Nike

Marketing Plan

By: Shriya Bahri, Avery Lopez, Brenda Moncivaiz, Diana Munoz, and Aaron Walter
Table of Contents

● Company Description Pg 2 - Pg 4

● Industry Analysis Pg 5

● Competitor Analysis Pg 6 - Pg 8

● Company Analysis Pg 9 - Pg 10

● Customer Analysis Pg 11 - Pg 12

● Market-Product Focus Pg 13 - Pg 14

● Product Strategy Pg 15 - Pg 16

● Pricing Strategy Pg 17 - Pg 18

● Channel/Distribution/Place Strategy Pg 19

● Advertising & Promotion Strategy Pg 20 - Pg 21

● Work Cited Pg 22 - Pg 23

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 Company Description

Nike is an American sportswear company based in Beaverton, Oregon. The company was

founded in 1964 by Bill Bowerman and Phil Knight, a track-and-field coach and a student both

at the University of Oregon; at the time of its founding, it was known as Blue Ribbon Sports.

After opening its first retail store and launching the Nike brand shoe, the company renamed itself

as Nike Inc. and went public shortly after. Since then, Nike has expanded, having stores in over

170 countries; their “swoosh” logo has become a widely recognized icon and they have had

several endorsements from professional athletes. Nike has also expanded its product line to

include the Jordan, Converse, and Hurley brands.

On their website, Nike writes that their mission is to “bring inspiration and innovation to

every athlete in the world”(Nike). The brand reinforces its inclusivity by classifying all human

beings as athletes. Their mission is their purpose, their whole reason for being. They aim to

constantly enhance their products to fit the needs of the athletes while simultaneously increasing

their social responsibility. Nike believes in the idea of creating a circular economy: the strive to

only utilize materials that can be reused in an effort to reduce waste. They also care about

maintaining above average conditions of their factories in order to keep their workers engaged

and satisfied. Their image consists of promoting an active lifestyle in everybody and promoting

equality in success.

Alongside their mission Nike has a corporate Vision Statement: “To remain the most

authentic, connected, and distinctive brand”(Nike). With a breakdown of this statement we can

tell key beliefs of Nike Inc.. The company believes in the strength of their brand but believes for

this strength to continue the company must strive to keep a prime role in the global market. For

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the company to keep its role in the global market, Nike must continue to say authentic and

continue delivering high performance products to it consumers. While doing this the company

recognizes that keeping a leadership position in their industry is dependent on the needs of their

stockholders and their efforts to meet these needs, they recognize the importance of staying

connected to reach these goals. Lastly, the part about staying distinctive refers to the company

making products that because of its quality could only be identified as Nike. Based on the

company's vision statement Nike Inc. views itself as a leader in their industry but believe to keep

this position they must continue to push to keep the gap between Nike and their competitors. One

way that Nike keeps this gap so wide is through their use of corporate social responsibility. This

vision is a prime foundation of Nike Inc.’s corporate social responsibility strategy and

stakeholder management approaches.

Nike has many advantages over competitors in its same industry. Some of their most

known core competencies are their strong marketing strategy, research and development

capabilities, and their supply-chain management capabilities. Nike’s strong marketing strategy

can be traced back to the strong brand awareness that consumers have, for example being able to

recognize the company slogan and logo, and the endorsements that Nike contracts with well

known top ranked athletes. Nike also has the resources and drive to do extensive research and

development that helps them with finding the best product design, developing new products, and

finding the best methods to combine comfort and performance into their product. For example,

thanks to Nike’s research and development capabilities, Nike has developed a shoe-cushioning

systems that reduces shook, decreases pressure, and protects from impact and offers comfort,

increasing its value to consumers. Nike’s supply-chain management capabilities are well-known

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especially in global sourcing which is very common in the Apparel Accessories Sport

Equipment industry however, because of Nike’s well known brand and unique business model it

outperforms competitors.

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 Industry Analysis

Sportswear as a product is defined as clothing or footwear that is used for sport or

exercise. Sportswear has been showing signs of growth in recent times. According to ​The NPD

Group​, the footwear industry has grown by 7% in the first half of 2018 (US Footwear Industry

Growth). The “sport leisure” category for footwear accounted for 65% of sales gains, making it

the fastest growing category of footwear (US Footwear Industry Growth). ​Euromonitor

International​ states that sales of sportswear products have grown 5% as of 2017 (Salpini, “The

State of Sports Retail”). ​eMarketer​ has reported that almost 20% of all apparel sales are from

online purchases (Garcia, “The State of US Apparel Shopping”). Even though online retailers

such as Amazon are very popular, consumers still choose to utilize brick and mortar stores as a

means of buying apparel.

From a demographic perspective, the increase in the sales of athletic apparel is believed

to be caused by an increased desire for comfortable clothing and the appearance of a more fitness

oriented lifestyle (Salpini, “The State of Sports Retail”). Increases in disposable income

amongst the consumer base are also driving the growth of sales revenues (Global Activewear

Market). According to a report published by ​Allied Market Research,​ the North American

activewear market is the most profitable with 42.3% of the total revenues (Global Activewear

Market). This report also projects that the global sportswear market was valued at $351,164

million in 2017, and is projected to reach $546,802 million by 2024 (Global Activewear Market).

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 Competitor Analysis

Nike’s competitors​: Adidas, New Balance, Reebok, Puma, Under Armour, and Hanesbrand.

Type of Competitive Market​: Monopolistic Competition

Adidas

Size of Competition: top competitor

Strengths: Legacy and heritage (established in 1949 as a youthful brand), Diversified portfolio

(varied range of footwear and accessories), strong financial position

Weaknesses: Premium price range (affordable to a limited range of customers), outsourced

manufacturing (93% of production is outsourced, concern over quality of products), limited

product line

New Balance

Size of Competition: strong competitor

Strengths: Brand manufactures its shoes in America, customizes its shoes for its customers,

brand is differentiated (customers are willing to pay a premium price for its quality),

endorsements from professional athletes, strategic brand placement (its shoes are used in popular

movies to make them look more attractive)

Weaknesses: high costs to the company, expensive to customers, not up to date with popular

culture (teens are turning more and more to European brands over brands like New Balance)

Reebok

Size of Competition: subsidiary of Adidas, strong competitor

Strengths: specific product ranges (offer products for specific sports needs), products are known

for having features that help customers get the most out of their exercises, multi-channel

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distribution, very active on social media (high customer engagement), celebrity endorsements,

trendy image

Weaknesses: excessive commercialization (once considered a premium brand, Reebok has now

become very mainstream), fails to educate its market on the features its product provides

Puma

Size of Competition: mid-level competitor

Strengths: high growth rate (increase in sales), sponsorship by professional athletes has heavily

promoted the brand, invests a lot in research and development, distributes its products in over

120 countries

Weaknesses: faces heavy competition from brands like Nike and Adidas, revenue is low

compared to its competitors, holds a relatively small share of the market, poor labor relations

(constant disputes among its workers over low wages)

Under Armour

Size of Competition: weak competitor

Strengths: high growth since going public, advertising (Under Armour advertises through

partnerships with professional athletes which has provided high returns for the company), high

potential if company leverages its infrastructure investments

Weaknesses: high expenditures

Hanesbrand

Size of Competition: weak competitor

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Strengths: effective ad campaigns which promote a positive image of the company, money-back

guarantee which appeals to customers, continues to build its brand by branching out into many

lines of outerwear, good visibility

Weaknesses: still known mainly as an underwear brand and not as a sportswear brand, has a

difficult time entering emerging markets

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 Company Analysis

Strengths:​ ​Nike Inc.’s strong brand image; they’re swoosh logo is recognizable all over the

world, and partnering with professional athletes to assist in marketing their products has

increased sales. They have been able to increase their global marketing, production and

distribution and expand their leadership sales globally. Nike puts in a lot of time into research

development in its products and customers. Additionally, Nike Inc. retails to a variety of

different sports; they want to produce the best quality apparel to enhance athletic performance.

They have increased their profits in supply chain management by being able to produce high

quality product for low cost.

Weaknesses:​ ​Labor disputes on the low cost manufacturing of Nike’s products is something that

damages Nike’s image. Nike has factories in developing countries and receives criticism for their

rough conditions and low pay wages to their workers. Although Nike is known globally, there

are some limitations in global marketing, specifically in developing areas such as affordability,

imitation of the Nike brand and patent protection. Nike has a higher pricing compared to its

competitors especially in footwear which makes it hard to afford in developing markets. It is an

opportunity for Nike Inc.’s to lose customer sales to its competitors.

Opportunities:​ ​There is opportunity for growth in emerging markets, especially for growing

economies. Nike can also further product development; “consumers that wear Nike product do

not always buy it to participate in sports. In youth culture, especially Nike is a fashion brand”

(SWOT Analysis of Nike).

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Threats:​ International trade practices, Nike Inc. “buys and sales in different currencies” (SWOT

Analysis of Nike), this exposes the company to currency fluctuations, which can lose money

when doing the exchange rates. Economic recessions also decrease the amount of sales being

made; consumers will purchase from other brands or other competitors that are way cheaper.

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 Customer Analysis

Nike, Inc. is an American multinational corporation ​that is engaged in the marketing and

sales of athletic apparel, primarily targeting athletes for their marketing. ​Different branches of

Nike have different distinct target audiences. For example, Converse, Inc., a subsidiary of Nike,

focuses more on the manufacturing and sales of casual apparel and targets premium customers.

Air Jordan is another shoe and apparel brand that is produced by Nike which focuses on being a

premium brand for athletes. Hurley International LLC targets athletes with a focus on young

adults and sports that traditionally have younger demographics such as skateboarding and

surfing. Nike markets its products under its own brand so the Nike Golf brand focuses on golfers.

Nike’s method of targeting consumers is very diverse. In recent years, Nike has begun

focusing on the key demographics that they believe will best increase their market sales:

Women, Young Athletes, and Runners. The women demographic has grown double digits in the

quarter it was first introduced and this may be attributed to the “athleisure trend”. This is a trend

that has been popularized primarily by women in their 20s and 30s in which they wear athletic

apparel for situations other than ones that are athletic. Young athletes are a growing

demographic that Nike has began to approach through the sponsorship of local miniature leagues

and clubs. A big attention grabber for these young athletes are the signings of famous athletes to

the brand of their equipment that are respected or even idolized by these young consumers.

Lastly, runners are the most recent demographic which, currently based on numbers, isn’t doing

well compared to the others. One way that Nike plans to address these issues through the

redesigning their Nike+ running app. Additionally, in countries such as China or in Western

Europe, Nike’s marketing approach is more aggressive.

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 Nike focuses on customer satisfaction and seeks an insight into the thoughts of their

customers. They accomplish this by having customer surveys and offering incentives. Based on

results shown on statista.com, Nike was within a few points of their competitors in almost all

scenarios.

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 Nike Market Product Focus

Nike is in the market of designing, marketing, and selling athletic footwear, apparel, and

accessories. The company has further broken down its products to fall into nine athletic

categories: running, basketball, soccer, men’s training (which includes baseball and football),

women’s training, action sports, sportswear (active lifestyle), golf, and the Jordan brand.

Additionally, Nike designs products for kids and includes a miscellaneous category which

contains products for a variety of athletic and recreational activities like cricket, lacrosse, tennis,

volleyball, wrestling, etc. Nike also markets products featuring the logos of different colleges

and professional teams. Through its Jordan and Converse brands, the company has been able to

expand its product focus to include casual footwear. Nike seems to be slowly making the

transition from an athletic brand to an active lifestyle brand, with more and more people

purchasing its products for casual wear. Because of this transition, the target market for Nike

should be individuals between 15-45 years of age that are physically active with an average

income of $50,000 per year. Households with the combined income of parents can withstand the

costs of youth sports as well as their own lifestyles, and they will want the best products that fit

their needs.

As the company continues to face competition from companies like Adidas and Puma,

Nike is beginning to think more innovatively with new product designs. In January 2019, Nike

introduced the first smart shoe, Adapt BB. The basketball shoe is currently priced at $350 and

was worn by Boston Celtics star Jayson Tatum, during their game against the Toronto Raptors.

Adapt BB uses a power lacing system called Fit Adapt, which allows users to tie the shoe

through the control of the Nike Adapt mobile application. While this shoe is very unique in

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design, but due to the custom fit and function the technology in the shoe provides, it also opens

up Nike to a new world of data insights into athletic workouts. The innovative product designs

and quality of materials used in the products will be what sets Nike apart from its competitors in

the market. As Nike continues to harness technology in their products to help athletes have more

effective workouts, the company continues to honor its mission statement of bringing inspiration

and innovation to every athlete in the world.

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 Product Strategy

All products go through the four stages of the product life cycle, which include new

product introduction, growth, maturity and decline. Nike is currently in the introduction stage

with its newly released Nike Adapt BB. During this stage, Nike will focus on expanding

consumer awareness and establishing demand for their product. Since Nike is currently the only

company with this type of product on the market, they will first begin by establishing primary

demand. Then, once they have created demand for the product and other competitors begin to

emerge the company will focus on establishing selective demand for their brand.

Once demand begins to rise and the product enters the growth stage Nike will need to be

on the lookout for competitors. These competitors will include other athletic wear companies

such as Adidas, New Balance and Reebok. During this time Nike will need to improve and

expand their market in order to differentiate their product. They may also make changes to

factors such as price, distribution of the product, and advertising. How they choose to address

competition and create selective demand will impact the success of the Nike Adapt product line.

Nike’s product manager will choose the marketing mix decisions he/she sees best fit for

the success of the product. First, Nike has decided to initially release one version of the product,

which is targeted towards basketball. However, they will soon release different versions of the

product to accommodate a variety of athletic sports and lifestyles. In addition, the product line

will continue to update and improve based on technology, consumer preferences, and lifestyles.

By limiting the variation of the product in its initial stage the company can ensure product

quality and simulate trials. Secondly, the company emphasizes their brand by focusing on the

consumer and catering to their needs. Nike states that their “mission is to solve problems for

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athletes, and delivering to their exact needs has always been the best path forward.” As for their

packaging and labeling, Nike is known for their classic, yet highly known orange box displaying

their signature “swoosh” logo. Next, placing their Nike Adapt BB at a premium price, the

company seems to be adopting a price skimming strategy. Once the product line enters the

growth stage the company may decide to lower its price, but for now this strategy will allow the

company to recover initial investment costs. When selling the Adapt product line, Nike will

continue to place their products in athletic apparel and shoe stores. Lastly, Nike is currently

using professional athletes, such as Jayson Tatum to represent and promote the product. This

strategy will assist in the simulation of the product while simultaneously raising consumer

awareness and demand.

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 Pricing Strategy

The price of a product is one of the most influential aspects of a product that can

determine whether or not it is purchased by the consumer. The price is determined by

identifying the needs and objectives of the firm, estimating demand and revenue, determining the

relationships between cost, volume, and profit relationships. When all of these factors are

determined, a price can be set that should be optimal for the products in the target market.

A very important facet of any company’s success with a product is the value that it

provides to the consumers in the marketplace. Nike provides consumers with high-quality sports

apparel that is both reliable and visually appealing. When customers buy Nike products, they

want to be under the impression that they are wearing something that will last and will enable

them to get the most out of their daily activities whether it be sports or otherwise.

Because Nike is a for-profit corporation that manufactures sports apparel, price setting

can be influenced by its sales objectives. If the price is more desirable for consumers, the

potential for cumulative sales to increase is greatly improved. The costs of manufacturing,

operations, distribution, and advertising must be surpassed by the profits generated by the sales

revenue for Nike to profit successfully in its business endeavors.

Since Nike is one of the premier sports brands in the world, its current pricing strategy

would be one that helps the organization maintain its status or bring it even higher than it was

before. Their industry involves many competitors that sell similar products, so it is key that the

prices that Nike sets make sense in that they provide Nike a profit while being appealing enough

to enable consumers to choose Nike over other brands. Because of the plethora of competitors in

the sports apparel market such as Under Armour, Adidas, New Balance, Reebok, and Puma,

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Nike needs to be able to stand out with product choices that are in a similar price range as its

competitors using an “at-market pricing” approach.

Nike having outlet stores of its own in addition to being a manufacturer that sells to

retailers allows for multitude of ways to create sales revenue. Because of its for-profit approach,

the best pricing policy for achieving its goals would be a “fixed-price” policy. When the

customers shop for Nike products, the only money that will be accepted for the products will be

what is advertised, and they have the option to purchase the product or to find an alternative.

However, adjustments can be made to these purchase prices in order to boost sales revenues over

time. Nike can offer quantity discounts to retailers that wish to sell their products. It can offer

cash discounts to retailers by having their bills be paid sooner for a cheaper price. It can also

provide cash discounts directly to consumers for them to buy something at an outlet store for a

cheaper price. Seasonal discounts can be given to retailers so it can prepare itself for future

product sales by having enough stock to meet the anticipated demand.

By using the aforementioned pricing strategies, Nike can manufacture, advertise, sell

products that meet the needs of the consumers in the marketplace, and generate a profit. With a

keen eye on its competitors, Nike can keep itself relevant in the industry by offering its quality

products at a price that not only gives the company a competitive edge, but a true sense of value

to its customers as well.

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 Channel/Distribution/Place Strategy

Nike makes its products easily accessible for its customers. To do so, Nike utilizes three

major distribution channels: selling to wholesalers in U.S. and international markets,

direct-to-consumer sale in factory retail outlets, and through their company website. Currently,

sales to wholesalers make up the largest portion of the company’s revenue.

Nike has been shifting its focus to increase its sales in its stores since those direct sales do

provide a larger margin than do their wholesales; this new initiative is known as Triple Double

Strategy (2X). Nike launched this new initiative in 2017 in an effort to increase the company’s

direct connection with its consumers. As part of this initiative, Nike will potentially reduce its

number of distribution partners from 30,000 retailers to 40 retailers. The company claims that it

focus on customer experience has driven its growth virtually 100%.

Nike has also continued to grow to its online presence through its own app. The Nike

App enhances the customer experience by giving them access to the Nike Rewards Program, in

which customers receive offers to exclusive products through their continued spending at Nike. It

is a win-win situation: Nike customers receive the rewards and Nike receives the customer data it

needs to keep its client-base better engaged.

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 Nike Advertising & Promotion Strategy

Nike, considered to be the world’s most powerful sports brand, spends more on

advertising per year than any other competing brand. They promote their products in a variety of

ways, including sponsorships, digital marketing, and social media. However, this is not what

differentiates them from other competitors. Nike sets itself apart by utilizing emotional branding

as their advertising strategy. This strategy allows them to connect with the consumer on a

personal level. Secondly, they use motivation as their advertising appeal to promote and create

demand for their products. Using phrases like, “Just do it” or “find your greatness” in their

advertisements promotes a sense of strength, determination and achievement. Nike promotes

both their brand and products primarily by utilizing storytelling to appeal to their audience. This

approach further develops a connection by allowing consumers to see themselves as the “hero”

of their own story. Their advertisements are designed to inspire viewers, to let them know that

they can do anything they put their mind to with Nike on their side. Not only does this sense of

connection create demand, but it differentiates their brand from other competitors.

In addition to emotional branding, Nike engages in public relations that address social

issues linked to their business. For example, over the years the company has held campaigns and

sponsored sports events supporting causes such as inequality, the prevention of HIV, and climate

change. They also take advantage of social media platforms like Twitter and Instagram to build

relationships and engage with their customers. This contributes to Nike’s goal of having

outstanding customer service and relations. Another contributing factor to this goal is the use of

direct or personal selling. While Nike does use intermediaries to sell their products, they prefer

to use direct selling, which allows them to ensure a positive customer experience. This is done by

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providing customers with trained store personnel, which in return contributes to both the

company’s success and profitability. Lastly, Nike uses promotional tools such as coupons,

student and military discounts, and loyalty programs using the push strategy to gain sales. These

promotions increase demand by persuading customers to purchase more products on the basis of

the perceived benefits that they are receiving.

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-distribution-strategy-hits-the-ground-running/#28cb4944f1d0
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