Marketing Plan for Nike: Reducing Dependency on Celebrity Endorsements

The aim of this report is to discuss about a marketing plan for Nike, which will help them to reduce the dependency from the celebrity endorsements. In this report, the situational analysis of Nike is being done to determine and understand the business environmental factors in their operation. In accordance to that, it is recommended that Nike should initiate cost leadership strategy to increase their market share and revenue. Accordingly, the ideal marketing mix strategies are being discussed in this report.

Running head: SPORTS MARKETING
Sports marketing
Name of the student
Name of the university
Author note

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Executive summary
The aim of this report is to discuss about a marketing plan for Nike, which will help them to
reduce the dependency from the celebrity endorsements. In this report, the situational analysis of
Nike is being done to determine and understand the business environmental factors in their
operation. In accordance to that, it is recommended that Nike should initiate cost leadership
strategy to increase their market share and revenue. Accordingly, the ideal marketing mix
strategies are being discussed in this report.

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Table of Contents
Introduction......................................................................................................................................3
Determination of the external factors..............................................................................................4
Identification of target customers of Nike.......................................................................................5
Identification of the targeting strategies..........................................................................................6
Determination of the internal factors...............................................................................................6
Summary of the situational analysis................................................................................................8
Recommended strategies.................................................................................................................8
Recommended marketing mix elements..........................................................................................9
Product.........................................................................................................................................9
Price.............................................................................................................................................9
Place.............................................................................................................................................9
Promotion..................................................................................................................................10
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................12

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Introduction
In the recent time, there are number of incidents being identified where the brand
endorsements by the celebrities went wrong and it affected the potentiality and brand image of
the particular product. For instance, the doping charges leveled against Lance Armstrong cause
negative brand image of Nike as he was endorsing Nike at that time (Williams, 2019). Thus, it is
important for the brand to have an effective marketing plan, which will be beneficial to have
reduced requirement for the celebrity endorsements. Moreover, the proposed marketing plan for
Nike should also design the marketing elements, which will increase the revenue for Nike
without the endorsements by the celebrities.
The major intention of this marketing plan is to reduce the dependability on the celebrity
brand value in promoting the Nike products. The target of this marketing plan is to design the
marketing mix elements that will be effective in generating revenue without using the celebrities.
It is expected that this marketing plan will help Nike in having their brand positioning based on
the product characteristics and how they are meeting the target customer requirements (Dwivedi,
Johnson & McDonald, 2015). In addition, it is also desired that this marketing plan will help
Nike in further penetrating in their target market along with covering more customer segments.
A situational analysis will be done in determining the influential external factors for
Nike. In addition, the target customer segments along with the product positioning of Nike will
also be discussed in this report. In accordance to these factors, the strategy and tactics will be
discussed.

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Determination of the external factors
Political factors  Political factors are relatively favorable for Nike due to the
reason that United States is the prime market for them and they
are enjoying lower interest rates and taxation.
 However, it should also be noted that Nike is having their
operations in different countries and thus is vulnerable to
different interest and taxation rates (Houlihan, 2013).
 Political conflicts between the countries are having adverse
impact on their international trade including import and export.
Economical factors  Nike is selling higher end products and thus is vulnerable
towards economic downturn, which will reduce their market
revenue.
 Market penetration is less for Nike in different countries and
thus the threat of competition is getting increased for them
(Chung, Derdenger & Srinivasan, 2013).
 Even though the revenue for Nike is increasing and sales
volume is getting stagnant for them.
Social factors  Sports apparel is witnessing increase in demand as health
consciousness is increasing among the average customers.
Thus, Nike is having more business potential in the long term.
 However, unethical business practices such as poor working
conditions in their manufacturing units in the Asian countries
are affecting their social goodwill (Lund-Thomsen & Coe,

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2013).
 Changes in the taste and preference pattern will further pose
challenge for Nike in changing their product strategy.
Technological factors  Nike is one of the most extensive users of social media
marketing and this is helping in them in catering to larger
customer segments (Kreng & Wang, 2013).
 They are also having technologically updated research and
development programs that are helping them in having
innovative products in the market.
Identification of target customers of Nike
Nike is catering to different customer segments and thus different segmentation variables
will be used in identifying their target customer segments. In terms of the geographic
segmentation, Nike is catering to the customers majorly from metropolitan cities around the
world. This is mainly due to the reason that higher end pricing and premium products will only
have acceptances among the tier I customers (Parris, 2013). In terms of the demographic
segmentation, Nike is targeting the younger generations as the core segment and age groups
above 40 as the secondary segments. This is due to the reason that most of the apparels offered
by Nike are targeted to the needs and preferences of the younger segments. In addition, in terms
of gender, both male and females are targeted. In terms of the behavioral segmentation, loyal
customers are being given more preferences due to the fact that they act as the continuous flow
of revenue along with generator of positive word of mouth (Ogawa & Pongatanalert, 2013). In

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terms of the psychographic segmentation, customers having preferences for active lifestyles and
innovative products are being targeted as they will be attracted by the lifestyle products of Nike.
Identification of the targeting strategies
According to the Porter’s generic strategies, Nike is following product differentiation and
market focus strategy in targeting their segmented customers. This is due to the fact that the
products of Nike are unique and distinctive compared to other available in the market. Among all
the sports apparels available in the market, Nike is having distinctive identity in terms of design,
color, utility, quality and branding (Tanwar, 2013). This is helping them in targeting the
customers from the competition and creating unique value proposition for the customers. On the
other hand, it is also identified that Nike is also following market focus strategy in targeting their
customers. His refers to the determination of the requirements and expectations of a particular
target segment and offering products accordingly. As Nike is operating in the Niche target
segment, thus they are not considering the preference pattern of the larger customer segments.
Both these strategies are helping Nike in targeting their customers in most effective way.
Determination of the internal factors
Strengths  Huge brand value of Nike is helping them in pushing the sales of their
newly introduced products.
 Global presence is helping the m in generating revenue by targeting
larger target customer segments (Dhanapala, 2015).
 Diversified product portfolio is helping Nike in meeting the different
needs of their customers and generating more sales volume.
Weaknesses  Extensive use of the celebrities from different sectors in promoting their

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products is diluting the product utility as the selling point.
 Nike is not having high level of penetration in the global market, which is
restricting the potentiality of them (Schmidt, Spann & Zeithammer,
2014).
 Emergence of unethical business practices is further affecting the brand
value and image among the global customers.
Opportunitie
s
 Targeting the emerging economies and further penetrating in the existing
market will help Nike in enhancing their business.
 Diversifying the brand in different segments will also help Nike in
generating more revenue from the market (Johanson & Mattsson, 2015).
 Leveraging on the product characteristics more will help to reduce the
dependence on the celebrities.
Threats  Emergence of new competition in different markets will reduce the
profitability for Nike in the long term.
 Emergence of economic recession will reduce the purchasing power of
the customers and will affect the business of Nike (Mahdi et al., 2015).
 Legislations regarding the business procedure and lawsuits for unethical
practices can also affect the brand image of Nike.

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Summary of the situational analysis
Thus from the above situational analysis, it is identified that Nike is having huge
potential from the global market but their limited target customer segments is restricting the
enhancements of their business. Moreover, it is also identified that Nike is also facing issue from
the bad brand endorsements by the celebrities and this is affecting their potentiality in the
market. Thus, it can be concluded that Nike is having the need for reducing the dependence from
the celebrity endorsements and should more focus on the product characteristics. On the other
hand, due to the premium positioning and higher end pricing of Nike, market penetration for
them is also low compared to their local competitors. In this case, Nike is having the need for
larger target segments, increased revenue and market share.
Recommended strategies
Based on the factors identified from the above situational analysis, it is recommended
that Nike should be initiate cost leadership strategy to cater to larger customer segments. This is
due to the reason that initiation of the cost leadership strategy will help Nike to reduce their cost
of operation and offering end products in lower cost. This will attract more customers and market
penetration for Nike will get increased. Thus, rather than just being restricted among the niche
customer segments, it is recommended that Nike should position itself as a more mass market
brand in the market to cater to larger customer segments. On the other hand, they should also
follow the strategy of larger market presence by having extensive distribution strategy to have
more brand exposure in the market. This can also help in covering more market areas in the long
term. However, initiation of the cost leadership strategy will be most effective in line to their
requirements and desire outcome.

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Recommended marketing mix elements
Product
It is recommended that variety of products of Nike should be increased to target larger
customer segments. Moreover, the Nike should have products across different price levels to
match the different income level of the customers. This will ensure that Nike is having their
presence across different customer segments. The product diversity should also made on the
basis of different taste and preference patterns of the customers rather than offering standardized
products. Local production will further ensure that cost of operation is getting reduced and end
price is as lower as possible.
Price
Nike is currently following premium pricing strategy in line to their premium and higher
end positioning. However, it is recommended that they should follow market penetration pricing
strategy to cater to more number of customers. The more competitive and affordable will be the
pricing of the products, the more will be the sales volume of Nike. Even though the profitability
may get reduced by market penetration pricing but it can be adjusted with increased sales
volume. Competitive pricing will also help Nike in catering to the huge opportunities in the
emerging markets across the world and thus they will cover more market areas.
Place
It is recommended that Nike should follow extensive distribution strategy over their
current exclusive distribution strategy. This will help them in having more presence and
exposure in the market and catering to more customer segments. In addition, outsourcing the

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retailing will cost less for Nike and it will further contribute in offering competitive pricing to the
customers. On the other hand, the current Omni Channel marketing strategy should also be
followed to target the customers though maximum medium available. The objective of the
recommended distribution strategy is to make the brand available to maximum number of
customers and to increase the brand exposure in the global market. Also, increasing the presence
in the tier II cities can also be achieved with this strategy.
Promotion
Nike is currently following extensive promotional strategy in their global operation with
the involvement of both online and offline media. However, it is recommended that they should
involve more traditional mediums such as print and television media to cater to mass market
customers. Involvement of more mediums will increase the customer base for Nike along with
targeting the customers across different price and income levels. It should also be noted that tier
II customers will be more targeted by the use of traditional mediums.
Conclusion
This can be concluded that initiation of the cost leadership will help Nike to generate
more customer revenue by increasing the sales volume. In addition, the expected outcome of
larger market share can also be achieved if Nike can maximize their presence in the global
market with the implementation of the above discussed strategies. These strategies will help Nike
to become a more global brand with having high level of market penetration. Thus, the expected
outcome of covering more market share can be achieved by this approach. On the other hand,
this report also recommended the initiation of extensive distribution strategy, which will further
help Nike to increase their presence in the market. The more will be the presence in the market

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and market penetration; the low will be the requirement for celebrity endorsements for the brand.
This will ensure that negative branding by means of celebrity endorsements will not happen in
the long term for Nike.

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