Nike Incorporation Marketing Mix Strategies

Abstract

Marketing is one of the critical elements in a firm’s effort to maximise its profitability. Thus, it is imperative for a firm to develop effective marketing strategies. One of the ways through which a firm can achieve this is by integrating the marketing mix strategies which include pricing, product, promotion and distribution strategies. Nike Incorporation has formulated and implemented effective marketing mix strategies. The strategies have played a critical role in enhancing the firm’s competitiveness in the global market. This paper outlines the various aspects that the firm has taken into account with regard to the four marketing mix elements.

Company background

Nike Incorporation is a private limited company that operates in the US textile industry. The firm was established in 1964 and deals in designing, development and marketing of diverse athletic products such as apparels, sporting equipments and footwear. Its headquarters are located at Beaverton, Oregon. The firm’s mission entails bringing a high level of innovation and inspiration amongst athletes (Nike Incorporation, 2013).

The firm has developed a strong organisational culture, which is guided by a number of principles. These principles relate to innovation, doing the right thing, to develop a strong brand and letting the consumers decide. Moreover, the firm’s management team is guided by the principles of coaching, inspiring and leading.

In an effort to maximise its level of profitability, the firm has adopted internationalisation strategy thus operating as a multinational corporation. Nike Incorporation has established over 700 factories which are distributed across 51 countries. Moreover, its human resource base is estimated to be over 500,000 employees (Nike Incorporation, 2013).

Marketing mix

Nike Incorporation is categorised amongst the pioneers in marketing. Nike has adopted an aggressive marketing strategy that has been nurtured through creativity and innovation. This is well illustrated by the slogan ‘just do it’ that the firm has adopted. Over the years, the firm has managed to develop a strong marketing mix that is based on the pull strategy. This has played a major role in enabling the firm to deal with intense competition from Reebok, Fila, Puma, Under Amor, New Balance and Addidas. An analysis of Nike Incorporation marketing mix strategies is provided below.

Product strategy

Nike has developed an effective product strategy that is based on the concept of product diversification. The firm deals with a wide range of sports apparels, accessories and footwear products. In its diversification strategy, the firm has effectively segmented its market using gender and age as the core demographic variables. Nike markets its products to both the young and the elderly. Moreover, the product strategy is designed to take into account both genders. This has played an essential role in increasing its customer base and hence the level of its profitability.

In an effort to develop an effective product strategy, the firm has categorised its product offering into football, running, women training, men training, basketball, men training and action sports and Nike Sportswear. These products are marketed under the Jordan and Nike brand names. The firm also markets products meant for various sports such as golf, wrestling, walking, tennis, lacrosse and cricket.

The other product category that the firm deals in include performance equipments such as sports ball, gloves, eyewear, socks, golf clubs, digital devices, timepieces, bats and protective equipments. Nike also manufactures various types of casual and athletic apparels and footwear products. These products are marketed under the brand names Star Chevron, Chuck Taylor, Converse, Jack Purcell and One Star.

The product diversification strategy has played an essential role in improving the firm’s competitive edge. By offering diverse categories of sports footwear, accessories and apparels, the firm has been able to tap into diverse sports market segments. Consequently, Nike Incorporation has been able to maximise its profit.

Nike Incorporation faces intense competition from different firms within the global textile [footwear and apparels] industry. To deal with this challenge, the firm has integrated the concept of continuous product innovation. Consequently, the firm is able to offer customers high quality products. The firm’s strength with regard to product innovation and development is enhanced by the fact that it has adopted modern footwear and apparels production technology. Thus, the firm is able to produce high quality products that satisfy the customers’ needs.

Pricing strategy

According to Ferrell and Hartline (2008), product pricing plays an important role in determining likelihood of an organisation achieving its financial goals. Moreover, price influences the consumers perception regarding a particular product and hence their purchase decision. This arises from the fact that price communicates the value of a product. For example, some consumers have the perception that a high product price is an indicator of its high quality. Armstrong and Kotler (2011) further argue that consumers are conscious of price in their purchase decision making process. Therefore, it is imperative for a firm to integrate an effective pricing strategy.

Nike Incorporation has adopted the premium pricing strategy. The strategy entails setting the price of products at a premium. Nike’s products are amongst the most expensive compared to those of its competitors. The firm’s decision to adopt premium pricing strategy is informed by the product diversification strategy. Nike Incorporation offers customers diverse product features through its product line extension strategy. The products are targeted at diverse customer groups.

As a result of the premium pricing strategy, Nike Incorporation has managed to develop and maintain a high market share. This arises from the fact that the firm’s target customers who value products that are laden with appealing features. Thus, they are willing to purchase the products at a premium.

The firm’s ability to adopt the premium pricing strategy is enhanced by its effectiveness in exploiting the concept of vertical integration. Nike Incorporation has a substantial amount of influence on its product distribution channel. Thus, the firm is able to influence and control product pricing within the supply chain. Moreover, the firm’s premium pricing strategy is enhanced by geographical differences. The firm’s product prices are high in some regions compared to others as a result of shipping costs, differences in legislations and taxation.

Promotion strategy

Creating sufficient market awareness is critical in firms’ effort to maximise their profit (Kotler & Keller, 2012).Nike Incorporation engages itself in an aggressive market promotion campaign by adopting the concept of integrated marketing communication. The firm creates market awareness using diverse methods such as advertising, sales promotion, direct marketing and public relations. The firm considers advertising as one of the most important vehicles towards improving its effort to develop a strong brand value (Kotler & Keller, 2012).

With regard to advertising, Nike Incorporation uses diverse mediums such as the television, the internet, the internet and outdoor advertising. Using diverse advertising mediums enables Nike to reach a large number of potential customers. With regard to internet advertising, the firm creates awareness through diverse technological platforms such as You Tube, Facebook and Blogs. These mediums enable the firm to interact with customers directly. Thus, the firm is able to obtain market feedback which is used in its product development and improvement. In order to appeal its target customers, the firm ensures that its advertising message is effectively formulated.

The firm has also sponsored renowned personalities to be its brand ambassadors. Examples of such individuals include Renaldo, Roberto Carlos and Ronaldo who are renowned Brazilian sports personalities. Other celebrities include Jermane O’neal and Lebron James [renowned basketball players] and Tiger Woods [golf] and Rafael Nadal. In an effort to penetrate the emerging market, the firm selects renowned sports personalities in different regions. For example, in 2010, the firm contracted Baichung Bhutia, a renowned soccer team captain, to be its brand ambassador in India. Nike has also entered into an agreement with various entertainment celebrities. In 2010, Nike Incorporation entered into an agreement with Jay-Z who endorsed the firm’s products during the Tip Off World Basketball Festival (Nike Incorporation, 2013).

These celebrities have played an important role in marketing Nike’s brand. Their effectiveness arises from the fact that consumers tend to associate themselves with famous individuals. Consequently, their purchase decision is likely to incline to that of celebrities. The firm’s promotion strategy also entails sponsoring various sports events for example the Golden West Invitational and Hoop It Up.

The firm’s name [Nike] and its trademark [swoosh] are amongst the most recognised brands globally. The swoosh trade mark has played an effective role in communicating speed, which is a key element in sports. On the other hand, the brand name ‘Nike’ is associated with quality. Thus, the two elements have improved the firm’s brand image hence enhancing its market dominance. By adopting the above market promotion strategy, Nike Incorporation has managed to attract and retain a large number of customers (Nike Incorporation, 2013).

Distribution strategy

Effective product distribution is essential in a firm’s effort to ensure that its products and services are easily accessible in the market (Ferrell & Hartline, 2008). Nike’s management team is committed towards ensuring that its products and services are available in the global market. The firm has achieved this by integrating an effective product distribution strategy that is comprised of both direct and indirect channels of distribution.

The firm has established exclusive Nike stores that are distributed across world. Some of Nike’s affiliate firms include Hurley International, Converse Incorporation, LLC and Jordan Brand and Nike Golf. By the end of 2012, the firm had established over 700 retail stores. Nike also distributes its products through multi-brand stores, specialty stores, independent distributors, subsidiaries and licensees. The stores sell the firm’s products to over 23,000 distributors across the world. The firm has also adopted e-commerce in its product distribution strategy (Nike Incorporation, 2013).

The firm is ranked amongst the first firms to market its products through the e-commerce website. Thus, customers are able to order Nike’s products online. Nike Incorporation intends to generate approximately $30 billion in sales revenue by 2015. This will be achieved through distribution of various sporting equipments, apparels, footwear and accessories. The firm’s distribution strategy has played a critical role in improving its ability to penetrate emerging markets such as China, India, Brazil and Russia (Nike Incorporation, 2013).

Summary

The analysis shows that Nike Incorporation has been very effective in developing and implementing the various components of marketing mix. By using the marketing elements, Nike Incorporation has been able to formulate and implement effective marketing mix strategies. As a result, the firm has managed to develop adequate competitive advantage in the global market. To survive in the long-term, it is imperative for Nike Incorporation to continuously review and evaluate it marketing mix strategies. This will give the firm’s management team insight on how to adjust its marking mix strategies.

Reference List

Armstrong, G., & Kotler, P. (2011). Marketing: An introduction. Upper Saddle River, NJ: Prentice Hall.

Ferrell, O., & Hartline, M. (2008). Marketing strategy. Mason, OH: Thomson South-Western.

Kotler, P., & Keller, K. L. (2012). Marketing management. Upper Saddle River, NJ: Prentice Hall.