Analysis of Nike's Marketing Strategies and Performance in China

This report provides a comprehensive analysis of Nike's marketing strategies in China, examining the company's performance within the competitive sportswear market. It begins with an executive summary highlighting the dynamic nature of the market and the challenges faced by top brands like Nike. The report includes a PEST (Political, Economic, Social, and Technological) analysis of China to understand the external factors influencing Nike's operations. It then evaluates Nike's current marketing strategy, competitive advantages, and unique selling propositions (USPs), specifically focusing on its product offerings. The analysis considers factors such as political relationships, economic conditions, technological advancements, and customer experience. The report also suggests recommendations for marketing goals, objectives, and strategies tailored to the Chinese market, emphasizing the importance of adapting to local market dynamics to sustain and improve its position. The report highlights the importance of innovation, financial prowess, and supply chain management for Nike's success.

Running head: MARKETING OF NIKE IN CHINA
Marketing of Nike in China
Name of the Student
Name of the University
Author note

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MARKETING OF NIKE IN CHINA
Part 1:
Executive Summary:
The study shows that the market conditions are so dynamic that even the top leading
companies have to strengthen their marketing strategies. The paper further shows that companies
holding top positions do not hold equal positions in every host market. This is evident from the
marketing performance of Nike in China. The company undoubtedly holds the top position in the
global sportswear industry but its position is challenged by modern innovative marketing
strategies like experiential marketing outlets by its competitors like Adidas. This necessitated
Nike to carry out a marketing audit in order to measure the effectiveness of its marketing
strategies in supporting to retain its position in China. It can also be pointed that emerging
markets like China have become so profitable that the companies aim to operate in their markets
profitably. Thus, it is clear that Nike cannot afford to lose Chinese market and should form
strategies in order to sustain its position in the market.

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Table of Contents
Part 1:...........................................................................................................................................1
Executive Summary:....................................................................................................................1
Introduction:................................................................................................................................3
Environment analysis (PEST) of China:......................................................................................4
Political:...........................................................................................................................................4
Economic and social:...................................................................................................................5
Technological:.............................................................................................................................6
Evaluation of current marketing strategy/performance:..............................................................7
Analysis of the Nike’s competitive advantage and USP:............................................................7
Part 2:...........................................................................................................................................7
Marketing strategies, marketing....................................................................................................13
Conclusion.....................................................................................................................................15
Bibliography (References):........................................................................................................16

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Introduction:
Marketing of sporting footwear has become so competitive with both international and
local companies competing to maintain their market position as well as upgrade their positions in
the future that even the top brands in the market have to restructure their respective market
positions. According to the international magazine, the Forbes, commanding a brand value of $
15,000,000,000, Nike based in the United States of America holds a whopping 38 percent share
of the sportswear market internationally1. The same report shows that the German company,
Adidas and Reebok, based in the United States are closing onto the second and third positions
respectively. The Forbes magazine in another article shows that lack of efficient stock
management and weak sales strategy has resulted in low profit of Nike in China. The article on
the Forbes Magazine further reports that the cut throat competitors of Nike like Adidas are
launching concept stores in China to enhance the customer experience, a strategy which is
predicted to boost the sales for the latter companies2. The strategy in other words if successful
would result in weakening the position of Nike in the Chinese market. Moreover, weakening
sales and lack of management of inventory of Nike in China clearly point out that the leading
sportswear company requires forming powerful marketing strategy to retain its position in
China3. These three articles from the Forbes would form the perfect ground for the study. The
aim of the study would be evaluation of the current marketing strategy of Nike with respect to
China.
1 "Forbes.Com". Forbes.Com, 2018, https://www.forbes.com/pictures/mlm45jemm/1-nike/#41be0433314e.
Accessed 30 Dec 2018.
2 "Forbes.Com". Forbes.Com, 2018, https://www.forbes.com/sites/greatspeculations/2014/03/04/nike-faces-tough-
competition-in-europe-and-china/#2bbb26df6e79. Accessed 30 Dec 2018.
3 "Forbes.Com". Forbes.Com, 2018, https://www.forbes.com/sites/deborahweinswig/2018/09/17/millennials-a-pro-
sports-government-and-large-sports-events-drive-the-china-sportswear-market/#4f231e6d796c. Accessed 30 Dec
2018.

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The study would be initiated with a PEST analysis of China followed by an analysis of
the current competitive advantage and USP of the company on the grounds of the findings of the
PEST analysis. This would be followed by an STP of the company succeeded by
recommendation of marketing goals and objectives. This would be followed by identifying
appropriate marketing strategies for the company with respect to China. Since, Nike has a huge
product line, the study would concentrate on the shoes Nike markets to narrow down the study in
order to be able to propose appropriate marketing strategies.
Environment analysis (PEST) of China:
The following is the environment analysis of China using the PEST framework:
Political:
The political factors play significant roles in the expansion of industries into host
countries. Political factors plays significant roles especially for transnational companies which
includes leading sportswear companies. This is evident from the fact that most of the leading
sportswear companies are based in the western markets like the US while the booming
sportswear markets are slowly shifting in emerging countries like China. China, like the US is a
republican country with the President as the head of state. The Chinese government makes laws
to promote entry of foreign companies (like Nike) in the economy to promote the development
of the expanding market of China. The Chinese Government has strong political ties with several
European and American countries which are the home countries to leading international
sportswear companies. For example, the leading sportswear company, Nike is based in the US.
This means that the strong relationship of Beijing with Washington would pave ways for the
American sportswear companies including Nike to expand their business further into China. As
pointed out by the Walls Street Journal, the two countries are working towards strengthening

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their trade ties and Beijing is considering giving preferential benefits to American companies in
the country4. This means that American sportswear companies would be able to derive more
benefits like availing preferential tax rates which would ultimately, lower their operating costs in
the country. Thus, first finding from the analysis is that political relationships between the
home and host countries have significant impact on the business of transnational industries
like sportswear.
Pharr and Robert point out that this international bilateral relationship between nations
provide business expansion opportunities to multinational sports companies but can emerge into
political challenges as well5. This fact can is evident from the fact that the United States also has
strong bilateral relationship with India, a country which is the economic competitor to China and
an important market to Nike. Thus, it can be pointed out that the complex political relationships
between the three countries can hamper the business of Nike in China. Thus, the second finding
from the analysis is that volatile political relationship between nations have adverse effect
on the business of transnational industries like sportswear industries.
Economic and social:
The economic factors play great role in terms of businesses of the sportswear industries.
Farhi and Ivan point out that volatile exchange rates of international currencies have direct
impacts on the capital and revenue generation of transnational companies since their business
spread across multiple countries having different currencies6. For example, the exchange rate of
4 Davis, Bob. "WSJ.Com". WSJ.Com, 2018, https://www.wsj.com/articles/u-s-and-china-fleshing-out-trade-deal-
11546126975. Accessed 30 Dec 2018.
5 Pharr, Susan J., and Robert D. Putnam, eds. Disaffected democracies: What's troubling the trilateral countries?.
Princeton University Press, 2018.
6 Farhi, Emmanuel, and Ivan Werning. "Dilemma not trilemma? Capital controls and exchange rates with volatile
capital flows." IMF Economic Review 62.4 (2014): 569-605.

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USD and Chinese Renminbi would have serious effects on the business of Nike. If, USD
weakens against Renminbi, the company would have to bear more expenditure to operate in
China. Thus, the third finding from the analysis is that the volatile currency exchange rates
have significant impact on the revenue generation of the multinational companies.
The second economic factor which would come into play in terms of international
companies is capital generation and banking network. Buch and Linda mention that capital
generation and banking network play important roles in the international operations because the
latter attract immense capital investments7. As far as China is concerned, the country is
economically very strong and can provide multinational companies with a huge capital
resources, thus supporting their international operations. Moreover, there is a great demand for
sportswear in the Chinese society which means that multinational companies like Nike can earn
immense revenue. Moreover, the country has a wide network of banks which enable smooth flow
of financial resources to the companies. This ensures both availability of capital and liquidity of
capital to the transnational companies like Nike. Thus, the fourth finding is that availability of
capital and banking channels in the host countries play very significant roles in the
business operations of the multinational companies.
Technological:
Technology plays a very significant role in the manufacturing and marketing of
sportswear products like shoes. The country of China is technologically advanced owing to its
economic strengths. Technology is one of most important capital which companies like Nike
7 Buch, Claudia M., and Linda Goldberg. Cross-border prudential policy spillovers: how much? How important?
Evidence from the International Banking Research Network. No. w22874. National Bureau of Economic Research,
2016.

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making sports shoes. Thus, the fifth finding is that technological strengths of host countries
have significant impacts on the business of multinational companies in host countries8.
Evaluation of current marketing strategy/performance:
The current marketing strategy of Nike is powerful in terms of the American market but
weak in terms of the Chinese market. This means that the company would be required to form a
powerful marketing strategy.
Analysis of the Nike’s competitive advantage and USP:
The main competitive strategy of Nike is its capital and revenue generation power. The
main USP of the Nike shoes are their superior texture and comfort. First of all Nike is listed on
the NYSE and operates in more than a hundred country. This financial prowess of the company
enables it to invest in high-end sports technology while manufacturing sportswear including
sports shoes. This technological prowess is one of the unique selling propositions which enable
Nike to make appropriate shoes for different types of sports. The immense financial strength and
a global presence enable the company to command a huge supply chain which enable the
company to obtain raw materials for its products all over the world. Thus, the competitive
advantage factors of Nike consists of its global presence and immense financial strength.
Part 2:
Product rationale and specification
Nike offers the customers the best brand experience of sport shoes and the experience
stores involves NIKETOWN. Each NIKETOWN provides six or seven brand categories of Nike
8 Nawan, Achareeya, and Patarapong Intarakumnerd. "Interaction between host countries’ innovation systems and
investment strategies of transnational corporations: A case study of a US-based conglomerate." Institutions and
Economies (2017): 131-154.

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and provides the best innovative products and the services they could offer. The best customer
experiences only provide the higher pricing latitude of the products offered by Nike9.
The second goal is to create the category experiences that is Nike aims to create unique
experiences for the customers by introducing the House of Hoops for playing basketball with the
Foot locker, the Nike Track Club for runners with the finish line and the Field House with the
Dick’s Sporting Goods store. Their differentiation strategy allows for the premium pricing and
these benefits the Nike’s wholesale partners for bringing them into the limelight.
Nike offers the premium value proposition that broadens the customer base for Nike and
the factory stores of Nike also provides the premium product to those customers who shops for
value. Nike’s product portfolios produces those premium products that generally commands for
the higher prices. This strategy helps the company to differentiate it product in marketplace.
These also charges the higher prices than the competition and this company also focuses on
providing the personalized customer experiences that is by serving the hub of the premium level
of the services like the premium level experiences 10.
Nike’s introduction of the best running shoe in 2018 is NIKE FLYKNIT LUNAR 2 as it
adds comfort and support while running on any ground. Nike Flyknit Lunar 2 is the breathable
shoe, which is ideal one for both the treadmill and the road. The Flyknit weave looser when there
9 Mestre, Ana, and Tim Cooper. "Circular Product Design. A Multiple Loops Life Cycle Design Approach for the
Circular Economy." The Design Journal 20.sup1 (2017): S1620-S1635.
10 PANDEY, BANKIM CHANDRA. Nike Inc-Complete Analysis: SWOT, PESTLE and Marketing strategy.
BookRix, 2017.

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is less support needed and also weaves tighter when there is structure around the foot is needed.
This shoe is mostly recommended for those customers with the under pronation as they have soft
but the structured foam inner, which would better support the movement while running. These
products generally comes in the choice of the neutral colours for both men and women and this
product is also a great worthy investment for those who usually takes running seriously. Along
with the speed-laces and the integrated reflective elements of the enhanced visibility in the low
light. Nike provide lot of offerings of running shoes but this pair is considered as the best
designed running shoes that they knock spots the rest of the shoes.
Segmentation Targeting & Positioning (STP)
Segmenting
There are generally six interactive bases for the market segmentation, that are
demographic, variables, behavioural style, geographic variables, psychographic profile and the
socioeconomic variables and benefits sought. Nike has usually targets all the athletes, which
defines the market segmentation11.
The demographic segmentation is considered as the mostly used techniques like Nike and
this is so because the characteristics are both easy to identify and measure from the sources like
the government population count, which is associated with the sport attitudes like attending any
game and watching sports. Nike targets the individuals as per the gender, lifecycle and age based
on the demographic segmentation12.
11 Kam, Cindy D., and Maggie A. Deichert. "Boycotting, buycotting, and the psychology of political
consumerism." annual meetings of the Midwest Political Science Association, Chicago, IL. 2017.

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Nike generally uses the psychographic segmentation for targeting the customers that is
based on the lifestyles personality, interest and the activities. Nike mainly aims the active
individuals who take pleasures in the sports activities. Nike also approaches the fashionable
customers apart from the sport person that is there are people, who are passionate regarding the
brands and the company’s product, for following the fashion trends13.
Nike’s segment market is based on the world and the country region in the different way
that is Nike promotes the different campaigns in the United States of America, and in other
places. Nike also does not segments the market based on the climatic conditions even the
company is ecologically conscious14.
The socioeconomic factors involving the income, education and the occupations are
related to the fact that the people generally those who belongs from the higher educational level
enjoys the higher income and the high respective status15.
12 Childs, Michelle, and Byoungho Jin. "Nike: An Innovation Journey." Product Innovation in the Global Fashion
Industry. Palgrave Pivot, New York, 2018. 79-111.
13 Baek, Woo-yeul, et al. "Millennial consumers' perception of sportswear brand globalness impacts purchase
intention in cause-related product marketing." Social Behavior and Personality: an international journal 45.8
(2017): 1319-1335.
14 Valencia Cardona, A. M., et al. "The design of smart product-service systems (PSSs): An exploration of design
characteristics." International Journal of Design, 9 (1), 2015(2015).
15 Camilleri, Mark Anthony. "The rationale for responsible supply chain management and stakeholder
engagement." Journal of Global Responsibility 8.1 (2017): 111-126.

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Nike generally focuses on the benefits sought for segmenting the market place. The
company’s product strives to meet the elite athletes regarding the professional and the casual
performer’s needs. These also need the customer to look forward for fulfilling the purchasing
quality, duration, comfort, innovation and the brand awareness. Thus, Nike segments the markets
in to three core bases of the concerning benefits that is the utility so that customers could
accomplish high performances16.
Targeting
The next step of the segmentation process is the target marketing that is to found out
where the company systematically choses for the segments which allow most of the effective and
the efficient achievement of the goals. Nike evaluates the target market that is based on the size
of the reachability, the behavioural modules and measurability variables17.
Positioning
The final step of the STP concerning of the market decisions is the positioning. Nike has
positioned the brand as one of the market leader of the sports equipment market that is by
providing the high quality and the innovative technology. The promotional activities has made
the brand to connect with the brand for the magnificent achievements of the prominent athletes.
The brand speaks a lot in the athletes’ hearts through the unique and the momentous feelings,
16 Lee, Chia-Lin. "The Impact of Product Involvement on Reciprocal Effect in Co-branding." ASIA MARKETING
JOURNAL 18.3 (2016): 19-34.
17 Lohneiss, Annika, and Brad Hill. "The impact of processing athlete transgressions on brand image and purchase
intent." European Sport Management Quarterly 14.2 (2014): 171-193.