Marketing Management: Case study of Nike

This case study explores the marketing strategy of Nike, a leading sports apparel and footwear company. It examines the company's target customers, competitors, and market research efforts. The study also discusses Nike's 5Cs - Company, Customers, Collaborators, Competitors, and Context. The analysis provides insights into Nike's marketing strategy and its success in the sports goods industry.

Running Head: Nike
Marketing Management
Case study of Nike
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Running Head: Nike
Table of Contents
Nike: Company Overview..........................................................................................................3
Nike 5Cs.....................................................................................................................................4
Company................................................................................................................................4
Customers...............................................................................................................................5
Collaborators..........................................................................................................................6
Competitors............................................................................................................................6
Context...................................................................................................................................7
Market Research:.......................................................................................................................8
Customer Demands:...............................................................................................................8
Competitor’s Moves:..............................................................................................................9
Context Change:.....................................................................................................................9
Marketing Strategy for Nike:...................................................................................................10
Objectives of Marketing Strategy:.......................................................................................10
Segmentation, Targeting and Positioning............................................................................10
Nike Market Segmentation:.............................................................................................10
Target Marketing..............................................................................................................11
Positioning:......................................................................................................................12
Marketing Mix Strategy: 4Ps...................................................................................................12
Product:................................................................................................................................12
Pricing:.................................................................................................................................12
Place:....................................................................................................................................13
Promotions:..........................................................................................................................13
Conclusion................................................................................................................................15
References................................................................................................................................16
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Running Head: Nike
Nike: Company Overview
The company Nike Inc. is all about providing innovative products and gears for athletes. It’s
a leading sports apparel and footwear company. The brand mainly targets athletes by selling
related products like sporting equipment, clothes, and shoes. The footwear and athlete
industry are characterized by increased competitive rivalry and it is highly fragmented, and
yet, Nike holds a very strong position. Over the last ten years, Nike the sporting goods
industry has witnessed a consistent growth because of the modest increase in the sports
participation ratio. There has been a continuous demand for sporting goods, which has
created a perfect opportunity for companies like Nike (Ryan, 2016).
The top players of the sports goods industry are forecasted to observe 20% more revenue by
the year 2025(Araujo, Caldwell, and DeFanti, 2018). The market for sports goods like
footwear has been on an increase and this industry is projected to witness sales of more than
89 billion in the U.S in the year 2020. That explains why Nike has been using vertical
operations for implementing new technologies and to examine the latest customer trend
(Baena, 2017).
Nike had tremendous growth all over the United States. Not only did it make itself one of the
leading brands of the U.S athletic market but also covered 50% of the market share with a
span of ten years. The company then made a great deal with Widen Kennedy and started
investing in multiple marketing mediums to reach the target buyers and spread awareness
about their products. By the year 1980s, Nike had already established brand recognition by
making the association of sports and athletes with its product offerings (Araujo, Caldwell,
and DeFanti, 2018).
For Nike, the mission has been to bring both innovation and inspiration to all the sports
players and athletes in the world. Nike’s chief vision is to continue its legacy of creative
thinking. They strive to do this by either developing unique products which athletes of all
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abilities can use to reach their potential, or by creating distinct business opportunities which
the company ahead of its competitors and adds value to their shareholders (Brohi, Prithiani,
and Chawla, 2016).
Nike 5Cs
Company
Founded in the year 1964, by Phil Knight and Bill Bowerman, the original name of this
popular brand was Blue Ribbon Sports. Initially, the company started its operation as a
Japanese distributor for a local shoemaker from Japan, Onitsuka Tiger. In the first financial
year, Blue Ribbon Sports sold over 1300 shoe sets made by the Japanese manufacturer and
had a net worth of $8,000. A few years later, BRS launched it’s a very first retail store in
California (Zhang, 2018).
After the successful operation of their first store, the company started expansion in multiple
regions in Wellesley. Then, in the year 1921, when the partnership with Blue Ribbon Sports
and Onitsuka came to an end, BRS was quick to introduce its range of footwear. Their
product line mainly included sports shoes. It also included the Swoosh by Carolyn Davidson.
The same year, Nike utilized Swoosh and registered itself with the US trademark and patent
company by the year 1974 (Sichol, 2019).
Now, Nike offers an exclusive range of products that are brought by customers all over the
world. Not only are Nike’s product offerings globally popular, but they are also known for
their durability, quality, and innovative designs. As of FY 2015, Nike generated an income of
$3.30 billion and was recorded to have collected the revenue of 30.6 billion(Nufer, 2016).
Nike generated over $12 billion of free income through its global operation. The company
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Running Head: Nike
continuously strives to expand its product offering and penetrate international markets
(Sichol, 2019).
Customers
Nike products are world renowned. All thanks to the brilliant advertisements, campaigns, and
word of mouth strategies Nike has been using over the years. Nike’s target customer has
always been athletes and people who play sports or want equipment that is highly
comfortable and also doesn’t interfere during the play time. One can segment Nike’s
customer into three broad categories:
1. Athletes: This is the second widely exploited area by Nike. Apart from sponsoring
famous athletes and creating products for sportsmen, Nike is targeting the young
athletes who aspire to play sports. These young children are an important part of
Nike’s marketing plan. The company advertises to appeal to this segment and gets the
young players to buy their products. That explains why Nike has been sponsoring
clubs, sports federations, and local leagues (Baltes, 2015). Nike also has partnered
with professional sportsmen with the purpose to draw the young athletes in. To target
this specific range, Nike has partnered with the NFL, where all the NFL players wear
Nike products (Schmid, Dauth, and Leding 2018).
2. Runners: Nike has always focused on the running shoe line. That’s why there has
been a very fast pace for innovative running shoes. They have a very robust pipeline
that guarantees exclusive production where the product is developed under a state-of-
the-art approach and with the advanced technologies. Another reason for Nike to
target this segment is to compete with the running apparel companies like Under
Armour, Adidas, and Lululemon. To further enrich their product offering, Nike
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Running Head: Nike
Launched a running app that allows the users to track the distance they’ve covered,
check the pace, time, and route, and the calories they’ve burned (Stoeva, 2017).
Collaborators
Nike’s key collaborators are primarily headquartered in the South and East Asian countries.
As of the 2015 fiscal year, these companies who mainly supply and distribute the products
were operating in China, Vietnam, and Indonesia. Mainly Indonesia and China account for
90% of the supplier needs (Schmid, Dauth, and Leding 2018).
One of the main suppliers with whom Nike has been collaborating for years is Pou Chen
Corporation, which is also one of the largest shoes manufacturing company in the world. This
company alone accounts for 20% of the international footwear market for both casual and
athletic wear. Apart from producing shoes for its own retail business, Pou Chen also operated
under Nike and provides the raw material for footwear (Stoeva, 2017).
PT Pan Brothers Tbk is also a key supplier, headquartered in Indonesia. The company
produces garments like casual clothing, outdoor sportswear, and fashion products. The
company has collaborated with Nike for supplying the material for its international clothing
brand. Apart from Nike, PT Pan also supplies similar products to Under Armour, Calvin
Klein, and New Balance (Heroux, 2017).
Fulgent Sun International Holding Company is a key supplier for Nike. The company has had
a long association as they manufactured shoes and footwear equipment under contract for
brands like Nike. It has been supplying Nike with shoes for more than ten years. Another key
supplier for activewear, women apparel and leisurewear is Delta Galil Industries (Motion,
Leitch, and Brodie, 2013).
Competitors
Nike has mainly two competitors, who are also the leading players of sports good industry:
Reebok and Adidas. Both these companies have a product that is in the same line as Nike. All
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the products and sports goods involved in the marketing and design Reebok and Adidas have
fitness as the main perspectives, which is the same as Nike. However, Nike has distinctive
competency and differentiation in the marketing area. Nike has strong brand power and it
creates brand awareness through investment in product positioning and advertising. The
market campaign of just do it emphasized sportsmanship, fitness, and competition (Flynn,
2015).
In the Global Market of Sports goods, Nike has a market share of 30%, Reebok has a market
share of 10%, and Adidas stands at 18%. After Reebok and Nike, other key competitors are
Puma, Fila, and Converse (Davis, 2016).
Context
Some of the factors that affect Nike are Political, Economic, and Legal factors.
Political Factors affecting Nike:
 The worker’s right, fair pay, and employment laws are likely to affect the company’s
internal operations.
 Nike has had positive sync with government policies which support their growth,
mainly in the United States.
 The company can always take help from the US and foreign governments since they
have a favourable relationship with them (Holtbrügge and Schuster, 2017).
Economic Factors affecting Nike:
 Nike sponsors varying ranges of sports events and matches, and it gets
sponsorship from several other companies as well.
 In the future, there can be a risk related to the exchange rate, interest rate, and
currency exchange issues for Nike.
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Running Head: Nike
 Due to inflation, material prices and production cost can increase, which can
reduce the revenue and cash flow (Holtbrügge and Schuster, 2017).
 Nike is likely to create more jobs and offer employment opportunities.
Social Factors affecting Nike:
 Given the quality and innovative products Nike offers, they have a loyal customer
base who have become brand conscious.
 The changes in health awareness and lifestyle, and the need to participate in sports
activities are going to create opportunities for Nike.
 The increasing market opportunity in the women segment.
 Customer preferences and demands are always changing, and so, Nike will need
to broaden the product differentiation (Holtbrügge and Schuster, 2017).
Technological Factors affecting Nike:
 Through technology, the company will need to introduce highly innovative
products.
 Companies similar to Nike are creating a mobile app and offering website services
from where buyers can shop online. Nike can use the same(Holtbrügge and
Schuster, 2017).
Market Research:
In order to stay competitive and to maintain its position in the market, Nike uses the
Quantitative research process. This is used to measure what customer are demanding,
understand the specific trends and topics.
Customer Demands:
The company gathers the interest of its consumers and potential buyers through various
different tools like online surveys, questionnaire, and feedback generation system. To
understand buyer’s demands, the online surveys are conducted from time to time that
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Running Head: Nike
questions what women, men, typically wear for playing sports. These questions also seem
answers to how important product sustainability is for the buyers. The questionnaires are used
to understand how much buyers are willing to spend for the sustainable gears, and they also
focus on understanding the importance of both fashion and functionality for the buyers
(Castle &Bebek, 2017).
Competitor’s Moves:
In order to stay ahead of its competitors, Nike keeps a close watch on its competitors. As
soon as Adidas and Reebok launch a new product or participate in a new form of
advertisement or adopt a new marketing tactic, Nike reacts rather aggressively. It uses the
branding and scales advantage it has to beat the competitors move (Childsand Jin, 2018).
With Worldwide revenue of $16 billion, Adidas is the key competitors. The company has a
very strong subsidiary in Reebok and it operates alone as Adidas brand as well. This
combination has given Adidas a very strong position in the industry. It has a brand valuation
of $7 billion and it competes with Nike on the basis of clothes, footwear, and
accessories(Childs and Jin, 2018).
Reebok, on the other hand, stands third in the top player in the sports good industry. It is a
subsidiary company by Adidas but it operates independently. Reebok has revenue of $3
billion and a brand valuation of $1 billion. Reebok products are known for innovative designs
and the latest sports footwear. To compete with Nike, Reebok has been sponsoring various
cricket, football, and sports matches and events. Through its sub-brands like Reebok Pump,
Reezig, and Rex, it is the second biggest Nike competitor(Childs and Jin, 2018).
Context Change:
Since the context can change for any company, depending on the external factors and
environments, Nike makes sure to conduct PESTEL analysis from time to time. The analysis
of the political, economic, social, technological, and legal factors helps the company to
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review the strength and weaknesses. Nike recently acquired an analytics platform called
Zodiac, which explains how robust they are in terms of analyzing both the external and
internal environment of the business. Zodiac is a platform which leverages an organization’s
logs, historical transactions and trends to predict the future buying habits, enhance the
forecast accuracy, assess the impact of external factors, and reduce the churn (Childs and Jin,
2018).
Marketing Strategy for Nike:
Objectives of Marketing Strategy:
 To produce high quality and value-based products
 To increase the profitability of up to 3% in each of the product lines
 To meet buyers, demand by making sustainable products worldwide
Segmentation, Targeting and Positioning
Nike Market Segmentation:
Demographic Nike should segment the products for the
buyers in the age group 15 to 55 years. A
promising market for Nike is Woman athletic
wear. This way they can target the young
female athletes, sportsmen, sportswoman and
people in late adulthood who want to achieve
fitness.
Psychographics Nike can segment products here by offering
athletic and sports-oriented benefits and also by
an active lifestyle. This way the buyers from
both the type of psychographics can be roped
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in. Buyers with interest in sports and also the
buyers who are interested in exercise and
fitness for recreation.
Geographic Nike can segment the product ranges to serve
buyers all over the world. Since it has the major
market in the USA, Asia, and Europe, it should
penetrate in other countries like China, North-
America, Japan, and the Middle East.
Target Marketing
Nike’s marketing tactic should comprise of aggressive marketing for people in the 15-55
years age group, with a special focus on people in late adulthood too. It should make buyers
aware of the product range and also advertise how they can get customized products. Their
targeting strategy can also include product sponsorship through celebrities and sports team
(Lee, Cottingham, and Park, 2016).
Ever since Nike expanded its product offerings for woman, the company witnessed
tremendous revenues. So, Nike should expand its operations in several countries to offer
woman apparel, mainly tights, leggings, and sports bras. One of the top-selling products in
this segment are running and training apparel for women. The sales for these products have
grown twice in the last quarter, which has outpaced the men’s business (Holland, 2015).
Under this segment, Nike should target the women aged between 20 to 30, and strives to
provide them with the athleisure trend. They compel the customers to buy special leggings
and tights with the intent to wear them to brunch, errands, and gyms. Nike already forecasted
that the women section like alone could add $5 billion in additional sales for them in the year
2020 (Hertrichand Mayrhofer, 2015).
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Running Head: Nike
Positioning:
Nike should position itself as a premium company that offers well-designed products with
appealing style and innovative approach. The positioning strategy should be enhancing the
athletic lifestyle of men and women, and appeal the valuable products and quality level.
Marketing Mix Strategy: 4Ps
To continue playing a leading role in both the footwear and apparel industry, Nike will need
to strengthen the marketing mix by exploiting the 4-Ps for the target market (Chaffey, Dave,
and Ellis-Chadwick, 2019)
Product:
The company should also launch the couture-style women collection where the main products
are the lace-trimmed jerseys and skirts. Apart from tights and leggings, the couture and lace
trimmed jerseys offer a promising product segment for Nike. Since Nike has been selling
shoes and gear for football, baseball, tennis, and golf, now the company should also sell the
products for aquatic activities and other equipment that can be used for recreational activities.
This will appeal to the people in middle and late adulthood. All these products should
collaborate with the NIKEiD, which is a sub-brand which lets the buyers design their
personalized NIKE footwear (Chaffey, Dave, and Ellis-Chadwick, 2019)
Pricing:
So Far, Nike Pricing Strategy has been competitive. For these products that target women and
elder men, Nike should use the value-based or cost-based pricing strategy. The product
shouldn’t be of low prices because most the customers of Nike are those who are capable of
affording the product because of the quality it promises. Buyers are willing to spend more as
long as Nike ensures the same high quality and service (Kingsnorth, 2017).
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Running Head: Nike
Place:
These products for women can be conceded in multi-brand stores and also in the Nike
exclusive shops. Since Nike already has over twenty thousand retail channels, they can use
the same to distribute these products. Nike can reach international markets through its
independent distributors, suppliers, and collaborators. To decrease the production cost, Nike
can use outsourcing strategy with countries like India and China. Online selling is a great
bonus which Nike can use by investing in online marketing channels and online marketing.
Nike can also distribute these products through Nike town shop, Nike Flagship shop,
NIKEiD, and the big retail discount stores (Mahdi, Abbas, and George, 2015)
Promotions:
Nike already has had a track record of making the most through its promotions and
advertisements. Nike ad campaign yields great response from the buyers all over the world.
For the new products, Nike can do the following:
a. Advertising
i. Internet
 Social Media (Facebook, Twitter, Facetime)
 Personal Emailing Campaign
 Online Ads and Videos
ii. Traditional media
 Outdoor Banners
 Posters around metro cities
 pamphlets distribution.
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b. Public Relations
 Media release
 Press release
c. Consumer Sales Promotions
i. Online Promotions
 Online blogs and articles product details and benefits.
 Photoshoot pictures sharing online.
ii. Traditional Promotions
 Contest and Coupon distribution
 Complementary giveaway contests
d. Direct Response
i. Offline approaches
 Loyalty programs
 Membership Cards
ii. Online approaches:
 Bulk Emailing
 Online ads the potential customers
e. Event Marketing and Sponsorship
 Large scale product launch
 Sports events sponsorship
 Celebrity Brand Ambassadors
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Conclusion
Nike products are world renowned. All thanks to the brilliant advertisements, campaigns, and
word of mouth strategies Nike has been using over the years. Nike’s target customer has
always been athletes and people who play sports or want equipment that is highly
comfortable and also doesn’t interfere during the play time. For the new product, Nike should
target women and differentiate their products in this segment. Since Nike has been selling
shoes and gear for football, baseball, tennis, and golf, now the company should also sell the
products for aquatic activities and other equipment that can be used for recreational activities.
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