its online platform, online shoppers are considered to be those with higher household and personal incomes; it will be difficult to reframe Nike customer's mind.

Merchandise Assortment

Customers can get everything in Nike stores around the world. Customers can get all kinds of products and services such as housing supplies, drugs, clothes, general merchandise and grocery products. In the United States, there are three Nike divisions such as Nike markets, supercenters, and discount stores. Discount stores include a cell phone store, a bank branch, a fast food outlet, optical center, a pharmacy, garden center and a photo processing lab. Nike supercenters stock most of the things found in discount stores, including a full-service supermarket including dairy products, baked goods, meat, poultry and sea food. The company also has pharmacy brands that sell drugs and healthy supplements and a white stag that sells women's jewelry, footwear, and clothing.

Nike continues to grow its private label options, and it has recently added more in-house grocery brands such as Sam's Choice Italia. The private label brands include 40 items, such as salad dressings, sauces, gnocchi, and risotto. The companys products life cycle is in the maturity stage. Its product labeling has attached the life cycle to products by providing shopping experience and provides better service to customers. Thus, the company has increased its product range, thereby improving its product life cycle. Nike can be categorized as a convenience store because consumer prefers buying the most readily available brand of product because the store is readily available.

Store Location

Location influences customers in a manner in which suppliers bring products and how customers go shopping. Nike keeps its stores close to each other to economize on shipping. This means that its logistics strategy is to have a network of dense stores to make it easier for customers and suppliers to buy and deliver products respectively. The location of the Nike store is 4.3 miles in a shopping center making it the closest place for Americans to go shopping. This place is chosen because of it close to highways that make it easier for both customers and suppliers trucks to enter. Besides, with the big parking area makes it easier for customers shopping by a car. Through innovation, Nike is striving to develop a customer based experience, which integrates physical and digital shopping to save their customer's time. Their digital presence includes mobile commerce applications and e-commerce websites. Physical presence includes motor and brick presence in the markets they operate. The major strategy of the company is to deliver a great experience, be competitive on assortment, differentiate on access, and lead on price. In the fiscal year 2016, the company generated $485.9 billion revenues that include net sales of $481.3 billion.

Omni-Channel Strategy

Nike has grown its online presence bringing its online offerings to 19 million. For example, Nike uses a Go and Scan app for Android that enables customers to scan items and add them to their carts and pay their bill through the app. The company can present a similar image across all its channels by consolidating its Omni-channel strategy through e-commerce and brick and mortar units. Suppliers only sell their products online to increase on Nike.com. Therefore, the constant focus on Omni-channel has helped the company remain to be a major competitor in the sector.

Pricing

The pricing strategy of the company is based on cost leadership. In the retail sector, Nike offers the lowest cost of operation and lowest prices in the market. This is referred to as everyday low pricing strategy. It is also common for the company to offer discounts on products important on a daily basis. There are weekly deals where products are sold at great discounts. The company has been raising the prices of selected items on its online platform. The higher prices are particularly on household and grocery products. Research shows that Nike prices are lower than Amazon. However, the prices come close in baby products, outdoors and sports. Other promotion strategies include coupons where a customer is allowed to combine a product at everyday low prices. The frequent shopper program is the lowest price always. This means spending less money on particular products. This enables the company to see an upward in sales making an important tool that increases the company sales.

Communication Mix

Nike uses paid advertisements such as public relations, personal selling, and public relations. The company also advertises on websites and newspapers. Through sales promotions in the form of coupons, special deals, and discounts the company can improve its ability to attract clients and build client recall or loyalty. The type of unpaid communication used by the company is through Facebook and Whatsapp. Nike uses traditional vertical cooperative advertising programs that today have migrated online. In the US, many families get their weekly grocery circulars both in print and online.

 

References

Sherry, J. F. (1998). The soul of the company store: Nike Town Chicago and the emplaced brandscape. Servicescapes: The concept of place in contemporary markets, 109-146.

Locke, R. M. (2003). The promise and perils of globalization: The case of Nike. Management: Inventing and delivering its future, 39, 40.

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

 

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