Nike's PESTEL Analysis, SWOT Analysis, Target Market, Ansoff Matrix, and 4Ps of Marketing - Case Study Example

Table of Contents Executive Summary 2 Introduction 3 Purpose of the report 3 PESTEL Analysis 3 SWOT Analysis 7 Target Market 9 Research Design 9 Ansoff Matrix 10 4P’s of Marketing 11 Competitive Advantage 12 Conclusion 13 References 14 Executive Summary The world’s athlete industry and offers the customer a wide variety of footwear and apparel to choose from. The launch of running shoes for men which has different features like the distance run, the average speed, the calories burnt is the need for the hour as rising obesity is making people look towards that option. The report finds out the different techniques and theories of marketing that will help Nike to ensure the new variety of show to be successfully accepted by the general public. The PESTEL helps to find the environmental factors which will have an effect on the shoe. The SWOT analysis helps to identify areas where the company has to work upon to achieve the desired result. The buyer behaviour and competitive advantage explain the relevance of the theories. The report will thereby help to ensure the unique identification point which will help the shoe to be successful and the areas that needs to be worked upon for best results. Introduction Nike is a world leader and dealer in sportswear and equipments. The company is based in United States. The company was started in 1964 and since then it has grown to become a major power in sports wear. The company divulges in different sportswear depending on the requirements. The Nike running shoes for men is a success and the company has promoted it well. Those shoes are used by athletics and the company has seen a surge in demand for it. The fact that the shoe has been designedand developed in a manner which helps people to find out the amount of calories burnt, the distance covered and the average speed which will ensure that consumer who are tired of obesity uses it to improve their health. Purpose of the report Identify the different marketing techniques and theories implemented by Nike and how successful they are Identify the value offerings for Nike running shoes for men and the SWOT the company has Identify the USP for the product and the different aspect of marketing that will ensure easy accpetability of the product in UAE PESTEL Analysis The PESTEL analysis if Nike will help to explain how these factors have being included in the marketing strategies. It will also throw light on the effectiveness of the marketing concepts and theories that has helped Nike. The analysis is Political The production and marketing strategy of Nike gets affected by the political conditions prevalent in different countries where it is operation. The production got hampered for Nike when there was “a strike in the dock due to wage rise”. (Mullins, 2004) This caused huge stock to pile up. As a result sales plummeted. Nike due to this had look for alternatives thereby affecting their strategy Nike production also got hampered due to political unrest in India as Nike relies on India as it is a cost efficient country. (Mullins, 2004) This causes the strategy to go wayward and changes are needed. Nike was also affected by terrorism. This caused prices to shoot up and sales fell down. Their strategy backfired and the company was facing difficulty. Economic The strategy also gets affected by the economic condition prevalent throughout in the following “Slowdown in an economy” (Mullins, 2004) like the recent global recession has affected the sales to fall. Despite the company looking for different marketing strategies the sales are not rising. Nike performance also got affected “due to consumer confidence in the economy as the started to believe that it will take time for the economy to come out of sluggishness”. (Mullins, 2004) This affected the overall growth trajectory The growth also hampered and strategies rendered useless due to barriers of entry into the European Union. This affected the strategic thinking process and entering into different markets became difficult. Social Nike strategies also get affected due to the social culture. This makes the company use different marketing concepts and theories in different countries like “Change in the buying habit of consumer” (Mullins, 2004) has increased the sales of shoes used by men for running as people have become more health conscious Change in generation as Y generation prefers different type of footwear (Mullins, 2004) has brought a change in the way production is done and changed the concepts and theories used by Nike Technological The change in technology has enabled Nike to bring about a change in marketing theories used previously and now as The changes in the quality, design and look of shoes for men have gone a rapid change (Mullins, 2004) thereby making more people purchases it. This has also changed the buyer behaviour towards it. Environmental The changes in environment has led to Nike change the concepts it was using before as The ability to re use a shoe by recycling is giving Nike the option of changing the marketing concepts applied before The changes in climate due to global warming have increased the role of Nike towards the society by ensuring that pollution level falls. (Mullins, 2004) This has made the concepts and marketing theories to undergo change and look more into the social responsibility aspect Legal This also brought about a change in which Nike performed as it changed the concepts like Workers threatening to go on strike as being paid poorly (Mullins, 2004) is making Nike look for alternatives of production and ensuring equality for all. “Entering into trade agreements” (Mullins, 2004) which was not seen as a great measure previously is being employed widely by Nike to ensure swifter marketing tactics and growth SWOT Analysis The analysis of SWOT will help to identify how Nike based on its strengths and weakness was able to use the different marketing concepts and the result it yielded for the company. The SWOT is as Strengths Nike has a wide range of sports products like shoes, footwear for ladies and gents which gives it an opportunity to grow It is a global brand which makes the customer to recognize the brand easily. (SWOT, 2010) It has a strong research and development wing which is helping Nike come up with new products It has a strong marketing campaign (Adam, 2009) which is lead by top athletics giving them an opportunity to tap them. “Ability to source material from the cheapest source” (Adam, 2009) at the same time ensuring quality Contract manufacturing has allowed Nike to invest very little in fixed assets thereby giving them more liquidity Weakness Too much dependence on footwear segment for the profits despite having a diversified range of sports product. This is a concern for Nike “The market is very price sensitive” (SWOT, 2010) which is making it difficult to retain customers as customers switch frequently Opportunities Wide range of product offering company the opportunity to market it as a luxury brand Opportunity to move into other areas like “sports wear sunglasses and jewellery” (SWOT, 2010) which will give them a room for growth Opportunity to move into other markets as the brand has a renowned name Threats “Risk of currency fluctuation “ (SWOT, 2010) as the company operates in different countries so there is a high risk that the value of currency fluctuates causing Nike to loose valuable money Intensified competition in the sportswear industry from Reebok and other brands. “The segment is price sensitive” (SWOT, 2010) thereby making companies to reduce the price when a competitor does so to retain customers The global recession is a concern as people postpone their expenditure on luxury items (Adam, 2009) which has caused the sales to dwindle Target Market Nike running shoes looks to target a lot of customer of different age because the company looks to attract atheletics, students as well as people who suffer from obesity (Luther, 2011). This helps to identify the target market of running shoes as follows Targeted Segment Age Group Class of Customer Customer Needs Rural 5 - 70 years Premium Middle Class Lower Middle Class Providing quality product Superior comfort fitting the pocket Semi-Urban 5 - 70 years Middle Class Lower Middle Class Quality product at a price suiting the pocket Urban 5 - 70 years Lower Middle Class Low priced product with comfort Businesses look toward identifying the strategy of the competitors so that they can identify the potential the market has and develop their own strategy based on it (Ireland, Hoskisson and Hitt, 2007, P. 162). This goes a long way to build a strategy which closely resembles to those of the competitors thereby helping to improve the efficiency of the marketing segment. This has been substantiated by a study which stats that identifying competitors helps to develop sound strategies (Bangs, 2002, p. 61). Research Design The launch of the running sjoes has gone through various research stages and based on the different parameters has been developed so that confort as well as usefulness for the customers increases. This will help to ensure that the correct targte customer is aimed at. A research conducted shows that with decreasing customer base organisations to ensure that customers stay back and at the same time new customer become a part research need to be carried out. (Considine 1995) This will help to identify areas which needs to we worked on. It will also help to evaluate areas where the organisation is lacking and will help to grow. The marketing strategy gets affected by the research carried out. Organisations that conduct a research look into various factors and integrating those factors brings about a change in the marketing strategy. This brings about a change in marketing strategy because “it looks into what people think and thereby design products accordingly”. (Bureau of Labour Statistics 2010) This helps to find the customer requirements and develop product accordingly. The company has thereby looked into the different aspect of marketing and based on it developed a strategy which will ensure that the company is able to tap the correct customers by working on the different aspect of marketing. Ansoff Matrix This tool is a very handy one that Nike is using as it helps to find out their strategy. It also helps to give Nike a competitive edge. Nike by using this tool had found out the opportunity through which it can grow and market its strategy. This will help Nike to better position its product so that they can grow. Product Market Market Present New Present Market Penetration Product Development Promoting its footwear product line Promoting its new running shoes for men to attract athlete and other users Developing new shoes and apparels both for men and women New Market Development Diversification Sell Nike shoes and other products in new market to tap the opportunity and grow Improving their presence by entering into agreements traders and dealers to ensure steady supply The above strategy helps to understand the buyer behaviour which can leads towards strategy development for the future. 4P’s of Marketing The 4P’s of marketing will help to understand the areas where the company needs to work on so that it is able to improve the marketing strategy and will thereby help the marketing personnel to act in the better interst of the company. The 4P’s are as follows Product (Developing Value Offerings): The product offered by Nike is of high quality and durability. They offer a wide range of shoes, apparels and equipments mainly for sports athletes. (Cuizon, 2009) Nike running shows for men is aimed at the people who face obesity and jog in the morning and afternoons. The shoe has being designed in a manner that it is light at the same time provides the comfort and makes it easy for the user to run comfortably after wearing it. Pricing (Capturing Value): The price set by Nike is competitive and matches with the price set by other manufacturers. The pricing is for the premium segment. Nike has ensured that even the shoes used for running by men are “priced in the premium segment” (Cuizon, 2009) as it their target market and based on that the strategy has been made. Place (Delivering Value): Nike has ensured smooth delivery. This has been done by ensuring that Nike’s shoes are available at Nike “own brands and exclusive showrooms throughout the globe”. (Cuizon, 2009) It has more that 20,000 outlets. Nike is present in around 200 countries. The company has a solid pool of distributors and independent agencies. Promotion (Communicating Value): The Company has laid stress on promotion. On store promotion is used as a weapon and along with it paper space and also advertisements where they use athlete to promote the product. The company has endorsed various athletes from the field of football. This is ensuring that Nike is being able to market the product accordingly. Competitive Advantage The unique selling point for the shoe is that it provides comfort as well is similar to a normal shoe but has additional features which have an impact on the performance of atheletic and also people suffering from obesity. The shoe is built with a sensor whici records the distance covered, the average speed and calories burnt which will help people suffering with obesity. Ths is a unique selling proposition that the company has to bank upon and targeting specific along with normal customer due to the comfort and light weight associated with it will ensure that the shoe is sold well and has easy acceptability in the market. Conclusion Nike thus has been able to use a lot of marketing concepts and techniques in their business model. This has helped them to achieve the target sales and grow. Nike by promoting their product vigorously has ensured that customers remain loyal. The company has outsourced the production function but has ensured that the production quality doesn’t suffer. The company is very high on quality which has ensured that it grows and multiplies rapidly. The company needs to ensure that they look towards highlighting the benefit of the new shoes and the manner it will help people overcome their obesity. The company also needs to ensure that they look towards aiming at all section of the customers and ensuring that they are able to deliver proper services. References Adam. 2009. Nike SWOT Analysis. Retrieved on October 14, 2011 from http://www.soopertutorials.com/business/strategic-management/3379-nike-swot-analysis.html Bangs, D. 2002. The market planning guide: creating a plan to successfully market your business, product, or service, Sixth Illustrated edition, Kaplan Publishing Bureau of Labour Statistics. 2010. Occupational Outlook Handbook. Retrieved on October 13, 2011 from http://www.bls.gov/oco/ocos013.htm Considine, J. 1995. Developing a marketing research process for religious organisations. Journal on Ministry Marketing and Management, 1 (2) Cuizon, G. 2009. Audit on Nike’s Marketing Strategies. The 4P’s of Marketing, Suite 101.com Ireland, R. D, Hoskisson, R. E, and Hitt, M. A, 2007. Competing for advantage, Cengage Learning Luther, W. 2011. The Marketing Plan: How to Prepare and Implement It, Fourth edition, AMACOM Div American Mgmt Assn Mullins, K. 2004. Critically examine the main drivers for Nike’s growth. Free Press, New York SWOT. 2010. SWOT Analysis Nike Inc. Marketing Teacher Ltd, retrieved on October 14, 2011 from http://marketingteacher.com/SWOT/nike_swot.htm Read More