Thesis on "Sports Marketing Nike's Marketing Strategy"

Thesis 5 pages (1643 words) Sources: 12 Style: APA

[EXCERPT] . . . .

Nike's Marketing Strategy

Nike, the world's largest athletic wear company, has developed a sophisticated marketing strategy that supports its vision of inspiring athletes. At the core of their strategy is the concept, developed by co-founder Bill Bowerman, that "if you have a body, you are an athlete." Much of Nike's marketing strategy flows from that statement, and the mission to inspire "athletes."

The company develops inspiration through the development of high-end products. They have built a diverse line of complementary products to maximize the value of their brand. Nike products are available through many different channels. The promotional programs are comprehensive, cultivating and reinforcing Nike's positioning.

Nike has adopted a differentiation strategy. To do this, they have placed significant emphasis on their product. This emphasis manifests itself in two ways. The first is that the product is of premium quality. The second is that the product mix consists of a series of lines both broad and niche that complement one another. Nike attains premium quality in its products by focusing design on athletic performance, with casual use as a byproduct. This is supported by specialized teams for each major product line that not only research trends but work with athletes to develop specifications to be used in product development. These teams help Nike to better segment their target market. The target market for Nike as a company may be almost everybody, but within each brand or product that market will be more specific. Additionally, these teams give Nike valuable insight into consumer behavior. The trends and buying habits of each sport subset is driven by the innovators and early adopters. By placing their teams within the culture of these groups, Nike is able to be at the fore of these trends. Thus, not only do the specialized teams help Nike segment their market, but they give the company insight into the behavioral trends of these unique segments.

From these core lines, Nike builds out complementary lines of branded wear such as sunglasses, an idea they borrowed from Oakley. In recent years, Nike has expanded its range of complementary products further, developing the Cole Haan casual wear line and the Hurley line of skate apparel. They also build new core lines around emerging segments, as evidenced by their increased targeting of the female demographic. Complementary products are a key component of Nike's new product development strategy. The company seeks to develop products that they can sell to their existing customer base, and that will capitalize on Nike's core competencies with regards to distribution, marketing and oftentimes brand recognition as well.

Nike has a sophisticated distribution network. They market their products in a wide range of retail locations, including their own chain of 260 stores. This element of their strategy - retail saturation - supports their view of everybody being an athlete and therefore part of their target market. Nike also works extensively with their major retail partners with respect to product mix and other marketing initiatives to coordinate strategy. The "place" strategy is supported by a substantial sales infrastructure, including 18 regional sales offices in the U.S. alone, plus independent sales representatives for specialty lines like golf. The concept has been expanded overseas as well. All told, Nike markets their products in 160 countries around the world. These are serviced - just as with the domestic regions - by sales offices. Nike operates sales offices in over four dozen countries to help support their global marketing initiatives.

Nike has supported its differentiation strategy with high price points. Part of the support for this comes with Nike's use of their other brands such as Converse to target lower price points, leaving the high end for the flagship brand. The use of high prices points delivers Nike superior margins, but has also come under criticism for being unjustifiable on the basis of quality, unduly leaving the company exposed to competitive pressure.

The most important component of Nike's marketing plan is its promotion strategy. This strategy has three main thrusts. The first is the use of celebrity endorsements. Nike solicits endorsements from the top athletes in the world, to highlight the "premium" nature of their product. The use of Tiger Woods, for example, established Nike's golf line as premium whereas the company had previously been a minor player with no premium credentials.

The second main thrust of Nike's promotional strategy has been its iconic advertising campaigns. The company and its agency Wieden + Kennedy have built a relationship since 1980 on creating powerful campaigns that blend the worlds of the celebrity athlete and the everyday athlete. Campaigns such as "Revolution" and "Instant Karma" resonated with audiences in ways that ads seldom had before. Through these ads, Nike has developed its brand, positioned its product and become a pop-culture icon.

The third promotional thrust for Nike is the development of brand recognition. The Nike swoosh has become one of the most recognizable brands in the world today. This happened through careful coordination. The swoosh place placed on every product, and was featured prominently in every Nike ad. Its simplicity and uniqueness helped it to stand out and over time Nike was able to build marketplace saturation for the mark. Similarly successful is Nike's tagline "Just do it." Again, the line is very simple but conveys a strong message. Through ad saturation, "Just do it" entered popular culture and proceeded to go viral. Consumers would use the tagline, without any hint of irony, and every person who heard it would connect it at least subconsciously with Nike.

Furthermore, the brand itself is a key component of Nike's value proposition. While part of customer value derives from the quality of the product, Nike derives further value from the strength and image of their brand. Consumers have demonstrated that they are willing to pay more to be associated with the Nike brand, the images it presents, and the athletes who endorse it. Furthermore, because of the power of this image, Nike builds a relationship with the customer, loyalty that fuels sales of complementary products short-term and further sales long-term.

The most dominant feature of Nike's environment is the social feature. At its core, Nike is in the fashion industry. Their success is in part driven by their ability to anticipate trends and when trends move against them, they suffer declines in revenue. Shifts in fashion can be driven changes in fashion tastes, or by demographic shifts.

Another significant environmental variety is the economic climate. This will impact Nike more than their competitors because of their premium positioning. When the economy struggles, demand for Nike products shifts to lower-priced competitors. This is especially likely in light of the perception in some circles that Nike products are not superior to those of their main competitors.

A third key environmental variable is the political environment. Nike has faced difficulties in the past due to various issues in their overseas production facilities. Considerable controversy ensued, with damage accruing to Nike's reputation. While these issues have been quelled for the time being, a renewal of anti-Nike fervor could cause more harm to revenue streams.

Overall, Nike has demonstrated itself to be one of the world's most successful marketers. They have successfully positioned themselves as a premium product and built a globally powerful brand. Nike's use of product teams embedded in the cultures of their respective sports has allowed them significant advantages in terms of market segmentation and understanding of consumer behavior. They have developed a sophisticated sales and retailing network around the world. But most importantly, every aspect of Nike's marketing program ties back into their core concepts of "everybody is an athlete" and premium positioning.

Works Cited

Nike 2008 Annual Report. Retrieved November 17, 2008, 2008 at http://media.corporate-ir.net/media_files/irol/10/100529/Areports/ar_06/docs/10k.pdf

Lowthian, Michaela. (1999). "Marketing Muscle." Willamette Week. Retrieved November 17, 2008 at http://wweek.com/html/25-nike.html

Surowiecki,… READ MORE

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