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A Business Report Examining Nike's Current Marketing Mix and Suggestions for How It Can Be Modified to Incorporate Critical Success Factors

By:   •  December 20, 2014  •  Essay  •  1,698 Words (7 Pages)  •  1,212 Views

Page 1 of 7

1.0 Introduction

Nike was founded in 1964 in Oregon as a brand selling athletic footwear. Nike still sells sports footwear however it has now diversified into most branches of the sports market and has a 54% market share of the entire apparel, footwear and accessories industry. This making Nike the market leaders ahead of their competitive set who produce similar items on a global scale such as Adidas and Reebok. Nike operates across 6 continents and in 2012 its global revenue was $24.1 billion (Nike annual report, 2012). Nike not only makes running shoes but also produces fashion clothing and sports accessories ranging from footballs to skateboards.

2.0 Assessment of critical success factors. In order of importance, high to low

2.1 Celebrity endorsement

One of Nike's main promotional methods is based on the belief that if professional sportsmen and women wear their products it will influence other consumer groups such as young children or budding athletes to wear the products as well. The importance of celebrity endorsement as a critical success factor is really showed when you examine the Jordan brand at Nike. It is a sub brand of Nike that sells basketball shoes named after the U.S basketball legend Michael Jordan. In 2012 the Jordan brand brought in $2.5 billion's worth of revenue, and it is estimated that ‘Air Jordans' account for 58% of basketball shoes ever bought in the U.S. Michael Jordan is now in his fifties and it is vital that Nike look for replacements to maintain customers choosing the Nike brand (Rovell, 2013).

2.2 Meeting corporate social responsibility (CSR) targets

Nike has had problems in the past surrounding child labour and wage issues in certain countries where they produce their goods. The Nike brand had become synonymous with slave wages, overtime and arbitrary abuse. (Murphy and Mathew: 2001). For Nike after their previous allegations sticking closely to what is expected under the concept of corporate social responsibility is key. If Nike don't completely eradicate issues surrounding their production then it is likely that many customers will seek out an alternate socially responsible brand. The other reason upholding good social responsibility is it is unlikely celebrities will endorse a product that is shrouded in negative publicity, as it may be damaging to their popularity, and without this endorsement Nike may not uphold bran loyalty.

2.3 Research and development

Research and development (R&D) is an important action that needs to be carried out by Nike so it can achieve its aims. R&D is key for creating new innovative products to keep growing the company. Innovation cannot be achieved without R&D (Chesbrough, Crowther 2006). R&D is also crucial in areas such as CSR, this is important to avoid situations such as Nike being blindsided by sweatshops in 1998. Nike operates in 6 different continents and subs out its production to independent factories not linked directly to Nike. Therefore there must be a sufficient level of research into where and how Nike's products are being produced.

2.4 Innovation

Nike's mission statement is ‘To bring inspiration and innovation to every athlete in the world' (nike.com). Innovation is an important critical success factor because it not only means innovation of the product design, which is vital for setting apart Nike from their competitors and by doing so keeping their customer base and enticing first time buyers including professional sportsmen and women. But it is also important in areas such as sustainability and the environment, if Nike can innovate their production process and materials to make it for example more environmentally friendly, this will help keep Nike as the market leader.

2.5 Advertising

Nike's advertising levels are already very high. However in a TOWS analysis of Nike one regularly occurring threat is that of competitors such as Adidas. A good way of keeping the competitive edge is through advertising. It is good to innovate and develop new products, but if Nike doesn't advertise their new products on a large scale and in an effective manner then they open themselves to the risk of their competitors gaining the advantage through their advertising. It is not enough for Nike to sit back and rely on their recognised logo and slogan ‘just do it' this needs to be backed up by up-to-date advertising that adapts to the fast changing industry.

3.0 Current marketing mix

3.1 Product

Nike provides a wide variety of sports apparel, with a concentration towards footwear. Nike understand that many athletes will not just partake in one event and they design their footwear around this by making many of their products multi purpose, not just for the sports field but also for fashion conscious everyday wearing. Nike also makes an attempt to add value to their products for example the inclusion of a microchip in certain shoes to measure the speed and distance of the wearer. Nike's products are also synonymous with quality and their footwear has a reputation for being long lasting.

3.2 Price

Hunger (2003) defines price as being the thing that must be given up to derive value from a product. The value and price of Nikes products are higher than the average in the industry, as they have adopted a premium price strategy. This strategy adheres to having a fixed price based on the high quality of their products. Beech and Chadwick (2007) believe they can charge the prices they do because of their association with successful athletes and sports teams.

3.3 Place

Nike's production occurs across 6 continents in countries where labour is cheap and intensive to keep costs down and production high. Nike has flagship stores in many of the world's cities. However most of the distribution of their products is done through sport shops and other clothing retailers, this is convenient for many customers who don't live in cities and makes Nike's products more readily available. This is also aided by their website which sells all of Nike's products worldwide and also gives customers access to ‘Nike id' a service which allows the customer to design their own shoes.

3.4 Promotion

Nike establishes relationships with professional athletes, sports teams and leagues to evaluate, promote, and establish product authenticity with consumers (Nike shareholders report). They also use these professionals in promotions such as television adverts or in newspapers.

4.0 Recommended changes to the marketing mix in light of the aforementioned critical success factors.

4.1

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