Environmental Analysis

Discuss about the Marketing Mix for Nike.

This report weighs the different dimensions of the marketing strategies and their significance on the business. To evaluate the approaches and their application in a particular organizational context, Nike has been chosen.

This report includes the background analysis of the company along with the marketing scenario of the company. Strategic tools such as PESTLE has been used here to get an idea about the important factors that are influential in case of market establishment of any organization. Moreover, marketing objectives of Nike have also been discussed as well as the performance of this company. For this purpose, this report has also incorporated SWOT analysis, that depicts both the strength and weakness of the company also the opportunity and threats. Moreover, this study also deals with the marketing mix strategy and their implementation.

Nike an America based international corporation, founded as Blue Ribbon Sports in the year of 1964, officially got the recognition by the current name in 1971. The company sells the products under its own brand name with the trademark tagline of “Just Do It”. Logo of the company is recognized as Swoosh. The company includes designing of the products, development, production and global marketing of their merchandises. Nike deals with footwear, equipment and other accessories; however, the main focus of their business is on athletic shoes and sports equipment. Around 44000 employees worldwide are engaged with this company. Due to the higher quality and standard service this company has achieved the fame of most valuable brand in terms of sports business (www.nike.com 2016).

Mentioned that marketing environment is significant for any organization as it influences the marketing strategies, adopted by a company and its effect after the implementation. Thus, here, factors that could affect market of the Nike has also been put using the PESTLE tool, as mentioned below:

• Political factors: Helm and Gritsch (2014), mentioned, political factor involve the stability of the government, changes in policies and rules for the economic market, an imposition of additional taxation and service charges and such other things that involve government or political aspect of the particular country. For Nike, the main concern in this regard could be the new structure of the tax and service charges, as the product pricing get increased with increasing the charge for importing materials or the products. Apart from that, unstable government results in fluctuated economy and uncertain business scenario for any nation; that in turn results into less effective outcome for a company (Majaro 2013).
• Economic factors: Nike products ranges from medium to higher price. Economic collapse results in the switching of the consumers to affordable products and cheaper brands. Nike has also faced the financial crisis since the market slowdown in 2008-09. Moreover, the revenue collection of this company depends on the eastern economic scenario to some extent as Nike involves labors from this region in a lower rate of wages (Leonidou, Katsikeas and Morgan 2013).
• Social factors: Recent awareness on healthy practices and fitness consciousness has left an obvious positive impact on the business of Nike (Mullin, Hardy and Sutton 2014). However, there are several controversies regarding the business policy of this company; such as Nike was criticized for hiring labors in countries like Vietnam and Indonesia in minimum wages. Moreover, a report has revealed that the company also violated the child labor acts by employing children as their sweated labor. There was also an issue with the fact that, this brand declined to share any information about the firms, they have contracted for the business expansion (Burgelman 2016). However, Nike had taken steps to provide clarification on these allegations.
• Technological factors: According to, Yap and Yazdanifard (2014), advanced technology helps the organizations to apply innovative ideas for their marketing and promotional strategy, also enhances the standard of the service to the customer. Nike has utilized the digital platform for the analysis of the customer’s information and segmented their products as per the demand. This company has also entertained the social media for an interactive evaluation of their business (Mahdi et al. 2015).
• Legal factors: Nike has followed different policies and legal structures of the different country, with those Nike contracted to expand their business. However, there are several issues concerning the illegal activities, such as dodging of the taxation, attempting unfair competition and promoting false discounts. Moreover, Nike had to close their factories in Pakistan due to the allegation of violating the labor laws while employing people for their sweatshops (Ko et al. 2012).
• Environmental factors: Nike holds positive approach towards the environmental concerning and holds ISO 14000 consents. Apart from that, Nike has also launched a number of pilot projects named under ‘sustainability champions’ that involves the reduction in emissions of carbon also waste management. However, an opinion of Ziek (2013), reflected that manufacturing centers of this company often directly pollute the rivers along with the heavy aerial pollution.

Nike is the leading brand in the sector of sportswear and apparel. This company has the reputation for its high performing gears, mainly targeted for the professional athletes. However, this organization has the vision to expand their business by allowing more demographic segmentation of their products. Nike has focused on three type of consumers such as:

• Women: As stated by Mark Parker, the CEO of Nike, revenue from the sale of the women’s products has suppressed the business from the men’s apparel. The company has been successful to their strategy of drawing maximum attention from the young women by introducing products that are both trendy and sporty (Brohi et al. 2016)
• Runners: Nike products majorly focus on the innovation and modification of their accessories for the running segments (Lim, Kim and Cheong 2016). The company has launched new footwear range with LunarTempo for the long distance runners. Moreover, their business strategy has also evolved Nike+ application that helps runners to get information about the distance, route, time, pace and calories during the course of running.
• Young athletes: According to, (Su and Tong 2015), to get the sight of kids and young adults, an organization must focus on their interest and approach through their requirements. Nike has followed this policy by providing sponsorship to the local clubs and leagues; in turn, they make the players wear their products. Moreover, the company has also contracted famous athletes for the endorsement of their products so that teens can get easily attracted to the products.

As mentioned before, Nike promotes their products involving famous athletes to advertise their products, that psychologically effect the youth generation and other athletes. Apart from that, Nike has set their pricing strategy a little bit higher than other brands as it mainly focuses on that particular user who embraces the products rather giving priority to the cost of the products. The main objective of this strategy is to uplift the supposed value of the brands.

Target Markets

 For the status of the performance of Nike, it has been seen that the quarterly of the company has increased for the fiscal year of 2015. Earnings Per Share (EPS) of this brand has increased since last six years. Moreover, the company has published the third quarter results for the year 2016, that clearly detects that revenue collection has been increased by 14% excluding the currency exchanges. Diluted EPS is up by 22%. Furthermore, worldwide orders have increased by 17% excluding currency exchange (Nike News. 2016).

According to, Santos and Laczniak (2015), SWOT analysis helps to evaluate both the external and internal factors for an organization that can influence the performance and business of the company. The dimensions of this management tool are-

• Strength: Nike enjoys the worldwide recognition for its high-end sports accessories such as footwear for different kind of sports. This company adopts a strategy of ‘make to shock’ that allows faster delivery to the customer from the available product stocks. This company is efficient for the purpose of research and development as manufactures the high-quality product at the possible lowest price. Apart from that, Nike logo Swoosh has its own recognition that has also resulted in a positive market scenario for the organization.
• Weakness: Nike has the different segmented products; however, revenue collection depends on the share of its footwear in a large context. This fact can negatively affect the market in case of sudden fall in its market shares. Moreover, Nike is dependent on the other retailers for the selling of their products as they do not have their own retailing service. As retail sector tends to be very sensitive towards the pricing of the products, it squeezes the profit margin by putting competitive pressure on the low pricing of the products on Nike.
• Opportunities: It is not necessary to be an athlete to wear the sports gears; thus among the young generation, the products of this company also concern with the fashion statement. This aspect has opened the door for the vast population who relies on this company for its brand value as well as for the style quotient also. The company can also concentrate on the more diversification of the products such as eyewear and jewelry accessories. Nike can also use the international platform by making a partnership with the global events like Olympics and world cup tournaments.
• Threats: The main threat for Nike is the growing competition in this sector. Rival companies have adopted several strategies to narrow down the share of this company. Furthermore, the company deals with a number of countries as the part of its market expansion; thus it requires to follow different rules and policies of different countries, that may not come out as profitable for the business as expected. Moreover, importing and exporting of the products involves different currency exchanges that in turn results in instability for the costing and marginal profits (Silveira and Marreiros 2014)

Nike holds almost 33% of the global market for the achieving the place of largest athletic footwear seller. Objectives of 4Ps marketing mix have been applied to understand the actual scenario behind the marketing strategy of Nike.

• Products: recognition of the products among people is the primary criteria for the establishment of any business (Neuhausen 2012). Nike covers all the popular athletic segment as the market of their products. They supply sports equipment as well as the shoes, shorts and jerseys for the sportsman. Recently they have also launched shoes for skateboarding. Apart from that, Nike products are also very popular among the teens and youths as it embraces the urban essence in their product styling.
• Price: According to Burgelman (2016), quality of the good influences the price of the product. Nike also has segmented their pricing based on the quality of the products and target customers. They apply vertical integration and can allow either participation in more than one channel based operations or can own the participants at different channel levels. It possesses competitive pricing strategy to the other shoe retailers.
• Place: Nike shoes are available in both exclusive stores of the brand and in multi-brand stores. The company sells their products in 200 countries worldwide. Nike products are mainly produced in the country of Asia-Pacific region. From the objective of international market expansion, it has built offices outside the US, in 45 countries.
• Promotion: Promotion is the ultimate approach for the 4Ps theory of marketing mix. Buil, De Chernatony and Martínez (2013), mentioned that promotion always helps to reach the targeted audience and creates strategic alliances. Nike has signed contracts with many famous sports personalities, the sports team also as the part of their promotional activities. Apart from that, website campaigns and social platform have also been utilized by this organization. Moreover, the attractive logo and the interesting slogan of the company, “Just Do It”, have helped in establishing pf the brand value and reputation of the company.

Conclusion:

Hence, after revising the entire discussion, it can be said that this report is relevant to the purpose of understanding the marketing strategies of Nike. Moreover. This study has also incorporated the various tools for analyzing different approaches and factors that can affect the business of this company. Apart from that, this study also involves four Ps for the marketing mix.

Thus, this report fulfills all the requirements and can be further reviewed prior to the extensive research on this topic. 

Reference List:

Brohi, H., Khubchandani, R., Prithiani, J., Abbas, Z., Bhutto, A.H. and Chawla, S.K., 2016. Strategic Marketing Plan of Nike.

Buil, I., De Chernatony, L. and Martínez, E., 2013. Examining the role of advertising and sales promotions in brand equity creation. Journal of Business Research, 66(1), pp.115-122.

Burgelman, R.A., 2016. Complex Strategic Integration at Nike: Strategy Process and Strategy-as-Practice Combined. The Handbook of Strategy Process Research from a Middle Management Perspective. Edward Elgar Publishing.

Helm, R. and Gritsch, S., 2014. Examining the influence of uncertainty on marketing mix strategy elements in emerging business to business export-markets. International Business Review, 23(2), pp.418-428.

Ko, E., Taylor, C.R., Sung, H., Lee, J., Wagner, U., Navarro, D.M.C. and Wang, F., 2012. Global marketing segmentation usefulness in the sportswear industry. Journal of Business Research, 65(11), pp.1565-1575.

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Nike News. 2016. NIKE, INC. Reports Fiscal 2016 Third Quarter Results. [online] Available at: https://news.nike.com/news/nike-inc-reports-fiscal-2016-third-quarter-result.

Santos, N. and Laczniak, G., 2015. Marketing to the poor: A SWOT analysis of the Market Construction Model for engaging impoverished market segments. Social Business, 5(2)

Silveira, P.D. and Marreiros, C.G., 2014. Exploring Shopper Marketing Approach Implications On Brand Communication At The Point-Of-Purchase: An Expert’s Opinion Qualitative Study. Journal of Applied Business Research,30(5), p.1329.

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Ziek, P., 2013. CSR Infrastructure for Communication and the Nike Controversy. Journal of Management and Sustainability, 3(1), p.63. 

https://news.nike.com/news/nike-inc-reports-fiscal-2016-third-quarter-results