BUS330: Principles of Marketing
Professor David Kalicharan
August 08, 2011
Market Analysis of Nike
One important issue marketers need to realize is that it is essential to have a heavy commitment and solid customer focus and to attempt to satisfy customer wants and needs. (Kotler & Armstrong, 2012) Companies need to be able to gauge their threats and opportunities to fully understand the different roles in the marketing environment. Environmental forces, such as demographic, economic, technological, etc, can play a huge role in the marketing environment. Nike has been analyzed to give an example of the importance of understanding its marketing environment.
Nike has been in business since 1972 and has become one of the leaders in sports apparel that covers all ranges of uses and applications. The company was founded by Bill Bowerman and Phil Knight in 1964 and was first called Blue Ribbon Sports. The logo for Nike became the deciding factor in the renaming of the company. Bowerman and Knight were looking for a logo that would define their company and the “Swoosh” was designed by Carolyn Davidson, a Portland State University student in 1971. Nike was introduced to the public the following year under its new name, “NIKE.” With its successful business growth, many competitors appeared; however they did not yet threaten the market and the position of Nike. The business has been sharply growing since the first shoes were launched and sales have been increasing from $2,000 million to $16,000 million between 1990 and 2007. Despite competition, Nike experiences an average growth of about 5% each year. The greatest and the most successful marketing strategy of Nike was that sponsored by Michael Jordon in 1984. Afterwards Nike signed top athletes like Roger Federer, Michael Schumacher, and Tiger Woods to encourage fans of each athlete to consider Nike products. Using celebrities can be a gamble as they might also cause negative images if the particular celebrity gets into any trouble. In addition, Nike prefers to use advertisements to particular groups or a special advertisement in a particular event, such as The Olympic Games and The World Cup. According to one study (Goldman & Parson 1998), the cost of advertising was about $978 million in 1997 and has increased each year. Nike has several main competitors like Puma, Adidas, and Reebok. In 2005, Adidas spent $3.8 billion to obtain Reebok, which makes them the largest rival of Nike. Moreover, Adidas has acquired the authority to launch the apparel in NBA which will allow them to expand even farther into the industry in the United States. Despite their competition, the marketing team for Nike has done extensive research to figure out what their customer wants and need with their products. Nike has a clear product positioning in the market, and because of that, consumers are more likely to purchase Nike products. As can be seen, Nike’s marketing strategy is the key element of its success. A well-organized grouping of the 4 Ps (Product, Price, Place and Promotion) has led to Nike becoming a giant in the sports industry. Nike sells a number of sport products that include basketball, tennis, football, cricket, golf and so on. The product range suits all ages, people and both sexes, whether children or adult, male or female. In addition, customer can get not only sports equipments, but also apparels in the Nike shop. The products are produced by contracted factories; the majority of these factories are located in the Asia region in order to decrease the manufacturing cost. Nike has a wide range of products that customers can purchase on different price levels. Nike’s branches are located in more than 110 countries in the world and more than 18,000 retailers in the United States (Goldman & Parson 1998). Moreover “Nike Town” and the on-line shop provide all categories of goods and a fast delivery service....