Marketing Management

Tropic: Assignment on Marketing plan on Nike shoes

Supervised ByJannatul Mawa Nupur

Assistant Professor of Marketing

Submitted To:Department of Business Administration

Northern University Bangladesh

Submitted By:Section- A

Submission Date: 07-04-2014

Sl No Name ID01 S.M. Al-Shahriar BBA 120304790

Executive Summary

Nike is the most renowned supplier of athletic shoes and apparels. NIKE, Inc. was incorporated in 1968 under

the laws of the state of Oregon. The brand can be found everywhere, examples of its major target areas are:

USA, Europe, Asia Pacific and the Americas.

Our principal business activity is the design, development and worldwide marketing and selling of athletic

footwear, apparel, equipment, accessories and services. NIKE is the largest seller of athletic footwear and

athletic apparel in the world. We sell our products to retail accounts, through NIKE-owned retail stores and

internet websites (which we refer to as our “Direct to Consumer” operations) and through a mix of independent

distributors and licensees, in virtually all countries around the world. Virtually all of our products are

manufactured by independent contractors. Virtually all footwear and apparel products are produced outside the

United States, while equipment products are produced both in the United States and abroad.

The business has obtained a huge position in the market of these places thanks to the innovative and attractive

design, quality production of the product and wise marketing strategies.

[Table 1.0] Sales Forecast

Sales 2014 2015 2016

Recreational $911480 $1197754 $1375530

Competitive $145836 $191640 $220084

Total sales $1057316 $1389394 $1595614

Direct cost of sales 2014 2015 2016

Recreational $164066 $215596 $247596

Competitive $26250 $34496 $39616

Subtotal Cost of Sales $190316 $250092 $287210

2.0 Situation Analysis

The marketing environment for NIKE represents overwhelming opportunities. It also contains some challenges

that the firm believes it can meet successfully. It’s products have been well recived, and marketing will be key

to the development of band and product awarness as well as growth of the customer base. Nike has built some

impressive strength while looking forward to new opportunities. Its dedicated founders, the growing number of

brand-loyal customers, and sound financial management place the company in a good position to grow.

However, building strong relationships with consumers, retailers, and suppliers should help thwart competitors.

2.1 Market Summary

NIKE is a consumer products company, the relative popularity of various sports and fitness activities and

changing design trends affect the demand for our products. We must, therefore, respond to trends and shifts in

consumer preferences by adjusting the mix of existing product offerings, developing new products, styles and

categories, and influencing sports and fitness preferences through extensive marketing.

NIKE has good information about the market. This information is helpful to better understand who is served,

what their specific needs are, and how Nike can better communicate with them.

NIKE brand operations based on our internal geographic organization. Each NIKE Brand geography operates

predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel,

equipment, accessories, and services. Our reportable operating segments for the NIKE Brand are: North

America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. Our NIKE

Brand Direct to Consumer operations are managed within each geographic segment.

Target Market

Recreational

Fitness

Athletes

Sports

Students,

[Table2.1] Target Market

Target Market Forecast

Potential

Customers

Growth 2014 2015 2016 2017 CAGR

Recreational

Fitness

Athletes

Sports

Students,

Total

10%

15%

10%

6%

4%

10.48%

42113500

15686000

852500

5257600

4513600

68423200

46324850

18038900

937750

5573056

4694144

75568700

50957336

20744736

1031526

5907440

4881910

83522948

56053070

23856446

1134678

6261886

5077186

92383266

10.00%

15.00%

10.00%

6.00%

4.00%

10.48%

2.1.1 Market Demographics

Profile for the typical NIKE customer consists of the following geographic, demographic, and behavior factors.

Geographics

Nike’s geographic market consists of major markets throughout the globe. Until 2009 Nike’s geographical

markets consisted of United States, Asia-Pacific, Americas and an area comprising of Europe, Middle East and

Africa. However Nike announced its plan to reorganize its global business in order to bring goods closer to the

markets and in turn consumers as well as to reduce management overlap. Following this plan Nike then decided

to develop its market share in North America, Western Europe, Eastern/Central Europe, Greater China, Japan

and Emerging Markets.

Demographics

Male•

Running•Training• Basketball• Nike Sportswear• Soccer• Action Sports• Football• Golf• Jordan• Lacrosse•

Outdoor• Baseball• Tennis• Track & Field

Female•

Running• Training• Basketball• Nike Sportswear• Walking• Soccer• Action Sports• Golf• Outdoor• Softball•

Tennis• Track & Field• Volleyball

Youth•

Pre School• Infant/Toddler• Kids•

Age:

From 13-46 years (80%)

Education:

64% have an undergraduate degree

Income:

Median personal income around $50,000

Behavior Factors:

Users spend money on typically sports equipment .Users have active lifestyle, Users enjoy fitness activities for

a healthy life and recreation.

2.1.2 Market Needs

As nike is a customer friendly company it gives most empasis on customer needs and choice. The company

seeks to fulfil the following benefits that are important to it’s customers:

Quality product: the customer work hard for their money and innterested to spend their money only for quality

product that have high working period.

Well-Thought-Out Desigs: NIKE have industry exprencece and personal dedication to produce best designed

products.

Customer service: To build a sustainable business the most considerable factor is good customer service. It

refers after sales service and loyality building program.

2.1.3 Market Trends

We believe Nike will be able to maintain its strong growth performance in fiscal 2014. High demand in running,

basketball and football categories coupled with healthy growth in North America, emerging markets, and

central and eastern Europe bodes well for the company’s outlook. We expect Nike to increase its prices in the

future, which will positively impact its profitability. Excess inventory in China represents a near term threat,

and addressing this problem faster than expected could help the company outpace market expectations Nike

U.S. has eschewed both “separated toes” and “no support” shoe designs.  After observing some Nike-sponsored

athletes training barefoot, Nike introduced the Nike Free shoe with a segmented, highly flexible sole in three

different levels of support that fall in-between barefoot and the most supportive shoes . The Free brand is

positioned by Nike as a “barefoot-like ride,” but the relatively thick sole separates it from true “feels the

ground” barefoot shoes and has actually helped make the brand very popular among non-runners; thus, the

brand is generally excluded when measuring sales of the minimalist running shoe segment. Nike has also

introduced another lightweight running shoe, the Flyknit brand.  This is not being marketed as a barefoot

product but rather is positioned as “the perfect fit,” responding to a long-standing consumer desire for shoes that

are as light and unnoticeable as socks.  Flyknit shoes are half the weight of Nike’s most popular running shoe

and made of a stretchy material with the comfort of a sock .

2.1.4 Market Growth

Strong growth in running, basketball and soccer categories is fueling demand for Nike’s products. Nike’s

strategy is to focus on discrete categories (category offense) has further helped drive its sales. In fiscal 2013,

Nike brand wholesale equivalent sales in running, basketball and soccer rose by 18%, 22% and 9% in constant

currency terms. While innovative technologies are fueling growth in the running category, the growing

popularity of basketball around the world coupled with Nike’s sponsorship of leading basketball players  is

driving the sales in the basketball category. We expect the growth in the soccer category to accelerate in the

future owing to upcoming sporting events such as the 2014 FIFA World Cup.

2.2 SWOT Analysis

The modified sneakers have various strengths, weaknesses, opportunities, and threats on the market.

The following SWOT analysis captures the key strengths and weaknesses within the company, and describes

the opportunities and threats facing NIKE.

2.2.1 Strengths

a. Broad distribution network i.e. sells its products globally

b.It’s a worldwide brand leader.

c.  Nike has a large market share.

d. Nike uses new technology to innovate products and to give them a competitive edge e.g. Nikes partnership

with Apple.

e. Offers wide variety of footwear products and allows customization as well

2.2.2 Weakness

a. The highly centralized management hierarchy (the McLemores) and lack of managerial backup may impede

creativity and growth. Too few people hold too much knowledge.

b. NIKE’s current facilities are crowded. There is little room for additional employees or new equipment.

c. A challenge to find employees who possess the necessary skills and customer-centric attitude.

2.2.3 Opportunities

a. Government funding towards sport and large programs set up by leading companies 

b. Growing opportunities in India- increase in India’s urban middleclass; Indian government has removed

restrictions on foreign direct investment, meaning Nike can have full ownership of its Indian operations.

c. Increase in health awareness with regards to weight loss and benefiting those with problems such as high

blood pressure and cancer.

d.General growth of the global footwear market- By 2016 its predicted to increase by 28.9% since 2011.

2.2.4 Threats

a. Reengineering, right-sizing, and outsourcing trends in management may alter traditional channel relationships

with brokers, dealers, and distributors or eliminate them altogether.

b. Competition increasing day by day.

c. Natural, economic and political situation will not remain favorable always.

2.3 Competition

Sports giant Nike recorded a strong 2013, with its stock price rising nearly 60% over the year. The surge in

stock price was driven by strong performances across all divisions, product types and geographies. In Q2 2014,

revenues from North America grew by 9%, while Central & Eastern Europe and Western Europe saw revenue

growth by 14% each. We expect the strong growth to continue in 2014, on the back of strong future orders

growth and the presence of big sporting events such as the upcoming FIFA World Cup. Future orders growth at

26% in Western Europe was especially strong during the period. However, the region has traditionally been a

strong hold of competitors such as Adidas and Puma. After losing market share in the region to Nike, these

companies have amplified their marketing and demand creation activities to recover lost ground.

2.4 Product Offering

NIKE, Inc. (NIKE), incorporated on September 8, 1969, is engaged in the design, development and worldwide

marketing and selling of footwear, apparel, equipment, accessories and services. NIKE is a seller of athletic

footwear and athletic apparel worldwide.

The Company focuses its product offerings in seven key categories: Running, Basketball, Football (Soccer),

Men's Training, Women's Training, NIKE Sportswear (its sports-inspired products) and Action Sports.

It also markets products designed for kids, as well as for other athletic and recreational uses, such as baseball,

cricket, golf, lacrosse, outdoor activities, football (American), tennis, volleyball, walking and wrestling. NIKE's

athletic footwear products are designed primarily for specific athletic use.

2.5 Key to Success

Nike one of the top listed shoe company in the current world begun their business in 1962. The company

focused on high-quality running shoes designed especially for the athletes. They have been able to establish a

huge customer market all over the world through their quality products and strong marketing concepts.

The key factor for Nike is that we have been able to create strong brand preferences among the customers. Nike

created their brand image into consumers mind. The company’s commitments to designing innovative footwear

for serious athletes help it build a cult following among consumers.

Another important reason for Nike’s success is that we read the consumers mind perfectly. Nike does not sell

“Nike air max” shoes, it sold a way of life, which is key to its success. This flag is the incentive for the people,

and the philosophy behind the energy and determination, is that everyone concerned, whether you are not

athletes. Nike uses a motivational type of language to inspire consumers.

2.6 Critical Issues

As a start-up business, Nike is still in the early stages. The critical issues are for Nike to:

*Establish it’s self as the premier Shoe Company.

*Pursue controlled growth that dictates that payroll expenses will never exceed the revenue base. This will help

protect against recessions.

*Constantly monitor customer satisfaction, ensuring that the growth strategy will never compromise service and

satisfaction levels.

3.0 Marketing Strategy

The marketing strategy of Nike rested completely upon a product image which is favorable and allowed it to

develop into one of the best multinational companies after a while.

Nike’s favorable product icon has been kept optimistic because of the strong relation with the company logo

that is quite distinct and unique as well as the product slogan that has been utilized in commercials for a long

period of time. The marketing strategy of Nike invests a lot in commercials and product promotion.

3.1 Mission

Nike’s mission statement is “To bring inspiration and innovation to every athlete* in the world.”

The legendary University of Oregon track and field coach and Nike co-founder Bill Bowerman said, “If you

have a body, you are an athlete.”

Bowerman was a teacher who showed athletes the secrets to achievement. Nike invites you to experience our

innovative and inspiring products.

3.2 Marketing Objectives

Nike’s marketing objective is to employ a range of marketing communication tactics that can cater to the

organization’s target market, who have different nationalities, genders, cultures, and ages.

Nike continuously aims to apply marketing tactics that are appropriate with the people who reside in these

continents or nations.

Nike applies an effective marketing communication and at the same time still relatively manages to be cost-

effective in terms of its marketing programs.

3.3 Financial Objectives

*Use Financial Resources Wisely

*Increase Revenue Growth Rate

*Build Accurate Financial Models

*Set Numerical Productivity Targets

*Include All Marketing Costs

*Create Realistic Financial Projections

3.4 Target Markets

With a wide line of products covering many different sports, Nike’s Target market has a very large range. The

company aims to meet the needs of people of all ages in the varying categories, and sticks by it’s mission

statement, “To bring inspiration and innovation to every athlete in the world. If you have a body, you are an

athlete.”

3.5 Positioning

For Nike to be the world's leading seller of athletic footwear, they must have a pretty good position in the

market of shoes. Over half of Nike's sales are made through their shoe products, especially their athletic

footwear. They have shoes for practically every activity from aquatics to auto racing. As a company with such

versatility, it is no wonder that they are dominating the industry worldwide. It is kind of hard for consumers to

avoid Nike products when shopping for athletic shoes. They are a household name and everyone knows the

famous Nike symbol, the swoosh. Nike holds a strong position in this market because it always seems to be

ahead in the technology and style of their shoes when compared to competitors. Nike's prices are also

competitive as well. They have the high-end, high-tech shoes that people are looking to pay a little more money

for and then they have shoes such as Converse which start at $44.99. Nike provides obtainable products for

people on multiple levels of income so virtually anyone can get their hands on a Nike product. All this together

is what allows Nike to be in the firm and stable position they have in the athletic shoe market and will continue

to do so as long as they continue to do what they are doing as a company.

3.6 Strategies

*The mission is to exceed from all leading athletic companies and make it widely available across the globe.

*Maintain the leading position in the market by supplying quality products and innovative designs and attracts

maximum number of customer belonging to all ages and lifestyle.

*Guarantee the availability of all kinds of products at all leading stores and markets.

*To meet the challenging demands of customers.

*Value the labors, stake holders and other communities in the implementation of every strategy and decision.

*Encourage the environment friendly and pollution free development by reducing the emission and waste

minimizing activities with the help of various projects sponsored by WWF and other organizations.

*The company will now focus on providing quality products on low prices to have greater share in the market.

3.7 Marketing Mix

Nike marketing mix is comprised of the following approaches to pricing, distribution of product, advertising

and promotion, placement and customer service.

4 P of marketing mix and their branches*Product

Product verity

Quality

Design

Features

Brand name

Packaging

Sizes

Services

Warranties

Returns

*Price

List price

Discounts

Allowances

Payment period

Credit terms

*Promotion

Sales promotion

Advertising

Sales force

Public relations

Direct marketing

*Place

Channels

Coverage

Assortments

Locations

Inventory

Transport

Product: Thanks to the large number of researches, Nike offers a wide range of athletic footweardesigned for sports and also for every day usage. But the company now produces otherequipment specialized for sport activities such as sport balls and eyewear. The products meet all requirement of all type of customers (old, young, man, women). The production facilities are very close to the raw material to have low labor prices.

Price: The company has designed its pricing structure in a way to be competitive with othershoe sellers like Converse and Adidas. The prices of the products are variable depending on the season (especially springapparel), type and size (for example a good pair of shoes would cost from 70 to 150dollars). Nike offers good quality products at low prices; in fact this was one of its first goals:when the company was born its aim was to break German domination in sports shoeindustry.

Placement: Nike has its individual stores and it is also sold in malls and department stores. They have more than 20,000 retailers in USA and some more in other 200 countries; infact Nike’s mission is to make its product available all over the world. In every country there are not only sellers, but production units and customers services.

Promotion: The company has used mass media (such as TV, Internet, newspapers and magazines)to promote their brand. Many well-known athletes have worked for the advertisement (for example Ronaldo). The business promotes sport events and takes part in some projects (for example theyhelped WWF to reduce pollution). The brand swoosh logo and image play an important role in its advertisement: in fact itmakes the company recognizable all over the globe.

3.8 Marketing Research

Nike is engaged in the design, development and worldwide marketing of footwear, apparel, equipment and

accessory products. It sells its products to approximately 18,000 retail accounts in the United States and through

a mix of independent distributors, licensees and subsidiaries in nearly 200 countries. Nike's athletic footwear

products are designed for specific athletic use, although some of its products are worn for casual or leisure

purposes. The company creates designs for men, women and children. Running, basketball, children's, cross-

training and women's shoes are the Company's top-selling product categories. Nike also markets shoes

designed for outdoor activities, tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling,

cheerleading, aquatic activities, hiking and other athletic and recreational uses. It sells active sports apparel that

covers most of these categories, athletically inspired lifestyle apparel and others.

4.0 Financials

This section will offer the financial overview of Nike related to marketing activities. Nike will address break-

even analysis, sales forecast, expense forecast, and indicate how these activities link to the marketing strategy.

4.1 Break-even analysis

The break-even analysis indicate that $15520 will be required in monthly sales revenue to reach the break-even

point.

$12000

$8000

$4000

$0

($4000)

($8000)

($12000)

($16000)

$0 $5024 $10050 $15074 $20100 $25124

Monthly break-even point

Break-even Analysis

Break-even point = where line intersects with 0

[TABLE 4.1] Break-even Analysis

Break-even AnalysisMonthly Units Break-even $124Monthly Sales Break-even $15520

AssumptionsAverage per-unit Revenue $251.24Average per-unit Variable cost$45.22Estimated Monthly Fixed cost $12726

4.2 Sales Forecast

Nike feels that the sales forecast figures are conservative. It will steadily increase sales as the advertising

budgets allows. Although the target market forecast (Table 2.1) listed all of the potential customers divided into

two categories: Recreational and Competitive. Reducing the number of categories allows the reader to quickly

discern information, making the chart more functional.

Monthly sales Forecast

[Table 4.2] Sales Forecast

Sales Forecast

Sales 2014 2015 2016

Recreational $911480 $1197754 $1375530

Competitive $145836 $191640 $220084

Total sales $1057316 $1389394 $1595614

Direct cost of sales 2014 2015 2016

Recreational $164066 $215596 $247596

Competitive $26250 $34496 $39616

Subtotal Cost of Sales $190316 $250092 $287210

4.3 Expense Forecast

The expense forecast will be used as a tool to keep the department on target and provide indicators when

corrections/modifications are needed for the proper implementation of the marketing plan.

[Table 4.3] Marketing Expense Budget

Marketing Expense Budget 2014 2015 2016

Web site $50000 $16000 $20000

Advertisements $16100 $30000 $40000

Printed Material $3450 $4000 $6000

Total sales and

Marketing Expense $69550 $50000 $66000

Percent of Sales 6.58% 3.60% 4.14%

Contribution Margin $797450 $1089304 $1242404

Contribution Margin/Sales 75.42% 78.40% 77.86%

5.0 Controls

The purpose of Nike marketing plan is to serve as a guide for the organization. The following areas will be

monitored to performance:

#Revenue: monthly and annual

#Expenses: monthly and annual

#Customer satisfaction

#New product development

5.1 Implementation

The following milestones identify the key marketing programs. It is important to accomplish each one on time

and on budget.

Milestones

[Table 5.1] milestones

Milestones Plan

Milestones Start Date End Date Budget manager Deportment

Marketing plan completion 1/1/14 2/1/14 $ 0 Skim marketing

Web site completion 1/1/14 3/15/14 $40800 outside firm marketing

Advertising campaign# 1 1/1/14 6/30/14 $7000 Skim marketing

Advertising campaign# 2 3/1/10 12/30/14 $9100 Skim marketing

Development of the Retail channel 1/1/14 11/30/14 $0 Skim marketing

Totals $56900

5.2 Marketing Organization

Skim Mark will be responsible for marketing activities.

5.3 Contingency Planning

Difficulties and Risks

#Problems generating visibility, a function of being an internet-based start-up organization.

#An entry into the market by an already established market competitor.

Worst Case Risks Include

#Determining that the business cannot support it’s self on an ongoing basis.

#Having to liquidate equipment or intellectual capital to cover liabilities.