Evaluating Nikes TQM Strategy - Literature review Example

EVALUATING NIKE’S TQM STRATEGY by Student’s Name Code + Name of Course Professor Date Description of Nike Nike is a company engaged worldwide. The company headquarters near Beaverton. Being the world’s leading supplier of athletic materials, Nike attains revenue in excess of around US$24.1 billion in its fiscal year 2012. Its employees this year are more than 44 000 worldwide. Among the sports business, Nike is a very valued organization because its value is estimated at $10.7 Billion (Aaron 2008). According to David (1991), the company was started in 1964 January under the name ‘Blue Ribbon Sports.’ It became Nike officially in 1978 and the name means the Greek goddess of victory. Nike Company has developed marketing strategies and selling philosophies that have made it the most distinguishable and demanded brand and logo tandems ever since it entered the world market. David (1991) illustrates that Nike offers a range of products and services viable to all customers with regard to are and tastes. Moreover, they are offered at a reasonable price and thus are affordable. Storbacka et al. (1994) notes that due to the ever-changing character of demography, performance, competition as well as dynamic customer needs, Nike Company has taken into account the need for innovation to attain new products. Nike is the largest industry that deals in shoes and thus outshines its competitors. It gains much profit through sales made in more than 110 nations that exist in the six continents of the world. A consumer knows the company as an overriding influence in the sports arena and thus remains their top choice in sports apparels. Total Quality Management According to Waldman (1995), the concept of total quality management embodies the effective and professional approaches used by an organisation to create a social revolution in the workplace. It is a management system that is embedded in the organization’s strategy. It is very significant to the organisation’s performance as it leads to progressive improvement of products and services. These result into customer satisfaction and strong customer loyalty. The company may only compete with similar companies in the industry that embraces total quality management. The management approach is used by organizations to control the production chain and also ensures that tactical operational decisions are made. The total quality strategy is not a one person deal. It is organised by senior managers after which it is dedicated to the supervisors and employees who implement the designed policies. This strategy is a process which aims at improving business production continually by getting everything right the first instance. Basically, the business focuses on the customer (Spencer, 1994). How Nike Implements Total Quality Management The company’s Board of Directors has established and implemented effectively diversity related objectives and strategies towards achieving the set goals. The assessment of the objectives and reviews are normally carried out once a year where recommendations are placed appropriately in regards to the reports that are brought up on the same issue. The progress against targets is also monitored which includes the company’s annual reports on all realms of the firm’s operations (Waldman, 1995). Nike has been successful because of support from numerous well-built partnerships which it has formed around the world due to its high standards, integrity, values and performance. In the 1980’s, the company’s market base comprised of young people of between the ages of 15 to 35. Currently, the company’s customer base entails people of all ages and gender. This is because, the new market strategies fit the needs of all human beings and hence the high command of the company’s products in the sports business market (David, 1991). The company is dominant with regard to the popularity of its brand name. It carries a trade mark that is recognized internationally. In addition, the company leads the competitors with regard to product differentiation. The company has therefore managed to sell different products for many years. That is why even if one of the products fail, it still dominates due to the varieties that compensate for the loss (Solomon 2010). In reference to Prus and Brandt (1995), Nike has always worked hard to maintain a competitive edge. The company has thus been able to secure a large customer base due to continuous innovation of the apparels, equipment and footwear. Nike is highly advanced in terms of research and hence owns its own sports research laboratory where the new products are analyzed intense fully. The company thus understands the usability and durability of its products. In reference to Ross (1993), Joseph Juran's Theory of management is the basis for the company’s clasp of quality management in market segmentation. The company considers the socioeconomic characteristics of the target market, product usage potential and psychographics. Since the company was founded, the segmentation strategy used targets young people of 15 to 35 years who are actively involved in sporting activities and are fascinated by the high quality of sporting materials offered by the company. However, the only products that were highly viable in the market were footwear. Since then, the company has gradually improved its target market features through innovation, retail presence and brand elevation in comparison with competitors. The company is currently targeting extensive geographical market penetration in the business world (Faulkner & Campbell 2009). Nike employs market segmentation as an effective marketing strategy. Aaron (2008) notes that the buyers are divided into groups such that the company is able to apply appropriate market mix strategy for various groups. The traditional segmentation strategies have been based on gender, age, location, season and culture. The company has since embraced the sports dynamics and hence restructured the segmentation process in accordance to the contemporary market needs (Solomon 2010). Apart from selling sports items to a particular gender, currently, the company is interested in promoting fitness campaign through its products. In this regard, they are promoting sports for the benefit of everybody including women who have lagged behind in sporting activities for many years. Presently, Nike is supporting women’s sports by highlighting the benefits of sports for young girls and women whenever they participate in sports. This is aimed at expanding the market along gender segmentation (Prus & Brandt 1995). In reference to the “fourteen points of Deming's theory of total quality management”, the company has managed to maintain customer loyalty to its brand due to its high quality products, pricing strategies, product promotion and distribution. Due to continuous production improvement, the loyalty has expanded over time, making it the leading company in the market (Prus & Brandt 1995). For Nike, good marketing strategies are not enough or are not based on the promotional value. They consistently strive to deliver the real value to the customers for their money. The high levels of product development and innovation ensures customer loyalty because they keep coming back for new goods and services. Moreover, the company changes its goods according to customer needs. Customer loyalty is achieved in this way (Storbacka et al 1994). The company is engrossed in Crosby’s theory of TQM, which analyses various steps towards attainment of quality. Nike is customer focused and it is achieving this through strong marketing strategies. The company exhibits total commitment towards understanding the customer and attempting to satisfy their needs. The target markets are well defined and everybody in the organisation is motivated towards attaining a super value for the customers. This has led to high level of customer satisfaction leading to customer loyalty. For Nike, a clear-cut customer value proposition provides persuasive and strong points that make a customer distinguish its trade name or type of product from the competitor substitutes. It thus expands the customers’ focus and their approval which results into more sales (Ross 1993). It is notable that Nike gives its customers more than the quality item: the athletic gear. They believe in what the customer gets from the products they offer in terms of value. It is more of a way of life and a sports culture which comes with Nike items. Sheth and Parvatiyar (1995) note that Nike brand marketers understand the ever-changing perception of consumers, and thus, strive towards triggering the chances of driving the mass consumers to their brand. For instance, the exclusivity of the kind of shoes they offer has granted them more sales due to higher market attention. Many consumers perceive that the shoe will not be long in the market, and thus, desire to obtain it immediately it is placed in the market. Therefore, they assert that by understanding the consumer’s perception of a particular brand, it is easy to manipulate their decisions in regards to buying the products (Prus & Brandt 1995). With regard to the invitational theory of total quality management, workers in the Nike Company are energized through policies created by the company regarding employee motivation. The working environment is serene and allows for healthy relationships to develop making people to realize their potential. Since workers are satisfied, they work creatively and innovatively towards attaining customer satisfaction (Ross 1993). Elements of Task Environment and how Nike implements it For Nike, the task environment entails the space in which interaction of the organisation takes place. This has greatly influenced the organisation’s ability to attain its set objectives. The company’s task environment entails the sports industry, competitor management, production techniques and the international business environment (Spencer 1994). In reference to the sports industry, the company targets the young people as well as the elderly group. The youth of between 15 and 25 years will form one category whereas the elderly people of age between 40 and 60 will be considered as the second sub-segment. In future, the elderly segment will be more established because many elderly people are becoming more active in sports because of health issues. For this reason, they may buy more sports attires and shoes and thus the target. Due to the need to incorporate all genders in innovation and creativity, Nike is introducing Tailwind, a line of shoes for fashion- as well as value-conscious women (Storbacka et al 1994). In order to manage the competition, the company focuses on innovation such that new products are brought to the market often. According to Prus and Brandt (1995), the company wishes to break from the traditional notion that sports is for the male youth and thus target more females and elderly people in the future. Nike intends to maintain flexibility to operate in this changing environment (Sheth & Parvatiyar 1995). Children are becoming important market target in this particular industry. Nike intends to develop marketing strategies targeting this particular market segment. Moreover, children will definitely influence their parent’s decisions regarding the various brands. Therefore, Nike should come up with a product designed for the entire family whereas the marketing strategy should have the child as the centre point. Aaron (2008) illustrates that Nike product consumers gain much knowledge regarding the Company through the advertising and sponsorship strategy. In addition to television advertisements, the company sponsors various sport activities, especially athletics and football in which many people are fans. For instance, Nike sponsors the Penn State University’s athletic programs and also pays the renowned athletes to promote their products. Their technology and designs are advertised using these strategies. In this manner, both the sports companies as well as the fans get exposed to the company’s shoe brands severally before making a decision to buy the products. Nike also sponsors some of the renowned teams in the world. It is important to deepen customer relationships and respond to each customer’s ever changing value. In this way, the business can thrive in increased revenue since more sales channels will continue to come by. Either, Nike has already established a comprehensive customer base through the numerous stores and thus the only strategy required is to venture into relationships directed towards retaining customers and creating new outlets (Solomon 2010). How to Improve Total Quality Management in Nike Organisation Solomon (2010) argues that the company may foster customer loyalty by recognizing a suitable range of products that fit into the target market, controlling prices according to the season and market condition and engaging the marketing staff in identifying adequate and apposite distribution outlets. It is advisable to take a comprehensive survey of the past and present customer needs especially when intending to introduce new products to the market. The firm ought to monitor the trends of consumption to guide you on which new product best suits the customers. Most importantly, never compromise on quality because the product will face negative response in the market. Maintain high standards such that the company stays at the top and there will be no worry about competitors. Always conform to changes and maintain demand for every product availed at the market through a strong sales and marketing force (Faulkner & Campbell 2009). Nike should aim at the provision of high quality products at affordable prices. Occasional free samples and gifts to loyal customers may be a good promotional strategy. Let the best prevail in terms of the product, price and packaging. The main goal of business marketing is to establish the right relationship with customers which results into increased purchases and extends how long customers continue to buy from the same marketer. It is factual that customers repeat their buying habits from those marketers who show greater understanding and respond well to their needs every time they change. To improve customer value, the marketers ought to have a grip of the differences between their customers and follow up their buying habits over time. In reference to Nike, at least it is wise that it has known that potential customers fail to buy their products because they lack opportunity where the products are applicable (Spencer 1994). Faulkner and Campbell (2009) advice that the company should intend to achieve adequate provision of products and customer services online for convenience. This market objective will attract more customers and therefore increase market shareholder as well as maximize profits. Nike should aim at the utilization of feedback obtained online to gauge the level of customer satisfaction. This may lead to necessary actions and adjustments that suit customer needs. Finally, improvement of the e- buying will be convenient for many people and thus make the company competitive in the technology industry. Turban (2002) argues that the market place online is flooded with numerous internet service providers. The company will prefer a market place that is economical but promises quality operations. This refers to suitability of the website design, features, interface and ease of usage to the customers. The place should additionally be able to offer feedback support, customer service and support, possess ethical policies, fairness and integrity. It is important to consider creation of a platform for customer feedback channel where they may leave written messages that may contain invaluable information that will lead to adjustment and improvements. Above all, the company will employ e- marketing campaign strategies by integrating other social media and also through the increase of website traffic that makes news spread faster (Spencer 1994). Conclusion The total quality management is not a proposal for action, it is a philosophy. It does not advocate for concepts of ranking production, competition, evaluation of performance and any structures that denote hierarchy. Instead, the strategy promotes team policies that embrace cooperation that motivates employees. This becomes the basis for customer satisfaction. The model entails statistical techniques provide the data required for decision making. In this regard, the organization that embraces the TQM strategies promotes the quality of its products and services and also enhances satisfaction of employees. By fixing mistakes, Nike is able to work on the facts that were not correctly stated. Repairs are likely to be made on time by quickly admitting that they are faulty. This indicates that excellent customer services enable the organization to correct their flaws and strive towards attaining high- quality productivity. The high level of standards an organisation exhibits through excellent customer service grants it more customers and preservation of the already existing ones who believe in their dexterity. The fact that an organization is liable for its own slip-ups is a guaranteed tactic of attaining a good business reputation. It is notable that service work is substantial when an organization exercises pellucidity in its pacts. Nike should employ strategies that lead to increased sales, reducing costs and ensuring that benefits are shared with the customers in terms of reduced prices of goods. This will drive further sales volumes that result to higher profits, earnings and the return on capital. In addition, innovation and technology application will move the company further since it will be in a better position to handle the consumers’ ever changing demand for new items References List Aaron, F 2008, The Story of Nike. The Creative Company. David R. 1991, Philip Knight--running with Nike, Garrett Educational Corp Faulkner, D & Campbell, A 2009, Oxford Handbook of Strategy, Oxford University Press, Oxford, U.K. Prus, A & Brandt, D 1995, Understanding Your Customers, Marketing Tools, pp. 10-14. Storbacka, K., Strandvik, T & GrÖnroos, C 1994, Managing Customer Relationship for Profit: The Dynamics of Relationship Quality, Industrial Journal of Service Industry Management, vol. 5, pp. 21-38. Sheth, J & Parvatiyar, A 1995, The Evaluation of Relationship Marketing, International Business Review, vol. 4, pp. 397-418. Solomon, M 2010, Seven Keys to Building Customer Loyalty--and Company Profits, Fast Company. Ross, J. E 1993, Total Quality Management: Text, Cases, and Readings, Boca Raton, FL, St. Lucie Press. Spencer, B. A 1994, Models of organization and total quality management: A comparison and critical evaluation, Academy of Management Review, vol. 19, no. 3, pp. 446–71. Turban, E 2002, Electronic Commerce: A Managerial Perspective, Prentice Hall Waldman, D. A 1995, What is TQM research? Canadian Journal of Administrative Sciences, vol. 12, no. 2, pp. 91–94. Read More