Nike is a globally incorporated business that works in the sports sector. The business is well known for the designs it creates and markets for athletic footwear, sports gear, and accessories. The company has its headquarters in Oregon and is still one of the biggest producers of athletic footwear and clothing in addition to being the top maker of sporting goods. Nike has greatly improved their name in the sports sector by endorsing a wide range of famous athletes and teams in every conceivable sport as well as in the entertainment business. Nike was originally founded by Bill Bowerman and Phil Knight in 1964 as Blue Ribbon but officially took on as Nike in 1971 (Johnson, 2011). As of today, Nike has over 700 distribution outlets across the globe located in over 45 countries outside the United States (Johnson, 2011), and this promotes its reputation as the leading supplier of sports’ gear, especially shows, and the geographic market is strategically spread across the world. The success of the company is mainly owned to its marketing strategy and the promise it holds to the stakeholders that it has managed to live up to for a long time.

Regions of Operation

Despite being established in the United States, Nike has created strong market points in the UK, Asia, South Africa and South America, in particular with the increase of interest in sports and entertainment in these regions. As part of its efficient operations, Nike focuses mainly on the faster-growing markets and the new areas that the company currently exploits include North America, China, Japan, Western and Eastern Europe (Beresin, 2010). Among these markets, China and Eastern Europe remain to be the fastest growing markets for the sports company that currently generates most of its sales outside the United States. Market

Environment Analysis

Microenvironment

The microenvironment is made up of forces that influence the business and directly affects the relationships of the organization. The core factors in Nike’s microenvironment are the customers, company, suppliers, and competitors.

Customers

Customers are the key forces behind the success or failure of any business, and thus they play a critical role in the existence of a company. Consumers define the target market and help a company understand what products are needs and how they can be delivered. Within the microenvironment, customers can either be an individual, an organization or a household interested in purchasing a product for the sake of consumption or resale.

Nike’s market is global as it perceives every person as a potential consumer and therefore it strives to tailor its product and services to individual’s taste. The target market and customer base for Nike mainly entails youths and young adults who have an interest in sports and fashionable sportswear (Brohi et al., 2016). With the increased interest in sports and as many people continue to join exercise communities such as gym, the demand for sportswear continues to rise. Nike thus embraces this as a market opportunity where it promotes its products through consistency and design innovation by creating a market that is consumer driven. Nike continuously introduces modified footwear well designed with the latest technology that encourages customers to take part in sports or stay urban for those interested in its aesthetic values. To make this possible utilizes two strategies; allowing customers to design their sneakers and releasing new and advanced designs within short periods of time. Additionally, Nike has strong marketing strategy and policies that influence the customers to stay in touch with their latest products. Nike is known for being savvy by having marketing messages that appeal to the target market and this made possible by using celebrities in marketing.

Threat of Entry

Nike is already an internationally recognized brand with a stable market, and therefore it is never threatened by the entry of new companies into the market. Instead, Nike continues to expand its consumer base annually as they venture into emerging markets and produce new footwear.

Company

The different departments within an organization have the potential to either positively or negatively affect customer satisfaction and general operation of the business (Bose, 2010). As a result, it is critical that all departments operate in harmony especially with the marketing department who interact directly with the customers. In regards to Nike, three factors primarily drive the performance of the company, and these are sustainability, brand mission, and employer/employee relationship.

Sustainability refers to a business being environmentally sound and how it can maintain its performance in a long time. Sustainability is about being environmentally responsible as well as a way of saving money and maintaining stability through recycling of used products. Nike is considered as the most sustainable company in the footwear industry. In its innovation process, Nike strives to use raw materials that are not heavy polluters and that are recyclable. Also, the company is involved in various social issues such as supporting the HIV cause and giving the community chance to take part in sports as a way of making their lives better. In doing so, Nike ensures that it is shareholder friendly and this governs its structure; this reduces the chances of disruption and risks of reputational damage, especially from the extensive disclosure.

Suppliers

Availability of suppliers affects the availability of raw materials and the process of production. Therefore, if a company operates in a market where the raw materials are limited, it means that the availability of suppliers is limited hence forcing a high price on the raw materials translating to higher production cost and selling costs. Suppliers, therefore, dictate the final cost incurred by customers and the availability of products to meet the client demands as well as the quality.

For Nike, availability of suppliers has not been an issue as the company’s raw materials are primarily leather, cotton, and rubber. These are raw materials that are readily available chiefly in the Asian regions such as Vietnam and China where most of Nike’s factories are based (Park & Kincade, 2010). With many suppliers ready to offer these raw materials, Nike has a complete advantage over its supply chain since it receives readily available materials at low cost. The biggest suppliers of Nike are Vietnam, Indonesia, and China with China being a home to approximately 339 factories (Park & Kincade, 2010). Nike, therefore, can meet the growing demand in its market because it has active suppliers who sustain the company’s production. Nike approaches supply chain as a means of ensuring social responsibility as it obtains sustainable products and changing the lives of the communities around it as they work to bring their footwear to life.

Competitors

Competition within the market determines the different approaches that the company uses in luring and maintaining the consumer base. Footwear is a market filled with stiff competition as every business strives to take out each other and remain as the dominating name. In sportswear industry, Nike currently remains as the dominating company, but it is closely followed by Adidas, Under Armor and Puma. Despite the stiff competition, Nike maintains the market advantage because of it vigorous marketing strategies that are customer oriented. For example, Nike has given customers the chance to take part in customizing their footwear before purchase; this helps the buyers feel like they are part of the organization and thus building customer loyalty. Furthermore, Nike uses prominent celebrities in sports to promote their products, and this attracts as well as develops the consumer knowledge. Nike also partnered with Apple, and the joint venture supports the brand’s recognition among Apple users. Lastly unlike various competitors, Nike has outlet stores in the emerging markets as a way of making their products readily available to the customers.

Macro Environment

Macro environment refers to the external and uncontrollable forces that influence how an organization makes its decisions in addition to its performance and strategies. PESTLE is the best tool for assessing an organization’s macro environment.

Political

In estimation, Nike’s operation has majorly benefited from the favorable policies within the various countries in which it operates mainly the US and the UK. Most of the governments in these countries maintain low-interest rates, the stability of the currency exchange and global tax arrangements that are competitive. In various occasions, Nike has corporate with government initiatives concerning transparency of operation in their value chain. Globalization is another political factor that favors Nike when entering new markets as various governments continue to invite foreign investors as a way of impacting the country’s economy.

Economic

Nike is a multinational corporation, and it has positively impacted the global economy. However, like every other organization, Nike is affected by the global economic aspects such as the financial crisis of 2008 in the United States that caused economic slowdown (Deng, 2009); this affected both local and international market as many consumers had to cut down on their expenditure. On the contrary, Nike established a brand equity that handles the growing demand in the consumer market supported by the emerging economies of different countries. The expansion of the brand’s value chain enables Nike to take advantage of low wage rates in developing countries as they can offer their footwear at affordable prices.

Social

In the macroeconomic environment, many people are becoming aware of the significance of sports as well as health and fitness; as a result of Nike majorly benefits from this shift. Today, sports is no longer a leisure and liability, but part of daily lives and this awareness favors Nike as a multinational company that is well strategized and located to increase the awareness. Nike has sponsored many sports teams around the world and across various disciplines such, and this has favored the company’s public relations and its social status. Besides, Nike has always outsourced most of the skilled and semi-skilled personnel from emerging countries, and this creates a sense of social responsibility.

Technology

Like all other manufacturing companies, technology has been a major force towards the success of Nike since the brand has been able to embrace the latest and advanced levels of technology and digital metrics in analyzing customer demands and feeding into the demands. The supply chain management and transaction of the company uses the optimum model that links the two variables via SOAP and MPPS systems to ensure that there is no delay in the operations. Technology has helped the company in its marketing strategies because the social media platforms are the best tools for interacting with the customers and promoting the brand.

Legal

The viable strategies of Nike rely on internationalization, and this means that the company must comply to the ever changing legal and policy frameworks in different nations. Countries that have similar legal structures such as the US and the UK do not affect the operations of the company because they support less interventionist system. But still, there are countries with strict policies such as Germany who have legal systems that are code-oriented forces, Nike, to alter its culture.

Environmental

Nike maintains an active relationship with any environmental policies; this is because the company embraced sustainability by using environment-friendly materials that are recyclable. The factories too strive to the level best to minimize cases of air pollution by implementing latest forms of technology in their industries. In turn, this creates a positive effect on the psychological contract of the employees and community.

Breakdown of Nike’s Customer Groups

Demographic segmentation is an aspect employed by Nike as a way of targeting individuals according to their age, gender and generation. Despite the idea that in the apparel industry the market is often broad, in most cases, Nike primarily focuses on consumers between 15 and 40 years olds who are active in sports (Brohi et al., 2016). Irrespective of gender, the company caters for this age range equally using the same marketing strategies by using sports idols that most of the people in this group worship. Nike also uses geographic segmentation in marketing the brand to nations and regions differently. An example is the United Kingdom, the common sport in that area is soccer; therefore, it designs marketing campaigns about soccer and soccer related products. Since games tend to vary with region, it is scarce to see commercials of America football in the European market.

Current Market Position

Nike Market itself globally as the leading sportswear company and this is evident in its marketing strategies whereby it signs deals with sports clubs as well as sponsoring major sporting events such as the World Cup. In social media, Nike promotes its products by allowing people to win sportswear signed by prominent personalities as a means of maintaining consumer loyalty. Though the company remains to be the leading brand in the market, it regularly faces stiff competition from Adidas and Under Armor who share similar interests and ideas towards the shared market. One of the strongest points of Nike is the idea that it allows people to make future orders; hence they can estimate the market coverage and push their marketing in areas that do not hold promise for future purchases. In summary, Nike uses vigorous marketing analysts to assess and understand the demand of the market while building ways of quick response to the needs of the customers; allowing consumers to be part of the designing program is another aspect that helps Nike maintains the lead.









References

Beresin, A. R. (2010). “Nike, Nike, Who Can Do the Nike?”. Recess Battles, 63-76. doi:10.14325/mississippi/9781604737394.003.0005

Bose, C. D. (2010). Modern marketing: principles and practice. New Delhi: PHI Learning

Brohi, H., Prithiani, J., Abbas, Z., Bhutto, A. H., & Chawla, S. K. (2016). Strategic Marketing Plan of Nike. SSRN Electronic Journal. doi:10.2139/ssrn.2760631

Deng, T. (2009). “Just Done It”--- Nike’s New Advertising Plan Facing Global Economic Crisis. International Journal of Business and Management, 4(3). http://doi.org/http://dx.doi.org/10.5539/ijbm.v4n3p102

Johnson, C. (2011). Nike Becomes a Global Citizen. Sportswear Journals, 4, i-12. http://doi.org/10.4135/9781506326023

Park, H., & Kincade, D. H. (2010). Historical Analysis of Apparel Marketer’s Strategies: Evidence from a Nike Case. Journal of Global Fashion Marketing, 1(3), 182-193. doi:10.1080/20932685.2010.10593070





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