Marketing and Nike Essay

We can evaluate Nike’s core marketing strategy as related them to the relevant marketing theories. First of them is distribution theory. Nike distributes its products on different level basis. The high quality products are given to a certain distributers while the low price to be sold at highly discounted price at the retail stores such as Wal-Mart. Nike has also become the leader in the e-commerce by being the first to the market whit its e-commerce website. This program represents the first time a company has offered mass footwear through the internet and provides competitive advantages to Nike. One of the other theories is advertising and promotion. Nike makes contracts with some celebrity athletes which can take attention to their products such as Michael Jordan, Tiger Woods, Maria Sharapova, Ronaldo. This has created a relatively high level of Nike’s awareness. Nike also employed a large amounts of advertisements. Their aggressive advertising campaigns, celebrity endorsements and quality products all enhance their brand and image. The other theory is price. The price is not effective on their strategy because Nike’s target market is based on the consumers who care more about the utility and quality of the product . This strategy focuses on the consumers who like Nike and pushes the products value to a higher level. Once the consumer develop the product intimacy, they come to associate their person with the products and will pay whatever price quoted on the products. Nike use vertical integration price strategy and they also engaged in various channel level operations both to control costs and influence the price function. And when we look at the market segmentation theory, we see that most of the consumer of Nike’s products is mainly athletic. Their segmentation market typically targets athletes, both women and men, from the age 15 to 35. Nike focuses on creating premium consumer experiences on product innovation, brand leadership and elevated retail presence. But Nike focuses on athlete more than any group of individuals. This strategy is especially successful because of its ability to reach a large number of athletes. Although Nike’s core marketing strategy had brings lot of positive directions to the company, but it will bring negative directions to Nike too. The mainly negative theory is the cost theory. Nike had incurred high costs in producing and promoting its products. The costs are increasing among handling inventory, designing, advertising and production. The inflation had also rised the costs. So Nike has increased the products prices and reduces its marketing budget. Nike had also employed child labor in Cambodia to reduce its production and labor costs. This affected brand image negatively and many people stop buying products from Nike. Furthermore, Nike has been using child labor in the production of its soccer balls in Pakistan. One of the Nike’s core marketing strategies is depend on a group of athletes to promote its products. Nike prefers to have high profile athletes as its endorsers, like Runner Steve Prefontaine, Michael Jordan and LeBron James. The action and attitude of Nike’s chosen spokespersons could bring the impacts on its promotional strategies. For instance, it will attract the athlete’s idolater to purchase the products if Nike using a popular athlete as endorser. On the other hand, if the athlete were caught in drug addicted or any immoral attitude, it will affect the customers not to buy Nike’s products, thus will affect Nike’s sales, revenue and profit. There is intense competition faced by Nike. Their competitors are Adidas, Reebok, Puma, and so forth, whilst competition is tighter with the coming of Adidas. More, the product line is slightly different between Nike and Adidas. Nike faces many risks when they use their core marketing strategies to achieve their goals and these risks can come from both internally and externally environment. The risks will have a negative influence about Nike’s future development. Nike needs to stay on the top of changes in consumer taste and preferences as evidenced by changes in fashion. So Nike face the risk that fashion trends may change so fast that Nike fails to follow. If Nike cannot follow the fitness trends in the market they will face risks of losing market shares. To compete with this risks and problems, Nike should position it as a trendsetter and not a trend follower and be responsible to their customers. The global trends are to be fashion and personality. So Nike change its marketing strategies and products design to become more fashion and focus on the youth consumers. It brings risks to Nike because in the traditional mind of customers, they consider Nike only sell the athletic products. The fashion or the changing style products is unimaginative for customers to purchase. Not all the customers can follow the changing of Nike. Therefore, Nike should analyse the market and customers’ preference as well as customers’ buying behavior from time to time. One of Major Nike’s marketing strategies is to expand to overseas and become the leader in the world. It also will bring risks to Nike when they expand their business globally. Currency exchange rate fluctuations can disrupt the business of the independent manufacturers that produce Nike products by making their purchase of raw materials more expensive and more difficult to finance. Besides that, the global economic recession influence the overall business operation in the outsourcing countries. 2) If you were Adidas, how would you compete with Nike? One difficulty most likely to be faced by Adidas is in its marketing, compared to its competitor Nike, Nike spends more money on advertising and promoting their products reputation. Adidas will have a hard time trying to compete with Nike in terms of advertising and promotion, considering Nike’s utilization of low labor cost of production, Nike can afford to spend so much money in creating awareness for their products and gaining consumers loyalty by utilizing celebrities. If I were Adidas I would invest more money on advertising and create innovative means of advertising their product, having consumers in mind and following the trends of technologies, for example, Adidas can collaborate with IT companies such as Samsung to create innovative means of advertising their products. Also a merger could be good for the Adidas, if the right strategy has chosen. For example; Adidas and Reebok joining up together as a merger would be a good deal for leading over Nike but the two companies have a bad reputation due to financial problems which almost led them to bankruptcy and since they are to work together.