Nike’s Company: Customer and Competitor

This report is going to be discussing about Nike`s Company, focusing on its shoes. The report begins with the overview of the company, including history, a brief discussing of customer and competitor.

The next part of the report will exploring how Nike creates and delivers value its targeting customer and capturing value from customer through the value delivery process and marketing mix which are product, price, place and promotion. This is achieved by understanding market place and customer needs and wants, designing marketing strategy to deliver value and after capturing value from customer. Nikes always provides high quality shoes with a reasonable price (Product – Price), sells its product in 200 countries in the easily accessible locations (Place) and uses celebrities and effective advertisements (Promotion).

Then the discussion continues on to the enlightenment of the two target market categories, named: Demographic and Psychographic segmentation. Under demographic segmentation, issues such as: gender, age and income are brought into discussion whereas the Psychographic segmentation explores issues such as life-style and personal values.

Finally, this report is concluded with a discussion about the four recommendations for marketing mix strategy to strengthen competitive advantage through added value for segments which are targeted by Nike.

Marketing is about satisfying consumers` needs and wants. The task of any business is to deliver value customer value at a profit. The value delivery process is one of the most important theories that need to understand in all marketing activities as it helps companies capture value from customers to create profits and customer equity. If the marketers do not aware customer satisfaction they cannot create and deliver value, as the customer perceives it, and customer can buy competitor product or services, In order to reach the goal of profit or to be successful, companies should provide more value to customer. (Kotler&Armstrong, 2012 p.4)

INTRODUCTION

This report presents a real life case study focusing on the company of Nike and its` shoes. The objective of writing report is that to provide recommendations about marketing mix strategy that would create more value for target segments in result reaching the company goals.

Nike is the world`s number one manufacturer of sport shoes and sport clothing. It controls more than 50% of athletic shoe market with sale of US dollar 3.7 Billon.This company was founded in 1962 by Bill Bower and Phil Knight as Blu Ribbon Suport and later on it became Nike in 1978 (Partlow 2003) It is suppyliying its high quality products in more than 100 countries with its major target areas including United States, Europe,Asia Pasific and the Americas. Behind its successfull position their innovative and attractive design, various product, quality and its marketing strategies are. Nike’s mission statement is ” To bring inspiration and innovation to every athlete* in the world. *”If you have a body, you are an athlete.” – Bill Bowerman “ Nike’s vision is “to carry on his legacy of innovative thinking, whether to develop products that help athletes of every level of ability reach their potential, or to create business opportunities that set Nike apart from the competition and provide value for our shareholders.” (Dillonsblogformarketing,2011)

This report depended on research activities that involved intensive activities regarding analysis and scrutiny of literature such as relevant articles, publications, and presentation journals. All sourced information is a result of quantitative research methodologies.

The report will explain Nike and its shoes how create value and deliver to its customers by using marketing mix 4Ps , evaluate two markets and concluded four recommendation in order to add more value .

COMPANY-PRODUCT
Nike has various sports equipment. They currently also make sport shoes, jerseys, shorts, t-shirts, sportsgear etc. for a wide range of sports, including track and field, baseball, ice hockey, tennis, association football (soccer), 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 skateboarding. New design cricket shoes also were designed recently and it has big advantage because that shoes 30 % lighter than its competitor’s one. In 2008, The Air Jordan XX3 Nike’s new technology basketball shoes were introduced. It has huge variety in its target market. They intend to reach the requirements of people of all ages belonging to varying categories. This strategy increase nike customers number and company’s benefit as well. The industry is currently experiencing hypercompetition, led by six main firms – Nike, Reebok, Adidas, Fila, Converse, and New Balance , with nearly $7 billion in revenues domestically. Nike is called as leaeder in sport industry with 47% market share, and it followed by Reebok, a distant second at 16%, and Adidas at 6%. (UNC. N.d.) Evaluation of Nike`s shoes

To evaluate Nike`s shoes, the focus is on customer value, customer satisfaction and customer retention as the central concept of delivering value to the customers through the marketing mix or four Ps: product, price, promotion and place. Customer value creation, value delivery and capture value (See Appendix 1)

Holbrook (2005) (as cited in Ledden and Kalafatis 2010) agrees with the Kotlerian concept of marketing as managerial activities leading towards the facilitation and consumption of exchanges. He further states that customer value is a base for every activity done in marketing (See Appendix 2). Nike`s marketing strategy is also based on this concept. Nike understands the needs and wants of its customers and using marketing mix deliver superior vale with product, price promotion and place finally it captures value from its customer. (Ledden, 2010 pp,141-147)

Segmentation, Targeting and Positioning

Segmentation

Nike produces various shoes and sport clothings with different price. They cover all segments (demographic, geographic.etc) all around the world. For example they make basketball shoes for USA however they make shoes for cricket for India because people needs changeable country by country.

Targeting

People are target for Nike who is active, sportive and interested in other sport type does not matter professional or amateur so product innovation and brand leadership are important for Nike. Further geographic expansion and farther marketing penetration in all regions and cultures is targeted by nike and they still continues to growth in all range.

Positioning

Nike has good TV advertising so it makes its positioning well. Its advertising makes Nike global brand so Nike known as a winners athletes shoes. According to Graeme Newell (emotional marketing expert) Nike answering to how Nike built a brand with Universal appeal because they make good advertising and they use different people who are from nations and cultures.

MARKETING MIX
PRODUCT
Nike shoes deliver value to its customer through product features, design, quality, size, warranties and variety.

Nike shoes appear in augmented product section in customer-value hierarchy because Nike always provide high level quality product at a reasonable. Nike offer to customer stylish, colorful, fashion and comfortable shoes. In addition it has strong customer services and warrantee processes. If the customers have a problem they can get easily contact retailer or directly
apply the company.

Nike is a leader in sports equipment research and development. Because Nike identified a gap in the sports shoe market –a shoes which mimics barefoot running in order to strengthen runners’ feet and legs, giving them more power and speed while reducing the risk of injury. (Financial Review, n.d.)

Nike uses latest technology and always try to develop its product For example: Flywire and Lunar Foam technologies. (Marketingmixx,2011)

They have used different chemical which make shoes lighter such as Phylon or Phylite. This chemical has foam effect and protect the foot’s fragile bones from any possible incident. This technology uses high-performance and quality nylon threads where foot needs it. Nike new technology shoes good example for engneering and sports combination. This innovation has led to the lightest track spikes ever. (ICIS,2008 Latest materials improve sportswear performance) Nike does employ teams of four expatriates per each of the big three countries (China, Indonesia, Vietnam), that focus on both quality of product and quality of working conditions, visiting the factories weekly. ( UNC, n.d.) A Various product can be supplied for sports industry for example sports balls, eyewear, skates, bats and other equipment for sports activities.For example Nike and Apple are partner now for new product , Nike+iPod Apple said that the partnership is meant to take what people do naturally — like running — and make it better. (Macworld,2006). This can be another way of customer satisfaction and creating and delivering value by providing different product. PRICE

Acording to Charlie Fewell, President Charlie Fewell & Associates Memphis, Tenn. Understanding your customers’ values will lead you to develop products and services that can provide high profit-potential for your business. If you are delivering the quality and the value that will keep your customers coming back for more. Once your customers become convinced of the value of what you offer, they will be far less concerned about the price. (Bloomberg Businessweek, 2008) Customer demand is important factor which is determined by consumption habits. Also income and market geographic conditions and other similar products may directly affect customer demand.

In addition, customer demands is the dynamics of the relationship and how these demands force the process, companies can address the request energy into positive channels leading to a better product that customers are excited about and willing to pay for. It’s pricing structure has planned to compete to other competitors.The raw material and manufacturing cost of Nike are relatively cheap, but marketing the product to the customer is expensive. (Kotler&Armstrong 2012 p34) The prices of Nike shoes are changeable with size and comfortable but average price for good pair of shoes between 70 and 200 dolars. (Nikestore, n.d.) Nike sometimes offer low price for old fashion shoes in order to compete. Value is delivered to customers according to their need and status quo, quality plus price reflecting product, its all status conscious customer required. Product reflecting its price is enough value which this kind of market is seeking of.

PLACE

Nike is a very continental because it has its individual stores and also available at major malls and departmental stores selling shoes all around the world. They just have more than 20.000 retailers in USA and also in other 200 countries. Auxiliaries and other licenced shop also sell nike products too. One of the easy way of getting it is to order via online. Making the product available all the time is the most efficient way of building long-term relationship that enable to the companies create customer satisfaction and capture value from its customers.

PROMOTION
Promotion is another way of delivering value to customer. Companies can communicate its customer trough promotion strategies and can deliver a consistent brand image to its customers. (Kotler&Armstrong,2009 p.59)

Nike’s marketing strategy is in many ways the reason for the companies success. Nike is now positioned as a premium-brand. Nike draws customers with a marketing strategy centering around a brand image which is made up of a unique logo and the advertising slogan: “Just do it”. In many ways NIKE promotes its business through T.V. ads, magazines, and with many player sponsorships. 1982 was the year Nike aired its first ever T.V. ad during the New York marathon. Since then, Nike has won two Emmys in best commercial; these two commercials were “The Morning After” and “Move”. A big part of Nike is their player sponsorships. Without any of the sponsored players, Nike would not have been have become the strong competitor they are today in the sporting goods industry. One of main reasons behind Nike’s success all started with one guy as the face of the company, and he still is to date. In 1984, Nike sponsored Micheal Jordan to be a Nike player and be part of many other athletes before him. Nike’s image grew rapidly for many years after the sponsorship of Michael Jordan and Nike remains one of the only companies to have their foot print in every sports league around the world. (the-nike-wiki.n.d.)

References

1. Bloomberg Businessweek, 2008, Delivering Value to your customer.Retrieved date 03.08.2012 http://www.businessweek.com/smallbiz/tips/archives/2008/05/delivering_value_to_your_customer.html 2. Dillonsblogmarketing, 2011 Nike coporation missian vision Retrieved date 15.12 2012: http://dillonsblogformarketing.wordpress.com/2011/06/01/nike-corporation-mission-and-vision-statement/. 3. Financial Review, n.d. Nike: Product development from concept to customer. Retrieved date:14.12.2012: http://www.afrbiz.com.au/case-studies/nike-developing-nike-free/Page-1.html. 4. ICIS,2008.Latest materials improve sportswear performance. Retrieved date; 02.12.2012 http://www.icis.com/Articles/2008/08/04/9144388/latest-materials-improve-sportswear-performance.html. 5. Ledden, L., & Kalafatis, S.P. (2010). ‘The Impact of Time on Perceptions of Educational Value’. International Journal of Public Sector Management, Vol. 23 Iss: 2

6. .Kotler ,P.,Armstrong,G.,Stewart,A.,&Denize ,S.,2012 Principles of Marketing 5th ed. Pearson, Australia. 7. Macworld, 2006, Nike and Apple partner for new product Retrived date : 01.12.2012 http://www.macworld.com/article/1050989/applenike.html>. 8. Marketingmixx,
2011.Marketing mix .Retrieved date 05.12.2012. http://marketingmixx.com/marketing-plan-2/164-marketing-plan-of-nike.html. 9. Nikestore,n.d. Women Shoes, Retrived date : 01.12.2012 http://www.nikestore.com.au/womens-shoes/i1033896__1033951__