BUSN20019 Professional Project: Analyzing Nike's Advertising and Sales

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Central Queensland University, Australia
Term – 3, 2018
BUSN20019: PROFESSIONAL PROJECT
Unit Coordinator:
Lecturer:
Assessment: Professional project
Prepared by:
Student name:
Student ID: 12046039
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Executive Summary
The main aim of this project is to provide the necessary information and details in relation to a
professional project. The aim of the project is to have proper research to capture the market with
the support of marketing which is explained in the questions of the research. The main research
question on which the discussion will be done is about how practices of visual merchandising, as
well as advertising, are having a relationship with the behaviour of consumers and sales.
Advertising and merchandising are the two major and most significant factors that support the
overall growth and development of the company appropriately.
A critical literature review is also presented by the sportswear industry that will make provision
of the detailed explanation regarding the impact of advertising on the revenue or sales of an
organisation. From the research which is done, analysis has been done that various contributing
factors are there that gives proper assistance in the overall success and growth of an organisation.
In relation with the case of this study, there is the identification and analysis of the advertisement
expenses and the sales of the Nike that will give proper support to the researcher in generating
effective and valid outcomes.
Data which is gathered will support in analysing the connection between advertising and
merchandising expenses and revenue of the company. The result is that advertising expenses
support well in increasing sales of an organisation. From the study, it can be concluded that there
is a continuous increase in the advertising expense that will improve revenue.
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Table of Contents
Executive Summary.........................................................................................................................2
1. Introduction..............................................................................................................................5
1.1 Research Aim....................................................................................................................5
1.2 Research Questions...........................................................................................................5
1.3 Research Objectives..........................................................................................................5
2. Critical Literature Review...........................................................................................................7
2.1 Advertising Strategies............................................................................................................7
2.2 Methods to increase sales......................................................................................................8
2.3 Role of advertising strategies in increasing sales..................................................................9
3. Methodology..............................................................................................................................11
3.1 Research Design..................................................................................................................11
3.2 Research Methodology........................................................................................................11
3.3 Data Collection....................................................................................................................11
3.4 Data Analysis.......................................................................................................................11
3.5 Variable Specification.........................................................................................................11
3.6 Regression Analysis.................................................................................................................12
3.7 Anova: one way.......................................................................................................................12
4. Findings and Analysis................................................................................................................13
Regression Analysis...................................................................................................................14
Analysis of Variance..................................................................................................................14
Anova Single Factor..................................................................................................................14
Descriptive Statistics.................................................................................................................15
5. Discussion..................................................................................................................................17
6. Conclusion.................................................................................................................................18
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6.1 Recommendations................................................................................................................18
6.2 Limitations...........................................................................................................................18
7. References..................................................................................................................................19
8. Appendix....................................................................................................................................21
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“Impact of advertising and merchandising strategies on the consumer behaviour and sales of
the company: A Case Study of Nike (Australia).”
1. Introduction
Advertising is one of the most significant factors that support the organisation in overall success
and growth. With the help of effective advertisements, organisations can also attract more and
more customers towards it. The relationship between the revenue and growth of the company has
made dramatic changes with the help of advertising in Australia. It has made provision of the
immense control and power to the customers and also to the associations as well as to the
organisations having an online presence. Owners of the different associations in Australia have
analysed that effective advertisement can make or break a business, so the business like Nike
could use this opportunity to make a presence on different platforms. Nike is one of the most
successful organisations and makes delivery of innovative services, products and experiences to
give inspiration to athletes. The company has made around $36, 397 million revenue in which
advertising also played a main role. The revenue of the company is continuously increasing due
to which effective increase is there in the customers also. The selected topic for the report is
about the impact of advertising and merchandising strategies on the consumer behaviour and
sales of the company. Here the proposal which has been developed already is carried out to
prepare and present justifiable details and information to the audience. In the report, there will be
involved in the background of the project, research aims, and questions in addition to the
literature review. In the other parts of the report, the methodology, discussions conclusion and
findings will be described.
1.1 Research Aim
The prime motive of the research is to analyse the impact of advertising strategies on the sales of
Nike.
1.2 Research Questions
Primary Research Question
 Can advertising and merchandising help a company to boost its revenues?
Secondary Research Questions
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 What are the distinct kinds of advertising strategies utilised by Nike?
 What are the methods with the help of which Nike increase sales?
 How advertising strategies correlated with sales of the company?
1.3 Research Objectives
 To attain knowledge about the advertising strategies of Nike
 To decide on the ways used by Nike in increasing sales
 To examine the effect of advertising strategies of Nike on the sales of the company
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2. Critical Literature Review
In the era full of competition, many businesses are making the struggle to operate to be on the
top of the world. Advertising is one of the significant tools that may support business to get
known and in the mind of customers. Zawawi et. al., (2017), describes that advertising is the tool
for communication that attracts as well as activates the customers to purchase services and goods
that may be persuasive and informative. Non-businesses, as well as business associations both,
are making use of the advertising method to get attention and acknowledgement from the
customers. In the words of Su & Tong (2015), advertising could be a cost-effective method for
disseminating messages, whether to educate people or to build brand preference. Even in the
challenging media environment in today’s world, good ads could be very much beneficial. With
the support of the advertisements, education could be given to individuals by making provision
of the knowledge and information that needs to be shared for the better future. Different kinds of
advertising objectives are there which are classified as they aim to remind, to inform, to reinforce
or to persuade. Advertising can be done through newspaper, radio, television, magazines,
brochures, direct mails and telephone.
2.1 Advertising Strategies
As per Buil et. al., (2013), it has been found out that Nike is making successful implementation
of the ‘Just Do it’ campaign with the increase in the number of sales after the enactment of the
campaign. Nike markets its product globally with the support of a different spectrum of
promotional and advertising programs as well as campaigns by making the involvement of
mobile applications, social media, and other online advertisements. According to Azadi (2016),
demand creation expense makes the inclusion of advertising and promotion cost, involving the
cost of the complementary product, print advertising and media, brand events, endorsement
contracts, print media, and advertising cost.
As per Form 10-k (2018), total promotion and advertising expense of Nike was $3,577 million
for the year ended May 31, 2018. In 2017 it was $3,341, and in 2016 it was $3,278. The net
profit in the year 2018 was $36,397, in 2017 it was $34,350, and in 2016 the total revenue was
$32,376. From these statistics, it has been proved that Nike has made the successful
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implementation of the campaign that makes provision of the positive influence on the brand and
will make the indirect promotion of the brand with the support of advertising method.
In the view of Kobayashi (2012), advertising strategy which is utilised by Nike has won the
audience’s heart by making the promotion of the brands with the use of famous sportswear as
Nike’s image in the campaign ‘Just do it’. Aminiroshan et. al., (2014), says that consumers easily
get attracted to the particular brand by looking at what their public figures or idols wear. It is due
to the reason that consumers tend to get attracted and buy up to date trending lifestyle and
fashion. Nike has made the application of this strategy as a tool to make an impact on the
consumer’s mind. Also with it, decisions to choose sportspersons like Neymar Jr., Cristiano
Ronaldo, Eldrick Tont Woods for advertising their brands contributed to the investment of high-
profit amount. These sportsperson supports the marketing and advertising strategy for Nike and
therefore bring the brand in front of the world.
H0: There is the impact of advertising strategies on the increase in sales
2.2 Methods to increase sales
As per Khoei (2014), in the consumer market which is stagnant, basically in the countries which
are developed, sportswear manufacturers are increasingly attracting the attention of investors. As
per statista (2018), it has been analysed that Nike is on the top among different sportswear
companies in the world. From this, it can be said that Nike is having the highest sales revenue in
the market and is making the application of different methods which are about the sales of
products and services.
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(Source: Statista, 2018)
Rynarzewska & McClung (2012), explained that there are different methods with the help of
which an organization makes a sale of products and services in the market. The global industry
of sports is very large with the estimation of around $1.3 trillion. It has been analysed that in the
sports, sportswear market is being defined as a great place for various investors who are
searching for strong brands in the growing and large market. Azadi et. al., (2016), describes that
the sportswear industry recently has seen an increase in the discounting and advertisement
activities. A combination of the different factors such as a decrease in the spending of tourist,
negative environment for consumer spending and slowing foot traffic has made an impact on the
majority of the organisations in space, pricing power and limiting potentials of growth. All these
headwinds, together with the aggressive excess inventories and expansion plans of the company
have triggered the increase in the advertisement activities that have ultimately impacted the sale
of the company.
Aminiroshan et. al., (2014), defines that the major tool which is being used by the sportswear
industry to increase sales is with the help of advertisements. Advertisements could be through
print media, online advertising, mail, and many other ways. The creation of the relationship
among customers is very necessary for marketers who want to have a proper understanding of
the attitudes and needs of the consumer group. In today's market, there is an increase in the
number of users in social networks, which simply means that more information flow is there on
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these sites and therefore more impact on the opinion of the customers. Sportswear industry is
making use of social media for advertising and with the help of it making a continuous increase
in sales.
As per the Form 10-k (2018), in the year 2018 the overall sales revenue of Nike is $36,397, and
for this advertisement, strategies have played the main role. The overall advertisement expense
of the year was $3,577 million.
2.3 Role of advertising strategies in increasing sales
Khoei (2014), says that there are lots of advantages regarding the implementation of the
advertising methods to make promotion and to do marketing for both non-business and business
purpose. For the business, the advantage of advertising is to market and promote services and
goods of the business. Kobayashi (2012), defines that advertisement worldwide makes an impact
on attitude and behaviour formation of the customers. Advertisement helps in the development of
the dreams, expectations, and symbols for a product. On TV it needs a scenario, actors and a
setting as it is a form of a movie.
In the words of Buil et. al., (2013), advertising is one of the most visible activities of marketing,
and he thinks that advertising is beneficial in the development of brand equity by customers,
having an accumulative and sustaining impact on the assets. Sportswear marketers must
concentrate on the development of the effective advertisements and campaigns in the procedure
of developing effective personalities of the brand in relation with the ruggedness, attractiveness,
innovation, activity, sincerity, and excitement for the sportswear brand. If there will be effective
advertising, then it will make an impact on sales of the organisation positively and effectively.
Nike, the leader of the market, has a successful association of its brand with the top sports event
and celebrities to make increment in the awareness of brand and sales.
According to Azadi (2016), growing, maintenance and promotion of the brand are dependent on
marketing efforts and design, involving consumer campaigns and advertisements. There is a
continuous increase in the advertisement expenditure of Nike, and this has played a role in
increasing sales as well, as there is also an increase in the sale of the company.
H1: There is no impact on advertising strategies on the increase in sales
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3. Methodology
3.1 Research Design
The main aim of this study is to decide about the impact of the advertising strategies on the sales
of Nike. This study is exploratory is being carried out with the base of the secondary resources
that are generally written documents having availability publically. To make research precise,
data about the revenue and profit of the organisation will be reviewed (Lewis, 2015). It is
necessary to make utilisation of the research methodologies, data analysis, and collection to
develop the framework to implement the research appropriately.
3.2 Research Methodology
It is necessary to describe the methodology of the research that supports well in the collection of
the appropriate data. There is the utilisation of both qualitative as well as quantitative research
methodologies to collect data of numerical and non-numerical nature (Groenewold & Lessard-
Phillips, 2012). There is the provision of the support from quantitative data to develop a
correlation between the independent and dependent variables of the research topic which
advertising strategies and sales (Dang & Pheng, 2015). Apart from this quantitative data has also
given support in making relation between the factors.
3.3 Data Collection
Data collection is one of the main parts that assist well in developing authenticated and valid
research (Goudgaon & Reddy, 2014). The research analysis is being done with the help of the
secondary data that are gathered through an annual report, journals, articles, and government
websites in relation with the advertising strategies and revenue (McCusker & Gunaydin, 2015).
3.4 Data Analysis
In this research, there is the proper utilisation of the quantitative methods to make data analysis
like T-test, correlation, ANOVA and regression.
3.5 Variable Specification
To carry out the study and to make analysis appropriately, two variables are being specified here
which is independent and dependent. The topic which is selected for the study is the impact of
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the advertising strategies on the sales and consumer behaviour of Nike. As per the topic, the
independent variable is ‘advertising strategies', and the dependent variable is ‘Sales/Revenue’.
Variables Specifications
Advertising
strategies
Independent
variable
Sales/Revenue Dependent
variable
3.6 Regression Analysis
Regression analysis is the tool which is used most commonly and is being considered as the
statistical technique which is being used to describe the relationship among variables (Wahyuni,
2012).
3.7 Anova: one way
One way ANOVA or one-way analysis of variance is being considered as the technique that can
be utilised to compare means of more than two samples (Wan, 2015).
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