Sample Assignment on Nike Corporation (pdf)
Added on 2021-03-17
6 Pages2050 Words38 Views
Nike, Inc- will Nike reach their revenue goal of $50 billion?1.0Executive SummaryNike Corporation has been able to create and sustain their brand over many decades due to various marketing strategies. These strategies have been desirable for a long time, however do they have the capability to achieve their $50 billion goal? The demand of various Nike products seems to fluctuate throughout the years. This case study highlights the history, competition, current fashion trends, and internal challenges of Nike, which impact its current position in society and around the world. As stated in the case study, the main aim of Nike is to “inspire and bring innovation toall athletes around the world”, whilst the vision is to “remain the most genuine, connected and most distinctive brand globally” (T. Rothaermel, 2019).John Donahoe is the new CEO of Nike, currently in Beaverton, Oregon, and is in the process of realising the importance of growth for Nike and focuses on how he needs to execute the vision. Donahoe has been appointed CEO while Oregon sports have been faced with numerous controversies and scandals, of which he needs to handle and manage. Will he be able to achieve the growth that he had promised? The following case study highlights the biggest challenges Donahoe will have to face and discusses the various competitive markets he will have to battle with to continue to lead and manage this favourably up-and-coming firm. The report will discuss the marketing environment which has an influence on brand positioning, the value proposition of the brand, and the internal and external challenges that will have to be overcome for the growth of the business. 2.0Pricing Why is it that people pay hundreds for Nike products when there are clearly other options that are much cheaper? Nike has developed and diversified its business and their products through the means of various acquisitions of which include the shoe companies Converse, Cole Haan, and Umbro, the athletic attire and equipment company. The rise of sneaker culture has ultimately risen the cost of sneakers and
therefore consumers are prepared to spend hundreds of dollars on Nike products as they view it as “good investments or bold statements” (Cain, 2019). The Air Jordan’s,Nike’s most well-known brand, is based on the popularity and famous legacy of Michal Jordan, the NBA star, is recognised by the iconic logo of Jordan dunking the basketball. They are made in China and cost just over $15 a pair, however, are priced on Amazon for around “$250-$550 a pair” (O'Keefe, 2017). Celebrity collaborations and endorsements have become extremely popular and are truly nothing in relation to sneakers. Entertainers such as Lebron James, Kobe Bryant, Christian Ronaldo and many more, are able to attract and leverage the existing fanbase that they have createdand hence have helped boosting products. The symbol of the Nike tick also plays a large role as it sells a mentality for consumers to purchase it and to “Just Do It”, promoting it in a way that captures the audience while not making them feel guilty either. Nike’s competitors including Adidas, Under Armour and New Balance all need to work hard to overcome each other ways of promoting and selling similar products. Pricing a product ethically is such a big decision for companies to make, and “fair pricing” is used by producers to sell products at wholesale costs. They need to be able to pay for employment, materials and other things to make the products with a margin of profit that is reasonable. Retailers will have to bump up the price up a few times higher so that they can pay for their employees and overhead with a considerate profit margin for the company (Springs, 2020). However, considering other aspects such as unethical advertising, use of child labour, environmental degradation and more, the ethicality does decrease. 3.0 BrandingNike has acquired several apparel and footwear companies, with many footwear factories and nearly 365 attire factories that generate Nike’s products around the globe. As stated in the case, Nike owns Converse, Hurley and the Jordan brand, all of which have made significant revenue, as well as being diverse from pure athletic apparel to swimwear. By keeping these brands, they result in more sales, as seen by the case study, the Converse brand, they plan to doubling their sales from $2 billion to$4 billion from 2015 to 2021 respectively. (T. Rothaermel, 2019). Diversification strategy is an important strategy used by many companies to increase profitability and the overall success of the brand. It helps companies expand and explore industriesthat they haven’t so yet (Pilcher, 2020). By diversifying and expanding their horizon,
companies minimise the future risks of “industry downturn” (Pilcher, 2020). As mentioned in the case study, similar to Nike’s inspiration SONY, it highlights the importance of maintaining diversity among various product lines to allow consumers to think of Nike as a brand that provides a wide variety of products from premium products to casual wear too, done by Converse. Nike should definitely keep all of its brands such as Converse, Hurley and the Jordan’s as they continue to provide extra revenue for the business. Entertainers are able to promote these brands online, via Instagram and Twitter which now are some of the most popular ways consumers purchase items. 4.0 Marketing EnvironmentIt is really important that the marketing environment is analysed, in order for there to be differentiation between businesses, and hence to allow for the greater success of the business. Some challenges that Nike faces within its macroenvironment is the social culture of its brand, since there have been many controversies with the business, and scandals, positioning the brand at great risk. Throughout the years, few of the so called “Nike’s heroes”, were so called “cheaters, frauds, and criminals”, withsome committing serious offences. As long time CEO and chairman Phil Knight has said, these scandals are “part of the game”. For example, as mentioned in the case study, “NBA star, Kobe Bryant was accused of rape”, “Tiger Woods was engulfed in a sex scandal”, “Michael Vick was charged with conviction of running a dog-fighting ring and engaging in animal cruelty” and many more likewise (T. Rothaermel, 2019). The “Boy’s Club” was another major controversy where women also complained about the minimal opportunity for promotions, the pay differences between gender and inappropriate work behaviour which all present a major challenge that Nike faces in relation to the workplace culture. John Donahoe must address this and press the importance of culture to value diversity and inclusion within the workforce. The business is always open to public eye as it is more engaged in social and political advertising. Therefore, the CEO, John Donahoe should definitely be more focused on encouraging diversity, improving leadership training, and modifying the current HR processes to minimise such scandals in the future.5.0 Competencies/Sustainable Competitive Advantage
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