Nike business marketing case study PDF

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MARKETING MANAGEMENT AND STRATEGY: ASSIGNMENT 1 Angela Przybysz

SUNY Empire State College Strategic Marketing Management

Marketing Management and Strategy: Assignment 1

Assignment 1: Individual Case Study Analysis 5 Questions. Each question is worth 2 points Nike--Globalizing the Sportswear Industry Graeme Rankine; Kenneth Ferris Q1 Essay Describe PESTEL analysis (environmental influences on buying behaviors) for firms in the industry and the nation that you want to study based on your selected case study for that industry. This is the macro environment not the micro or company factors. You should not include information about the firm here. Note each fact should be referenced. PESTEL stands for: P- Political E – Economic S – Social T – Technological E – Environmental L - Legal. Nike is one of the largest international sports companies which hailed from America which is involved in developing, designing, producing as well as sales/ marketing of footwear, sport equipment’s. Political: The United States, Nike’s ‘home country’ so to speak, has fantastic policies for growth which are especially valuable to this corporation. These include low-interest rates and well-arranged international tax agreements. As a company that produces and sells physical goods, Nike is, however, always subject to changes in tax and manufacturing laws. Various political conflicts can always make customs related processes difficult, or prevent imports and exports. Nike being into sports business is obviously impacted by the country it procures, sells its products, Taxation, import duty and export laws as well as labor laws and local market rules are also important for it.

Economic: The economic condition of the country it is trying to sell or market its product is very important because of purchasing power of people. In developed economies it can target to have a safe and stable cash flow due their secure and peaceful nature. These countries are having sound economic prowess as well as great infrastructure. Hence Nike can target them for their high end products. Similarly developing countries offer great potential for rapid growth due to their rampant growth rate in economy. They also have big chunk of young population who are more in to sports hence Nike can 1

Marketing Management and Strategy: Assignment 1

specifically manufacture some budget friendly products for these developing countries (India, China). A market collapse could mean bad news for Nike, along with many other big brands. Consumers may choose to switch to lower-end, cheaper products if this were to occur, or even just as a decent level of quality becomes easier to produce. Nike’s revenues are to some extent dependent on the low cost of labor in Far Eastern countries. This is changing, though, which might mean higher Nike prices across the globe come with the development in Less Economically Developed Countries. With its ‘deep pocket’ of finances, Nike has the resources to chase after small emerging markets in which they could sell products.

Social: Due to rapid advancements in technology there has been rise in morbidity among young adults as well as adult population all over the world. Lifestyle diseases like cancer, diabetes has been on the rise. Nike can promote consciousness among people by informing them the benefits of exercising and sports. Worldwide increases in ‘health consciousness’ means that more and more individuals are moving towards better lifestyles. These people will undoubtedly buy plenty of sports apparel, something which would make Nike happy. Nike can do cultural segmentation in countries and regions and target proper audience for its products according to their profiles. Technological: Nike has been a major mover when it comes to introducing technology into sports. It has been pioneer in developing amazing marketing information systems to innovate its business operations. Other leading firms that are doing R&D in technology for sports industry is a threat for Nike. Technology is something that gets obsolete overnight or become trend today, hence firm has to keep a close watch on rapid technological movements, Smart phones, fit bits, smart bands, Internet of things and a great deal of health data from its various customers can aid in great insights for developing new products. Social media allows things to blow up or whittle away faster than ever. Nike is doing well with using social media to build their brand, but it can be a double-edged sword if used incorrectly. Nike also gets the opportunity to use valuable information based metrics thanks to technological advances, allowing for them to optimize targeting and production, and maximize revenue. Environmental: Environmental decline has been a cause of concern around the world for all the countries and all firms have to adopt its approach according to Nike should focus on using recyclable and ecology friendly material to aid in environment movement. It should promote green movements among its customers and various meets. Nike’s mass production factories are, without a doubt, harming the environment. Not only do they release plenty of aerial pollution like most factories, but Nike’s production centers occasionally go as far as directly polluting rivers. However, Nike also shows promise of a change in their current practices, with a strong resolve to become more ‘eco’. Legal: Legal factors are also important for Nike and its expansion plans. Legal inhibitions direct the way they can do business in a country, hire staff (labor law), Intellectual and patent laws direct how 2

Marketing Management and Strategy: Assignment 1

can file and manufacture a product. Employee benefits are also subject to local governing body and law. It shouldn’t surprise you to hear that, like most massive corporations, Nike also dodges substantial amounts of tax. In recent years, there hasn’t been too much of a crackdown on this, but it’s still valuable to consider. Also, Nike occasionally meets legal repercussions for its shady marketing practices, which include false discounts.

Q2 Essay Create a stakeholder analysis - looking at the impact of each (power and interest) and the impact of globalization on each stakeholder. Stakeholders refer to the individuals or groups who are interested and take participate in a particular project. These stakeholders are organized, grouped together according to their interest and knowledge before the initiation of the particular project is referred to as stakeholder’s analysis. Stakeholders have a major interest in the working and operations of the company. Nike’s stakeholder’s analysis includes the following points that highlight the initiatives taken by the company for the interest of stakeholders:  Customers: Nike gives the topmost priority to the customers by providing them highquality shoes, equipment, and accessories and many such products. Nike’s shoes are most suitable for sportspeople but can also be purchased for casual wear. The company provides a wide range of products throughout the world by fulfilling is social responsibilities. It manufactures products for males, females, and children of all age groups.  Shareholders: Nike’s focus is on creating value for its shareholders by ensuring the long-run profitable circumstances. It includes the following:  Revenue growth of the company  Growth of per-share earnings  Higher returns on the capital invested  Increased cash flow Impact of globalization:  The company sells its products throughout the world by opening up its own retail shops and by other retailers as well. The customers can purchase products from any nearby shops and can also order online. Globalization has increased the customer base of Nike.  The company has almost 23 distribution systems in countries like Asia, Australia, America, Africa, and Canada and many more. This huge geographical coverage of the company results in large revenue over the years which benefits the shareholders and other interested stakeholders.  Nike’s product is of superior quality and has a distinct competitive advantage in terms of quality and price. The number of served and satisfied customers throughout the world is increasing day by day. This is the reason behind the strong brand image of Nike.  Nike is superior in technology and innovation as far as the quality of the products is concerned. The staff of the company is highly specialized and knowledgeable in the concerned area. Globalization has opened up the way for serving a large number of customers throughout the world 3

Marketing Management and Strategy: Assignment 1

which results in increased revenue. The fulfillment of the company’s social responsibility can be seen through the satisfaction level of the shareholders. There will be more earnings for the shareholders in terms of increased revenue.

Q3 Essay Competitive Positioning Maps are an important way to access the firm's competitive position as compared to the strength of competing firms. You may also use an analysis similar to the one found in exhibit 8.6 or 8.8 of Mullins and Walker. If there is insufficient information in the case you may use the internet to gather additional information. Nike’s Competitive positioning map. Nike, an American multinational corporation, established in the year 1964, is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. Nike is a well-known and well established brand around the world and it is doing all its work accordingly. However, it's pricing has always been high, as a result, many people cherish to buy them but most often they find it difficult to afford. Nike should focus more on reducing its prices without hampering its quality and grand appearance. 4

Marketing Management and Strategy: Assignment 1

High Price high quality product Nike uses different types of segmentation to break a bigger market into small customer groups. 1) Psychographic With the mindset that everyone is an athlete, Nike targets to cater to all the people around the world, belonging to any age group who wants to live athletics’ lifestyle. 2) Demographic: Nike targets middle and high segment customers of all age groups and does not set a bias for any group. 3) Targeting: Above mentioned are the few potential market segments that Nike chooses to target for driving their business strategy, sales and marketing activities. 4) Positioning: In-depth knowledge of the key market segments like their buying behavior, their likes, spending patterns, purchase drivers, media habits, are required before devising the marketing strategy or programs. In conclusion, it would be wise for business world to consider these factors when addressing this issue. In my opinion, Nike is the leader in sports equipment creating a fortress in the sports market that is difficult to conquer. The company excels because is the first that brought innovation to sports shoes through the R& D department. At the same time, Nike constantly attracts the best athletes from all sports and signs contracts that bring enormous profitability to the business by associating the products with triumph and victory, creating the consumers the need to acquire the product. Clearly, the company has applied the STP strategy correctly, as well as having understood the needs of consumers affects their buying decisions with a tremendous success

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Marketing Management and Strategy: Assignment 1

Q4 Essay 1) In looking at the whole environment assess the key factors using a Porter's Five force analysis (see Valetin) and mini-lectures in this module 2) Then apply the PESTEL factors from question 1 in order to identify the support for the industry (Porter's diamond model) by the nation and the relevant market boundaries (or what factor causes a customer to prefer one competitor over the other) In other words: from the competitive analysis create the Porter Five force model, and based on the PESTEL analysis - create the Porter's diamond model analysis for the industry. When analyzing the demand conditions include the relevant market boundaries based on your Pestel analysis.

Porter's Five force Analysis on Nike: Nike is known as a brand of sports shoes basically. Be that as it may, it likewise makes athletic attire and apparatus. The ongoing years have been very gainful for the brand. It is a direct result of the athleisure patterns and for the popularity during the Olympics. Nike's Just do it trademark and the Swoosh logo set it apart from the horde of brands. Ever, it has continued marking the best competitors for underwriting its brand and items. Competitive Rivalry within The Industry: Serious competition from built up and up and coming opponents could compromise Nike's piece of the pie development. The worldwide market for athletic footwear, attire and gear is described by extreme competition, with nearness of an enormous number of players, for example, Puma, Adidas, V.F Corporation, Asics, and so on.  The worldwide athletic items industry is presented to consistent changes in shopper inclinations and innovation; if Nike can't adjust to these progressions rapidly, it could endure misfortunes in its piece of the overall industry.  Nike additionally faces rising competition from nearby players in developing markets, who are progressively improving their item quality.  Having said that, Nike has a solid brand notoriety which likely will keep on pushing solid interest for its items. Further, Nike keeps on separating its items inside a creative item portfolio, utilizing an especially solid brand with upgraded promoting exercises. Bargaining power of Suppliers The dealing intensity of Nike's providers is low. While singular providers are little in size, they don't have the capacity of forward coordination either. This diminishes the odds of competition from providers. Besides, the quantity of providers is high and they are dissipated all through the world. It is the reason singular providers can't apply any weight on Nike. The brand sets guidelines for its providers to conform to. On the off chance that a provider doesn't cling to the norms, Nike can 

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Marketing Management and Strategy: Assignment 1

without much of a stretch change to another. Notwithstanding, in such a case, the provider would lose a significant wellspring of income. By and large, Nike holds solid command over its providers and reviews them routinely through outsider examiners for consistence. Bargaining power of Buyers The bargaining power of Nike's purchasers is low to direct. The quantity of its rivals isn't so little if not huge. Aside from Adidas and Under Armor, there are different contenders like Puma and Reebok. There are numerous other neighborhood and worldwide brands additionally that contend with Nike. The exchanging costs for clients are low. Somewhat this power is directed by the quality and promoting of Nike's items. Nike centers on execution and plan. It is the reason it has had the option to fabricate great client reliability. This lessens the haggling intensity of individual purchasers which is low to moderate. Threat of Substitutes The threat of substitute items is moderate for Nike. It is on the grounds that an enormous number of contending brands make comparative or coordinating items. There are a few brands in nearby and worldwide markets that make low evaluated shoes contrasted with Nike. These brands offer lower evaluated substitute items for Nike. Somewhat this threat is directed by the quality and structure of Nike items. By and large, the threat from substitute items is moderate. The threat of New Entrants The threat of new entrants for Nike can be viewed as low to direct. It is on the grounds that while the speculation for beginning the business isn't extremely enormous, still there are different prerequisites that are difficult to satisfy. Any new contender may need to begin at a nearby or little level at first. Aside from creation, there are promoting, conveyance and store network the board that require speculation, gifted specialists and time. Building a brand picture and value are additionally troublesome. These components moderate the threat from the new entrants. For any new brand, it is beyond the realm of imagination to expect to make the sort of brand picture like Nike medium-term. It requires some investment, endeavors and capital venture. Nike's solid situation in the market mitigates the threat to a huge degree. In view of these components the threat from new entrants is low. While speculation for generation might be low, building up a prominent brand can be tedious and requires a ton of capital venture. Porter s Diamond Model of Nike: The American system educator Michael Porter built up a financial diamond model for (little estimated) organizations to assist them with understanding their aggressive situation in worldwide markets. This Porter Diamond Model, otherwise called the Porter Diamond hypothesis of National Advantage or Porters twofold diamond model, has been given this name since all factors that are significant in worldwide business rivalry take after the purposes of a diamond. Michael Porter expect that the intensity of organizations is identified with the presentation of different organizations.

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Marketing Management and Strategy: Assignment 1

Factor conditions Factor conditions can be classified into two structures: "Home-Grown" assets and profoundly particular assets. The first alluded to the first assets from one country. Furthermore, the last one brought up that a nation makes its own significant factors, for example, gifted assets and mechanical base. In the genuine challenge, Porter expressed that adequate in normal assets or minimal effort factors frequently bring about wasteful distribution of assets. By contraries, nearby lacking in factors of creation could prompt development. Additionally, asset limitations may energize improvement of substitute capacities. Demand conditions As indicated by Porter, demand conditions in the household showcase give the essential driver of development, advancement and quality improvement. A solid local market could be viewed as incitement to the firm from being a startup to a somewhat extended and greater association. Related and supporting industries The third determinant of national favorable position is the nearness in the country of related and supporting ventures that are globally aggressive. In light of Porter's view, when nearby supporting ventures are aggressive, related organization will appreciate more financially savvy and inventive sources of information. This impact is reinforced when the providers themselves are solid worldwide contenders. Firm strategy, structure, and rivalry Definitely, the procedures and the structure of the organizations assume a key job to impact the national execution specifically parts. Additionally, rivalry in fact greatly affects driving development 8

Marketing Management and Strategy: Assignment 1

and the ensuing up degree of upper hand. Clearly, residential challenge is more straightforward contrasted and the effect of remote contenders. So the boost gave by home national challenge is higher regarding development and proficiency. Government’s role Regardless of the effect from Government strategies and guidelines don't has a place with the significant determinant of national bit of leeway, somewhat, they assume a significant job on affecting the national framework. Watchman called attention to "Government's appropriate job is as an impetus and challenger. From the start, government can give an essential domain to industry improvement, since it could contribute on foundation advancement, opening up capital channels, preparing data incorporation, etc. Additionally, governments can make new chances and weights through intercede action. Likewise, governmental sourcing could broaden item request. What is generally significant, the government could guarantee that the local market is under vivacious challenge, maintaining a strategic distance from Trust status. Chan...