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Executive Summary:
This report looks into a famous company Nike, well famous for its sportswear products. Nike
being a Fast Moving Consumer Good (FMCG) is ranked number one globally and British
market holds a great repute for Nike products. In this report, I looked at different aspects
about the company which led to its success in British market.



The report also includes a literature review with explanatory reviews and in-depth details into
different scholarly journals, books and academic resources.



A mixed methodology was prepared for research findings, combining both qualitative and
quantitative research.



The market of Nike was segmented by discussing the promotional techniques, its market
strength, differentiation and its target audience. Several factors including, price,
advertisements are also included in the report and discussion has been made as to how it
affects Nike brand and its customers and competitors.



Researches have been carried out to examine and to create a clear image about my project.
Analysing them through the help of graphs and questionnaires will help to conclude Nike’s
market analysis and where it is going right now.




Acknowledgements
I would like to thank ‘ALLAH ALL MIGHTY’ first of all who gave me the courage and strength
and foremost an opportunity to study abroad. Then i would like to thank my family who has
been a great support throughout. Many thanks to my tutor Chris Evans, whose guidelines
have helped me prepare my dissertation. Thank you all for being there and being a source of
inspiration and motivation.




Topic: Strategic marketing analysis of Nike in British market

and its critical success factors
Background of Nike:
Nike is a universal brand, highly idolized by teenager groups and leading sports brand and
supplier. Initially the company was founded with the name of Blue ribbon by Bill Bowerman in
1964 and the name was changed to Nike in 1970. Pronounced also as NI-KEY, Nike is a
Greek word meaning ‘Goddess of victory’ and kicked off with an investment of just $500. Nike
starts to sell the first ever football shoe in 1971, named Nike. In 1980’s after hard work and
dedication, Nike market share increased by 50% and started to appear in TV commercials
with the famous slogan; ‘Just Do It’. In 1986, Nike had one billion sales showing its financial
strength since it started off. With time Nike, progressed through market segmentation,
differentiation, promotion until it made blunders such as Sweat shops in Asia. With the
competitors active and accusations proving right Nike gave its own statement, and told all its
contractors strictly to abide by the code of conduct; which worked to some extent. Nike has
been successful till today and stays number sports brand, competing with famous brands like
Adidas and Reebok. Nike is operating a large market in United Kingdom, with an area of
244,755 km2 and a population density of 249.9 people/km2 (GMID 2009).



Nike stocks and sells a variety of products ranging from footwear to t-shirts and sports
goods.




Problem definition:
Nike is number one sports brand and faces internal and external threats. Nike faces
internal threats from its employees, product, consumers, which may not be loyal at
times. External threats are linked with internal threats and can turn your assests into
loss. Nike fears of losing its customers to its competitors, which are part of an external
threat. Competitors are active in this fast consuming world and dangerously active in
developing new strategies, differentiating their products, innovating new products,
advancing in technology and manufacturing their products at a large scale. In this
highly competitive and sensitive market Nike can not afford to make mistakes such as
Sweat shops in Asia and repeat child labor issues. Market shares were seen stumbling
down due to Nike’s policies in Asian countries. Hatred for the brand developed which
then again forces consumers to switch towards other brands. Due to this competitive
advantage Competitors like Adidas and Reebok, promote their product to a greater
extent; taking full advantage of Nike’s weaknesses.
All the problems mentioned above, have been discussed and linked together and
solutions have been given at the end to overcome weaknesses and turn them into
strengths for the company chosen (Nike). (Mintel 2009)




Literature Review:



Brand image:
For every business uniqueness is important to distinguish themselves from their
competitors. This is important because when a brand is unique, people associate
themselves with the brand. Therefore it allows them to value your brand (Heaston,
2002). Awareness about the brand comes through different range of ideas, advertising,
word of mouth, company portfolio, personal experience with that particular brand, and
many more (Armstrong and Kotler, 2004). Nowadays, the trend is to follow and adapt
something that sounds cool and looks cool, even if its meaningless to the
audience (Pesce 2002) Strong brand image pulls a customer to buy the company’s
product, even if they are paying more (Sims 2001) and success of a brand depends on
how well a brands image and meaning is maintained over long term (Michell, King and
Reast, 2001)



Companies must manage their brands by creating awareness so the brand’s
positioning must be continuously communicated to the consumers. Positioning is how
you want to be perceived in the marketplace, and branding is a further modification of
that positioning (Moran, 2008)


Marketing Mix:
Product: According to Jobber (2006), ‘Product decision’ is the type of service or
product that should be offered. If a company has a strong brand image customers will
buy company’s product even if they have to pay more for it (Sims, 2001). Product
prototype should be sampled before launching their products like Nike. As (Lury
2001) states that managing the product is therefore vital to a brand’s success. For a
company to succeed it needs to improve its services, revise its market position, and its
image besides managing it.



Promotion: Promotion covers the communication areas which include, sales
promotion, advertisement, public relations, internet marketing etc (Sims, 2001). These
help enhance the awareness of the products benefits among the consumers. All of the
communication areas mentioned have their own strengths and weaknesses (Jobber,
2006).
People: People can turn out to be a great asset or a great weakness for businesses.
    The impact of variables highlighted as attached in appendice during market research
    help in critically analyzing the market research factors and opting for best tools of
    pricing of Niche products. Lury 2001, mentions that brand interaction is important with
    customers to create awareness of the brand. Likewise, for a company to overcome its
    weaknesses the targeted audience (people) plays a pivotal role and helps a company,
    like Nike to shift from a bracket of threats to opportunities. Timely understanding and
    market research of a company’s weaknesses will prove helpful in overcoming the
    threats and shift towards opportunities in short and long run.



    Place: Place is like a key of branding strategy, because if customers do not have a
    guide as to where to find the product how will they buy the brand (Lury
    2001). Businesses have to Target their audience and then setup their shops according
    to the demand of their products. Nike has been promoting its products globally and
    has targeted every country according to their market demand. Customers expect that a
    company delivers them high quality products in shortest time available. Access is
    improved through multi site locations (like McDonalds, KFC, Pizza Hut), where
    customers dont have to wait for long for their product delivery. Nike synchronises
    supply in almost every major countries in Europe, Asia, Middle East and Africa and
    productivity problems are solved through its Multisite chains.




    SWOT analysis:
                                    Weaknesses
Strengths
•       Swoosh logo                •   Diverse Range

•  Number one global
   brand                           •   Price margins
• Sponsors                             squeezed
• Joint ventures/
   alliances
 Opportunities                      Threats
•     Teens desire                 •   Child labor and
                                       sweat shops
•     Strengthen brand:
      IPL (Indian                  •   Competition: Rivals;
      Premier League),                 Reebok and Adidas
      Olympic Games,
football
      tournaments.
•     Emerging Asian
      economies: China
      and India

    Source: Kotler et al (2005)




    Strengths:
    Nike is leading the sports wear market with its innovative products and customer
    services. Biggest strength that ‘Nike’ has over its competitors is its percentage of
    market share within the footwear industry. The revenues recorded of the company
    were $16,325.9 million in the financial year (FY) ended May 2007, up by 9.2% over 2006.
    Nike operates in more than 160 countries, covering America, Europe, Asia Pacific,
    Middle East and Africa. `In 2007 Nike launched a hat phone, hat with built in controls
    for iPod nano . At the Atlanta Olympics, Nike also sponsored the top athletes and
    gained valuable publicity and coverage. At different stages Nike allied itself with
    celebrities and stars. In 2006, Nike unveiled its new women fitness dance with music
    videos featuring some famous stars like Rihanna and artist def Jam, celebrity director
    Jamie king. This Nike rock star work out and its stylish moves show that Nike shoes
    are not just stylish but flexible and allow for maximum performance. The workouts are
    available for viewing at nikewomen.com for fitness conscious women.



    http://www.pocket-lint.co.uk/news/news.phtml/6514/7538/nike-hatphone-ipod-nano-
    clothing.phtml



    In 2006, UK contributed the largest to overall sales of footwear and clothing in Western
    Europe with a volume sales share of 27%. (GMID 2009)



    Nike is the leading sports footwear brand in the region, placed ninth overall among
    footwear manufacturers. In Spain, Converse has done very well, with 2006 sales
    growing 37% over prior year (GMID 2009). In response to the price-led competition
    brought on by less expensive Asian imports, many important players will continue to
    shift their production facilities to countries where labour costs are substantially
    lower (GMID 2009). Casual footwear was estimated to account for 56% of all footwear
    sold in 2006, up from 49% in 2004. (GMID 2009)However, the market is growing
    because of price discounting and promotions.
www.nike.com




Weaknesses:
Nike promotes and sells diverse range of products. However, their income of business
is heavily dependant on footwear sales. Nike targets its customers through its
branches and different retailers which sell Nike products to gain their shares as well.
This results in price differences, less stock and price margins being squashed due to
their demand.
Adidas on the other hand Segments its market with a different approach like
introducing gift cards for shopping online or in store. These gift cards are only
redeemable at Adidas originals and its outlets and factories. Nike fails to introduce
such gift cards till now, showing that Adidas differentiates its products, and has a
realistic approach when it comes to promotions.




Opportunities:
Nike is a fashion brand among youngsters especially teens, also seen in appendix.
Youngsters get easily influenced by fashion, style, price and design. Youngsters
especially Teens tend to purchase more and are sometimes claimed as shopaholics,
compared to the normal population. Teens get easily influenced by stars and
celebrities and consider their brands as up to date and Fashion oriented. Nike spends
a lot of money on celebrities to endorse their product; and if they spend more, this will
help increase their revenues. These revenues can be used by Nike to focus on their
existing product lines such as jewellery, sunglasses and sportswear and at the same
time introduce new ones.



Nike can focus on new emerging markets such as China and India, two developing
economies, to build up strong brand recognition. China is a large market rich of
consumers and Nike can promote their products by indulging in their sports activities.
Global events in sports like football tournaments and events such as IPL (Indian
Premier League) are opportunities to promote and market Nike’s brand. Other sports
events such as rugby tournaments, boxing events can also be utilized especially the
upcoming Olympic Games to build up and strengthen Nike’s global brand recognition.




Threats:
Nike has been accused several times for child labor policies in some underdeveloped
and developing countries, mostly Asian countries such as Pakistan, China, India,
Bangladesh and Indonesia. The result was a devasted market when consumers and
several retailers stopped purchasing products from Nike, as it broke the international
code of conduct and there was a risk that Nike’s assets might collapse at some stage.



Nike faces both internal and external threats from some of its great competitors like
Adidas, new balance and Reebok. Like Nike, Adidas and Reebok also manufacture their
products from abroad as the manufacturing cost and production is cheapest. Adidas is
a major sponsor of kits to famous Cricket teams like England and Australia. It is active
in supporting top football clubs like Chelsea, AC Milan and Liverpool and others. Not
only this, it also sponsors London Marathon.



Nike trades internationally and faces threats of stumbling international markets and
low exchange rates. Pound sterling recently faces threats from the rising Euro and
Dollar. Recent Global recession which lead to the collapse of some major companies
like Woolworths can also have its after affects on the company.




Slept factors:
Slept factors include Social, legal, economic and technological factors influencing a
business. These factors are part of external environment. (Lancaster 2002)




Social:
Nike has been engaged in social activities and seen as a much responsible brand. In
august 2008, Nike organized a one day running event in London and New York with live
music performances in designated race cities.



Developed economies were once traditionally strong markets for children’s footwear.
There is a current decline in the population of target segment: children and a rising
proportion of people over 45 years old in European countries. (Jobber 2007) This is an
emerging market and can be target segmented. In 2004, Nike denoted $37.3 million in
sincere services to charity. Nike has also been active in major sponsor events such as
age concern big band concert and Rhos y Ghalian Outdoor Education Centre in Wales
for the use of local community and children studying at school.



http://www.bumpershine.com/2008/08/28/nike-human-race-lots-of-concerts-on-
aug-31.html
http://www.nikegroup.co.uk/community.php
Legal:
Different countries have different legal requirements. In UK, there is a basic minimum
wage of £5.74 to be paid by companies. Companies paying less than basic amount are
said to be in an illegal activity. Nike . In 1997, Nike workers in Vietnam were forced to
work overtime illegally and exposed to chemical toxic and other hazards.



Similar type of cases were seen in Pakistan and Indonesian sweat shops, where
children upto 12 years of age and younger were made to work more than 70 hours a
week. Nike here violated the human rights laws and acted highly irresponsible. Nike’s
brand image was damaged at several stages like In 2006, Nike lost a case against
hackney over copying its logo.



http://www.motherjones.com/news/feature/1997/11/nike.html




Economic:
Recent credit crunch globally has almost stumbled the market shares and has brought
consumers buying decisions to a dead end. Due to increased interest rate and less
loan availability consumers have become miser in shopping and this has resulted in
declined sales of organizations compared to credit crunch free environment. Price
reductions and price losses are beared by companies out of their budget to reach
consumers buying power. A margin squeeze is seen with companies reserves and
market shares falling down. Organizations cannot invest in new advancement and
promotional sectors, with the delay of other projects. This means less innovation in
products, less budget availability for new marketing campaigns, economies of scale
gradually coming down. Nike and its competitor’s economic conditions have also been
affected by the above factors.



Exchange rates of currencies also affect the sale of a product. Buying and selling is
highly affected in situations where transactions are carried out between rich and poor
countries. However, the profit margins get squashed depending on the economic
environment of that particular country. Pound sterling being a strong currency is
therefore still in a beneficial position when transactions are carried out with poor and
developing countries in Asia or even European countries If the exchange rate is low
this means one can exchange more sterling for foreign currency, therefore if there will
be more surplus demand of Nike in Britain from abroad, this will lead to a poor balance
of payment which is beneficial for the British footwear organisations. If in Britain,
Export is greater than import this is excellent for the British economy in general. The
opposite of this would mean slump in countries exchange rate, which would correct a
balance of payment deficit, and is the Marshal Lerner Condition.
Political:
High taxes and minimum wage criteria in United Kingdom forces companies to recruit
sensibly. So companies prefer to choose workers who are highly skilled, motivated
and have an experience related to the field they chose. Nike is an old company and
enjoys its friendly ties with government officials, which think Nike is a surplus to their
economy. However, Illegal practices are unlawful and are fined heavily; these include
cash in hand jobs, child labor practices (like the one carried out by Nike in some Asian
countries) and tax exemptions. So far Nike has had several legal cases running against
him, but in 2003 Nike had to face Supreme Court charges for its foreign operations
which were considered unethical, unjust and against human law policies (Sweat shops
and Child Labor).




Technological:
Nike continues to be innovator in its footwear market and strives to create the best and
unique sports apparel and footwear possible. Nike were one of the first company’s to
implement the idea behind Nike ID footwear, which offers customized footwear created
by the customer on the company website. Nike invented air cushioned soles that
braught an impression in the market that Nike is more creative, price competitive than
any other brand. This was the first time Nike was recognized as being a footwear
innovator. Footwears have a huge market demand and it is crucial for Nike that it
continues study on implementing creative ideas and designs, much faster than its
competitors. Such Advances in technology help to build market strength position
through comparative analysis and should be available to the audience. Advertisements
and promotions of products require huge investments and are portrayed easily
through the use of fast internet, television, radio and other mobile technologies.




Porter’s five competitive forces:
The strategic business manager seeking to get an edge over rivals uses this model to
better understand the context of the industry in which the firm operates (Wilson A.
(2003). Michael Porter introduced a framework of models which shows an industry is
influenced by five forces:



Entry of new competitors is difficult in sports wear market. It’s a long way and difficult
for a new rival to enter and sustain in such a competitive environment where already
big brands like Nike, Adidas and Reebok are competing with each other to get on top.
This gives companies like Nike more chance to market segment their existing product
lines and promote them in the best possible way. Organizations are believed to spend
more on their promotional methods like advertisements rather than launch of the
product or any other method. Nike has so far been successful in giving its rivals a
competitive edge.




Threat of substitutes:
Nike sportswears are best in quality, design and comfort. It’s quiet hard for other
companies to produce the same product line, with the same quality and at cheap rates.
However other companies can copy the same product and design and display in the
market with a cheaper price. This price war starts when a company fails to differentiate
its products from its competitors. Nike and Adidas are seen to have an head on
collision with each other.



www.adidas.com
www.nike.com




Bargaining power of buyers:
Nike’s actual buyers are customers, supply chains like JD sports, Sports Direct and
stars/celebrities. The most willing shoppers are youngsters which take Nike as a
fashion brand. Youngsters all over the globe follow stars and celebrities to approach
their product. Brand loyalists are permanent asset for a company and it is impossible
for them to switch over to other companies even if they are offered cheap products.



www.nike.com
www.sportsirect.com




Bargaining power of suppliers:
Nike has a number of suppliers which promote and sell its product, like JD sports,
Sports Direct, Footlocker. These suppliers are big chains present in almost every big
town centers in London and its outskirts. One of the main benefits to sportswear
companies like Nike are that these retailers are globally diversified, meaning they have
links in several markets globally. These retailers aim at gaining popularity, profits and
appreciation about their chain through promotion and selling of new product lines of
these big brands. However these chains are not Brand loyalists to one specific
company and aim at gaining profits from other businesses as well like Adidas,
Converse, Puma, Lacoste and others.
www.sportsdirect.com
www.nike.com
www.adidas.com




Rivalry among the existing players:
Though Nike is leading in sportswear industry, this does not mean that it retains its
position as a leader in future as well. Nike is competing with one major rival which has
been fighting for years to get on top; Adidas. Adidas and Nike watch each other’s move
very closely. Sometimes new ideas and thoughts are copied by the competitor creating
an air of rivalry. We have seen this in several advertisement campaigns made by the
two. A company which is seeking success in short and long term never overlook the
strengths of its rival. The main aim of a company, like Nike, is to consider every
opportunity of its rival as a threat for itself and a point to signify the problems what it
might face in near future.




Children footwear
Children’s footwear holds an important position in the market as a subsector, resulting
in one-quarter of overall footwear volume sales in 2006. Volume sales witnessed a
CAGR of upto 5% globally during its review period. As children grow, there is a need to
keep replacing shoes and this drives the steady demand for children’s footwear. But in
terms of value sales, this subsector is relatively small, accounting for only 15% of
overall footwear sales in 2006.Among the countries under study; Japan is forecast to
have the lowest proportion of population (14%) below 15 years of age by 2011. Both
Eastern and Western Europe will also see a decline, with lower population of
youngsters.



China, which has declared officially that there will be one-child policy, will also witness
a decline in its younger population. However, even with the 12% decline projected over
the forecast period, the country will still have 16% of its population aged 0-14 years. In
India, nearly 30-31% of the population will be under the age of 14 groups and is hoped
by 2011.Countries, like Germany, Hungary, Japan, Italy, and most European countries
have already begun to see declines in children’s footwear sales. These decreasing
birth rates are going to affect the markets all over the globe; however some countries
like China and India will still have a mass market due to its huge size and consumption.
Consumers in developed markets are becoming increasingly obsessed with their
appearance and personal well-being. They are prepared to invest significant sums in
self-improvement, in terms of looking and feeling younger, shedding weight and
improving their physique.



http://www.portal.euromonitor.com/passport/GeographyTree.aspx




Advertisement:
Whether advertising or promotion helps or damages a brand, has still not been
researched (Mela, Gupta & Lehman, 1997) In the long run advertisement help brands by
making consumer less price sensitive and loyal towards the brand. For the add to be
seen it must grab the attention of its target audience. ‘Ads originality’ as defined
from Pietes, Warlop and Wedel, (2002) were easier for customer to remember than
ordinary ads by increasing attention to it. This thus increased attention to the brand
being advertised. Liking towards the brand itself can influence liking for the
brand (Hawkins, Best and Coney, 1992). However according to study by Bichal,
Stephens and Curlo (1992) whether customers hate or like an ad does not obviously
lead to brand acceptance or rejection. So even though the consumers may like the add
they see, it does not necessarily mean they will go out and buy the brand advertised
(see appendix).



Advertisers must remember that advertising messages are portrayed differently
between different genders (Maldonando, Tansuhaj and Muehling, 2003; Hogg and
Garrow,2003; Putrevu, 2001)Hogg and Garrow (2003) found that women paid more
attention to the details of the character of an ad, like celebrities, when asked to analyze
advertising messages. Advertisement can change consumer’s perception of a product
in terms of attributes content and proportion and also influence consumer’s taste for
attributes (Gwin & Gwin, 2003).




Pricing strategy:
Price is another form of attribute used by consumers to differentiate a product. Price
can sometimes be like an indicator to judge quality; with a higher price indicating
better quality and lower price indicating low quality (Mowen & Minor, 1998;Siu and
Wong,2002) Consumers perceive that a higher price can be attributed to the higher
cost of quality control(Siu & Wong, 2002). Some consumers are highly price sensitive,
whereby a high price may shift consumers to competitive brands (Mowen & Minor,
1998). Price plays and important role on the buying behavior of customers. Price is an
important key in marketing mix that raises revenues. Organizations have their own
different policy approaches to pricing. Prices reflect corporate objectives and policies
and are important in the marketing mix. Price changes are made fast and are easy to
communicate (Bradley 2003)According to Evans et al, (1995), technology has provided
the means by which consumers could be individually targeted and continues to drive
growth and development within industries.



Firstly that customers are interested in the bundles of benefits which a particular good
or individual service offers rather than just the product itself. Secondly that customers
view the benefits offered by the goods or services differently within the market. (Day
et al, 1979). ‘’Effective positioning is essential for a brand’s success’’, (Marsden, 2002)




Women:
Nike differentiated women’s market from the rest of the audience through market
segmentation and differentiation. By making a separate website for women, Nike target
segmented successfully. The site offers women dresses and shoes in diverse ranges
and also provides a link to other website nike.com.




Sweat shops:
According to William McCall, Nike battles backlash from overseas sweatshops
marketing news, (1998).Nike public relations got affected in late 1990’s due to
sweatshops. (Hapke 2004)The nineteenth century had earlier figured out that industry
could be damaging without being sweated (Hapke 2004). Workers were treated in the
most inhumane way, where they were verbally abused besides being
punished (Allendale 1992). According to Harper’s magazine, Nike employed its workers
in Indonesia for $1.03 per day, compared to Nike Spokesman (Tiger woods) $55,555 per
day. The same shoes that they made were sold out in USA for $80 or twice the price in
Britain (Allendale 1992). Nike’s code of conduct allows maximum working hours to be
limited to 60 hours per week, however workers in Indonesia, Pakistan and India were
forced to work for work than 72 hours per week. According to (Allendale
1992), Nike made a profit budget of $3 billion the previous year. Nike’s products were
heavily criticized and there was a fear adidas might take over.



http://www.american.edu/TED/nike.htm




Developing new products:
Organizations need to do a portfolio analysis of itself and its competitors in order to
create a benchmark. Organizations keeps a track of changing behavior of customers,
demographic changes, changes in income, financial status and their distribution.
Organizations acknowledge the increase in internet and media use. Concern rests with
determining whether an organization is a technology leader or follower in regard to
innovation. Product prototype is necessary before launching a product and
differentiates you from your competitors. Market testing of a product is important and
a product should be tested before hand of launch. Nike has focused more on
innovation, designing their products, and promotions through adverts as study shows
in appendix.



Differentiation can be based on market approach, delivering system by which it sells,
on the product, services and several other factors. According to (Porter
1980) differentiation is an important marketing strategy. Porter (1980) states that a firm
that achieves differentiation and then maintains it is a successful company above
average. Cost position is an important factor in differentiation and cannot be ignored.
Differentiators aim at Cost parity, by reducing prices in all those areas which have no
affect on differentiation.




Competition:
An organization’s success is determined through strategic positioning (Porter 1985).
Positioning strategy helps bring competitive advantage. A successful strategy aims to
differentiate its market and is of high value to the customers (Porter 1985).Product
differentiation is means to obtain a cost advantage. Nike’s uniqueness is indicative of
its brand logo ‘Swoosh’.



Successful companies in order to compete focus on their internal as well as external
threats. Strengths and weaknesses are short term goals and if they are successful then
it helps to overcome the Threats and benefit from opportunities. Nike likewise focuses
their attention on both customers and internal marketing(employees).Internal
marketing is done by investing heavily on effective training and employee
performance. Nike has successfully overcomed their internal threats by giving
employee benefits such as colleague discounts and higher salaries compared to their
competitors (Adidas and Reebok), as shown in appendix. Superior employee selection
and mass training is provided for a high standard service and environment. According
to appendice Nike and its competitors push their employees to promote their product
outside work hours as shown in appendice through interactive marketing.
A competitive market views its customers as the ultimate success at the expense of
rivals. Organizations attempt to capitalize on the weaknesses of vulnerable
competitors to win market position and customers from them, which as a result
produce profits in the long-run. The organization attempts to seek those activities in
which it performs better than that of its competitors. (Bradley 2003)



In the highly competitive sport shoe market, Nike stayed ahead of the competition and
enjoyed retail sales growth of nearly 10% in 2006 among the countries researched. The
umbrella brand has become well-known through brand awareness efforts, highlighted
by celebrity advertising and store merchandising. At the same time, Nike has used the
newly acquired Converse brand to good effect, particularly in markets like Spain and
Australia where the brand has seen high growth



The Nike brand, on the other hand, has forged ahead and it is doing especially well in
the developing economies of China, India and Russia. In Western Europe, the brand
has overtaken Adidas in the football market. (EuroMonitor 2009)



Technological Advancement: (Davies, 2001) believes organizations in order to
increase production efficiency and effective communication operations rely on
technology. (Heiko 1989) suggests that technology implementation is also influenced
by cultural factors, technological advances being one of them. Also(Dougherty
[1995]) suggests that the exchange of technology across foreign borders is essential.
The exchange of technology and expertise among people from around the globe
increases the key mass in R&D and hence organisations are able to attract more
people. For organisations must learn how to adapt to changing markets, competition
and technologies (Dougherty [1996])



(Cox, [1991] suggests that because employee’s come from different ethnic
backgrounds, wide perspectives are achieved, such as creative ideas and innovative
thoughts .



www.nike.com




Null Hypothesis:
•   H0: No brand loyalty towards Nike products.
•   H0: Nike does not give any significance to its competitors when it comes to
    market analysis and portfolio analysis.
•   H0: Nike’s promotional budget is at its least.


Research findings and Analysis



Questionnaire findings
1. Have you heard about Nike?
    Yes    No
    The aim of this question is to figure out how many people are aware about Nike
    brand. This research aims to identify the locals and students in Uxbridge, mostly
    from Brunel University. According to my research 98% students were aware of
    the brand, 2% were not aware of this brand name. One of the reasons why
    people were not aware could be communication and writing problems as some
    international students are still learning the basic language English. It could be
    that different people come from different backgrounds and cultures where
    different languages are spoken and understood. Majority of people answered
    ‘Yes’ which shows that they recognize the Nike brand. Nike is seen to be
    successful here in advertising their product. By creating the Swoosh logo Nike
    has made itself quiet popular by its simple yet extravagant style.
    If yes, where did you hear the name?
    TV, friends, internet, stores, other



    Most people answered adverts, which clearly shows advertisements such as TV
    as the fore most success factor. Followed by this was friends influence upon
    purchase decision. This shows that keeping personal relations with customers
    is an important factor in Nike’s success. Customers are the main market for an
    organization, without customers, companies can not sell their product.
2. Are you brand conscious?
    Yes   No
    Majority of respondents stated that they are loyalists towards Nike brand. Those
    who answered No were shoppers that looked for anything cheap or were either
    brand loyalists towards adidas or Reebok. Brand loyalitists towards Adidas were
    not impressed This proves my Null Hypothesis part A as wrong and shows that
    there is maximum Brand loyalty towards Nike products.



3. Do you buy this product due to friends influence?
    Yes   NO     Sometimes
    Majority of people answered yes. This shows that most people are brand
    followers. Second highest responses were ‘Sometimes’ showing that still people
    are interested in buying Nike products but not always.
4. How often do you purchase Nike products?
   Every week    once a month     once in a year   never buy
   Survey showed that 15% students purchase Nike brands every week, 35% buy
   the product once a month and 10% buy once every year and 0% never buy. This
   again shows that brand loyal customers not only shop at their respective shops
   but also avoid switching to another brand even if there are cheap sale offers.



5. What do you like about Nike?
   Logo, design, color, other
   Respondents Like the logo ‘Swoosh’ in majority, followed by design, color and
   others. It shows successful promotional marketing by Nike. Swoosh designs
   success lies in its unique promotions, its market strength and its brand position.



6. What attracts you towards this brand?
   Famous, fashion brand, logo, price, other
   Most respondents answered that they are attracted towards this brand as it is
   famous. Followed by Price, logo and others. Pupil who answered Nike as a
   famous brand were teenagers and young males and females. Nike could be
   witnessed also as a street brand when seen in highstreet corners, wheres street
   thugs and street boys were wearing Nike trainers, and long t-shirts. The second
   most important factor was price. Some teens expressed their positive feelings
   about the brand but expressed that as they were not given enough pocket
   money from their parents they could not afford it.



7. Do you think Nike is a fashion brand?
   Yes    NO
   Most respondents that answered ‘Yes’ were young age people from LIBT.
   Youngsters are fashion followers and most influenced by fashion brands. This is
   because of Celebrity endorsement that youngsters get influenced to a great
   extent. Young males and females stars expressed their happy feelings about
   stars like Beckham endorsing Nike products.



8. Which one would you chose Nike or Adidas?
   Nike Adidas
   Most respondents answered Nike. This was also visible from their dressing. This
   also shows my appendice study as correct where most respondents answered
   they like Nike compared to Adidas. Adidas though has a good market share and
   is just close to Nike, but respondents were too lazy to talk about adidas.
9. How much would you rate the brand, out of 5?
   Most people with the most ratings were 4. Followed by 3 and 5. This is how I
   made a market review of Nike and proved some factors that make Nike
   successful by proving my appendices right and null hypothesis wrong.




Focus Group Findings:
The aim of the focus group findings was to figure out the consumers buying
behaviours and their perceptions towards the brand Nike compared to its competitor
Adidas.



Appendix shows an advert about my research where different people were asked to
comment and show their liking for the product. As it was not easy to get an audience to
fill these forms i gave away 5 pounds to everyone interested in filling away these
forms.




Brands (Nike or Adidas):
According to the research findings, Adidas has not showed strength in its marketing
strategies especially advertising. Though the market looks weak, there are still loyal
customers who do not want to shift towards other companies, whether its their
personal experience with the brand or their taste. Majority of the students, taken from
leisure sports centre and Brunel University were students active in sport activities or
somehow related to sports. When facts were shown that Nike is number one sports
brand, I was able to convince one Adidas customer towards trying Nike (as seen in
appendix, Q3). However two respondents refused to swift from their brand (Adidas),
showing that brand loyalty is another important key to success for a company.




Nike Sports wear and athletic shoes
Nike’s sportswear market was seen to have the most positive responses compared to
athletic shoes, which were believed to have a strong market hold. Respondents
thought Nike Sportswear’s were on good offers, trendy, sexy and some considered it
as a fashion brand. Athletic shoes also had some good acceptance from the audience
but it was too less compared to Nike Sportswear. The most famous source of
advertisement found out was TV, followed by internet and others.




Conclusion & Recommendations:
Everyone in Nike should play their individual roles in promoting their brand
irrespective of their hierarchy level, ranging from Top CEO’s of the company to the
staff and from manufacturing sites till it reaches its customer covering all marketing
team and expertise’s in between.



A thorough check and understanding of the International code of conduct regarding
child labor and sweat shops needs to be maintained and stress should be on team
work rather than pushing it on a single person. Mistakes made in these sweat shops
should not be forgiven in future.



Carrying out our previous researches and surveys and as the appendices show, Nike is
doing well due to its promotional methods, like adverts, and has saved huge reserves
to be used for future of the company. Celebrities/ stars and adverts should also try to
focus older generation, rather than just focusing on youth and sportsmen. Nike should
be introduced as a casual brand which can be worn at any time, anywhere and without
any age restriction.



Nike needs to realize that inorder to benefit in the long run, it needs to overcome its
weaknesses and threats, which will automatically lead to opportunities and strengths
being followed.



All important issues such as market segmenting, differentiation of products, price
skimming, comparative analysis and market researches and surveys are key to a
company’s success. I have linked all of them to come to a conclusion that it might be a
hard time for Nike as it covers a large market sector and faces both internal and
external threats. But it must be noticed that Nike has a competitive advantage over its
competitors for being number one brand in sports. With more detailed online and door
to door surveys and questionnaires, Nike can benchmark and achieve a better market
analysis resulting in a far better market strength.

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Nike分析英文

  • 1. Executive Summary: This report looks into a famous company Nike, well famous for its sportswear products. Nike being a Fast Moving Consumer Good (FMCG) is ranked number one globally and British market holds a great repute for Nike products. In this report, I looked at different aspects about the company which led to its success in British market. The report also includes a literature review with explanatory reviews and in-depth details into different scholarly journals, books and academic resources. A mixed methodology was prepared for research findings, combining both qualitative and quantitative research. The market of Nike was segmented by discussing the promotional techniques, its market strength, differentiation and its target audience. Several factors including, price, advertisements are also included in the report and discussion has been made as to how it affects Nike brand and its customers and competitors. Researches have been carried out to examine and to create a clear image about my project. Analysing them through the help of graphs and questionnaires will help to conclude Nike’s market analysis and where it is going right now. Acknowledgements I would like to thank ‘ALLAH ALL MIGHTY’ first of all who gave me the courage and strength and foremost an opportunity to study abroad. Then i would like to thank my family who has been a great support throughout. Many thanks to my tutor Chris Evans, whose guidelines have helped me prepare my dissertation. Thank you all for being there and being a source of inspiration and motivation. Topic: Strategic marketing analysis of Nike in British market and its critical success factors
  • 2. Background of Nike: Nike is a universal brand, highly idolized by teenager groups and leading sports brand and supplier. Initially the company was founded with the name of Blue ribbon by Bill Bowerman in 1964 and the name was changed to Nike in 1970. Pronounced also as NI-KEY, Nike is a Greek word meaning ‘Goddess of victory’ and kicked off with an investment of just $500. Nike starts to sell the first ever football shoe in 1971, named Nike. In 1980’s after hard work and dedication, Nike market share increased by 50% and started to appear in TV commercials with the famous slogan; ‘Just Do It’. In 1986, Nike had one billion sales showing its financial strength since it started off. With time Nike, progressed through market segmentation, differentiation, promotion until it made blunders such as Sweat shops in Asia. With the competitors active and accusations proving right Nike gave its own statement, and told all its contractors strictly to abide by the code of conduct; which worked to some extent. Nike has been successful till today and stays number sports brand, competing with famous brands like Adidas and Reebok. Nike is operating a large market in United Kingdom, with an area of 244,755 km2 and a population density of 249.9 people/km2 (GMID 2009). Nike stocks and sells a variety of products ranging from footwear to t-shirts and sports goods. Problem definition: Nike is number one sports brand and faces internal and external threats. Nike faces internal threats from its employees, product, consumers, which may not be loyal at times. External threats are linked with internal threats and can turn your assests into loss. Nike fears of losing its customers to its competitors, which are part of an external threat. Competitors are active in this fast consuming world and dangerously active in developing new strategies, differentiating their products, innovating new products, advancing in technology and manufacturing their products at a large scale. In this highly competitive and sensitive market Nike can not afford to make mistakes such as Sweat shops in Asia and repeat child labor issues. Market shares were seen stumbling down due to Nike’s policies in Asian countries. Hatred for the brand developed which then again forces consumers to switch towards other brands. Due to this competitive advantage Competitors like Adidas and Reebok, promote their product to a greater extent; taking full advantage of Nike’s weaknesses.
  • 3. All the problems mentioned above, have been discussed and linked together and solutions have been given at the end to overcome weaknesses and turn them into strengths for the company chosen (Nike). (Mintel 2009) Literature Review: Brand image: For every business uniqueness is important to distinguish themselves from their competitors. This is important because when a brand is unique, people associate themselves with the brand. Therefore it allows them to value your brand (Heaston, 2002). Awareness about the brand comes through different range of ideas, advertising, word of mouth, company portfolio, personal experience with that particular brand, and many more (Armstrong and Kotler, 2004). Nowadays, the trend is to follow and adapt something that sounds cool and looks cool, even if its meaningless to the audience (Pesce 2002) Strong brand image pulls a customer to buy the company’s product, even if they are paying more (Sims 2001) and success of a brand depends on how well a brands image and meaning is maintained over long term (Michell, King and Reast, 2001) Companies must manage their brands by creating awareness so the brand’s positioning must be continuously communicated to the consumers. Positioning is how you want to be perceived in the marketplace, and branding is a further modification of that positioning (Moran, 2008) Marketing Mix: Product: According to Jobber (2006), ‘Product decision’ is the type of service or product that should be offered. If a company has a strong brand image customers will buy company’s product even if they have to pay more for it (Sims, 2001). Product prototype should be sampled before launching their products like Nike. As (Lury 2001) states that managing the product is therefore vital to a brand’s success. For a company to succeed it needs to improve its services, revise its market position, and its image besides managing it. Promotion: Promotion covers the communication areas which include, sales promotion, advertisement, public relations, internet marketing etc (Sims, 2001). These help enhance the awareness of the products benefits among the consumers. All of the communication areas mentioned have their own strengths and weaknesses (Jobber, 2006).
  • 4. People: People can turn out to be a great asset or a great weakness for businesses. The impact of variables highlighted as attached in appendice during market research help in critically analyzing the market research factors and opting for best tools of pricing of Niche products. Lury 2001, mentions that brand interaction is important with customers to create awareness of the brand. Likewise, for a company to overcome its weaknesses the targeted audience (people) plays a pivotal role and helps a company, like Nike to shift from a bracket of threats to opportunities. Timely understanding and market research of a company’s weaknesses will prove helpful in overcoming the threats and shift towards opportunities in short and long run. Place: Place is like a key of branding strategy, because if customers do not have a guide as to where to find the product how will they buy the brand (Lury 2001). Businesses have to Target their audience and then setup their shops according to the demand of their products. Nike has been promoting its products globally and has targeted every country according to their market demand. Customers expect that a company delivers them high quality products in shortest time available. Access is improved through multi site locations (like McDonalds, KFC, Pizza Hut), where customers dont have to wait for long for their product delivery. Nike synchronises supply in almost every major countries in Europe, Asia, Middle East and Africa and productivity problems are solved through its Multisite chains. SWOT analysis: Weaknesses Strengths • Swoosh logo • Diverse Range • Number one global brand • Price margins • Sponsors squeezed • Joint ventures/ alliances Opportunities Threats • Teens desire • Child labor and sweat shops • Strengthen brand: IPL (Indian • Competition: Rivals; Premier League), Reebok and Adidas Olympic Games,
  • 5. football tournaments. • Emerging Asian economies: China and India Source: Kotler et al (2005) Strengths: Nike is leading the sports wear market with its innovative products and customer services. Biggest strength that ‘Nike’ has over its competitors is its percentage of market share within the footwear industry. The revenues recorded of the company were $16,325.9 million in the financial year (FY) ended May 2007, up by 9.2% over 2006. Nike operates in more than 160 countries, covering America, Europe, Asia Pacific, Middle East and Africa. `In 2007 Nike launched a hat phone, hat with built in controls for iPod nano . At the Atlanta Olympics, Nike also sponsored the top athletes and gained valuable publicity and coverage. At different stages Nike allied itself with celebrities and stars. In 2006, Nike unveiled its new women fitness dance with music videos featuring some famous stars like Rihanna and artist def Jam, celebrity director Jamie king. This Nike rock star work out and its stylish moves show that Nike shoes are not just stylish but flexible and allow for maximum performance. The workouts are available for viewing at nikewomen.com for fitness conscious women. http://www.pocket-lint.co.uk/news/news.phtml/6514/7538/nike-hatphone-ipod-nano- clothing.phtml In 2006, UK contributed the largest to overall sales of footwear and clothing in Western Europe with a volume sales share of 27%. (GMID 2009) Nike is the leading sports footwear brand in the region, placed ninth overall among footwear manufacturers. In Spain, Converse has done very well, with 2006 sales growing 37% over prior year (GMID 2009). In response to the price-led competition brought on by less expensive Asian imports, many important players will continue to shift their production facilities to countries where labour costs are substantially lower (GMID 2009). Casual footwear was estimated to account for 56% of all footwear sold in 2006, up from 49% in 2004. (GMID 2009)However, the market is growing because of price discounting and promotions.
  • 6. www.nike.com Weaknesses: Nike promotes and sells diverse range of products. However, their income of business is heavily dependant on footwear sales. Nike targets its customers through its branches and different retailers which sell Nike products to gain their shares as well. This results in price differences, less stock and price margins being squashed due to their demand. Adidas on the other hand Segments its market with a different approach like introducing gift cards for shopping online or in store. These gift cards are only redeemable at Adidas originals and its outlets and factories. Nike fails to introduce such gift cards till now, showing that Adidas differentiates its products, and has a realistic approach when it comes to promotions. Opportunities: Nike is a fashion brand among youngsters especially teens, also seen in appendix. Youngsters get easily influenced by fashion, style, price and design. Youngsters especially Teens tend to purchase more and are sometimes claimed as shopaholics, compared to the normal population. Teens get easily influenced by stars and celebrities and consider their brands as up to date and Fashion oriented. Nike spends a lot of money on celebrities to endorse their product; and if they spend more, this will help increase their revenues. These revenues can be used by Nike to focus on their existing product lines such as jewellery, sunglasses and sportswear and at the same time introduce new ones. Nike can focus on new emerging markets such as China and India, two developing economies, to build up strong brand recognition. China is a large market rich of consumers and Nike can promote their products by indulging in their sports activities. Global events in sports like football tournaments and events such as IPL (Indian Premier League) are opportunities to promote and market Nike’s brand. Other sports events such as rugby tournaments, boxing events can also be utilized especially the upcoming Olympic Games to build up and strengthen Nike’s global brand recognition. Threats: Nike has been accused several times for child labor policies in some underdeveloped and developing countries, mostly Asian countries such as Pakistan, China, India, Bangladesh and Indonesia. The result was a devasted market when consumers and
  • 7. several retailers stopped purchasing products from Nike, as it broke the international code of conduct and there was a risk that Nike’s assets might collapse at some stage. Nike faces both internal and external threats from some of its great competitors like Adidas, new balance and Reebok. Like Nike, Adidas and Reebok also manufacture their products from abroad as the manufacturing cost and production is cheapest. Adidas is a major sponsor of kits to famous Cricket teams like England and Australia. It is active in supporting top football clubs like Chelsea, AC Milan and Liverpool and others. Not only this, it also sponsors London Marathon. Nike trades internationally and faces threats of stumbling international markets and low exchange rates. Pound sterling recently faces threats from the rising Euro and Dollar. Recent Global recession which lead to the collapse of some major companies like Woolworths can also have its after affects on the company. Slept factors: Slept factors include Social, legal, economic and technological factors influencing a business. These factors are part of external environment. (Lancaster 2002) Social: Nike has been engaged in social activities and seen as a much responsible brand. In august 2008, Nike organized a one day running event in London and New York with live music performances in designated race cities. Developed economies were once traditionally strong markets for children’s footwear. There is a current decline in the population of target segment: children and a rising proportion of people over 45 years old in European countries. (Jobber 2007) This is an emerging market and can be target segmented. In 2004, Nike denoted $37.3 million in sincere services to charity. Nike has also been active in major sponsor events such as age concern big band concert and Rhos y Ghalian Outdoor Education Centre in Wales for the use of local community and children studying at school. http://www.bumpershine.com/2008/08/28/nike-human-race-lots-of-concerts-on- aug-31.html http://www.nikegroup.co.uk/community.php
  • 8. Legal: Different countries have different legal requirements. In UK, there is a basic minimum wage of £5.74 to be paid by companies. Companies paying less than basic amount are said to be in an illegal activity. Nike . In 1997, Nike workers in Vietnam were forced to work overtime illegally and exposed to chemical toxic and other hazards. Similar type of cases were seen in Pakistan and Indonesian sweat shops, where children upto 12 years of age and younger were made to work more than 70 hours a week. Nike here violated the human rights laws and acted highly irresponsible. Nike’s brand image was damaged at several stages like In 2006, Nike lost a case against hackney over copying its logo. http://www.motherjones.com/news/feature/1997/11/nike.html Economic: Recent credit crunch globally has almost stumbled the market shares and has brought consumers buying decisions to a dead end. Due to increased interest rate and less loan availability consumers have become miser in shopping and this has resulted in declined sales of organizations compared to credit crunch free environment. Price reductions and price losses are beared by companies out of their budget to reach consumers buying power. A margin squeeze is seen with companies reserves and market shares falling down. Organizations cannot invest in new advancement and promotional sectors, with the delay of other projects. This means less innovation in products, less budget availability for new marketing campaigns, economies of scale gradually coming down. Nike and its competitor’s economic conditions have also been affected by the above factors. Exchange rates of currencies also affect the sale of a product. Buying and selling is highly affected in situations where transactions are carried out between rich and poor countries. However, the profit margins get squashed depending on the economic environment of that particular country. Pound sterling being a strong currency is therefore still in a beneficial position when transactions are carried out with poor and developing countries in Asia or even European countries If the exchange rate is low this means one can exchange more sterling for foreign currency, therefore if there will be more surplus demand of Nike in Britain from abroad, this will lead to a poor balance of payment which is beneficial for the British footwear organisations. If in Britain, Export is greater than import this is excellent for the British economy in general. The opposite of this would mean slump in countries exchange rate, which would correct a balance of payment deficit, and is the Marshal Lerner Condition.
  • 9. Political: High taxes and minimum wage criteria in United Kingdom forces companies to recruit sensibly. So companies prefer to choose workers who are highly skilled, motivated and have an experience related to the field they chose. Nike is an old company and enjoys its friendly ties with government officials, which think Nike is a surplus to their economy. However, Illegal practices are unlawful and are fined heavily; these include cash in hand jobs, child labor practices (like the one carried out by Nike in some Asian countries) and tax exemptions. So far Nike has had several legal cases running against him, but in 2003 Nike had to face Supreme Court charges for its foreign operations which were considered unethical, unjust and against human law policies (Sweat shops and Child Labor). Technological: Nike continues to be innovator in its footwear market and strives to create the best and unique sports apparel and footwear possible. Nike were one of the first company’s to implement the idea behind Nike ID footwear, which offers customized footwear created by the customer on the company website. Nike invented air cushioned soles that braught an impression in the market that Nike is more creative, price competitive than any other brand. This was the first time Nike was recognized as being a footwear innovator. Footwears have a huge market demand and it is crucial for Nike that it continues study on implementing creative ideas and designs, much faster than its competitors. Such Advances in technology help to build market strength position through comparative analysis and should be available to the audience. Advertisements and promotions of products require huge investments and are portrayed easily through the use of fast internet, television, radio and other mobile technologies. Porter’s five competitive forces: The strategic business manager seeking to get an edge over rivals uses this model to better understand the context of the industry in which the firm operates (Wilson A. (2003). Michael Porter introduced a framework of models which shows an industry is influenced by five forces: Entry of new competitors is difficult in sports wear market. It’s a long way and difficult for a new rival to enter and sustain in such a competitive environment where already big brands like Nike, Adidas and Reebok are competing with each other to get on top. This gives companies like Nike more chance to market segment their existing product
  • 10. lines and promote them in the best possible way. Organizations are believed to spend more on their promotional methods like advertisements rather than launch of the product or any other method. Nike has so far been successful in giving its rivals a competitive edge. Threat of substitutes: Nike sportswears are best in quality, design and comfort. It’s quiet hard for other companies to produce the same product line, with the same quality and at cheap rates. However other companies can copy the same product and design and display in the market with a cheaper price. This price war starts when a company fails to differentiate its products from its competitors. Nike and Adidas are seen to have an head on collision with each other. www.adidas.com www.nike.com Bargaining power of buyers: Nike’s actual buyers are customers, supply chains like JD sports, Sports Direct and stars/celebrities. The most willing shoppers are youngsters which take Nike as a fashion brand. Youngsters all over the globe follow stars and celebrities to approach their product. Brand loyalists are permanent asset for a company and it is impossible for them to switch over to other companies even if they are offered cheap products. www.nike.com www.sportsirect.com Bargaining power of suppliers: Nike has a number of suppliers which promote and sell its product, like JD sports, Sports Direct, Footlocker. These suppliers are big chains present in almost every big town centers in London and its outskirts. One of the main benefits to sportswear companies like Nike are that these retailers are globally diversified, meaning they have links in several markets globally. These retailers aim at gaining popularity, profits and appreciation about their chain through promotion and selling of new product lines of these big brands. However these chains are not Brand loyalists to one specific company and aim at gaining profits from other businesses as well like Adidas, Converse, Puma, Lacoste and others.
  • 11. www.sportsdirect.com www.nike.com www.adidas.com Rivalry among the existing players: Though Nike is leading in sportswear industry, this does not mean that it retains its position as a leader in future as well. Nike is competing with one major rival which has been fighting for years to get on top; Adidas. Adidas and Nike watch each other’s move very closely. Sometimes new ideas and thoughts are copied by the competitor creating an air of rivalry. We have seen this in several advertisement campaigns made by the two. A company which is seeking success in short and long term never overlook the strengths of its rival. The main aim of a company, like Nike, is to consider every opportunity of its rival as a threat for itself and a point to signify the problems what it might face in near future. Children footwear Children’s footwear holds an important position in the market as a subsector, resulting in one-quarter of overall footwear volume sales in 2006. Volume sales witnessed a CAGR of upto 5% globally during its review period. As children grow, there is a need to keep replacing shoes and this drives the steady demand for children’s footwear. But in terms of value sales, this subsector is relatively small, accounting for only 15% of overall footwear sales in 2006.Among the countries under study; Japan is forecast to have the lowest proportion of population (14%) below 15 years of age by 2011. Both Eastern and Western Europe will also see a decline, with lower population of youngsters. China, which has declared officially that there will be one-child policy, will also witness a decline in its younger population. However, even with the 12% decline projected over the forecast period, the country will still have 16% of its population aged 0-14 years. In India, nearly 30-31% of the population will be under the age of 14 groups and is hoped by 2011.Countries, like Germany, Hungary, Japan, Italy, and most European countries have already begun to see declines in children’s footwear sales. These decreasing birth rates are going to affect the markets all over the globe; however some countries like China and India will still have a mass market due to its huge size and consumption.
  • 12. Consumers in developed markets are becoming increasingly obsessed with their appearance and personal well-being. They are prepared to invest significant sums in self-improvement, in terms of looking and feeling younger, shedding weight and improving their physique. http://www.portal.euromonitor.com/passport/GeographyTree.aspx Advertisement: Whether advertising or promotion helps or damages a brand, has still not been researched (Mela, Gupta & Lehman, 1997) In the long run advertisement help brands by making consumer less price sensitive and loyal towards the brand. For the add to be seen it must grab the attention of its target audience. ‘Ads originality’ as defined from Pietes, Warlop and Wedel, (2002) were easier for customer to remember than ordinary ads by increasing attention to it. This thus increased attention to the brand being advertised. Liking towards the brand itself can influence liking for the brand (Hawkins, Best and Coney, 1992). However according to study by Bichal, Stephens and Curlo (1992) whether customers hate or like an ad does not obviously lead to brand acceptance or rejection. So even though the consumers may like the add they see, it does not necessarily mean they will go out and buy the brand advertised (see appendix). Advertisers must remember that advertising messages are portrayed differently between different genders (Maldonando, Tansuhaj and Muehling, 2003; Hogg and Garrow,2003; Putrevu, 2001)Hogg and Garrow (2003) found that women paid more attention to the details of the character of an ad, like celebrities, when asked to analyze advertising messages. Advertisement can change consumer’s perception of a product in terms of attributes content and proportion and also influence consumer’s taste for attributes (Gwin & Gwin, 2003). Pricing strategy: Price is another form of attribute used by consumers to differentiate a product. Price can sometimes be like an indicator to judge quality; with a higher price indicating better quality and lower price indicating low quality (Mowen & Minor, 1998;Siu and Wong,2002) Consumers perceive that a higher price can be attributed to the higher cost of quality control(Siu & Wong, 2002). Some consumers are highly price sensitive, whereby a high price may shift consumers to competitive brands (Mowen & Minor, 1998). Price plays and important role on the buying behavior of customers. Price is an important key in marketing mix that raises revenues. Organizations have their own
  • 13. different policy approaches to pricing. Prices reflect corporate objectives and policies and are important in the marketing mix. Price changes are made fast and are easy to communicate (Bradley 2003)According to Evans et al, (1995), technology has provided the means by which consumers could be individually targeted and continues to drive growth and development within industries. Firstly that customers are interested in the bundles of benefits which a particular good or individual service offers rather than just the product itself. Secondly that customers view the benefits offered by the goods or services differently within the market. (Day et al, 1979). ‘’Effective positioning is essential for a brand’s success’’, (Marsden, 2002) Women: Nike differentiated women’s market from the rest of the audience through market segmentation and differentiation. By making a separate website for women, Nike target segmented successfully. The site offers women dresses and shoes in diverse ranges and also provides a link to other website nike.com. Sweat shops: According to William McCall, Nike battles backlash from overseas sweatshops marketing news, (1998).Nike public relations got affected in late 1990’s due to sweatshops. (Hapke 2004)The nineteenth century had earlier figured out that industry could be damaging without being sweated (Hapke 2004). Workers were treated in the most inhumane way, where they were verbally abused besides being punished (Allendale 1992). According to Harper’s magazine, Nike employed its workers in Indonesia for $1.03 per day, compared to Nike Spokesman (Tiger woods) $55,555 per day. The same shoes that they made were sold out in USA for $80 or twice the price in Britain (Allendale 1992). Nike’s code of conduct allows maximum working hours to be limited to 60 hours per week, however workers in Indonesia, Pakistan and India were forced to work for work than 72 hours per week. According to (Allendale 1992), Nike made a profit budget of $3 billion the previous year. Nike’s products were heavily criticized and there was a fear adidas might take over. http://www.american.edu/TED/nike.htm Developing new products:
  • 14. Organizations need to do a portfolio analysis of itself and its competitors in order to create a benchmark. Organizations keeps a track of changing behavior of customers, demographic changes, changes in income, financial status and their distribution. Organizations acknowledge the increase in internet and media use. Concern rests with determining whether an organization is a technology leader or follower in regard to innovation. Product prototype is necessary before launching a product and differentiates you from your competitors. Market testing of a product is important and a product should be tested before hand of launch. Nike has focused more on innovation, designing their products, and promotions through adverts as study shows in appendix. Differentiation can be based on market approach, delivering system by which it sells, on the product, services and several other factors. According to (Porter 1980) differentiation is an important marketing strategy. Porter (1980) states that a firm that achieves differentiation and then maintains it is a successful company above average. Cost position is an important factor in differentiation and cannot be ignored. Differentiators aim at Cost parity, by reducing prices in all those areas which have no affect on differentiation. Competition: An organization’s success is determined through strategic positioning (Porter 1985). Positioning strategy helps bring competitive advantage. A successful strategy aims to differentiate its market and is of high value to the customers (Porter 1985).Product differentiation is means to obtain a cost advantage. Nike’s uniqueness is indicative of its brand logo ‘Swoosh’. Successful companies in order to compete focus on their internal as well as external threats. Strengths and weaknesses are short term goals and if they are successful then it helps to overcome the Threats and benefit from opportunities. Nike likewise focuses their attention on both customers and internal marketing(employees).Internal marketing is done by investing heavily on effective training and employee performance. Nike has successfully overcomed their internal threats by giving employee benefits such as colleague discounts and higher salaries compared to their competitors (Adidas and Reebok), as shown in appendix. Superior employee selection and mass training is provided for a high standard service and environment. According to appendice Nike and its competitors push their employees to promote their product outside work hours as shown in appendice through interactive marketing.
  • 15. A competitive market views its customers as the ultimate success at the expense of rivals. Organizations attempt to capitalize on the weaknesses of vulnerable competitors to win market position and customers from them, which as a result produce profits in the long-run. The organization attempts to seek those activities in which it performs better than that of its competitors. (Bradley 2003) In the highly competitive sport shoe market, Nike stayed ahead of the competition and enjoyed retail sales growth of nearly 10% in 2006 among the countries researched. The umbrella brand has become well-known through brand awareness efforts, highlighted by celebrity advertising and store merchandising. At the same time, Nike has used the newly acquired Converse brand to good effect, particularly in markets like Spain and Australia where the brand has seen high growth The Nike brand, on the other hand, has forged ahead and it is doing especially well in the developing economies of China, India and Russia. In Western Europe, the brand has overtaken Adidas in the football market. (EuroMonitor 2009) Technological Advancement: (Davies, 2001) believes organizations in order to increase production efficiency and effective communication operations rely on technology. (Heiko 1989) suggests that technology implementation is also influenced by cultural factors, technological advances being one of them. Also(Dougherty [1995]) suggests that the exchange of technology across foreign borders is essential. The exchange of technology and expertise among people from around the globe increases the key mass in R&D and hence organisations are able to attract more people. For organisations must learn how to adapt to changing markets, competition and technologies (Dougherty [1996]) (Cox, [1991] suggests that because employee’s come from different ethnic backgrounds, wide perspectives are achieved, such as creative ideas and innovative thoughts . www.nike.com Null Hypothesis: • H0: No brand loyalty towards Nike products. • H0: Nike does not give any significance to its competitors when it comes to market analysis and portfolio analysis.
  • 16. H0: Nike’s promotional budget is at its least. Research findings and Analysis Questionnaire findings 1. Have you heard about Nike? Yes No The aim of this question is to figure out how many people are aware about Nike brand. This research aims to identify the locals and students in Uxbridge, mostly from Brunel University. According to my research 98% students were aware of the brand, 2% were not aware of this brand name. One of the reasons why people were not aware could be communication and writing problems as some international students are still learning the basic language English. It could be that different people come from different backgrounds and cultures where different languages are spoken and understood. Majority of people answered ‘Yes’ which shows that they recognize the Nike brand. Nike is seen to be successful here in advertising their product. By creating the Swoosh logo Nike has made itself quiet popular by its simple yet extravagant style. If yes, where did you hear the name? TV, friends, internet, stores, other Most people answered adverts, which clearly shows advertisements such as TV as the fore most success factor. Followed by this was friends influence upon purchase decision. This shows that keeping personal relations with customers is an important factor in Nike’s success. Customers are the main market for an organization, without customers, companies can not sell their product. 2. Are you brand conscious? Yes No Majority of respondents stated that they are loyalists towards Nike brand. Those who answered No were shoppers that looked for anything cheap or were either brand loyalists towards adidas or Reebok. Brand loyalitists towards Adidas were not impressed This proves my Null Hypothesis part A as wrong and shows that there is maximum Brand loyalty towards Nike products. 3. Do you buy this product due to friends influence? Yes NO Sometimes Majority of people answered yes. This shows that most people are brand followers. Second highest responses were ‘Sometimes’ showing that still people are interested in buying Nike products but not always.
  • 17. 4. How often do you purchase Nike products? Every week once a month once in a year never buy Survey showed that 15% students purchase Nike brands every week, 35% buy the product once a month and 10% buy once every year and 0% never buy. This again shows that brand loyal customers not only shop at their respective shops but also avoid switching to another brand even if there are cheap sale offers. 5. What do you like about Nike? Logo, design, color, other Respondents Like the logo ‘Swoosh’ in majority, followed by design, color and others. It shows successful promotional marketing by Nike. Swoosh designs success lies in its unique promotions, its market strength and its brand position. 6. What attracts you towards this brand? Famous, fashion brand, logo, price, other Most respondents answered that they are attracted towards this brand as it is famous. Followed by Price, logo and others. Pupil who answered Nike as a famous brand were teenagers and young males and females. Nike could be witnessed also as a street brand when seen in highstreet corners, wheres street thugs and street boys were wearing Nike trainers, and long t-shirts. The second most important factor was price. Some teens expressed their positive feelings about the brand but expressed that as they were not given enough pocket money from their parents they could not afford it. 7. Do you think Nike is a fashion brand? Yes NO Most respondents that answered ‘Yes’ were young age people from LIBT. Youngsters are fashion followers and most influenced by fashion brands. This is because of Celebrity endorsement that youngsters get influenced to a great extent. Young males and females stars expressed their happy feelings about stars like Beckham endorsing Nike products. 8. Which one would you chose Nike or Adidas? Nike Adidas Most respondents answered Nike. This was also visible from their dressing. This also shows my appendice study as correct where most respondents answered they like Nike compared to Adidas. Adidas though has a good market share and is just close to Nike, but respondents were too lazy to talk about adidas.
  • 18. 9. How much would you rate the brand, out of 5? Most people with the most ratings were 4. Followed by 3 and 5. This is how I made a market review of Nike and proved some factors that make Nike successful by proving my appendices right and null hypothesis wrong. Focus Group Findings: The aim of the focus group findings was to figure out the consumers buying behaviours and their perceptions towards the brand Nike compared to its competitor Adidas. Appendix shows an advert about my research where different people were asked to comment and show their liking for the product. As it was not easy to get an audience to fill these forms i gave away 5 pounds to everyone interested in filling away these forms. Brands (Nike or Adidas): According to the research findings, Adidas has not showed strength in its marketing strategies especially advertising. Though the market looks weak, there are still loyal customers who do not want to shift towards other companies, whether its their personal experience with the brand or their taste. Majority of the students, taken from leisure sports centre and Brunel University were students active in sport activities or somehow related to sports. When facts were shown that Nike is number one sports brand, I was able to convince one Adidas customer towards trying Nike (as seen in appendix, Q3). However two respondents refused to swift from their brand (Adidas), showing that brand loyalty is another important key to success for a company. Nike Sports wear and athletic shoes Nike’s sportswear market was seen to have the most positive responses compared to athletic shoes, which were believed to have a strong market hold. Respondents thought Nike Sportswear’s were on good offers, trendy, sexy and some considered it as a fashion brand. Athletic shoes also had some good acceptance from the audience but it was too less compared to Nike Sportswear. The most famous source of advertisement found out was TV, followed by internet and others. Conclusion & Recommendations:
  • 19. Everyone in Nike should play their individual roles in promoting their brand irrespective of their hierarchy level, ranging from Top CEO’s of the company to the staff and from manufacturing sites till it reaches its customer covering all marketing team and expertise’s in between. A thorough check and understanding of the International code of conduct regarding child labor and sweat shops needs to be maintained and stress should be on team work rather than pushing it on a single person. Mistakes made in these sweat shops should not be forgiven in future. Carrying out our previous researches and surveys and as the appendices show, Nike is doing well due to its promotional methods, like adverts, and has saved huge reserves to be used for future of the company. Celebrities/ stars and adverts should also try to focus older generation, rather than just focusing on youth and sportsmen. Nike should be introduced as a casual brand which can be worn at any time, anywhere and without any age restriction. Nike needs to realize that inorder to benefit in the long run, it needs to overcome its weaknesses and threats, which will automatically lead to opportunities and strengths being followed. All important issues such as market segmenting, differentiation of products, price skimming, comparative analysis and market researches and surveys are key to a company’s success. I have linked all of them to come to a conclusion that it might be a hard time for Nike as it covers a large market sector and faces both internal and external threats. But it must be noticed that Nike has a competitive advantage over its competitors for being number one brand in sports. With more detailed online and door to door surveys and questionnaires, Nike can benchmark and achieve a better market analysis resulting in a far better market strength.