Nike’s Marketing Plan Essay

(Part 2)

 

Nike is in the footwear industry and their market is athletic shoes and apparel. Others in the footwear industry include Reebok, Adidas, New Balance and Fila. Nike presently dominates the U.S. footwear market with approximately 45% of the total market. Their closest follower is Reebok, with 16% of the market cornered. According to Hoover’s, Nike is the number one shoemaker in the Unites States. They manufacture a multitude of athletic shoes–from cheerleading and basketball, to golf and hiking. They also sell dress shoes, casual attire, and a variety of other related sports apparel. Nike has stores and outlets across America, as well as in 160 other countries.

A SWOT analysis of Nike is important in order to understand their current position in the market. Their strengths include their celebrity endorsements (Michael Jordan) and their public appearances at major events, such as the Olympics. In Atlanta, they outfitted the top athletes and gained key media coverage due to this. Other companies in this market undoubtedly also sponsor events, but Nike is seen all over (including our text in the case study about Blue Ribbon Sports) and highly recognizable. Secondly, Nike is global; the company sells all over the world and their “swoosh” is easily acknowledged all over. In doing this, they opened up markets in many areas and did not limit themselves to the United States, or North America, or so forth. Adidas is also actively involved in international business, starting back in Germany in the 1960’s, and recently in Asia with a strenuous outsourcing focus which may make them bigger there than they are here in the States.

A weakness of Nike is the fact that their main push still is footwear. They have so many other products, however, the constant push of athletic footwear could prove as a problem if competition in the footwear industry becomes tighter and Nike loses market share. This would leave the company with a lot of work in the apparel market to bring them back up.

Opportunities include that Nike is not a fashion brand; their main selling point is the quality of their manufacturing. However true this is, people–particularly youth–are greatly concerned with fashion. While the sneakers are made well, and help you run faster, jump higher, and so on, they have to look good. This is an important opportunity since styles will change faster than the sneakers will wear out, hence forcing consumers to purchase more sneakers. Also, since Nike is as far into the apparel industry as its footwear market competitors, it has great opportunity to expand on this into accessories (ex: sunglasses). The road is open as to where Nike can bring their apparel ideas. Lastly, since Nike is a global company, there are many areas they can expand into. China is a newer market for them and there is opportunity to establish the same brand recognition there, and in similar countries, as they have in the U.S.

As is with all companies, there are a few threats that Nike should be aware of. Firstly, there is heavy competition. While Reebok and Adidas only hole 16% and 6% of the footwear market, respectively, Adidas happens to produce more apparel than Nike does. Nike needs to be aware of the other companies and not rely too heavily on the fact that they are cornering the market and always be open to the possibility for change. At the same time, it is important to note that Adidas is also currently the fastest growing footwear company on the market. Just this alone is a threat to Nike. In going along with this, the market is extremely price competitive and consumers will spend time shopping around for the best deal. Lastly, as it has been mentioned, Nike is a global brand. Due to this, their price margins are always fluctuating due to varying currencies and changes in other countries’ monetary values.

All in all, Nike has a large portion of the market, and appears to be doing well at this point. After consideration of the key points presented in a SWOT analysis, it is clear that it never hurts to keep a close watch on your competition, and at the same time retain the idea of a possible curve in market position incase of change.

The marketing plan is a written document that explains the current situation of Nike with respect to its customers, competitors, and the external environment. It provides guidelines for objectives, marketing actions, and resource allocations over the Nike planning period. The marketing plan consists of ten sections.

The first section in the marketing plan is an executive summary. Nike’s intentions is to continue to produce new product lines at a rapid speed to deliver new and fresh footwear for the athletic market. They face problems in their managerial practices. As discussed earlier, they have been found to have unsafe work conditions in their overseas factories. The second section is the current situation and trends. Nike has a lot of competition from all aspects of the footwear industry. The U.S. Footwear Industry is made up of dozens of sneaker & shoe firms. However, Nike’s top two competitors are Reebok and Adidas. Reebok is Nike’s second top competitor. Currently Reebok has 15%-16% of the U.S. Footwear Industry. Adidas is Nike’s third top competitor, and fastest growing, is Adidas. However, Adidas is currently enjoying the fastest growth of any brand domestically, with a market share of 6%. While, Adidas’s numbers and market share are well below Nikes’, if left unchecked, Adidas cam become a bigger player then it already is in the U.S. footwear industry.

The third section is the performance review. In the past year Nike has increased their sales growth by 12.1%. In achieving this growth they have used marketing elements such as sales promotions, discount sales, celebrity endorsements and being the number one sponsor for athletes. Nike has provided many athletes with footwear, apparel and accessories. They have sponsored events such as the Olympics, World Series, Super Bowl, World Cup and Wimbeldon games.

The fourth section is the key issues. The main threats for Nike is the heavy competition from other brands in this category and pricing. They also must be price sensitive due to the competing brands and also because of their global business which can be affected by fluctuation in currency. An opportunity for Nike is their expansion into the apparel industry. They continue to grow their accessories in addition to their footwear. Their strengths are their celebrity endorsements and their global business. They have a highly recognizable “swoosh” symbol which can be seen all over the world. Although Nike has expanded into the apparel business they still continue to push footwear in their promotional efforts. This has become a weakness for Nike.

The fifth section is the objectives. Nike sets goals in their financial divisions . The total amount of assets in Nike has in less that ten years three doubled. This is normal, as a boost in assets naturally comes along an advance in revenues, because the more activity a company holds the more capital is bound in capital assets. They have set goals to continue to increase their sales volume, revenues and market share.

The sixth section is the marketing strategy. Nike puts great importance in having a marketing strategy that should add a special personality to its brand. The ideas behind Nikes marketing strategy are done by the agency Wieden and Kennedy. Nike takes much use of is promotion of their products trough sports celebrities. In this way sports stars like Tiger woods, Michael Jordan and the Brazilian national football team, are sponsored to use products of Nike in their sports. This is a brilliant way of making promotion, as there is a great possibility that many fans of the celebrities will choose the same brand of sports gear as their idols, to be like them. To strengthen this promotion Nike develops several collections of products, which are built up around the sport celebrities to make relations between these and the products. An example of the way Nike manages to link the identities of their product to the sponsored stars is for instance by naming models of sport shoes after them like Michael Jordan’s famous running shoes called “Air Jordan” or The Tiger Woods Shoe collection.

The seventh section is the action plans. To distinguish Nike’s target market they must identify the group of people with certain shared needs and characteristics within broad markets and combine these groups into large market segments according to mutual interest in product utility.

The eighth section is the projected profit and loss statement. In the end Nike will have made a profit by the end of their fiscal year. While their marketing budget is very expensive their revenues are suffice to continue to make a profit.

 

Conclusion :

 

We can conclude that Nike is a company with great success in almost every area. Thanks could go to many people, but one of them is surely a true winner. Phil Knight – and Bill Bowerman – made it possible to grow from nothing and reach the top of the beanpole. The almost 40-years-old company have throughout its whole existence reaped many benefits and will not stop provisionally. Knight has showed the world that he is a true businessman, who aims high just to go there and not go back again.

 

 

Nike's Marketing Plan