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Nike: Marketing Program for new conceptual product / service

Prashant Kumar, Anirudh, Karan

Master’s In business administration, Golden Gate University

Ms. Sue Ann Hirschberg

October 19, 2022

Contribution:

Prashant Kumar- Marketing Strategy & Marketing Program

Anirudh –

Karan-

Executive Summary

In this report, we have selected the company “Nike” and “Carbon credit points linked physical and virtual

products” as conceptual product- service mix of the company. Our marketing plan will hover around this

conceptual product. Under marketing plan of the company, we will be discussing on following points/ sections:

Situation Analysis: In this section, we will talk about the various factors of situation analysis, how these factors

are impacting or likely to impact placement of conceptual product & services.

Market Research: In this section, we will talk about various data, opinion, competitors’ position, market needs,

consumer needs etc. which will help us in devising marketing strategy.

Marketing Strategy: In this section, we will discuss and use various factors of Marketing strategy to devise the

strategy which should be aligned with marketing strategy.

Marketing Program: Here in this section, we will discuss about various aspects of marketing plan like 4 Ps ,

branding strategy and perceptual map.

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Situational Analysis

Nike — a PESTEL analysis

NIKE — Political factors

The political factors help the entrepreneur appraise the degree to which a government intervenes in the economy or a

certain industry and how its decisions affect the present and the future of the company.

Overall, the US government has developed many initiatives centred on growth. The United States is a core

market for Nike, with the company generating approximately 41% of its overall revenue there in 2019.

Nike shoes are manufactured in 36 factories in the US by 5151 workers. In order to expand to other markets and

other business reasons, Nike has 517 manufacturing facilities in 41 countries.

The company has the most manufacturing sites in China and Vietnam (108) followed by Indonesia and Thailand.

China is one of the largest markets for Nike with revenues growing 22% in 2019.

As an international company, Nike has to take into account the tariffs that its shoes and other goods are subject to. In

the US, for example, the shoe companies pay as much as 25% in tariffs, one of the highest duties compared to other

industries.

In 2019, the U.S.-China trade tensions had begun to escalate when Trump threatened to increase tariffs on Chinese

goods — including all types of footwear, from sneakers to sandals by 10%. It was estimated that the tariffs would

cost American customers an additional $7 billion per year.

In an open letter to Trump, Nike and other 173 footwear companies urged the former President to reconsider his

tariffs on shoes made in China and “bring this trade war to an end.”
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Industry experts argued that the company would have been affected by the increase in tariffs in a small degree since

only 10% of Nike goods produced in China are exported to the American market.

Also, it has diversified its supply chain to include manufacturing sites spread in other countries on the Asian

continent like Vietnam, Indonesia and Thailand. That was a good business decision which has shielded the giant

shoe producer against the financial consequences of political power.

NIKE — Economical factors

In PESTEL’s analysis, the economical factors determine the economy’s performance by examining economic

growth, exchange rates, interest rates, unemployment rates, the state of the country’s infrastructure, taxes.

This factor affects the purchasing power of customers and could change the demand and supply dynamics of the

market. Which, in turn, affects the prices of products and services.

Did the 2008 economical crisis affect the giant sportswear?

Yes, it did. Customers were struggling with job loss and falling incomes which lead to a 12% drop in sales. Also, the

company’s stock lost as much as 28%.

Nike has adapted to the new environment, by undergoing a costly restructuring cutting costs and 5% of its

workforce, in the biggest job reduction in the company’s history. While other businesses went bankrupt, Nike

survived.

Once the recession was over, sales and stock recovered strongly.
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“During times of economic challenge, consumers will go to brands that they trust and can connect with. We have

not seen the economy have a dramatic impact on the sales of our products, not just in the high end, but also in the

mid-priced range,” Chief Executive Mark Parker said at the time.

“We’re able to accomplish this by staying focused on what we do best — deliver innovative products and

experiences that serve athletes, inspire consumers and reward our shareholders.”

It’s the same now, in 2020, when we are going through another economic crisis caused by the COVID-19 pandemic.

The company lost sales due to widespread physical store closures with global revenues for the fourth quarter drop by

38%. This revealed the giant’s reliance on high-street shops and its influence on the business.

To balance out the negative consequences of shops closing down, Nike accelerated the efforts toward

its eCommerce business.

The company’s digital sales rose to 30% of overall revenues during the pandemic. New membership

registrations among Nike apps more than doubled to 25 million during the period, half of which belonged to women.

Nike realized as early as 2011 that going mobile was mandatory. Since then, the company developed

the Nike and SNKRS apps. They are designed to increase the brand’s direct connections to consumers which

translates into more sales.

Nike’s solution: an ongoing digital strategy.

NIKE — Social factors

According to PESTEL’s business analysis, by looking at social factors companies are able to analyze the behaviour

patterns of customers and create a customer profile as accurate as possible.

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Within the footwear market, an interesting culture has been growing since the late 1970s-early 1980s — the

sneakerhead culture.

Nike knew who its customers were, what they were about and who they were looking up to. At the time, Michael

Jordan was winning every game on the basketball court doing his iconic jump. Every kid around the world had a

poster of Michael Jordan in his room.

Nike’s partnership with basketball all-time-star Michael Jordan has contributed to the sneakerhead culture rise and

global development.

Today the sneaker resale market is estimated to reach $2billion.

Nike is also well aware of the changes taking place in society and how the values of their most important customers

transformed over the years. Launching its 2018 Dream Crazy ad, Nike knew it would run

into controversy and possible backlash from a certain segment of its customer base. Which it did happen. The

company was not concerned because this ad was targeted to a specific customer base which the brand was looking to

nurture and connect with. Nike: reflect your customers’ values and beliefs.

NIKE - Technological factors

Technology is one of the factors disrupting operations across almost every industry.

We’ve talked about how important is digital and mobile to Nike’s ecosystem of sales, marketing, and community

engagement.

Technological developments have been equally important to the company’s product design and manufacturing. The

brand’s mission is to expand human potential. And to achieve that, Nike creates new products through game-

changing innovations.
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Most innovations come from the brand’s own lab, the Nike Sport Research Lab. The Nike Flywire support

system, Lunarlite foam cushioning, Hyperdunk basketball shoe are among the most famous.

The latest innovation is Nike Fit, a foot-scanning solution designed to find every person’s best fit. Nike Fit uses a

proprietary combination of computer vision, data science, machine learning, artificial intelligence and

recommendation algorithms to find your right fit.

Nike is no longer an athletic shoe manufacturer, it’s a tech company.

NIKE — Environmental factors

As with the technological factor, the environmental factor is today of growing importance.

Businesses are now called to account for any negative impact their operations have on the environment.

Companies big and small are expected to reduce their carbon footprint, take actions to reduce waste and pollution,

and preserve the environment.

Not so long ago, Nike was synonymous with sweatshops and negative impact on the environment.

Over the past twenty years, Nike has made great strides in becoming environmentally conscious and sustainable.

Today Nike pledges to use only renewable energy and reduce its shipping emissions.

The company designed a line of sports jerseys and sneakers crafted from recycled waste plastics and announced

its commitment to switch to 100% renewable energy by 2025.

Also, by the end of 2021, Nike will completely eradicate single-use plastic bags in all its stores.
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Nike: environmentally conscious and sustainable.

NIKE — Legal factors

The legal factor of PESTEL analysis looks into the laws and regulations of the industry.

Over the years, Nike has been in a number of legal battles.

In the late 1980s, the company has been taken to court for failing to disclose poor working conditions.

It also has a long legal history with Adidas over patent infringements.

Recently Nike filed a recently filed a lawsuit against footwear rival Skechers for copying design patents.

The global athletic footwear industry is expected to rise to an estimated value of USD 96.10 billion by 2026 so the

competition within the market is fierce.

Nike: protects its design patents in court.

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Nike’s SWOT Analysis

Competitor Analysis

The top direct Nike’s competitor are:

1. Adidas

2. Reebok

3. Puma

4. Under Armour

5. New Balance

6. Fila
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7. Lulumelon Athletica

8. Skechers

The top indirect Nike’s are:

1. Gibi

2. Zanea

3. Figlia

Consumer Behaviour

The Internal Influences for Consumer behavior:

1- Motivation

 Slogans and headlines that Nike uses include victory, freedom, change, adapt and such words that gives

customers the sense to Just Do It. There are no limits; everything is possible once you wear Nike Shoes.

 Famous athletes from all around the world are participating in advertisements for Nike Shoes; some

examples are Tiger Woods, Cristiano Ronaldo, and LeBron James. Each athlete gives customers the

feeling that they are the best in their fields, so you can also do it, you can wear the same shoes with the

basketball player you admire.

2- Perception

 Entering a Nike shop, customers see all the motivational headlines, with famous athletes or strong,

healthy- and good-looking models, and these shape the perception of customers, they act in order to be

like them.

 Nike Shoes create the perception that if anybody can do it, you can also do it, so pushes customers to

buy shoes and start the change.

3- Learning
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 Nike Shoes is already a well-known brand through the world, with effective advertisements and word of

mouth, since customers tend to share their positive views with their friends and family.

 After buying Nike Shoes, consumers learn about the brand, and experience the quality and see

themselves that they got what they expected.

4- Beliefs and Attitudes

 Consumers enjoy running in Nike Shoes, the feeling that it gives to them. Everyone is and athlete, as

Nike argues. Beliefs of becoming a motivated healthy person are accomplished.

 Consumers’ formed attitudes about the brand are buying a shoe that is comfortable, makes you feel

good, and also look cool in it and Nike Shoes satisfy them all.

The Internal Influences for Consumer behavior:

1. Partnership with famous sports person like Micheal Jordan, Tigerwoods

2. People buy Nike products for the social class which is being depicted by Nike

3. Nike promotes the culture of sports which influence the consumers to buy their products

Market Research

Type of market research to be conducted: We have identified “causal research” to be conducted in the high-end

footwear and related accessories industry as there are many competitors in the segment with fast changing

technology with innovations. Products can become outdated very quickly and hence continuous research on the

part of product, consumer and market is required. In this situation causal research is likely to be the right type of

research to adopt for it having flexibility to evaluate a theory including it cause and effect to aid in decision

making in new product/ environments.

Market research problem: To find out the ongoing trend changes among young people, their habits, likings,

lifestyle, and concurrent innovations by competitors.

Description of the organization: Over five decades, Nike has built itself into one of the most iconic global

brands, instantly recognized by its ‘Just do it’ tagline and ‘swoosh’ symbol. The company is the world’s leading
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sportswear brand, edging out competitors like Adidas, Puma, and Under Armor. Nike achieved its legendary

status through innovative product development and marketing tactics, emotion-based messaging, celebrity

endorsements and sports sponsorships. The brand also invests heavily in advertising. Since 2014, Nike global ad

spend has reached over $3 billion annually, with $3.11 billion invested in advertising and promotions in 2021.

Market demographics: Nike demographics include a wide range of users, aged roughly from 15 to 45

years. By spanning the generations, Nike taps middle-aged consumers who have disposable income and

develops its relationship with younger audiences to ensure future growth and build life-long brand

enthusiasts. The company targets both male and female consumers, however, it continues to make significant

investments in its women’s line, focusing on leggings, sports bras and ‘athleisure’. Nike also strongly targets

the youth demographic, noted as the favorite footwear and apparel brand for teens in 2019 in the US. 

Market needs: Market needs is from the higher-income socio-economic group, reflected in the premium brand

image and pricing as well as market distribution channels. The average sports enthusiast, interested in leading

an active and healthy lifestyle, image-conscious and tech savvy, looking to be ahead of the trends and up to date

with the latest in fitness fashion and footwear technology need brands like Nike for their needs.

Market trends:

Potential Increase in Demand for the Athletic Footwear Segment

Growing enthusiasm and awareness regarding the health benefits of sports and fitness activities, the flourishing

retail e-commerce sector worldwide, and rising levels of disposable income of consumers are the key factors

facilitating segment growth. Rising health concerns because of a sedentary lifestyle and the resultant problems

caused by it are benefitting athletic footwear demand. This influences people to actively take part in both indoor

and outdoor physical activities. Major global sporting events held periodically, like the Olympics,

Commonwealth Games, Asian Games, Cricket World Cup, Super Bowl, and FIFA World Cup, also boost the

demand from both the athletes. The footwear market has seen a steep rise in the demand for athletic footwear
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emerging from lifestyle users, owing to the growing health consciousness. Demand is likely to see sustained

growth in near future.

Market growth: Global footwear market was valued around $365 billion in 2020. Its valuation is estimated to

reach $530 bln by 2027. Major players like Nike, use eco- friendly raw materials, including recycled car tires,

recycled carpet padding etc. Increase in health awareness is observed among individuals across world, which

has led to increase in number of individuals visiting fitness center and other outdoor activities. This in turn, has

boosted demand for athletic footwear among all age groups. There has been a trend among working people also

to remain healthy (few companies provide such facilities during worktime too), which has created demand,

thereby fostering footwear market growth.

Marketing Strategy

Mission and Mission Statement of the company:

Existing Mission Statement: “to bring inspiration and innovation to every athlete in the world.” Above

mission statement clearly in a way states company’s mission to not only help athletes in improving their

athletic potential through better gears but also in doing so reflecting Nike’s culture of promoting

innovation and creativity.

New Mission Statement proposed by us: “Develop average person into an athlete. We do that by

creating awareness about rational ways to improve human athletic efficiency through continuous

innovations, by making our products stakeholders in human development, implementing suggestions by

public, employing diverse and global team, and by making a positive impact in communities thorough

our social projects coupled with schemes of developing skills for self-employment for needy.”

We have tried to refine the mission statement further to include all age group persons, encouragement

for healthy gaming habits leading to energy conservation and contribution to critical social projects.

Marketing Objectives:
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Nike’s marketing objective is to show case its ability to innovate on continuous basis (including VR

Platform etc.) for the benefit of athletes and public and in doing so projecting its brand as customer

friendly, customers’ feedback seeking and also remaining contributor towards ESG goals as well as

underprivileged community. And in the process of doing above things, building a loyal customer base,

retaining existing customer base and making customers participant in company’s growth journey.

Nike/ we will aim to achieve its marketing objectives through various means which are aligned with its

business/ marketing strategy:

 Careful positioning of product: To athletes, 18–25-year group

 Selling stories of empowerment and not products

 Use of social media and through content created by its customers

 Collaboration with celebrities/ influencers

 Loyalty program

Thus, mission and mission statement of the company aligns with its marketing objectives.

Marketing Program

Perceptual Map of company’s position in the market vis a vis its competitors:

Given the presence of existing market players in the segment in various geographies and various channels, we

have taken following companies as competitors of “Nike”:

 Adidas

 Reebok

 Fila

 New Balance

 Skechers

 Puma
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 Sparx

 Bata

Based on our perception of quality of the products/ services produced by above companies, we have classified

them as per following mappings of quality & Prices:

Low quality & High Price: New Balance

High quality & High Price: Nike, Puma, Reebok, Adidas, Skechers

High quality & Low Price: Fila, Bata

Low quality & Low price: Sparx

High Price

Low quality/ High quality/ high diversity

low diversity

Low Price
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Perceptual map of “Nike” and its competitors

Nike has been innovative and trend setter in amalgamation of virtual and real world feel of products (shoes and

related packs) in the industry. Not only other players in same industry but in different industry too are trying to

emulate these kinds of models. If we simply talk about the uniqueness of presenting the physical product with

its virtual world version, “Nike” obviously stands out as the market leader and easily fits in the first quadrant.

Other players in the first quadrant are placed there with more of contribution from physical products. However,

marketing and product salability is very dynamic in the fast-changing industry and other players in the first

quadrant are also trying to catch up in terms of innovation and adaptation.

4Ps of Marketing:

Product:

o Shoes: Lifestyle, Sports, Running, Gym and training, Sandals and Slides

o Clothing: Sports Bras, Tops/ T-Shirts, Hoodies & Sweatshirts, Jackets, tracksuits, Shorts, Skirts, Jerseys

and Kits, Socks and other related accessories

o Virtual version of above products

Price:

o Production cost

o Selling Marketing cost

o R&D, Overhead cost (including third party cloud service provider)

o Brand Partnerships with VR platforms

o Delivery Cost

o Software / algo development and maintenance cost

Place:

o Physical Stores
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o Virtual Musical concerts

o Virtual Video streaming

o Physical feel centers for Virtual products/ services

Promotion:

o Sales promotion: Vouchers distribution at physical as well as online marketplace for purchase of virtual

products. Vouchers for purchase of physical products upon owning certain number/ value of virtual

products.

o Advertising: Advertising on Twitter & YouTube with short video displaying 18-25 years group players

in physical as well as virtual avatars.

o PR Branding: Joint branding on third party branding platforms displaying benefits of two/brands (one

of them being Nike)

o Promotion through engaging celebrities/ brand ambassadors

o Brand promotion through publicizing ESG achievements

Branding Strategy of Nike:

Nike/ We will use elements of internal as well as external branding in its branding strategy. For example, its

logo, tagline, name and form/ shape etc. as elements of external branding and mission, vision, values,

positioning, differentiation and the brand personality as elements of internal branding. We will briefly discuss

branding elements of each type.

o External Branding elements:

 Compelling Tagline: “Just Do It” is the compelling tagline which has a motivating effect on

consumers. This tagline itself has created a brand value for Nike. This tagline has magnetic

effect on age group of 18-25 years as this age group easily relates the tagline with themselves,
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thus creating a positioning among the psyche of this age group. This helps in customer

acquisition and retention.

 Brand Logo: Nike Swoosh logo has created its image as fresh and memorable in the memory of

public. This logo has powerful, energetic and archivers’ mindset effect & feeling amongst the

customers and hence is effect in brand positioning. It also denotes victory to its customers.

o Internal Branding elements:

 Brand positioning and differentiation: Nike has used brand positioning and brand

differentiation very aptly. It has very aptly placed itself among its competitors as innovative and

adaptive player. Nike brand is perceived as empowering, with clear goals, high quality, and

inspiring brand. Introducing virtual avatars of its products and molding into gaming platforms

has helped itself in differentiating from competitors.

 Mission: Nike mission statement is “to bring inspiration and innovation to every athlete in

the world.” This statement focusses on the influence that Nike has in the sports sector. It

specially resounds the ability of this company to stimulate and turn athletes into their best

versions. It also sort of hints athletes want to upgrade and prepare themselves to excel.

Summary
REFERENCES
Nike Mission and Vision Statement Analysis

https://mission-statement.com/nike/
https://www.alliedmarketresearch.com/footwear-market