MEDITERRANEAN COLLEGE

SCHOOL OF BUSINESS MANAGEMENT

YEAR 2

ASSIGNMENT TITLE: Principles and Practice of Marketing In Course

Assignment 2010/2011 about Nike

STUDENT NAME: Ioannis Chatzidis

MODULE LEADER: Mr. Sioulis

MODULE TITLE: Principles and Practice of Marketing

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Above, there are two diagrams in the past four-year period. Both diagrams

were designed according to clues from the case study that was provided with this

specific assignment. In the first diagram, it can be seen that Nike holds a 40% share of

the United States athletic footwear market share. Nike’s biggest competitor is Reebok

with a 13% market share and all the other brands which hold the rest 47%.

On the other hand, on the second diagram, it can be seen that Nike holds a

35% share of the top football marketers share in Europe. Something that is really

remarkable is that Nike is relatively new to football. Nike also managed to really

quick drop to the second place Adidas, which holds a 30% share and it was the top

football marketer for a lot of years. All the other companies hold the rest 35%. Nike’s

founder, Phil Knights, is now one of the richest people in the world.

To continue with, Keller and Kotler (2006) mention that every company,

especially if it is an international corporation, needs to make a macro environmental

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analysis in order to grow further than the current point that it is. The best tool of a

macro-environmental analysis is the PEST Analysis. Thus, there will be provided a

thorough PEST Analysis and some other analytical models, such as a BCG Growth

Share Matrix. The charts that will follow can be found in the annual report of nike in

www.nikebiz.com

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Resource of Figure 4.7: Lussier & Kimball (2009), Applied Sport Management Skills

To continue with, Kotler ét al (1999) state that PEST Analysis is comprised of

four type of environments. The letter “P” refers to the Political environment of the

company, “E” refers to the Economic environment, “S” refers to the Social-Cultural

environment and the letter “T” which refers to the Technological environment. Taking

every chart from above into account, there will be given a thorough PEST Analysis.

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Firstly, there is the political environment. In accordance with the charts above

and Messner, A.M. (2002), every government has to help the companies to grow by

the economic policies it creates. Nike, Inc. was always helped by the policies that are

created by the governments of the United States of America.US policies help Nike,

Inc. to have a general macroeconomic stability, low interest rates, stable currency and

to be competitive at an international level. Finally, if somebody take into account the

case study that we were given, the growth of Nike, Inc. is absolutely understandable.

Secondly, there is the economic environment. According to the case study of

Nike that was given to us and clues from www.nikebiz.com and the matrixes above,

the biggest threat for the Nike’s economy is the economic recession which still exists.

Thus, it is most certain that Nike’s growth is still affected by this global

economic recession. The economy of the United States of America is in a bad

situation. It can be said that Nike has just started to feel this economic recession, due

to clues from the annual report of Nike and because of the decrease in Nike’s sales.

Nike’s products are manufactured in Asia. Because of the Asian economic recession

the prices of the materials and the labor costs are increasing and this also affects Nike.

Thirdly, there is the social-cultural environment. According to Cuizon, G.

(2009), people are now more concerned about their health. As a consequence, fitness

clubs are going better and better. More and more people purchase fitness products,

such as apparel, footwear and several types of equipment. In the case study that was

provided to us and at the matrixes above, it is mentioned that Nike, Inc. is the

business with huge market shares not only in the Unites States of America but

internationally as well. However, in the case study there is a statement about the labor

and factory conditions under which a big amount of people work in Asia. As a result,

Nike’s publicity got worse, the sales declined and Nike’s customers now demanding

from Nike to be more responsible to the global society.

Finally there is the technological environment. Cuizon, G. (2009), claims that

Nike uses Information Technology in its marketing systems. Nike uses information

technology in order to be more innovative, segmented and differentiated than its

competitors. Besides, according to information accessed in www.nikebiz.com , Nike’s

leadership is an outcome of a very well-applied information technology, which is

applied at every stage of the product, from its development to its distribution. What is

more, taking a good look to the matrixes and diagrams provided, it can be said that

Nike is definitely the global leader when it comes to the athletic footwear. As a result,

Nike is able to affect the way that its environment will develop.

To continue with, there will be created a profile of the company’s target

customer. A broad range of segmentation variables will be used. Beginning, a profile

of Nike’s target customer can be created through a geographic variable.

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The chart above was created with data taken from http://invest.nike.com , in

which Emerging markets refer to South Europe, Americas, Africa and the Pacific. In

the chart above, it can be seen every geographic area in which Nike, Inc. has

businesses. It can be seen that, the first in the sales in 2009 comes North America with

$1429.3 mil. Continuing, there is Western Europe with $939.1 mil., Central and

Eastern Europe with $415.1 mil., Greater China with $575.2 mil., Japan with $205.4

mil. and the emerging markets with $342.6 mil.

Thus, it can be concluded that, geographically, Nike, Inc. does business in a

global range, in almost every country of every continent with Northern America

market being the a highest-income customer and Japan with the emerging markets

being the markets with the fewest sales. However, it can also be said that, because of

the high raise in the sales in Central-Eastern Europe, Greater China, Emerging

markets and Japan, Nike, Inc. is focusing more on these markets as a target customer

rather than the markets of North America and Western Europe.

To continue with, according to information taken from

www.nikebiz.com/customer_service , the following tables can be created, which will

help in segmenting demographically and behaviorally;

0

200

400

600

800

1000

1200

1400

1600

2008 (mil. $) 2009 (mil. $)

North America (-2%)

Western Europe (+2%)

Central and Eastern Europe(+16%)

Greater China (+34%)

Japan (+15%)

Emerging Markets (+12%)

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According to the tables above, it can be mentioned that when it comes to the

demographic variable of selecting a market, Nike, Inc. can sell products for every age

and gender of either boys/men or girls/women. Moreover, it can be said that Nike

provides its customers products for almost every type of sport and activity.

Furthermore, as it can be seen through a research on

www.nikebiz.com/customer_service about the prices of Nike’s products, it can be

concluded that Nike mainly focuses on middle and high income families. New Nike’s

products are expensive. However, Nike very often does discounts on its products and

sometimes even people from low-middle income families can afford Nike’s products.

Yet, a company’s market can be segmented by a behavioral or a

psychographic variable. As it can be seen in the tables above, Nike has products for

sports that focus on different social classes. For example, golf or lacrosse is

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considered to be the sport of the rich people. However, basketball is a sport which is

played by every social class. Thus, it can also be mentioned that Nike has a wide

range of products which can satisfy almost every people who may and will have not

only a different lifestyle, but a different personality as well. On the other hand, a

certain product may be used in different occasions and it may has a different usage

rate of it may benefit different people in different ways. However, Nike’s products

can cover almost any type of these behavioral factors.

In continuance, there will be provided a BCG Growth Share Matrix and a

SWOT analysis of Nike, Inc. which were all created by information taken by the

balance sheet and the annual report of the corporation and www.nikebiz.com ;

It is stated by Kotler & Armstrong (2001), that by using a BCG matrix, a

company can categorize every strategic sector of the company’s activities that are

used in accordance with the growth share. In the vertical axis there is the market

growth rate and in the horizontal axis there is the relative market share. In the upper-

left box there are the stars, which are the business activities or the products with a

high growth rate and a high market share. It is often important for the company to

make huge investments to further grow. Eventually, their growth rate will decline and

stars will be transformed to cash-cows.

It can be seen in www.nikebiz.com and in the annual report of the company,

that the marketing strategies that Nike uses, takes into consideration a lot of other

factors except for the market growth rate. Nike, Inc. uses a market elasticity indicator

which takes into account the market size, the market growth rate, the profit margins of

the market and the size of the competition.

Moreover, as it was mentioned above in the PEST analysis of the company

and due to the marketing strategies that are applied, Nike, Inc. has been helped by the

policies of the countries that has expanded (especially from the US policies). Also,

Nike Corporation has been helped by a very helpful socio-cultural and technological

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environment. What is more, Nike has managed to come over a really bad economic

environment.

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Moreover, Nike has taken into advantage the development of the international

trade, the general increase in the demand for clothing/footwear for leisure activities,

the women demands for clothes and footwear and the growing e-commerce. Thus,

Nike has developed certain marketing strategies that help the corporation to further

expand its strengths. Nike has a wide global range of distribution networks (and

online networks) and invests on them to accomplish an increase at the company’s

sales and market share and the satisfaction rate of the customers. However, there are

also some weaknesses that have risen up because of these strategies. Despite of the

increase of women demands for clothes and footwear, Nike has a lack of stores

catering exclusively women. What is more, despite the global distribution network of

the company, there are poor employment practices at their international

manufacturing sites. Also, a big weakness that comes up because of these strategies is

that Nike, Inc. becomes more and more heavily depended on the footwear sales.

Furthermore, as it can be seen in www.nike.com and www.nikebiz.com , Nike,

Inc. through its official website has managed to come into contact with its customers

with a more personal and personalized way.

What is more, Nike, Inc. besides its strong brand recognition and a superior

research and development department, it has also managed through its marketing

strategies to be really competitive. However, there are two big threats for the

marketing strategies that are used and those are Nike’s biggest competitors. Reebok

has a really strong presence in the global market with more than 200 factories and

Adidas, which is Nike’s biggest competitor in the European market.

All things considered, it can be concluded that Nike, Inc. uses mainly two

specific marketing strategies. One is a pull-oriented strategy and the other one is the

sports promotions and sponsorships. According to Jeannet and Hennessey (1998), the

main characteristic of the pull strategy is that the company is heavily depended on

advertising a product directly at the final user of this product (or service in general).

Campaigns which use a pull-oriented marketing strategy, are mainly a marketing

solution for firms (especially the international ones) that approach a really large

segment of the market.

Finally, the other marketing strategy that is used by Nike is the sports

promotions and the sponsorships. One of the most competitive of Nike’s strengths is

the investments in great celebrities and major athletic events. As it is mentioned to the

case study that was provided, Nike had signed in the past the basketball phenomenon

LeBron James to a $90 million contract. Moreover, in the Athens Olympics, Nike’s

investments in athletes brought the company back, 50 gold medals and many other

silver and bronze medals. Furthermore, Nike has been for many years the main

granter in the English football Premier League and also major granter in the Spanish

football league. Nike, Inc. has also invested in many other phenomenon athletes, such

as Michael Jordan and Tiger Woods.

As it is mentioned by Jeannet and Hennessey (1998), has moved beyond

sponsoring individually athletes. Nike, Inc. has started to sponsor entire teams. Nike,

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Inc. had spent more than $200 million to be the only sponsor of the Brazilian national

teams at any sport for a ten-year period (1997 – 2007).

Moreover, since Nike now sponsors the national football team of the USA, the

Netherlands, Italy, Brazil, Russia, etc. Nike has started sponsoring matches between

these teams outside the formal championships. A great outcome of this marketing

strategy as it can be seen in the charts in the beginning of this assignment, Nike has

managed to be more competitive against its biggest rivals, which are Adidas and

Reebok. One final thing that Nike must take into account from its product mix is the

high level of its products’ prices.

Word Count: 2198

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REFERENCE LIST

BOOKS

1. Armstrong, G. and Kotler, P. (2001), Principles of Marketing, 9th

Edition.

New Jersey: Published by Prentice Hall, Inc.

2. Hennessey, D.H. and Jeannet, J.P. (1998), Global Marketing Strategies.

USA: Published by Houghton Mifflin Company, pp. 481, 501, 502.

3. Keller, L.K. and Kotler, P. (2006), Marketing Management, 12th Edition.

New Jersey: Published by Pearson Prentice Hall, pp. 88-90

4. Kimball, C.D. and Lussier, N.R. (2009), Applied Sport Management Skills.

USA: Published by Human Kinetics, p. 100.

5. Kotler, P., Armstrong, G., Saunders, J. and Wong, V. (1999), Principles of

Marketing, 2nd European Edition. New Jersey: Published by Prentice Hall

Europe, pp. 127, 168-192

6. Messner, A.M. (2002), Taking the Field: Women, Men and Sports. USA:

University of Minnesota Press. Available from:

http://site.ebrary.com/lib/teesside/docDetail.action?docID=10151221&p00=ta

king%20field

7. Assignment’s Case Study about Nike

FURTHER READING

1. Annual Report of Nike 2010, Available from http://media.corporate-

ir.net/media_files/IROL/10/100529/nike-ar-20100804/index.html

2. Ashford, R., Drummond, G. and Ensor, J. (2008) Strategic Marketing:

Planning and Control, 3rd

Edition. Oxford: Published by Elsevier, Ltd.

3. Cuizon, G. (2009), Marketing Audit of Nike’s Strategies. Available from:

http://www.suite101.com/content/marketing-audit-of-nikes-strategies-a94402

4. Daniels, D.J., Radebaugh, H.L. and Sullivan, P.D. (2011) International

Business: Environments and Operations, 13th

Global Edition. Published by

Pearson Education, Inc.

5. Kerin, A.R. and Peterson, A.R. (2010) Strategic Marketing Problems: Cases

and Comments, 12th

International Edition. Published by Pearson Education,

Inc.

WEBSITES

1. http://site.ebrary.com/lib/teesside/

2. http://www.nike.com

3. http://www.nikebiz.com/

4. http://www.nikebiz.com/customer_service/

5. http://invest.nike.com/phoenix.zhtml?c=100529&p=irol-finReporting