Nike marketing case study

3.  CONS OF NIKE’S CORE MARKETING STRATEGY

Although Nike’s marketing strategies had brings lot of positive implications to the company, but it will bring negative implications to Nike too. The negative implications that will identify in this assignment are high cost incurred, influence of spokesperson, and competitors.

5. Costly

Since Nike has implemented several marketing strategies, it had incurred high costs in producing and promoting its products. The costs are increase among handling inventory, designing, advertising and production. (Abhiroopsur, 2009) Beyond that, the inflation had raised the costs of raw materials and transportation. To deal with these problems, Nike has increased the products’ prices and reduces its marketing budget. Therefore, this could hurt the long-term growth of the Nike. (Taulli, 2011) According to Boggan (2001), Nike had also employed child labor in Cambodia to reduce its production and labour costs. This had affected its brand image, and it might have many people boycott Nike and stop to buy anything from Nike. (Boggan, 2001) Furthermore, Nike has been using child labour in the production of its soccer balls in Pakistan. (TED, 2011)

6. Influences of spokesperson

One of the Nike’s core marketing strategies is depend on a group of athletes to promote its products. Nike prefers to have high profile athletes as its endorsers, like Runner Steve Prefontaine, Michael Jordan, and LeBron James. The athletes had positive and negative influence on changing consumer preferences, changes in consumer tastes and priorities, and also consumers’ buying decisions. The action and attitude of Nike’s chosen spokespersons could bring the impacts on its promotional strategies. For instance, it will attract the athlete’s idolater to purchase the products if Nike using a popular athlete as endorser. On the other hand, if the athlete were caught in drug addicted or any immoral attitude, it will affect the customers not to buy Nike’s products, thus will affect Nike’s sales, revenue and profit. (Cloke M., 2011)

7. Intense Competitors

There is intense competition faced by Nike. Their competitors are Adidas, Reebok, Puma, and so forth, whilst competition is tighter with the coming of Adidas. More, the product line is slightly different between Nike and Adidas. Nike is mainly focus on footwear for men and women who between 15 to 35 years old, while Adidas is specialize in footwear for men, women and children between the age of 10 to 30. This had shown that there is less diversification of Nike marketing strategy. They could also provide footwear for children to attract more parents to become their potential customers. Additionally, Nike distribution strategy is mainly focus in domestic market which is United States of America, whilst Adidas’s main office is located at Germany, but it focus in European market. Therefore, Nike should distribute its products to more region and countries in order to capture more potential customers and achieve greater reputation. (Allick et al., 2000)

4.  RISKS OF NIKE’S CORE MARKETING STRATEGY

Nike faces many risks when they use their core marketing strategies to achieve their goals and these risks can come from both internally and externally environmental circumstance. The risks will have a negative influence about Nike’s future development, for example, the market share in the world, reputation, brand image and customer loyalty.

1. Changes in Market Trends, Consumer Tastes and Preferences

Nike needs to stay on the top of changes in consumer taste and preferences as evidenced by changes in fashion. So Nike face the risk that fashion trends may change so fast that Nike fails to follow. For example, for a period, the global athletic sportswear is focus on personality and Nike’s products still be general to the customers this will lead Nike go behind of their competitors if their competitors can follow the trends. For another example, such as the social changes, women are becoming more fitness-conscious and are increasingly being targeted as growth potential in the sporting apparel and footwear industries. Due to constant changes in consumer tastes and fashion, these industries are always changing. If Nike cannot follow the fitness trends in the market they will face risks of losing market shares. To compete with this risks and problems, Nike should position it as a trendsetter and not a trend follower and be responsible to their customers. (St. John University, 2004)

2. Fast changing of Nike’s products

From the above risk, the changing in fashion and customers’ preference had brings negative effect on its marketing strategies. Hence, Nike should introduce new products to maintain its customer loyalty as well as attract new customer markets. However, it will also have negative implication if Nike’s implement new products rapidly.

As we know, Nike’s products are focus on the athlete’s shoes, apparels and equipments and their target consumers are for the athletes. But now the global trends are to be fashion and personality. So Nike change its marketing strategies and products design to become more fashion and focus on the youth consumers. It brings risks to Nike because in the traditional mind of customers, they consider Nike only sell the athletic products. The fashion or the changing style products is unimaginative for customers to purchase. Not all the customers can follow the changing of Nike. Sometimes customers maybe feel fed up because they cannot follow the changing of Nike’s products will lead Nike lose customers which drop down the customer loyalty and market shares. (St. John University, 2004)

        Therefore, Nike should analyse the market and customers’ preference as well as customers’ buying behavior from time to time. Nike could prepare survey form to their customers in order to have more understanding on customers’ taste, requirements when buying sportswear or footwear, and also collect the feedback and recommendation from consumers.

3. Expanding to the Overseas

One of Major Nike’s marketing strategies is to expand to overseas and become the leader in the world. It also will bring risks to Nike when they expand their business globally. For example, Nike outsources their products to developing countries such as China, Indonesia, and Thailand. Currency exchange rate fluctuations can disrupt the business of the independent manufacturers that produce Nike products by making their purchase of raw materials more expensive and more difficult to finance. Besides that, the global economic recession influence the overall business operation in the outsourcing countries. For example, inflation rate too high in an outsourcing country will increase the cost and reduce the profits for Nike. What’s more, the war and fuel price fluctuations also can lead to unstable situation for Nike over the long period. (Florzak, 2011)

5. COMPETITORS - ADIDAS

1. DIFFICULTIES FACED BY ADIDAS WHEN COMPETE WITH NIKE

1. Marketing Strategies

One difficulty most likely to be faced by Adidas is in its marketing, compared to its competitor Nike, Nike spends more money on advertising and promoting their products reputation, Nike spend about $1.13 billion as of 1998 involving celebrities like Tiger Woods, Micheal Jordan, Carl Lewis etc. while paying these celebrities large amount of money (Bedar, 2002), as of 2010, Nike spent about $800 million on Nontraditional advertising by using other medium of advertising their products other than TV and has reduce TV and Print advertising by 40%, and in 2006, Nike introduced the Nike + Platform which is a multi-channel, multi-sensory integration between apple and Nike technologies that allows persons to track performance (Fluffylinks, 2012) in essence, Adidas will have a hard time trying to compete with Nike in terms of advertising and promotion, considering Nike’s utilization of low labor cost of production, Nike can afford to spend so much money in creating awareness for their products and gaining consumers loyalty by utilizing celebrities. Adidas will have to invest more money on advertising and create innovative means of advertising their product, having consumers in mind and following the trends of technologies, for example, Adidas can collaborate with IT companies such as Samsung to create innovative means of advertising their products.

2. Adidas and Reebok Reputation on Its Finances

Adidas and Reebok joining up together as a merger would be a good deal for leading over Nike but the two companies have a bad reputation due to financial problems which almost led them to bankruptcy and since they are to work together. The expansion of their business will take a while to develop because they have to have strong advertising strategies until the Asians .If the Asians like their ideas then they might as well adjust to the culture in countries like china since it has the biggest population. In the long run Asian countries like China might as well take a long time to work with the company in terms of coming up with factories in china. This might be one of their biggest problems which will enable them take a long time to lead Nike in terms of their market Nike. To go through all that they will be a lot of expenses thus the company might run bankrupt again. (Adidas-Rebook, 2011)

2.   HOW ADIDAS COMPETE WITH NIKE?

1. Develop the Small Computer “Smart Shoe” Product Line

The development of a product line of smart shoes will build on this reputation and show buyers that Adidas is humorless about innovation and using technology to advance athletic accomplishment. The line of smart shoes combines a microprocessor or implanted controller, sensors, and tiny motors along with memory and battery. The sensors work to steadily monitor, measure, and supply data looking at the landscape, impact of each step, athlete’s body temperature, environment temperature, and athlete’s heart rate. This data can steadily be fed to a microprocessor which agent motors to adjust padding and airflow within the shoe. (Dogiamis et al., 2009)

Wireless GPS system is another feature on the small computer production line that enables runners to decide their accurate location, distance traveled, and speed from the shoe’s GPS by wearing a small wireless GPS wrist strap. The shoes implanted memory can keep data about workouts such as average heart rate, body temperature, calories burnt and force of each step. For situation, in basketball the micro can watch how high the athlete jumps and how hard of a landing they make.  As many athletes demand goods created that can deliver   both watching and accomplishment bettering capabilities, they will find Adidas the solution thus leading to much higher revenue, profit, and market share in sports that Adidas already leads and in sports where Adidas lags in revenue, profit, and market share (Dogiamis et al., 2009)

2. Implementation of Rebranding Reebok Program

Adidas Group should phase out its high accomplishment athletic shoe line and reposition itself in the casual footwear and active footwear market within the next years. The high accomplishment athletic shoe line can be sponged up into the Adidas brand. Adidas It should consider opening Reebok retail outlets that market Reebok as well stylish Reebok at more upscale department stores such as Macy’s and Nordstrom. Reebok should ensure keeping up a very high level of quality and durability of its shoes. However, it should work with major fashion designers such as Calvin Klein to come up with a well stylish product line of shoes meant for active, casual use, gain brand image as an upscale and more cultured shoemaker. Reebok should first come up with a line of casual but well stylish shoes designed by Calvin Klein that blend quality and style. (Dogiamis et al., 2009)

The rebranding of Reebok can help Adidas to make larger advancements with women. They want a shoe that can be useful for all visible feature of an active lifestyle. Therefore, marketing Reebok as a well stylish line of shoes meant for active lifestyle might allow Adidas to make larger in roads with women.  Reebok should start a line of well stylish shoes prepared toward women with active lifestyles. (Dogiamis et al., 2009)

The overall rebranding of Reebok should be finished to avoid internal competition within Adidas Group where the Reebok division is seen as the less profitable sibling of Adidas and to keep buyers from believing that Reebok is not an expensive substitute for an excellent Adidas product. (Dogiamis et al., 2009)

3. Expand Its Sponsorship Program (Marketing)

Adidas mainly focuses in the European market even though it is known in other parts of the world, which is because of its collaboration with soccer events all over the world and football associations with bodies such as FIFA, UEFA, leagues, clubs and individual players, in 2010, Adidas experience its most successful year in the history of football with sales above 1.5 billion Euros. It also had a sure climax during the 2010 FIFA World Cup of which it sponsored the wining team Spain and the adiZero F50 which is also an Adidas product had the top scoring boot in the event, lastly, Adidas Football group on Facebook massively increased from 100,000 members to over 6 million members presently. Adidas has been an official sponsor of the Olympics and has also been included as a sponsor of the 2012 Olympics; this gives it an edge over its competitor Nike. (AdidasGroup, 2011) It should use this opportunity to carry out precise marketing, by focusing on its segment market which includes the soccer, tennis and athletics teams and probably expand its focus to the up and emerging local teams in the grassroots, because, this group of people are keen about sports and spend time watching them on the TV but hardly get access to them unless they purchase the product themselves.

4. Change in Consumer Perception to Products

Adidas can also change the consumer’s perception about its products, most consumers perceive Adidas product as being too stiff and therefore are uncomfortable with it, Adidas can come up with a durable but use soft materials for its product as well as rebrand it product as not just a sporting shoe but also a fashionable shoe which consumers can wear on a casual basis example for outings, parties etc. when this is instilled in the minds of the consumers, more of Adidas product will be purchased by consumers as it will be perceived as durable and fashionable.

5. Encourage Product Customization

Adidas can also make provisions for consumers to customize their products online before it is delivered to them, this will give customers unique and a wide range of their products to choose from and will also allow them to understand what their consumers really want and focus on satisfying their consumer. With each consumer trying to be very creative and unique in their way, Adidas will shift its focus on their consumers from how much they are to pay for the product to how much they can benefit from the product. Adidas can promote this feature through its Facebook page which has over 6 million members

6. Focus on Emerging Market

Adidas can capitalize on Nike’s weakness which is its focus on local market, Adidas can capture emerging markets, and already it has a lead in market such as India and Japan. In Latin America, it experiences a growth sale of 38% in 2007. (ReComparison, 2012) Although it is competing with Nike in China, it should focus on ranking its investment solely on markets which offer superior channels to long-term growth and profit prospects and should also focus on expanding its share to unreached areas especially in China, Russia, Africa and the United States. It should also ensure that it differentiates consumers’ buying behaviors as it differs in different regions and countries and understanding this will be an added advantage to Adidas.

6. CONCLUSION AND RECOMMENDATIONS

From the above analysis, we had understanding about the pros, cons and risks of Nike’s core marketing strategies with relevant marketing theories. Besides that, the difficulties Nike faced when they competing with Adidas. We discuss from the distribution, price, products design, promotion and advertising, market segmentation to analysis Nike’s competitive advantages in the global market. We also find that the other side influences of Nike’s core marketing strategies such as costly advertising, raw materials costs affected by the global economic, the spokesperson’s behaviors which has negative influences to the Nike’s brand images. What’s more, the risks of Nike’s core marketing strategies such as Nike cannot follow the world fashion trends, the profits has affected by the currency exchange and economic recession when expand to the global.  

Nike has remained and continues to remain at the top in producing and distributing their sports clothes and equipments. However, Nike should consider the competitive pressure is very heavy and not allow the “sleep at the top”. So Nike should continuously find efficient marketing strategies to keep their top leaders positions.

The following recommendations are suggested in a situation where marketing management is competent. Nike should increase their market shares through issue new products, competitive pricing strategies, and advertisement and promotions activities. Nike also should restructure market dominance by separate themselves from the competitors mainly through mass promotion strategies and pricing strategies which make Nike more attractive to customers. Besides that, Nike must increase their awareness of corporate social responsibility to strengthen their image of themselves. What’s more, Nike should pay much attention to their R&D department to research out different kinds of people with different taste to get the market diversification goals.

All the above show a competent marketing management which can help Nike Keep their top market leaders and keep their competitive advantages.  

7. REFERENCES

Abhiroopsur (2009) ‘Nike - How the Brand Survived until Today’, (online) (cited 1st March 2012). Available from URL:

Adidas Group (2011) ‘Adidas Strategies’, (online) (cited 10th March 2012). Available from URL:  

Adidas-Rebook (2011) ‘’, (online) (accessed 11th March 2012). Available from URL:

Allick M., Keany E., Koslow J., Tansamrit A., Thorkelson D. (2000) ‘Comparison between Nike and Adidas’, (online) (cited 26 Feb 2012). Available from URL: http://www. Soc.duke.edu/~s142tm17/compare.htm  

   

Bedar S. (2002) ‘Putting the Boot In’, The Ecologist, 32:3, (online) (cited 11th March 2012). Available from URL:

Boggan S. (2001) ‘Nike Admits to Mistakes Over Child Labor’, (online) (cited 2nd March 2012). Available from:

Cloke M. (2011) ‘Marketing Management 01’, (online) (cited 26 Feb 2012). Available from URL:

Dogiamis G., Vijayashanke N. (2009) ‘Adidas: Sprinting Ahead of Nike’, (online) (cited 4th Feb 2012). Available from URL:

Enderle K., Hirsch D., Micka L., Saving B., Shah S., Szerwinski T. (2000) ‘Strategic Analysis of Nike, Inc’, (online) (cited 26 Feb 2012). Available from URL:

Florzak A. (2011) ‘Strategic Analysis: Nike’, (online) (cited 29th February 2012). Available from URL:

Fluffylinks (2012) ‘How Nike’s Marketing Revolution has Resulted in a 40% Reduction in TV and Print Advertising in the U.S.’, (Online) (accessed 11th March 2012). Available from URL:

Jerome A. (2005) ‘Pros, Cons and Risks of Nike’s Marketing Strategies’, (online) (cited 12th March 2012). Available from URL:

ReComparison (2012) ‘Nike Vs Adidas’, (online) (cited 9th March 2012). Available from URL:  

Sarah Hopkins (2008) ‘Nike’s Marketing Strategies’, (online) (cited 9th March 2012). Available from URL:

Smith L. C. (2010) ‘Marketing Strategies of Nike’ (online) (cited 10th March 2012). Available from URL:  

St. John University (2004) ‘Nike (Nke)’, (online) (cited 1st March 2012). Available from URL:

Taulli T. (2011) ‘Nike Shares’, (online) (cited 2nd March 2012). Available from URL:

TED (2011) ‘NIKE: Nike Shoes and Child Labor in Pakistan’, (online) (cited 28th Feb 2012). Available from URL: