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Nike Marketing India
Nike Marketing India
INTRODUCTION
The company taken into study is Nike and the scope of study is the marketing of Nike in India. Nike is the largest seller of athletic footwear, apparel and equipment in the world with subsidiaries in over 200 countries across the world. Nike appeals to customers with a marketing strategy centered on a brand image that is attained by distinctive logo and the advertising slogan "Just do it". Nike's logo, the 'swoosh' is thought to be one of the best logos ever designed and has had a high level of recall value. Nike's operations in India began in 1996 when the athletic footwear market was dominated by Reebok and Adidas.
ECONOMIC FACTORS
Worldwide operations of Nike have been affect by the Asian economic crisis. Nike footwear and clothing production is concentrated in Asia. The increase in material and labor costs has added to the fall in revenue. Indian economy has been one of the best performers in the world in recent years. The annual growth rate of 9.6% and 9.2% in 2006 and 2007 have been impressive and added the purchasing power of middle-income group in the country. However, growth has been vulnerable during the recession. As a result, growth projections for 2009 have been revised down to 6.5%.
SOCIAL FACTORS
The younger generations quest for involvement and professionalism in sports have determined the success of marketing campaigns. People are more fitness conscious. Consequently, exercise and fitness clubs are gaining reputation. The resulting surge for quality sports apparel and equipment has increased prospects for development. Upscale of labor and factory conditions in production facilities at manufacturing units and the sponsoring of social events has increased the 'Social Responsibility' image of the company.
TECHNOLOGICAL FACTORS
Quality of product owes in large part to the use of valuable information technology and its application in production and distribution function. Advantages of economies of innovation, design, segmentation and differentiation have depended heavily on the effective use of management information systems. Nike India leverages technological advantage from its leadership status and strong international presence.
COMPETITOR ANALYSIS
Competition is very fierce due to the number of multi-national and Indian companies competing for sales. The Indian market represents a complex structure where sportswear brands like Nike, Reebok and Adidas as well as lifestyle brands like Puma, US Polo and Indian Terrain are fighting it out in the sports lifestyle segment. India is the only market where Reebok has sprinted ahead of Nike and Adidas. Reebok owns 40% of the market share, followed by Adidas (20%) and Nike ( 15%).
WEAKNESS
Globally, Nike is a trendsetter in terms of design and technology. In India, however, Nike has been relatively slow in bringing the latest designs. Brand awareness among Indian youth is increasing and delay in introducing the latest fashion trends in the Indian market has affected the market share of Nike. Allocation of funds for marketing of Nike in India is significantly low when compared to its international advertising budget. Increase in marketing expenditure is required to penetrate a market that is already dominated by global giants Reebok and Adidas. Controversies regarding the allegations of having inhuman sweatshops in overseas factories have trimmed down brand image. Although sweatshops can be seen as an advantage for production and cost, they alter the representation of a socially responsible organization.
Fully owned retail establishments of Nike has been an integral part of Nike's distribution worldwide. Nike in India operates in a partnership with Sports Station India Private Limited. Nike does not control the distribution network. This association proscribes the establishment of Nike's own retail outlet in India.
OPPORTUNITIES
Athletic shoes and apparel have become a staple in wardrobes worldwide as a result of increasing fitness and fashion quotient among both men and women. India's huge population base, rapidly growing economy, rising income levels, changing lifestyle and consumer preferences has boosted the growth of sportswear industry. Large youth population and increased brand awareness among younger generation allows Nike to leverage its international brand status and market effectively. Nike is increasingly been perceived as a fashion brand and the trend for fashion merchandise creates opportunities to develop increased variety of sports and fashion accessories that tend to be associated with higher profits. International operation enhances scope to utilize global marketing events to support the brand locally. The emergence of e-retailing and customer designed internet merchandise has resulted in elimination of middle men in the distribution chain.
THREATS
A part of manufacturing components are sourced from foreign countries. International operations are exposed to fluctuations in exchange rates. Purchase and sale of goods are contracted in different currencies that are not stable over long periods. Such an exposure could result in manufacturing or selling at a loss. The retail market for sports apparel and footwear is highly competitive. Reebok and Adidas dominate a lion's share of the Indian market. The acquiring of Reebok by Adidas will earn the Adidas group significant competitive advantages worldwide. The market trend is witnessed by increasing cost of production inputs and labor costs supplemented by a highly price sensitive customer base. Increasing inflation in the Indian Economy may spark a cut in customer spending.
before the establishment of Nike stores in the country. This was a period when India didn't really figure in Nike's marketing promotion activities. Indian sportswear market had been characterized by unprecedented complexity and market dominance by Adidas and Reebok that had entered the market prior to Nike. Adidas and Reebok enjoyed a lion's share of the Indian market. Nikes penetration into emerging markets like India and China had to be backed up by high advertising expenditure. However, Nike's marketing budget globally was $5 billion (ranging from 11% to 15% of sales annually) whereas the spending in India was significantly lower. During this phase, Nike carried its international brand image into the Indian market. The marketing strategy aimed at capturing the Indian market by airing Nike's portfolio of athlete endorsements. Though this gave the impression of a cost saving system that completely wiped out advertisement developmental costs, its effectiveness was at a low level. The rate of increase in sales in the Indian market was measured. Advertisements endorsed by international athletes were highly represented football, basketball and golf etc., which were the centre of attraction in Europe and America. However cricket, football and tennis dominated sports in India. A basketball advertisement endorsed by Michel Jordan was besides the point to the masses. Reebok, on the other hand Indianised its ad campaigns right from the start, signing on high profile sportsmen like Mohammad Azharddin (Captain - Indian Cricket team ), Bhaichung Bhutia ( Captain - Indian Football team) and Dhanraj Pillai ( Captain - Indian Hockey team ). Reebok built its promotions around cricket, not only through endorsements but also through sponsorships of regional and local cricket associations. Even Adidas changed its advertising approach by signing Indian tennis star Leander Paes and Cricket icons Sachin Tendulkar and Virender Shewag. Nike owned close to 40 stores at the end of 1998, whereas Reebok through its aggressive marketing had earned market dominance and invested in nearly 100 retail outlets by that period.
40%. The success of the Cricket promotions was followed by Nikes foray into cricket accessories and equipment.
blogs in the market as a mechanism for self-expression. As this next generation gains momentum, Nike's marketing focus should shift towards Internet advertising and partner the youth in their movement by communicating Nike as a forum for expression and not as a salesfocused giant.