Nike's Competitive Advantage

This assignment delves into Nike's competitive advantage by examining its pricing strategies, market positioning, and financial performance. It analyzes Nike's revenue streams, distribution channels, and target markets. The assignment also explores the company's strengths, weaknesses, opportunities, and threats (SWOT) in the context of the athletic footwear and apparel industry. Furthermore, it investigates advanced revenue distribution models employed by Nike for cloud media content sales.

Running head: MARKETING STRATEGY AND PLAN
Marketing Strategy and Plan
Name of the Student:
Name of the University:
Author Note:

1MARKETING STRATEY AND PLAN
Executive Summary
This current report focuses on the market analysis of NIKE. This is an U.S based organization
that offers athletic products and accessories. However, their shoes are unique with other
organization that provides comfortable to the customers. On the other hand, their sales revenue
generation is high in the global market and they have high market share in the global footwear
industry. The main target market is athletes. In the year 2017 their net profit is 12.34% that
ensures their high growth in the global market. However, this organization has achieved a
valuable position the footwear industry and established a good customer relationship.

2MARKETING STRATEY AND PLAN
Contents
Introduction......................................................................................................................................3
Marketing Goals and Objectives.....................................................................................................4
Sales Objectives...........................................................................................................................4
Profit objectives...........................................................................................................................4
Pricing objectives.........................................................................................................................5
Product objectives........................................................................................................................5
Market Research..............................................................................................................................6
Analysis of Target Customers and Competitors..............................................................................9
Target customers of Nike.............................................................................................................9
Competitors of Nike..................................................................................................................10
7P’s of Marketing..........................................................................................................................12
Financial Information....................................................................................................................14
Conclusion.....................................................................................................................................16
References......................................................................................................................................17

3MARKETING STRATEY AND PLAN
Introduction
Nike is an American company which is engaged in the manufacturing, development,
design, sales and marketing of apparel, footwear, accessories, various equipments and services.
The company tried to focus on the culture of invention. Nike manufactures products and services
for the athletes. The company has various ranges of sports equipments. Recently, the company
has introduced cricket shoes and it is trying to develop and expand in this segment. Nike also has
a wide collection of sports products and assortments. The company has also collaborated with
Apple Inc to produce Nike+ product. The company has it’s headquarter in Washington. It is a
global leader in sports and other assorted sports product. The company has expanded its business
and diversified its product line through various kinds of acquisitions such as Converse Inc, Cole
Haan, Canstar Sports and many more. The company also sells sports technology accessories such
as high altitude wrist compasses, portable heart monitors and many more. The success of the
company is owed to endorsements by different athletes such as Roger Federer, Michael Jordan,
Mia Hamm, Tiger Wood. The chainstore of NikeTown was opened in the (Nike, 2017). The
company has expected 80% of the growth from certain cities such as Mexico, Barcelona, Paris,
Milan and Seoul. This paper will highlight the sales and growth of the company. The target
customers and the competitors of Nike alongwith the 7Ps of marketing are discussed in the
paper. Nike has also conducted research and development to identify the various changes in the
development of new product, redesign and improve the existing products and adjust according to
the preference of the customers.

4MARKETING STRATEY AND PLAN
Marketing Goals and Objectives
Sales Objectives
 Nike is putting greater emphasis on the consumers directly to improve the sales
and growth. This includes selling the product in the Nike stores or selling them in
the online stores.
 The company has tried to achieve 9% CAGR on the basis of revenue earned by
the company in the recent years. Nike has targeted to achieve the $8 billion sales
by 2017 in comparison to $4.3 billion sales in 2013.
 The company has targeted to increase its sales from the stores. The company is
trying to add $20 billion in the next five year period (Nike's Revenue, 2017).
 The company has targeted the women and this is regarded as one of the massive
business opportunity.
Nike wanted to expanded its business on two core items i.e. tights and sports bras. It has also
planned to debut a new technology in the footwear section by the end of 2017. The growth of
Nike implies that athleisure is the main trend of the company and this will help in the expansion
of its business. The company is also trying to focus on international sales especially from the
BRIC country (CNBC, 2017).
Profit objectives
The brand value is the most powerful asset of Nike. According to the data of 2015 the
revenue generation of NIKE was $1 billion. The recent profit strategy is to double this profit by
2017. However, this organization aims to increase their fiscal property by $23 at the end of
2017. Gross profit margin refers to revenue percentage that is used to cover the business

5MARKETING STRATEY AND PLAN
operations and other expenditure. In the context of NIKE their gross profit margin was 45.97%
in the year 2015. In the year 2016 it has increased to 46.24%. However, in the year 2017 it is
decreased by 44.58%. On the other hand, operating profit margin of NIKE was 13.64, which has
improved in the year 2016 that was 13.91%. On the other hand, this is deteriorated in the year
2017. Net profit margin is the vital part of the profit margin that indicates the net profitability of
the company. In order to calculate the net profit net income needs to divide by revenue. In the
year 2015 net profit of Nike was 10.7% and in the year of 2016 it increased to 11.61% and by
2017 it is improved to 12.34%. This ensures the significant growth of NIKE (Stock-analysis-
on.net, 2017).
Pricing objectives
 To introduce the new pricing strategy to enhance the sale
 To use high pricing strategy to gain profit
 To understand the customer value to set the pricing stratgey
An organization sets their pricing strategy in order to obtain their particular objectives
(Kireyev, Kumar & Ofek, 2017). In the year 2014 NIKE has introduced a new pricing strategy to
enhance their sales in the global market. This organization has conducted a market analysis in
order to identify the brand value of that is given by the customers. However, this organization
follows the premium strategy and has introduced a high pricing strategy in the year 2014. They
have raised their price by 4% to 5% per year. Rising price ensures the long-term advantages in
footwear industry. This pricing strategy is helpful for such organization to gain profit from the
U.S. NIKE has a good understanding about the customer value. This is suitable for the company
growth and statistical data shows that their athletic footwear sales sale is increased by $168 in
every year (News.nike.com, 2017).

6MARKETING STRATEY AND PLAN
Product objectives
NIKE focuses on development of high quality products. They incorporates unique feature
in their products. However, their shoes are unique from other companies. Quality of the product
is a big thing of any organization. However, based on this the success of the company varies
(Nike's Revenue, 2017). NIKE shoes include solid rubber and herringbone pattern that gives
comfortable to the customers. It is important for an organization to give comfort and satisfaction
to the customers. NIKE shoes are durable and lightweight that provides flexibility and comfort.
Customers get long term benefit from their products. On the other hand, such shoes are
beneficial to reduce the foot injury. This organization aims to provide innovative product feature
and high quality product to the customers. However, it is crucial to understand the current market
demand and provide products based on the customer demand (Baker, Collier & Jay
Market esearch
Size and Growth
NIKE is a global manufacturer and supplier of the shoes and accessories. It operates UK,
U.S., China and many other countries. In the year 2017 it this organization has operating 1.142
retail stores worldwide. According to the statistical data NIKE has 22.9% of the share market in
the global footwear industry in year 2015. This organization is considered as the largest supplier
of the shoes and apparel in the world. This leads a good position in the athletic footwear market.
This organization comprises 23% of the global athletic footwear market share in the year 2015
(Statista.com, 2017). However, it is crucial for an organization to increase their market share in
the global market. NIKE includes a good market share in the international market that ensures
their rapid growth and size in the global market.

7MARKETING STRATEY AND PLAN
Sales of the Company
Sales revenue ensures the success of the organization (KIM et al., 2017). In the context of
NIKE their sales revenue generation is 34.35 billion U.S dollar in the year 2017. This ensures
their highest growth in the global market. This organization sponsors several high professional
athletes. This is a big part of their revenue generation. In the year 2015 their revenue generation
was 31 billion U.S dollar. However, NIKE has increased their sales per year, which is a big
opportunity for such organization. This organization expands their market share due to their high
profit. According to the data NIKE’s sales revenue generation has been increasing since 2015 in
proper manner that highlights their increased sales and customer number. In the year 2016, their
fiscal report was strong in the fourth quarter. At the end of the year they had good fiscal
property. However, the diluted earnings per share was $ 0.49. This is increased to 17% that is
$2.16. In the year their sales revenue increased from 6% to 9% based on the currency neutral.
They got double digit growth in China, Western Europe and Japan. This ensures their high sales
revenue generation (News.nike.com, 2017).
Sales and Social trends
Sales and social trend focuses on the sales revenue per year and the popularity of an
organization. As per the statistics Nike, in the year 2015 their net profit was 10.7% while it is
increased in the year 2016 and the sales profit becomes 11.61. In the year 2017 their net sales
profit is 12.34%. Such profit is suitable for the growth of such organization (Stock-analysis-
on.net, 2017). Based on the sales revenue generation it can be said that the sales trend is good in
this organization. However, a sales trend is generated through such data that focuses on the high
growth of NIKE. Based on the analysis of the yearly data the sale trend is addressed in an

8MARKETING STRATEY AND PLAN
organization. This organization has a growing trend in the global market. That ensures the high
profit of NIKE. On the other hand, the social trend focuses on the social media marketing.
However, NIKE has high popularity on the social media marketing. As for example, 29, 226,287
people have visited their page and 29, 981, 144 people follow them. This ensures that this
organization has high popularity in social media (News.nike.com, 2017).

9MARKETING STRATEY AND PLAN
10.70%
11.61%
12.34%
Sales
2015
2016
2017
Figure 1: Sale Trend of NIKE
(Source: Stock-analysis-on.net, 2017)
Figure 1: Sales and Social trend of NIKE
(Source: Facebook.com)

10MARKETING STRATEY AND PLAN
Demographics
Demographic refers to the age of the target customers (Berger, 2017). In the context of
NIKE they mainly focus on the athletes as they are the main target customers of such
organization. The age of their focus group ranges from 18 to 35. In the recent years they give
their concern to women athletes. Apart from this they produce products for men, women and
children.
Analysis of Target Customers and Competitors
Target customers of Nike
Targeting is one of the most important activities for a brand while entering into the market. This
is because; through effective targeting the customer streamlines its customer and carries out the
marketing strategy accordingly targeting those potential customers. The products are also
designed according to the needs of the potential customers. Similarly, Nike too has a targeted
market for its products. The main targeted market of Nike is the professionals that are athletes
and normal consumers. The brand targets market according to their psychographic components
and demographic segmentation (Annual Report: Nike, 2017).
Demographic segmentation is done to target the market according to the age, gender and
occupation of the customers and on the category of products that the company manufactures. As
Nike is a well known shoes brand it targets customers mainly according to gender and
occupation. The brand ha mainly targeted two types of customers for their products such as men
and young athletes that takes part in various kinds of sports. This is because the brand has

11MARKETING STRATEY AND PLAN
portrayed itself as a sports shoe company. However, there are other accessories as well that the
brand manufactures for sport events. This made the company to take part in various kinds of
sports events and carry out sports sponsorships. However, the company has recently started
targeting the women customers by offering then various kinds of apparels and footwear. Nike
also target their customers according to their occupation such as sport persons that require good
quality shoe to run and jump (Hollensen, 2015).
Psychographic segmentation on the other hand, targets customers based on the thinking
such as brand lovers, quality shoe lovers and others. Nike also forms their target market for such
customers that have a passion for such good quality sport shoes and love to own high quality
brand in their wardrobe. Thus, the company targets the lifestyle and personality of their
customers. This is because people having passion for high quality shoes will be ready to buy
them at any price just for their comfort. Moreover, it will be easy for the brand to cut down its
customer types in better-streamlined way and carry out their marketing strategy accordingly.
Thus, Psychographic segmentation and targeting is very effective for the company while
analyzing their potential market for growth. Nike thus, presents its name in the market as one of
the premium shoe brand even though it has started manufacturing some women apparel too. (Pitt
& Berthon, 2016).
Competitors of Nike
Competitors play a great role while formulating strategy because they are the one that
take away the potential market share of the company. Thus, this makes it necessary to analyze
the strategy and the growth path of the competitors before formulating own goals. Nike too faces
severe competition from the sport shoes and footwear industry from other top and known brands
producing similar products and target similar customers. The main competitors of Nike are

12MARKETING STRATEY AND PLAN
Adidas and Reebok. Given below is the business profile analysis of the competitors that will help
Nike to improve their marketing and product goals. (Hill, Jones, & Schilling, 2014).
Adidas
Adidas offers a tough competition to Nike as it is a well known sports shoe brand with a
market value of $7 million and a revenue of $16 billion. Adidas also manufactures various types
of sports shoes, footwear and clothes. Every product has unique design that can suit the lifestyle
of all kinds of people. The brand also offers ranges of accessories and apparel such as jackets,
sweatshirts and others to the customers just like Nike. Adidas sells their product at low prices
compared to Nike and are affordable to upper middle class people. Thus, the brand uses
competitive pricing strategy to be in the business. The brand offers its products through various
distribution chain such as retail outlets, franchisee and online. Marketing activity of Adidas
includes television advertisements, sponsorships and product placement. Thus, such a strong
marketing hold and strategy of Adidas offers a tough competition to Nike (shop.adidas, 2017).
Reebok
Another tough competitor of Nike is Reebok, which is also a sports shoe brand and
mainly target the niche customer base in the market. However, the price of shoes of Reebok is
less compared to Nike and is affordable to the upper middle class people. The brand
manufactures products for men, women and children. This offers a wide customer range for the
brand. There are wide varieties of footwear that the brand offers to its customers such as
Reetone, ReeGym, ReeZig and ReeTrain. Each of these categories of shoes is meant from
different activities according to its material. The distribution of Reebok includes stores, outlets
and dealers. It also offers products through online channels. The brand is recently planning t

13MARKETING STRATEY AND PLAN
change its pricing strategy to reasonable pricing. Promotional activity of Reebok includes
television commercials with cricketers (shop4reebok, 2017).
From the above analysis it is seen that Nike faces a tough competition from these types of
brands as both the brands holds a strong position in their respective types of market. However,
Nike has certain competitive advantage over these brands as it has a financial strength then its
customers. This allows the company to maintain a hold in the market and carry out any
marketing strategy it wants to defeat its competitors. However, the brand is recently trying to
enter the women apparel and footwear market as well, which will again increase its potential
customers. It holds this competitive advantage.
7P’s of Marketing
Product
Nike portrays itself as a premium brand in the market of sports footwear by selling all
kinds of sports footwear at premium prices to the customers. There are wide range of products
that Nike offers such as Shoe, accessories and apparel. Further, it apparel includes sports apparel
and sport bags. However, the brad can start manufacturing women sports apparel as the number
of women are also including in the sports industry. This will help them to capture that section of
market as well (Editorial, 2017).
Price
Nike carries out a premium as well as value based pricing strategy for its products. This
is done by the brand to attract niche customers easily as well as some upper middle class
customers and increases it sales and profit. This is because the brad understands the value that

14MARKETING STRATEY AND PLAN
the products hold for the customers. However, it should try competitive pricing strategy for some
of its new women ranges that it is introducing in the market. This is because competitors of Nike
follows competitive pricing strategy and attract middle-income customers.
Place
Nike already sells its products through various channels such as retailers, Nike’s own
outlets and franchisee. They operate their stores all over the world through various venue
channels. Among all the channels retailers are the major distributors of Nike products. However,
it also offers products through online sources. The company can thus increase their online
distribution channel for their new product range of women apparel and footwear. This is because
online channel can allow the brand to capture a wide range if market easily (Nagle, Hogan, &
Zale, 2016).
Promotion
As the company already carries out promotion through channels like advertising, direct
selling, public relations ad personal selling. Thus, it will be profitable for them to extend its
promotional activities to online channels such as social media and online advertisements. This is
because people are becoming very active in online media and women are increasing shopping
from online sources (Dinner, Van Heerde, & Neslin, 2014).
People
The people of the company include the sales staffs, the in-store marketing professionals,
marketing managers and others that handle all the sales activities of the business. However, the

15MARKETING STRATEY AND PLAN
brand can still employee certain marketing managers or experts that can help them in carrying
out traditional way of marketing.
Process
The business process of Nike previously included manufacturing premium quality shoes
that they aimed to sale to the rich and middle-income customers. However, it is recently
targeting the women customers and trying to focus on using a new business model. This will
include introducing new cost effective techniques so that it can charge competitive price from the
women customers that mostly take part in sports.
Physical evidence
The physical evidences of Nike include putting its brand as a premium brand, which is
known for its rich quality and comfort for sports persons. Customers usually view the brand as a
footwear company focusing at quality. However, it can try to change its physical evidence by
manufacturing lightweight shoes and apparel for women sportsperson. This will help them cover
market for both the genders and all kinds of sports. This is because customer’s preference
depends on quality for footwear and it is better to target the quality of all types of customers.
Financial Information
The business information tactics has revealed that the company is trying to expand its
business by developing women products. Nike holds more than $6 billion in cash and
investments. The company is trying to fend off its competition in the coming years with much
financial flexibility. The revenue performance of the company is shown in the graph below:

16MARKETING STRATEY AND PLAN
2013 2014 2015 2016 2017
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Revenue
Revenue
Fig-Revenue of Nike
Source-Statista.com (2017)
The diluted earnings per share during the last quarter i.e. April-June 2017 rose by 22%
and this was driven by administrative expense and revenue growth. The fiscal diluted earnings of
Nike per share also rose by 16% i.e. by $ 2.52 and it reflects the revenue growth of 6%. A lower
amount of tax rate and average share count also rose by a small amount of lower gross margin.
Nike will continue to grow in this rate and become a leading brand in the dynamic environment.
The gross margin declined by 44.1% because the higher average selling prices are more offset by
certain unfavorable changes due to higher cost of the products and foreign currency exchange
(Nike News, 2017). The revenue growth was driven by the growth in every geography and
certain key categories such as Jordan Brand, Sportswear and Running. With the development of
women product, the company will increase its market share and revenue. This will help them

17MARKETING STRATEY AND PLAN
gain a competitive advantage over its competitors and help them gain a good growth in future.
The financial position of the brand is also estimated to improve with such kinds of strategy.
Conclusion
From the above analysis it can be deduced that Nike has been able to capture a wide
range of market and is a well-known brand in the sports footwear industry. However, it is seen
that company faces tough competition in the market from its competitors such as Reebok and
Adidas that offers similar kinds of produces and target the sportsperson. Thus, it is necessary for
Nike to increase its target market to women sportsperson as well as women are increasingly
being active in sports. Thus for the purpose various business model has been taken by the
company to target the women customers including competitive prices, online promotion and
others. Thus, it is seen that such kind of strategy will help the company to increase its financials
further and become offer tough competition to its competitors.

18MARKETING STRATEY AND PLAN
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DRM. Journal of Theoretical & Applied Information Technology, 95(17).

19MARKETING STRATEY AND PLAN
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20MARKETING STRATEY AND PLAN
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