Marketing Principles

INDIVIDUAL
ASSIGNMENT

Analyzing marketing environment of

Nike Inc corporation

Full name: Nguyễn Đăng Mạnh

Class: IB1602

Student ID:

Lecture: Bùi Thị Hạnh Thảo

Course: MKT101 – Marketing principles

Date: SPRING 2021

 Table of contents

1. Introduction
● Vision & Mission
● Target customer & Product

2. Microenvironment factor:
● The company
● Suppliers
● Marketing intermediaries
● Competitors
● Publics
● Customers

3. Macro Environment factor:

● Demographic
● Economic
● Natural
● Technological
● Political
● Social and Cultural

4. How companies can react to the marketing

environment?
5. References
1. Introduction:
Nike Inc is a multinational company with a headquarters in the United
 States. This company is design, development, manufacturing, and
worldwide marketing and sales of apparel, footwear, accessories,
equipment, and services. It was founded in 1964 with the old name Blue
Ribbon Sports by Bill Bowerman. The first Nike retail store opened in
1966 and became a Nike brand shoe on May 30 1971 and went public in
1980. In the early 21st century, Nike had retail outlets and distributors
in more than 170 countries ( Britannica, 2010) [1]. In addition to its own
branding, Nike markets its products under Nike Golf, Nike Blazers, Nike
+, Nike Pro, Air Jordan, Air Max. In 2014 the brand was valued at $19
billion (€17,5 billion), Became the most valuable brand among sports
businesses (Nike company blog, 2015) [2].
● Vision & Mission
- ‘’Our mission is what drives us to do everything possible to expand
human potential. We do that by creating groundbreaking sport
innovations, by making our products more sustainably, by building a
creative and diverse global team and by making a positive impact in
communities where we live and work’’ (About Nike, 2021) [3]. This
statement appears first when we come to the Nike official website
clearly shows what the company's mission is.
● Target customer & Product
- ‘’ Nike primarily targets consumers who are between 18-40 years of
age.
The goal is to equip teens under the age of 20 with athletic apparel,
especially in sports like football and soccer.
Nike targets households and teens that have a particular desire to
look athletic and fashionable at the same time.
All socioeconomic classes are targeted as part of the segmentation
of Nike’s demographics.
Most marketing occurs in the United States for Nike, but this is to
increase the market share of their athletic apparel more than it is to
 advertise their footwear.
No single customer accounted for more than 10% of Nike’s overall
sales in the last year, proving that the company has a very diversified
market. ‘’ (brandongaille, 2015) [4].

- Nike markets its products under its own brand, as well as Nike Golf,
Nike Pro, Nike+, Air Jordan, Nike Blazers, Air Force 1, Nike Dunk, Air
Max, Foamposite, Nike Skateboarding, Nike CR7 (statista, 2021) [5].
They also collaborate with famous athletes and celebrities to create
subsidiaries with their own brands as Brand Jordan ( Jobs nike, 2021)
[6].

2. Microenvironment factor:
Nike's market is global; seeing every single person as a potential
customer. The bigger the range, the more potential customers. Nike
allows customers to personalise their products. Nike works to their
customer's needs ( justanalyseit, 2013) [7].
● The company
- After founding Blue Ribbon Sports, the old name of Nike, the company
had a problem because Adidas and Pumas dominated the market. In
1965, the ever-inventive Bowerman proposed a new shoe design to the
Tiger shoe company. This design would turn out to be both a major
success and source of conflict between Blue Ribbon and its Japanese
supplier. The shoes are called Tiger Cortez. Around the time of its
success, though, relations soured between Blue Ribbon and Tiger. Blue
Ribbon claims that the Japanese company was seeking a way out of its
exclusivity deal with Blue Ribbon and sought to sink the company. Tiger
claims to have discovered Blue Ribbon Sports selling their own version
of the Tiger Cortez under a new line of shoes they called "Nike."
(thestreet , 2019) [8].
● Suppliers
- In terms of distributors, Nike has more than 1,152 retail stores in the US
and internationally ( statstic, 2020 ) [9], and employs about 76,700
workers worldwide (statista, 2020 ) [10], and outsources nearly all of its
generation of footwear, clothes to third-party supplies. To function
profitably, Nike needs to get a good value on products and supplies and
also offer good value to its customers with good items. In 2019, Nike
reported revenue of $ 39.11 billion, up from the previous year's $ 36.4
billion ( sec, 2019 ) [11].
● Marketing intermediaries
- Jordan Brand is one of the longtime partners of Nike, increasing the
revenue of Nike a lot. In 1984, Nike and NBA player Michael Jordan
collaborated to launch one of the most iconic athlete-endorsed brands
of all time is Jordan Brand and currently, the Jordan brand is in the top
10 best selling sneakers of all time ( businessinsider, 2020) [12]. The
Jordan Brand had revenue of $3.1 billion in the fiscal year ending May
2019 - 8% of company revenue ( forbes, 2020 ) [13]. In 2020, the
Revenue of Nike plummeted 38% for the quarter amid the closures of
physical stores around the globe because covid 19 but the Jordan
Brand, where revenue grew up 15% for the year to $3.6 billion ( forbes,
2020) [14}, with that revenue of Jordan brand contributing not a small
amount of Nike's revenue.
● Competitors
- Nike's top competitors include Anta, lululemon Athletica, VF
Corporation, Reebok, ASICS, FILA, Puma, Under Armour, Skechers, and
New Balance and the biggest is Adidas ( craft, 2020) [15].
● Publics
- The Nike Training Club App, the app made by Nike helps customers
reach their fitness goals with expertly designed workouts from our
world-class Nike Master Trainers. This way can help Nike get a direct
review of the product, what needs to improve the products ( Nike, 2020
) [16].
● Customers
- According to Nike's revenue worldwide from 2017 to 2020, by region
(statista, 2021) [17] Majority of the potential customers are located in
North America, Europe. These regions are considered as developed
 economies and the purchasing power of parity sustainable. However,
the recent demand from Asia has shown an increasing trend typical of
China (statista, 2020) [18].

3. Macro Environment factor:

● Demographic
- In 2017, Nike has gotten off to a slow start. Three-quarters under, in
March the company reported total global revenues up 6% year-over-
year but slowing to 5% in the third quarter ( News Nike, 2017 ) [19]. The
largest global market, North American just grew 4%. To solve that, Mark
Parker, Chairman, and CEO announced its “Triple Double” strategy -
focused on doubling down on innovation in performance and style,
speed to market, and direct connections with customers through
digital, membership, and personalization. After that one week, Nike
followed with an announcement of its “Consumer Direct Offense,” to
accelerate product innovation, move closer to the consumer through
initiative, and deepen the company’s one-to-one connections with
customers. Then, Nike performs that plan by a focus on 12 Key Cities in
its Consumer Direct Offense: New York, London, Shanghai, Beijing, Los
Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan.
These are the places the company predicts will generate over 80% of
Nike’s projected growth through 2020. For Nike, the company’s best
customer prospects are active, high-earning young people, for who else
can or will spend more than $100 for a pair of sneakers and 12 key cities
are the best place to find them. These cities are also the places where
consumer trends are made and Nike relies upon consumer trends in
athletic fashion and function to drive its business. As bellwether
markets where trends start, Nike can effectively use them as test
markets for new styles and designs to determine which have staying
power and should be distributed to regional markets as those trends
start to filter out and be adopted there. These 12 Key Cities will be
Nike’s incubator for new products, allowing them to quickly cut out the
losers and ramp up production on styles that have proven successful
( forbes, 2017 )[20]. The proof was that Nike's full year revenue
increased 6 percent to $34.4 billion ( News Nike, 2017 ) [21] and Nike's
North American revenue still grew ( statista, 2020 ) [22].
● Economic
- Even Nike, often lauded as one of the strongest global brands in the
retail industry, is taking a hit from the coronavirus pandemic. The
Portland, Oregon-based sneaker maker reported an unexpected
quarterly net loss and a sales decline of 38% year-over-year, as its
business was hurt from its stores being shut temporarily, and online
revenue was not enough to make up for that. Its inventories also piled
up, weighing on profits, as its wholesale partners such as department
stores also had their shops shut and took in fewer orders for shoes and
clothes. Nike shares were recently down around 4% in after-hours
trading. Total revenue was down 38% to $6.31 billion from $10.18
billion a year ago. Sales in North America were down 46%, while sales in
China were down just 3%, with many of Nike’s stores in that region
reopening sooner during the pandemic than in the U.S. Sales at the
Converse brand dropped 38%. For the Nike brand, footwear sales fell
35%, apparel was down 42% and equipment revenue tumbled 53%, as
sports and many recreational activities have largely been put on hold
due to the Covid-19 crisis ( cnbc , 2020) [23]

● Natural
- Nike is improving environmental impact by stewarding where the
largest volume of materials comes from through Nike’s Sustainable
Materials Principles. They are focused on reducing impact by prioritizing
more sustainable options under each of three material categories:
- Grown : Materials originating from a plant or other bio-based source.
Examples: Sustainable Cotton: Materials made from cotton fiber. Wood-pulp:
Raw material made from wood. Natural Rubber: Natural rubber
- Derived: Materials originating from a synthetic base.
Examples: Polyester: A fabric made from petroleum-based fibers.
EVA: Foam rubber is a soft yet durable polymer of ethylene and vinylacetate.
Flyleather: An engineered leather material that looks, feels, and smells like
natural leather, made by binding at least 50% reclaimed leather fibers
together in an innovative, environmentally sustainable water-powered
process.
- Raised: Materials originating from an animal
Examples Wool: Fabric is woven from the curly hair of sheep and other
animals.
 Down: Fine, soft, underlying feathers collected from young birds or certain
breeds of adult birds.
Leather: Leather made from tanned hides. ( purpose nike, n.d ) [24]
And most recently, Nike has just released a new shoe made from recycled
waste material including plastic water bottles, t-shirts, and textile scraps.
( forbes, 2020 )[25].
● Technological
- Nike has integrated technology to develop its products fast such as Nike
Air, Nike Zoom, Nike Shox, Nike Lunarlon, Nike React, Nike ZoomX.
Examples Nike upgraded its air experience to Zoom Air in 1995, a
pocket of air that includes a series of highly tensioned polyester or
nylon fibers that snap the Zoom Air bag back into position after
compression or about Nike Zoom: Zoom X foam on marathon shoes
that pairs with carbon fiber plates, all with the purpose of building
speed. Nike wants to expand Zoom X beyond the marathon racer but
will continue to build upon React, updating more sneakers with the new
versatility of foam that completely erases the use of EVA( forbes, 2018 )
[26].
● Political
- For big companies like Nike, the scandal is inevitable. Scandals involving
high-profile running coach Alberto Salazar, accused of both doping and
mistreating athletes, cast a dark cloud over Nike’s distance-running
efforts. Top executives who were also its major track boosters have
recently stepped aside, stirring uncertainty throughout the track world
about Nike’s future support. Nike to temporarily close its retail stores
that saw employees protest on its campus, former female executives
file a discrimination lawsuit, and athletes draw attention to complaints
about company policies that penalized women for getting pregnant. Not
only did this cause the company much financial hardship, but it also
attached a negative public image to the company which will have a
lasting effect ( washington post, 2020 )[27].
● Social and Cultural
- Nike has to recognize cultural considerations that are present in today’s
society. Some of the core American values are relevant to Nike’s
acceptance in the marketplace, such as activity, fitness and health,
progress, and achievement and success.Activity is a core American
 value that people believe to be important in today’s society. This, along
with fitness and health, greatly contribute to the successful marketing
and selling of Nike products in the United States. American families can
make fitness and health a part of their family culture by exercising
together and tracking their progress with the use of the Nike+ app or
Nike+FuelBand. Nike+ helps consumers track their progress by logging
their activity and workout and viewing their progress over time, as well
as shares their progress with a dashboard with other friends using the
application ( taylorhaz wordpress , n.d )[28].

4. How companies can react to the marketing environment?

- The biggest threat for Nike is the economic downturn which will result
in the slowdown in purchases. This in turn will affect the growth of
Nike. Along with the decelerated sales labor cost and raw materials
prices are increasing, which in turn will affect the profit margin of the
company. This will make Nike’s Stock Fall down. In the 2008 recession,
Nike stock has fallen 28% but its recovery by almost 17% to levels of
$102 once economic conditions begin to show signs of improving. By
taking action, companies can often surpass seemingly uncontrollable
environmental events.
5. References
[1] from https://www.britannica.com/place/Beaverton

[2] from https://nikecompanyblog.wordpress.com/about-us/

[3] from https://about.nike.com/

[4] from https://brandongaille.com/18-incredible-nike-demographic-

segmentation

[5] from https://www.statista.com/topics/1243/nike/

[6] from https://jobs.nike.com/brands

[7] from https://justanalyseit.wordpress.com/2013/10/09/macro-micro-

markets/#:~:text=Micro%20Environment&text=Nike's%20market%20is
%20global%3B%20seeing,works%20to%20their%20customer's%20needs.
[8] from https://www.thestreet.com/lifestyle/history-of-nike-15057083

[9] from https://statstic.com/number-of-nike-stores-

worldwide/#:~:text=Number%20of%20Nike%20stores%20worldwide%20was
%201%2C152%20in%202019%20compared,the%20U.S.%20and
%20784%20internationally.

[10] from https://www.statista.com/statistics/243199/number-of-employees-

of-nike-worldwide/

[11] from
https://www.sec.gov/Archives/edgar/data/320187/000032018719000051/nk
e-531201910k.htm#s1D0392843FB855B0863DA34733FDD2EB

[12] from https://www.businessinsider.com/10-best-selling-sneakers-of-the-

year-npd-analyst-2020-7#10-nike-air-max-90-
1https://www.businessinsider.com/10-best-selling-sneakers-of-the-year-npd-
analyst-2020-7#10-nike-air-max-90-1

[13] from
https://www.forbes.com/sites/kurtbadenhausen/2020/05/03/michael-
jordans-1-billion-nike-endorsement-is-the-biggest-bargain-in-sports/?
sh=2d52bbef6136

[14] from
https://www.forbes.com/sites/kurtbadenhausen/2020/06/26/china-and-the-
last-dance-propel-nikes-jordan-brand-to-record-36-billion-in-revenue/?
sh=4622a7175057

[15] from https://craft.co/nike/competitors

[16] from https://www.nike.com/vn/ntc-app

[17] from https://www.statista.com/statistics/241692/nikes-sales-by-region-

since-2007/

[18] from https://www.statista.com/statistics/241724/nikes-sales-in-the-asia-

pacific-region-by-area-since-2007/

[19] from https://news.nike.com/news/nike-inc-reports-fiscal-2017-third-

quarter-results

[20] from https://www.forbes.com/sites/pamdanziger/2017/06/19/nike-to-

stay-out-in-front-with-biggest-data-of-all-demographics/?sh=37e1db48432c

[21] from https://news.nike.com/news/nike-inc-reports-fiscal-2017-fourth-

quarter-and-full-year-results

[22] from https://www.statista.com/statistics/241706/nikes-us-sales-by-

product-category-since-2007/

[23] from https://www.cnbc.com/2020/06/25/nike-nke-reports-q4-2020-

earnings.html

[24] from https://purpose.nike.com/sustainable-materials

[25] from https://www.forbes.com/sites/scottsnowden/2020/08/24/green-

gear-nike-space-hippie/?sh=73ac459672f0

[26] from https://www.forbes.com/sites/timnewcomb/2018/11/05/the-

technologies-that-define-sneaker-cushioning/?sh=2026fb0f356e

[27] from https://www.washingtonpost.com/sports/2020/10/07/nike-track-

oregon-project/

[28] from https://taylorhaz.wordpress.com/what-influences-nike/