Term Paper Sample: Nike's Retail Profile

2021-07-12 09:56:54
6 pages
1650 words
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George Washington University
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Term paper
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Nike is a footwear company that is named after a Greek goddess of victory. Nike is the top shoe company in the world. Mark Parker has been its CEO since 2006, and the company started showing a rise in its sales since 2012.The company is located near Beaverton, Oregon state. It sits on a 400-acre site that has about 40 buildings. The company has over 1000 retail stores all over the world with an e-commerce platform. There are also thousands of independent retail accounts. Footwear accounted for 61 % of the companys revenue in 2016

Nike operates in six geographic segments with each having an industry on its own. The segments are used for the distribution, developing and marketing of the footwear and equipment used in sports. The company operates over 40 distribution centers outside of the USA.The company sells its items to sports centers that also deal with other brands and equipments related to sport. Most of the distributors are independent, and the company has sales representatives worldwide.

In the financial year 2016, the greatest Nike market was north America that accounted for 46% of sales followed by Europe that had 18 % of the total sales. Emerging markets accounted for 11% as compared to central and eastern Europe which had only 4%. In the USA owns six distribution centers. The company also has leasing services outside the US. The company also has offices and branch subsidiaries in other countries like Chile and Finland.

The Nike products get to the clients through retail accounts, retail store and its website. The company ships products to the more than 40 distribution centers in the world. The company markets its footwear and other items through social media platforms, endorsement contracts with athletes that are celebrities, and online advertising. The one major endorsement was that of legendary footballer Ronaldo. The cost incurred in the advertising of the brand was about $3 million in each year between 2014 and 2016.

During the financial year 2014, the three largest retail customers for Nike brought in approximately 25% of USA sales. Externally, the companies three largest retail customers brought in 13% of total non USA sales.142 factories are used to supply Nike with footwear. The factories are located in 15 different countries while the apparels are supplied by factories in 39 countries.

In the financial year 2016 net sales increased by 6% which was a decrease in the profits since 2012 due to the decrease in the emerging markets. It is ranked 80 in the top fortune 500 list. In the financial year that ended on September of 2012 the company had bought back stocks worth $ 10 billion. In recent years, Nike has begun concentrating more on footwear rather than the apparels used in sports. The footwear contributes to more than 60 % of total revenue the company acquires.

Nike is a very competitive company that requires strategies to propel to greater heights. Its main competitors, example Puma, have made the company re-strategize on its ideas for the company, therefore, making their products better throughout the years. They have majored in making the company a good brand that is recognizable anywhere in the world. The delivery and their access to the world market is also very impressive because the brand is found in almost all countries in the world.

Nikes Retail Strategy

The main competitors of Nike are Puma and Under Armour. All the brands are well recognized and have are of quality. They all have a strong consumer base in each country, but they each strategize on how to make more profits and sell more than the other brand. Puma is known to be relatively cheaper than the other two brands but why is it that they still have a low customer base and profits ratio as compared to the other brands. Under Armour is still struggling to take the brand beyond the USA market which it still isnt doing as well.

One of the Nikes strategies is in their accessibility. Nike has stores worldwide in countries that do not have to be able to order online for the products and shipments are done. Puma and amour are still not able to reach the wider demographic due to their limited number of stalls. The brands although big have capitalized mainly in the USA and are not yet tapping the outside market like Nike is. Nike is also tapping the emerging markets which are raw markets with no major competition.

Regarding Pricing, Puma is by far the cheapest brand but still has no consumer base like Nike. Under amour is also as cheap but does not bring in the profits that Nike does. Nike sells a brand and not a product. The brand has been molded to show quality and uniqueness in the items they sell. More customers prefer buying the brand that is Nike despite the pricing of the products being higher.

Nike also strategizes in their advertisement programs. In 2016 Nike put up a you-tube series that involved two sisters on a journey to fitness with Nike brands. The you-tube video has 80 million views so far. The company also endorses athletes and has a very interesting website. The growth of the advertisement has made Nike more recognizable than the other two brands. It has become a household name due to its relatability to the consumers.

Nike also offers clients with a variety of sporting items as compared to the two brands. Nike has a wider variety to that the customers are able to choose from. The Nike brands are also considerate of the demographics in various places that the stores are located. Due to the assurance of the customer to get whatever they need from this stores most prefer the brand as compared to the others that have fewer items.

Nike has also capitalized on how they treat the consumer. The consumer is able to communicate with the officials through the company website. The retail stalls are also equipped with knowledgeable attendants that understand the brand and what works best for each individual. The retailers are also very keen on customer etiquette and treat each customer with care. The store is also conveniently located in the town they are found in.

Nike has also capitalized more on footwear because it seems to be selling more than any other brand. By capitalizing in footwear, the company is able to maximize on the profits that the product brings. The others items have been reduced in production, therefore, the losses of the company are minimal. The company has been experiencing a rise in sales since 2012.The sales by the retail stores are also contributing to the countries general economy.

SWOT Analysis

Strengths

Nike is a strong brand that is recognizable all over the world. Its logo is known by all, and their products are easily recognized. Nike partnership with Michael Jordan has made the brand bigger because Michael Jordan is a world basketball icon. Nike has developed itself not only for its products but as a world-class brand.

Low cost of production is also a major strength because they can generate more profits. The factories that the items are made in are not located in the USA making them cheap to produce. The factories are mostly located in Vietnam and China where costs of production are low.

The company has intense research and development projects. The firm consults on how to improve their brands and have a creative team that assists in designing the products they offer. The designs change according to fashion and convenience of the individuals. The company also do research on how to improve amount its consumers that give them suggestions.

Weaknesses

Poor labor practices by the company. There have been a lot of critics over time because how the staff in the store have low wages and the safety of the workers in the factories. The stores pay their staff very little and do not take great concern of their safety. If an incident were to happen in the store the image of the company would be stained

There are also the high prices of the brand that makes most people unable to afford it, therefore, preferring cheaper brands. Nike although accessible cannot be afforded by emerging countries that still have slow unstable economies. The people there also seek alternatives in other cheaper brands like Puma.

Opportunities

Emerging markets. Nike is accessible to this, markets but has still not accessed it full market potential in such parts. China generated 9% of revenue in 2014 a figure that could rise if the brand improved its strategies in such markets. The brand needs to consider how the economies work and the best brands to take there.

The innovation of new products. Nike has invested a lot in technology and improving their brands despite failing of some innovations they invest in. They look forward to maximizing on the next big things in the markets. The innovative approach of things has made Nike a leading brand because it fits into the current systems.

Threats

Currency volatility. The Nike products are mostly sold outside the USA. Strength in the USA currency is also increasingly making the other world currencies weak. The pricing of the products in other countries as compared to the USA could be very low but may feel very high to afford for those local markets. The dollar is bound to strengthen more with time leaving the company with gaps in which to fill the outside market currency gap.

Competition from other brands. Nike is very expensive and therefore not accessible to all customers. The other names are coming up and giving Nike competition because they offer the same products but at cheaper prices. Companies like Under Armour have started investing in technology and developing their items to give customers a variety to choose from. The competition by other brands could affect the sales of Nike in the USA where most profits are generated and the currency strong. Nike needs to come up with strategies that also make it accessible to the lower class people in the society because they make up more of the population.

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