Nike's Marketing Communications Strategy: A Critical Analysis

This report examines Nike's marketing communications strategy, analyzing its effectiveness during the PyeongChang 2018 Olympic Winter Games. It delves into the company's use of celebrity endorsements, public relations, and sales promotions, evaluating their impact on brand awareness and consumer engagement. The report also explores the role of marketing theory and models in understanding Nike's approach to global marketing.

Marketing Communications
Student Identification Number:
Word Count: 4109
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Table of Contents
Introduction................................................................................................................................3
Task 1.........................................................................................................................................4
Task 2.........................................................................................................................................8
Task 3.......................................................................................................................................12
Conclusion................................................................................................................................16
Reference List..........................................................................................................................17
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Introduction
The process of marketing communication is used by organizations to attract consumers and
interest them in the organization’s products and services. The marketing communication
process includes advertising the products, building brand loyalty, and interacting with
consumers through direct selling and feedback. This business report aims to evaluate the
methods of marketing communications used by multinational company Nike, Inc. The report
attempts to develop a suitable marketing strategy for Nike, while analysing the importance of
the various elements of the communication process for marketers. Additionally, the report
evaluates the effectiveness of Nike’s marketing strategy during the PyeongChang 2018
Olympic Winter Games.
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Task 1
Using a multinational organisation of your choice with brief description of the latter, its
range of products, analysis of the specific product and profiling of the target market,
critically evaluate different methods of marketing communications being used currently
and evaluate the contemporary internal/external factors that are influencing the board
of directors in decision making for each stage of consumer buying process. Use relevant
marketing theory and models to justify your answer.
Initially established as Blue Ribbon Sports in 1964, the company shifted from selling
Japanese-made shoes to launching its own product line as Nike, Inc. in 1971. Nike is known
for its high quality sports footwear and apparel, designed for comfort, flexibility and high
performance in sports such as football and basketball. In the current scenario, as of 2017,
Nike had earned a gross profit value of over $15 million and a total revenue figure of more
than $34 million (nasdaq.com, 2018).
Nike’s range of products includes products for men’s training and women’s training (sports
apparel and footwear), footwear for casual purposes, customized apparel with team/institute
logos. Nike also sells specialized sports equipment such as backpacks, caps, shin guards,
gloves, footballs and other gear. Meanwhile, Nike has purchased several clothing and
footwear brands, and retails their products as well. These brand include Cole Haan, Umbro,
footwear brand Converse and Hurley (Brenner et al, 2013).
The marketing theory, which can be used to understand Nike’s market segment, is STP, a
combination of three processes-
Segmentation- Market segmentation may be understood as the process of separating an entire
consumer market into specific parts, or segments, the basis for differentiation being the
consumers’ demands, interests, and demographic location (Solomon et al, 2014). In Nike’s
case, the organization employs the psychographic segmentation strategy to identify its market
segments. The consumers who are interested in purchasing high-performance athletic and
sports products are in one segment, while consumers who want high quality comfortable
footwear for regular use are in another segment.
Targeting- As a continuation to the segmentation process, targeting aids the company in
identifying the most profitable and sometimes broader consumer segment (Tanner and
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Raymond, 2015). For Nike, targeting is particularly essential as a communication strategy as
it is a vast company with an equally wide market full of diverse consumer segments. Nike
uses differentiated targeting strategy to market its products to consumers based on
demographic differences, factors such as age, income group, gender, area of profession, and
personal interests.
Positioning- Market positioning is based on extensive market research, observation of the
competitors’ branding strategy, and an effort to fortify the brand image of an organization in
the minds of the target consumer segments. Positioning also entails following a certain
perspective, a set of norms or values that will continue to define the brand for consumers
through the years. For Nike, the use of the “Swoosh” logo as a trademark, and their signature
slogan “Just Do It”, has served to establish the brand and strengthen its position in the global
market, making it a well-known brand even in segments of non-buyers.
The methods of marketing communications used by Nike include the following:
Advertising- Advertising is the most important process of marketing communication, as it
helps in building the brand image (Aaker and Biel, 2013). It is a highly effective tool used by
companies to bring their products into focus and attract consumers. Nike’s advertising
strategy is well-planned and delivers strong messages through the ads, using concepts that
consumers can relate with personally.
Personal Selling- Personal selling is done through the medium of retail salespersons and
sales assistants in store locations. Nike’s stores have skilled salespersons who work diligently
to understand the customer’s expectations from a Nike product, and attempt to give a
personalized experience to the consumer.
Sales promotion- The promotion process is important for an organization to build a new
customer base, increase the number of sales, and empty the inventory and gain recognition
(Teck Weng and Cyril de Run, 2013). Nike offers discounts and sales as promotional
activities. The company also promotes the products via famous sportspersons such as Tiger
Woods, Lance Armstrong, Wayne Rooney etc.
Public relations- Public relations refer to the process a company uses in establishing a
positive image and a good relationship with the consumers and public. The company aims to
communicate with the public via press releases, events etc to answer queries, dispel rumours
and demonstrate ethical, productive practices. Nike’s reputation was affected adversely when
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the company was accused of neglecting the welfare of its sweatshop labourers, and extensive
PR strategies had to be employed to regain a favourable reputation.
Direct marketing- Direct marketing includes corresponding with the consumers directly via
e-mails, newsletters, feedback forms, surveys etc. The company contacts the consumer to
seek feedback on products and to promote newly launched or discounted products.
Apart from marketing theory and the STP process, several factors influence the decision-
making process of the organizational board of directors at Nike. The internal factors affecting
decision making at Nike may be identified by a SWOT analysis.
Strengths: Nike enjoys immense popularity and brand loyalty from its consumers. Because of
its distinctive Swoosh symbol and the “Just do it” motto, as well as its consistently strong ad
campaigns, Nike has become a household name (Dingilian, 2016). Today, Nike is one of the
most popular companies dealing with the design, manufacture and selling of quality, stylish
and high-technology sports products.
Weaknesses: After years of evading queries regarding its manufacturing process and location,
Nike finally disclosed that production took place primarily in Asian and Mexican sweatshops,
which were then discovered to offer terrible work conditions, substandard provisions for
labourers and pay scale lower than the minimum wage (Kennedy et al, 2017). This damaged
Nike’s reputation as the organization did not respond as effectively as human rights
organizations had demanded, and was slow to rectify the deteriorated situation. Another
weakness of Nike is that the revenue of the company is still heavily dependent on footwear
sales. If those sales go down, Nike’s overall performance will suffer.
Opportunities: Nike’s position as a globally reputed and established brand provides several
opportunities for the company to expand product line. As consumer trends shift towards
casual, comfortable but stylish clothing, Nike can utilize this demand to innovate on new
regular wear clothing and fashionable sportswear for the upper bourgeois consumers who
frequent class-conscious sports activities such as golf.
Threats: Nike faces considerable threat from competitors in the industry such as Adidas.
Adidas and Nike are always competing to offer the most competitive prices, and as of 2018,
Adidas is still offering products at lower prices than Nike, enjoying a Value for Money score
of +12 as opposed to Nike’s comparatively poor +6 score (yougov.co.uk, 2018). Although
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Nike’s ad campaigns continue to perform almost 50% better than Adidas’s, the threat of
competition persists.
The external factors affecting Nike’s decision making processes can be identified using the
PESTLE analysis tool. The analysis will be done focusing on the UK economy.
Political: Political stability in UK has deteriorated post-Brexit. Trade agreements are still
underway and new regulations are now required (Jessop, 2017). Analysts predict that UK will
not have such beneficial trade relationships as it previously enjoyed with EU, and new tariffs
may be imposed on imports. This may have a negative impact on Nike’s sales in UK.
Economic: Due to the recession in the economy after Brexit, consumers’ purchasing power
has lowered considerably (Morgan, 2017). Generally, consumers are more likely to spend on
essentials and only very specific luxury goods. Nike’s pricing is higher than Adidas’s, and
that may mean more popularity and sales for Adidas to enjoy, while Nike must reprice or
revise its strategy.
Social: Due to rising levels of pollution, stress and a largely sedentary lifestyle, UK citizens
have now become considerably health and fitness-conscious (Boulos and Yang, 2013). This
factor will have a positive impact on Nike’s performance in UK, as the company sells a wide
range of sportswear and equipment for various sports and exercise.
Technological: With technological advancement, consumers have more specific demands
and expectations from products (Baden-Fuller and Haefliger, 2013). Football is an important
sport in UK, and top football clubs wish to purchase only the best quality sports shoes and
equipment that use innovative high-technology processes. This may benefit Nike as the
company uses advanced technology to design products.
Legal: The legal implications of Brexit on UK have left the UK government studying
erstwhile applicable legislations and assessing which legislations to retain and impose in the
current scenario (Corpgov.law.harvard.edu, 2016). Nike has faced some legal difficulties in
the past regarding sweatshop production, mismanaged labour practices, and the Stakeholders
vs. Nike case. This might lead to an amendment of practices by Nike in UK.
Environmental: Consumers are becoming increasingly conscious of the damage sustained by
the environment due to past and continuing practices. Several businesses in UK have begun
to adopt sustainable solutions for their operations, particularly under CSR initiatives. Nike
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has shifted its production focus to environmental sustainability by making their footwear
easily recyclable, using organic cotton, and adopting ethical practices.
Task 2
Using the same organisation in task 1 develop a marketing communication strategy and
evaluate why marketers need to understand the elements of the communication process
before planning their global marketing campaign. Use relevant marketing theory and
models to justify your answer.
The marketing communications strategy refers to the marketing processes planned by an
organization to build a positive image of its brand. The aim is to inform consumers regarding
the products, and to enhance the hold of the brand on the consumer market. A good
marketing communications strategy enables the organization to sustain a good relationship
with consumers, earn considerable profit, and garner a reliable reputation with stakeholders
(Mulhern, 2013). Nike uses various tools and processes to develop an effective marketing
communication strategy-
4 Ps of Marketing- The 4 Ps of marketing mix are essential to any marketing
communications strategy.
Price- Pricing of the product depends on key factors such as the brand’s value and reputation
as understood by consumers. Nike is a popular brand for sports shoes, apparel and equipment;
and most consumers will agree to pay a little more for the brand.
Product- The factors that revolve around the product include the life cycle of the product, the
uniqueness of the product and the consumer segment targeted (Gordon, 2012). Nike’s
footwear is popular because of high quality, innovative design and assured comfort.
Promotion- Marketing processes such as advertising, limited period deals, direct selling and
public relations comprise the promotion process. Nike develops unique ads and provides
many incentives to customers.
Place- This element determines which distribution channel the product should go through, to
reach the biggest part of the target segment. Nike’s products are available online as well as in
physical stores.
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Consumer buying behaviour process- The consumer buying behaviour is determined by six
stages. Understanding this process is crucial to successful marketing and sales, as it reflects
the psychological makeup of a consumer’s mind while buying a product (Solomon et al,
2014). With reference to Nike, in the first stage of the process, the consumer will recognize
their need or desire for a product, for example, running shoes.
In the second stage, the consumer will begin to look for solutions, that is, they will look at
different companies selling running shoes. Nike has already established its reputation for
selling quality sports shoes, which means that the consumer is likely to consider Nike as a
primary option.
In the third stage, the consumer will analyse which company is the best one to purchase the
shoes from. Nike faces tough competition from Adidas, and thus, Nike must price its
footwear more competitively, and offer deals and discounts.
In the fourth stage, the consumer will have decided to either make the purchase or discard the
option (Gensler et al, 2012). If the consumer abandons the purchase, Nike will attempt to
change their mind by reminding them why they considered Nike shoes in the first place. In
case of online purchase, a strong Call To Action sent by e-mail, may convince the consumer
to buy the product.
The fifth stage is the penultimate one in which the consumer actually makes the purchase.
Nike will have to ensure that their purchase and billing system as well as purchase-related
information is up to date, so that the consumer does not get frustrated or confused, and can
make the purchase successfully.
The sixth stage is important to understand, in order to ensure future purchases by the
consumer. The consumer will try the product out, and assess whether it has satisfied their
needs and provides value for money (Mihart, 2012). In this stage, Nike must send a follow-up
e-mail or feedback form to gauge the customer’s satisfaction. Returns and refunds should
ideally be a simple process with as little hassle for the consumer.
Use of push, pull, and profile strategies- Nike has demonstrated maximum use of the Pull
strategy to attract consumers and increase its sales. According to the pull marketing strategy,
the consumer is an active participant (Lai et al, 2012). The consumer follows the progress of
an organization to get knowledge about new products, promotional offers etc. Nike can afford
to use this strategy as it enjoys high brand loyalty from consumers, who will follow the
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brand’s progress on social media and Nike’s websites, and will subscribe to e-mail
correspondence.
However, Nike can implement the use of push strategy along with pull strategy. Nike’s
advertising strategy is already good, and the ads are effective enough that the company can
now focus more on using push strategy. Nike practices personal selling to some extent in the
store locations, where the salespersons guide the customers to find the perfect footwear for
their required purpose and desire. Nike may need to use the push marketing strategy to boost
the sale of new products. Additionally, push marketing is effective when there are other
substitute products in the market, which consumers may choose to purchase. Push marketing
will help Nike to stay ahead of its primary competitor, Adidas.
The use of profile strategy helps a company build its reputation. While profile strategy takes a
good amount of time to take effect, practising this strategy will help Nike gain good publicity
and will convince its investors that Nike is a reliable organization. Through well-channelled
public relations initiatives, Nike can attempt to reduce the negative impact caused by
previous litigations against the company. Partial use of profile marketing may be seen in
Nike’s continuing sponsorship of reputable sports celebrities, and the CSR initiatives to find
sustainable solutions.
Product Life Cycle Management Plan- The product life cycle consists of the conception,
development, production, sale and finally, withdrawal of the product from the market. There
are primarily four stages associated with the Product Life Cycle: Introduction, Growth,
Maturity and Decline. Developing a Product Life Cycle Management Plan helps the
organization gain useful insight on the steps that should be taken during product development
and marketing (Stark, 2015). This plan also gives indication to the stakeholders regarding the
product’s actual performance compared to the expected performance. Nike will consider the
four life cycle stages when it is formulating the Product Life Cycle Management Plan-
Introduction: Once the product has been conceptualized and developed, it is then launched in
the market with the use of appropriate marketing tools. Even though Nike is a reputed brand
for sports shoes, the company cannot expect high sales initially, as other competitors like
Adidas, Reebok and Puma are launching products continuously.
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Growth: The number of sales will rise if the product is promoted effectively. For Nike, this
includes extensive advertisement, special offers and limited period deals sent by e-mail, and
sponsored events. The boost in sales and profits will be significant in this stage.
Maturity: In this stage, the maximum number of sales has been achieved, and the product has
reached the highest popularity possible (Hellweg and i Canals, 2014). To retain its product in
the market, Nike will have to reprice it, at least until it regains popularity. Brand loyalty will
help Nike in this stage, because a portion of loyal consumers will buy the product even after
it has lost its novelty.
Decline: Decline is the last stage, in which a product becomes obsolete due to lack of
demand. The lack of demand might stem from availability of new technology and innovated
products by other companies. To avoid slipping into decline, Nike will invest heavily in
research and development. This will help to identify emerging market and consumer trends
and to develop new products, which will immediately replace the outdated one.
Thus, a marketing communications strategy is helpful to identify the customer base and the
target audience (Mulhern, 2013). The strategy helps in understanding the consumer buying
behaviour process, which the organization can use to achieve productive results with
consumers. An understanding of the push, pull and profile marketing strategy can aid the
organization in identifying which strategy it should adopt. Finally, the Product Life Cycle
Management Plan adds efficiency to the organization’s marketing process.
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Task 3
Critically evaluate the effectiveness of NIKE marketing communications strategy
during the PyeongChang 2018 Olympic Winter Games.
Use relevant Marketing theories to justify your answer.
‘Marketing communication’ refers to the process through which a company targets the market
and creates awareness about the brand by the help of promotion. Nike in the PyeongChang
2018 Olympic Winter Games used many communication tools to promote its services and
product. Nike thought that the PyeongChang Winter Olympics is the right time to promote its
services as it would get the opportunity to cater to a larger audience. Nike desired to inform
the customers about the brand. The company tried to encourage the customers present in the
auditorium and also watching television. Nike has made use of hoardings and banners in the
Olympic ground to create awareness about the brand. Some of the marketing communication
strategies are:
Celebrity endorsement:
During the course of the Olympic game, Nike has offered celebrities to promote the brand. In
psychology, if a human being has a good reputation then any product advertised by the
person is also assumed to be good by the customers. Similarly, Nike used the approach of
celebrity endorsement. Nike has provided apparels to the players and the celebrity for
promotional purpose. The celebrity wearing the jersey having the logo of Nike has created an
impact in the minds of the customers. The customers have developed trust for the brand and
the quality of the products (Strauss and Frost, 2016). Celebrity endorsement though incurs a
huge cost of expense yet Nike to promote its brand adapts this communication strategy to be
apt to retain customer base and have a growth in the market. The celebrities’ uses their fame
to help the company to promote the brand. Nike has utilized this strategy so that the positive
image of the celebrity also influences the products and increases the purchasing factor of the
products.
To reach a vast number of customers Nike has chosen the field of the Olympic game to make
the customers generate trust on the companies. Nike has to consider the fact of choosing a
reliable celebrity so that it does not hamper the image of the brand. Risks are associated with
this communication tool as if the celebrity not so much reputed nor has a negative impact in
the views of the customers, it adversely affects the brand value. If the celebrity is famous
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among the customers then the brand image gets affected largely. Customers with the impact
of reliable celebrity endorsement, generates a feeling of not being ditched by the company
with its product quality. However, by choosing a loved celebrity, an impression is created in
the minds of the customers that the company provides good quality products. The celebrity
endorsement tool has contributed to the company in making billion dollars in the market
without compromising with the quality.
If the endorser places trust on the quality of the brand then the endorser adapts the products in
lifestyle. Celebrity endorsement has attracted majority of the audiences in the field.
Celebrities have influenced sales of the Nike products as they provide information focusing
on the remarkable features of the products in an unbiased nature and it impacts largely on the
business revenue. Customers are not always interested in viewing all the advertisements
featured in the television but when it comes to their likeable celebrity, they are more attracted
and gets aware of the products too. From research it has been concluded that celebrity
endorsement persuades more customers to purchase the product by having a good recognition
of the product. Nike with the help of this communication strategy has wider scope in the
market. Nike followed the AIDA model (Blakeman, 2018) to promote about its brand. The
AIDA stands for:
A-Attention
I-Interest
D-Desire
A-Action
Nike created a long lasting impression in the audiences mind by flagging banners in the
premises of the Olympic ground. Nike sent text messages to all the audiences about the offers
recently taking place in the company. This attracted many of the customers to purchase the
products. Nike has created an impression in the customers just by the releasing of the slogan,
“Just do it”.
Public Relation:
Nike promotes its brand with the help of public relation as an effective communication tool
(Parente and Strausbaugh-Hutchinson, 2014). Public relation as a communication strategy is
adapted by Nike to enhance the brand image and services offered by the company. Public
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relation strategy is as important as advertisements and sales promotions tools. Nike utilizes
this strategy as it is cost effective in approach. Nike promoted them by featuring their
products and services in magazines and newspaper. Nike approaches the customers by taking
their feedbacks directly and interacting with them. Nike conducts a market research to
analyse the loopholes and identify the demands of the customers. Nike approaches the
customers to enhance the goodwill of the company. Managers of the company conduct
research and interact with the customers about the products. Nike has developed its brand
value by improving the quality of the product. The demands for the products of children’s are
also rising in the market. Nike has created many products for all genders and children’s too.
This has positively affected the brand image of the company.
Nike has made use of sales promotion to stimulate the customers to purchase the product
(Burgelman, 2017). The sales representative provides information to the customers about the
new products launched by Nike and its advantages in details. Nike has offered the audiences
visiting the Olympic game free sample of its products to try. Nike hires salesperson for the
benefit of their company in creating awareness about the products of the company. Nike has
been recognized by many customers with the help of salesperson dropping leaflets or
answering the query of the customers personally with face to face interaction. This has
attracted the customers on majority as Nike showed that the customers are best persons to
judge the product. Nike has even given a feedback option in the mobile phones using digital
technology trying to conduct a survey. Nike has also announced in the grand occasion about
the facility of online shopping for customers (Hudson et al.,2016). This has attracted many
customers as they can purchase the items staying at home.
Nike has explained that any default in the product is refundable and can be exchanged. The
customers can view the products and services online just by clicking the Nike online site. The
customers can even give their feedback in the comment section of the online site of Nike,
which will help them to improve their products quality. Though the customers are
apprehensive about the payment, Nike confirmed that if any payment is transacted and the
desired product is not delivered then the company will refund the amount within 12 hours
with a confirmation text to the customer. Nike offered discounts to the customers preferring
to purchase the products online. Brochures are given to the clients and the customers. In the
Olympic game, Nike has invited one of the NGO’s and contributed a 35% of the revenue
earned in that year. Online tool has served the purpose of gaining competitive advantage in
the market and helped in time management within the organization. Nike has expanded its
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business globally with the help of digital technology as one of the communication tool
(Strauss and Frost, 2016).
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Conclusion
The marketing communications process is essential for an organization, as it is useful to
attract and retain consumers. The marketing communications process comprises of several
strategies, which strengthen the presence and reputation of a brand. This report analysed the
marketing communications process with reference to Nike, Inc. and observed that the use of
such a process in Nike has created a wide base of loyal customers. The report developed a
marketing communications strategy specific to Nike. Finally, the report assessed the use of
celebrity endorsement and public relations in Nike’s marketing strategy at the Olympic
Winter Games.
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