STRATEGIC MARKETING Case 2-2: Nike Inc.

SUBMITTED TO: Sir Mohammad Ahmed Butt SUBMITTED ON: December 30th, 2009 SUBMITTED BY: Fatima Ali

10 6. 8-9 4.1 Segmentation strategy 7. Recommendations to Nike’s management……………………………………… 14 9..6 Promotional strategy 7. SWOT Analysis ………………………………………………………………. 15 . 11 7.2 Weaknesses 4.1 Strengths 4. Introduction……………………………………………………………………… 5 3.7 Channel 8. Attachments…………………………………………………………………….4 Threats 5.4 Product strategy 7. Executive summary……………………………………………………………… 4 2. 6-7 4.5 Pricing strategy 7.2 Targeting 7.Nike Inc.3 Positioning 7. Strategic Objectives……………………………………………………………. 2 CONTENTS 1.3 Opportunities 4. Marketing strategy……………………………………………………………12-13 7. Market driven Strategy Objectives ……………………………………………. History of the Case ……………………………………………………………..

M. .A.Butt for providing us the opportunity and guiding us through the making of this report. 3 Acknowledgement Letter Firstly I would like to thank Almighty Allah who is the most Beneficial and Merciful. I hope that in future we will engage in such kind of activities that contributes worthy knowledge in our study. It was a great experience for in making this report and it was a great learning opportunity as I got to know more about Nike and I got the opportunity to apply my skills. I am also thankful to my course facilitator Mr.Nike Inc.

the marketing strategy is discussed that covers the segmentation strategy. targeting. was founded in 1962 by Bill Bowerman and Philip H. 4 EXECEUTIVE SUMMARY Nike Inc. Nike has attained a premier position in the market but in 1998. and subsidiary ventures and they have traditional as well as non-traditional distribution channels in more than 100 countries globally. Furthermore. Nike manufactures and distributes athletic shoes in the global market and 40% of its sales come from athletic apparel.Nike Inc. positioning and channel distribution of Nike and the product. In this report. Blue Ribbon Sports. the company has to face the issue of exploiting overseas workers and the changing consumer needs negatively affected the sales of Nike. Today. In the end. . Nike came with low-cost and high quality products for the American people. Since Germany dominated the domestic market in America. market driven strategy Objectives. sports equipment. I have given some recommendations to Nike’s management to drive it towards success. price and promotional strategy it must adopt. Knight as a partnership under the name. I have discussed the case history of Nike that majorly covers the child labor problem and the problem of change in consumer’s preferences after which I have done the SWOT analysis and have come up with strategic objectives.

Nike Inc. finance and production components after which I have prepared this report. Knight deemed my services as a strategic marketing consultant to drive Nike out of the crisis it is facing. legal. However. Philip H. Further in the report. I have studied both internal and external viewpoints in order to come up with a liable solution. Nike is facing child labor problems that are negatively affecting the sales of Nike. customer. I have come up with the marketing objective of Nike and strategies to cope up with these objectives to drive Nike out of this crisis successfully. organizational. Moreover. technological. Mr. I have also analyzed the social. it is also because of the changing preferences of the consumers that Nike’s market share is decreasing. 5 INTRODUCTION The chairman and co-founder of Nike. economical. international. competition. . For this purpose. marketing.

Nike became an Establishment. Nike was co-founded by Knight who sold shoes out of his car trunk. H. The new team came up with an idea to reinvent Nike and they moved on to non-traditional market and came up with products for extreme sports enthusiasts. Generation Y is individual oriented but the kids still do not know that Nike sells skateboard shoes as well. The golfer. sales rose only by 2%. who was trained to drive traffic towards Nike. In the millennium. Retails stores were closing and unfavorable currency served as another major problem. Nike introduced literacy programs for the workers in Indonesia and some basic improvements were made. budget and marketing plan. Nike introduced boots and casual leather shoes and Nike dominated the category with the sales of 40% in the US. A chief financial officer was hired by Nike from PepsiCo. The lean focus adopted by Nike increased the net income by 13%. sales were steady. A separate unit called ACG i. Philip. However. Nike replaced solvent toluene with water based cement on most production lines. Acura with NIKEMN license plates was the only American CEO to have corporate logo tattooed on his ankle. Nike entered cyberspace and educated its executives about the Web. Now was the time for the executives at Nike to consider the costs as well and they had to hold their expenses to increase the revenues.e. all conditions gear was made and this built its own staff. ACG knew that coming up with cool new products will not solve the problem but the company needs a new image. “Just do it. The payroll of Nike was trimmed by 1600 and most of the vice presidents at Nike have worked there for less than two months except or one who worked for 27 years. sales reduced by 8% but even after the recovery of the domestic market.” Since this outcry there was little control of Nike over its suppliers as Nike was getting negative press converge and students were protesting against Nike at the college campuses. In 1997. The sales of sneakers and sports apparels were facing challenges due to the shift in teen fashions and economic downturn in Asia. in 1998.com to increase online sales. The growth at Nike during 1994 and 1997 were fast and it was successful in blowing the competitors such as Adidas and Reebok as its sales suddenly rose and investment also increased. Nike counted the overseas markets or the increase in sales but since the Euro was weak. Nike promoted its products in the store and print ads were printed. and many other vice presidents were hired from many other good companies. Nike was blamed for exploiting workers by paying minimum wages to the workers in the Third World countries and this was a major damage that could not be undone but to reduce the impact. 6 HISTORY OF THE CASE It was in 1998 when Nike was blamed for exploiting the overseas workers and this was when the managers were deciding not to hire people less than 18 years of age but the Chairman of Nike. In 1992. the sales of Nike quadrupled and in 1996.Nike Inc. its headquarters today are in Beaverton and with the emergence of buccaneer style shoes. Knight just ended up saying. Tiger Woods was one of Nike’s top sponsored athletes. The customers .

For advertising. however Knight acknowledges that creating a big company culture is not an easy task. Nike is selling its products in millions and is meeting the real challenge by delivering on time. It was increased the financial accountability and have made the employees more conscious about sales. Today. 7 were also allowed to customize their products by choosing their own color and design. sales rose so much that it became hard for Nike to fill up the demand. In 1999.Nike Inc. . it pays the agency to make videos that highlights the products that are being sold by Nike. Polo shirts and shorts were more in demand that did hurt the sales of higher priced items.

If serious and immediate actions are not taken. WEAKNESSES 1. Competition: Nike is facing fierce competition. 3. Nike produces highest quality products which follow almost all of the quality standards. 8 SWOT ANALYSIS STRENGTHS 1. It had evolved from being a $100n million to $9 billion company. None f the labor unions has gone against Nike. 2. The competitive arena is continuously expanding. Competition: Nike is enjoying formidable competitive position vis-a-vis competitors. The company is not market oriented which is proving to be its weakness. 4.Nike Inc. it’s not facing untraditional competition from outside the boundaries of direct competition. Nike would face immense loss in respect of consumers’ loyalty which is decreasing day by day. 3. consumers are exhibiting fewer tendencies towards Nike brand and its products. Customer Component: Consumers are immensely seeking out value with a weapon to determine the fate of any brand. Nike has failed to meet consumers’ expectation about quality of sportswear. The operational system including processes has been replicated in other countries as well. Organizational Aspect: The strategic dimensions including vision. Considering Nike’s labor practices and changing Asian fashion. It shows that Nike is compensating its labor well. mission and strategic objectives need upward treatment. Labor Component: Labor environment in the USA portrays stable position. Production Aspect: Production at Nike is according to high standards. This includes both. The new competition has come from non-branded leather and hiking shoes. 2. Nike has never faced financial problems. Although Nike gave tough competition to Adidas and Reebok in past. Financial Component: Nike is financially very sound and has enough funds to support any of its activities. It has given very tough competition to Adidas and Reebok and has maintained its leadership in sneakers market. . direct and indirect competition.

Human Resource Management: HRM at Nike is a main weakness and needs improvement. Internationally. THREATS 1. Legal: The industry is confronted with legislations and its covenants to safeguard the interest of stake holders. which is a serious threat for the company. . 3. Marketing Aspect: Marketing management needs significant improvement since they have failed to form favorable image of Nike among its consumers. Education standards are also getting higher with time. This has made the consumers more rational and less emotional when it comes to purchasing. Social: The industry is facing a social shift in terms of heroism and females are coming in the main stream of industry. International Component: International component for Nike apparently seems less favorable and the parent country/company can feel consequential impact. The company is late to internalize the social shift. people are raising their voice against Nike’s illegal act of engaging child labor. Technology: Nike is equipped with contemporary information technology and all the productions processes of Nike use high and up-to-date technology. People are boycotting Nike’s products. OPPORTUNITY 1. it’s a threat for Nike. 5.Nike Inc. Since Nike is not abiding by the laws in a holistic manner. 2. 9 4.

The situation must be completely studied and on the basis of the analysis of the situation. More consideration should be given to the aspect of social corporate responsibility. New strategies must be defined to increase sales for which Nike must come up with new products to satisfy the changing needs of the customers. 9. 10 STRATEGIC OBJECTIVES 1. 3. 6. 7. they must be properly treated and they should be compensated with both monetary as well as nonmonetary benefits. Adding flexibility especially in terms of communication will play a major role in the success of Nike. . New market segments must be defined to obtain higher sales. Steps to make operations fasters and easier must be taken by Nike’s management for which new product types must be introduced. 5. Employees should be consulted while the strategic decisions are being made and ideas must be shared with all the departments. a long run strategy must be defined to counter to the child labor and other problems such as change in customer preferences. 4. Initially. It is essential to provide strong leadership to Nike by replacing Knight with someone else. To refrain the employees from leaving the organization. 2. 8.Nike Inc. Nike must redefine the mission and the vision of the company that would assist them in focusing more on the market and the consumers.

Customization of products must be provided to increase market coverage. The moves of both direct and indirect competitors must be closely studied to come up with the idea what the competitors might be coming up next with and to nullify their strategies by developing a competitive strategy. All the stakeholders involved in the value chain must be properly treated to maintain favorable relationships with them so that Nike can cater to the changes occurring in the environment in a better way. It is essential for Nike to know the changes occurring in the needs of the consumers for which extensive market research must be done consistently. 2. 3. 4.Nike Inc. 11 MARKET DRIVEN STRATEGIC OBJECTIVES 1. Favorable image of the brand “Nike” must be developed in the minds of the consumers for which the positioning of the brand has to be revised. 6. 5. The entire focus should be on the consumers and their changing preferences and the functions of the company must be defined accordingly. .

Besides this. Nike must sponsor sports events to make the consumers aware of their presence in the market but before this they must develop their corporate social responsibility. points of parity and points of difference must be identified to tell the people the way in which Nike is unique from its competitors and why the consumers should buy Nike’s products over the competitor’s products and positioning must be done in a way so that the consumers are reluctant to switch to competitor’s products. For this. . various tools such as one to one marketing and experiential marketing must be done. Only if the new products are profitable and they match the capabilities of Nike should they be introduced in the market. Only on the basis of distinctive capabilities must Nike target a segment so that Nike can serve these segments in a better way than its competitors.e.Nike Inc. All this would help make consumers loyal to Nike. the place of the brand in the minds of the consumers. psychographic segmentation must be done and the lifestyle of the people must be closely studied in order to know who the potential and the existing customers are so that Nike comes up with better products that match their personalities. the brand image in not very favorable in the minds of the consumers as people are easily switching to competitor’s products and for this Nike should work on its brand image. in depth analysis of profitability and growth must be done by Nike. Despite the fact that Nike’s products are unique. However. Moreover. females and elders. before coming up with new products. 12 MARKETING STRATEGY Segmentation Strategy: Nike must identify new market segments such as non-sport segments should be identified and they must be worked on after which only those segments should be served that are profitable. the demographics. For this. Besides this. those sports segments such as swimming and skating that are not yet explored must be served. Targeting Strategy: Once the segments have been identified. Nike must do proper analysis to identify the competitive advantage of the new products before they launch the products in the market. These segments consist of off those who like adventure such as the children. the competitors’ capabilities must be studied and evaluated and they must be compared with that of Nike. Besides this. Positioning Strategy: The way the consumers think about the brand is called positioning i.

experiential marketing must be done to give the consumers the true essence of the brand and they should sponsor various sports events. since the retail chains are closing down. Nike should work upon their distribution system and the automatic replenishment system must be made more efficient. Customization facility should be provided to the consumers as this is the best option to cope up with the changing needs of the customers. billboards and radio. at retail chains and on the Internet. However. they must improve their products and should provide better quality products. To build a stronger image of the brand. Nike must offer loyalty cards to the consumers. Nike must do Internet marketing and promotion to increase sales. They must also come up with a new product range and must introduce new products for the existing market as well as new products for new market segments. For this. However. Internet.Nike Inc. For this. 13 Product Strategy: Since Nike is continuously losing market share. therefore this factor should be worked upon. Channel Strategy: Currently. they should come up with products that are more comfortable and products with new and better features. Nike has to take some other steps. A long run strategy must be developed and new marketing plans must be introduced but the consumer needs should be taken care of since it is essential to link the product with consumer’s preferences and to promote them well to generate demand. All members of the channels must be treated as partners to provide better value to the consumers in an easy way. It is impossible to generate sales by selling low quality products at high prices. Promotional Strategy: To increase market share and the number of the consumers. Internet is a very good option for Nike to sell its products and it is convenient for the customer as well. Nike must do advertising through various mediums such as sports magazines. Pricing Strategy: Consumers have become more savvy and intelligent and so they want value pricing. therefore Nike should opt for value pricing. the products of Nike are sold at Nike stores. . consumers are more concerned about the quality of the product and not the price so Nike should work on the quality of its products and should highlight the unique features of their products. To make consumer loyal to the brand.

To develop brand salience.Nike Inc. Since the employee turnover is high. New segments in the market should be explored to increase market share and sales. Nike should focus more on corporate social responsibility so that a positive image of the brand in developed especially in areas where Nike’s products are sold the most. People should be made aware of ACG products for which Nike must sponsor extreme sports. • . Nike must opt for massive advertising. 14 RECOMMENDATIONS TO THE MANAGEMENT • • • • • • • • Nike must stop all child labor practices. Nike must adapt clear consumer focus in all its practices. Nike must understand that the competition is tough and steps should be taken to nullify the competitor’s strategies. Nike must take steps to reduce it for which they must provide flexibility and authority to the employees. A CEO with better leadership skills must be appointed for Nike.

N. 15 ATTACHMENTS Cravens. Sir Mohammad Ahmed Butt .W. (2008). F. Strategic marketing.Nike Inc. McGraw Hill. 8th Edn. D. & Piercy.

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