Market Planning Management and Control
Nike is a multinational company based in the United States that was established in 1964 by Bill Bower man and Phil Knight and it started as Blue Ribbon Sports, its headquarters are located at Oregon. The company deals with manufacturing, designing and selling of different types of sports materials, equipment and offers a variety of services. Nike’s earliest retail store started as a BRS retail store which was essentially located in Santa Monica about 1966. In the beginning of 1970's Blue Ribbon Sports went further and expanded beyond the shoe distribution production to huge shoe manufacturers. Around 1978, the company formally became Nike, Inc., a name that is attributed to the imagination of the company's first employee, Jeff Johnson (Katz, 2004, p.43). Nike Company manufactures and sells products under its own registered brand all over the world. The company maintains high levels on innovativeness to perfect its operations in order to remain on the competitive edge ahead of other competitors.
On the current world the sports industry is highly growing and this has attributed many investors to establish and invest on this sector thus this has increased competition in sportswear market. As a result, battle of the brands has started with companies competing with each other. For instance, in the United Kingdom, market research conducted by Mintel company estimates that the total worth of British sportswear is approximated to be £2.5billion. This research paper will illustrate on how Nike UK can effectively develop new product ideas so that it can remain on the competitive edge ahead of 2014 football World Cup, which will be held in Brazil and it will portray on different strategies that can be put in place to widen its market (Katz, 2004, p. 126).
Changes that have occurred in sportswear market in the last 10 years or more
In the last decade, sportswear market has enormously grown leading to a worldwide make and at the same time attracting more investors who have established several companies which deal with sportswear. For instance, companies like Nike.INC and Adidas are best known as the leaders in the sportswear market all over the world thus it is largely believed that sportswear market is so volatile as compared to other markers (Carbasho, 2010, p.193). On the same note, several changes are adversely taking place in the sports company and if they are not addressed effectively they largely affect sportswear market. The changes in sportswear market are attributed to be as a result of growth of global sporting industry. Nike promotes its products by venturing into sponsorship agreements with celebrity athletes, professional teams and also the athletic teams. Nike pays the performing athletes in most sport functions in order to utilize their goods and thus support and publicize their technology and skills (Crossan, et, al, 2010, p.145). The current growing trend as evidenced among the teenagers wearing sporting apparel is a good incentive to the growth of sportswear market.
PESTLE factors that may have affected changes in the market for sportswear
Pestle analysis is one of the tools that are useful in analyzing landscape in an organization, the features which impact on the organizations performance and operations so as to make the decisions and plans of the organization regardless of the futures uncertainties (PITTS, et al, 2013, p.182). Each letter in the pestle analysis stands for an element of the organizations external operating environment. This analysis generally tackles Political factors, Technological, Economic, Social, Legal and Environmental factors. Pestle analysis of Nike UK will help greatly as it guides the management of this company on key areas where more effort should be added in order to achieve established goals and objectives (Ranchhod, 2012 p.223).For an organization to gain a bigger picture view of the environment, one need to analyze the external and the internal framework. The pestle analysis provides the external perspective thus leading to an assessment of the opportunities and threats. The internal perspective can be determined by a review of both the strengths and weaknesses. (SWOT Analysis' 2013, p.149) The summing of an external view together with internal perception enable one to analyze the opportunities and threats from outside the organization and the strengths and weaknesses from inside the organization which is known as SWOT analysis which includes opportunities, threats, strengths and weaknesses in a given business.
Political factors
The government is responsible in creating economic guidelines and regulations which will increase the expansion of the business. Nike is a beneficiary of these regulations in the United States which provides them with an opportunity to modernize and sell their demanded products. This support by the United States government, the global competitiveness and the stable currency situation has helped a lot in the formation of the basis which may be sensitive to the expansion and development of the Nike Company (Ranchhod, 2012, P.248). Nike Company mostly trade in America and United Kingdom as its potential trade influence.
Economic factors
These factors have various impacts on how the entire company makes its own decision and how it operates its major businesses. In the example of many other organizations and also other companies, the greatest weakness in the economy would be the economic break down. The breakdown always has adverse and harmful effects on the expansion, development and advancement of Nike. The number of the consumers is decreasing downwards as a result of the current negative trade market in the United Kingdom. Asia too faces the economic decline thus contributing negatively to the Nikes sales since most of its products are being manufactured in Asia as well.
Environmental analysis
The study of the environment is not necessarily the inclusive of the overall environment of the globe but it includes all the internal and external factors affecting a business. The company has made sure that as it advances in technology it also puts measures on remaining environmental friendly by making sure that it avoids pollution by all means possible. Nike is a supporter of the green environment and thus does everything necessary so as to protect the environment. Nike is objected in fulfilling the expectations of the customers, creation of the environmental friendly atmosphere globally, motivating its employees and lastly being on the very top of the legislation. Nike displays its positive attitude in a study towards social and environmental responsibility on various parts of the company’s globally. Nike has proven to be an environment friendly company thus being counted among the responsible companies.
Society analysis
Since many people in the world are opting to keep fit in order to live longer, Nikes products such as shoes and clothing are in demand in order for people to join the fitness clubs. . Nike has been the most choice of people in purchasing sporting related product. Nike is yet to address the problem for example that of the situation of labor factory at various different locations of the products in India. (Carbasho, 2010, p.229). This has contributed to the negative effects as Nikes sales decreases. In addition, Nike is located in healthy environments which enable it to encourage safety of the environment. Currently, people are getting conscious of their body and health in general hence they have joined various fitness clubs in order to maintain their fitness and health status.
Legal factors
Nike is a multinational which has always maintained the business ethics. Nike has always remained friendly to the environment in accordance with the stated environmental laws in the United States and other countries. It has handled legal issues in accordance with the surrounding the legal issues have been operating in. Nike on entering a new country to increase its manufacture does so in accordance to the existing laws, regulation and practices of that particular company. Nike does anything in order to avoid the unnecessary problems thus whenever they have entered a new country they do so long after they have checked the local laws in detail. (HITT, et al 2013, p.231) In any case the laws are in extreme cases and are not in accordance with what Nike can offer Nike always stays out of trouble by respecting such regional laws. For example, the government policies with regard to foreign investment and permit business are different both in the developed and the under developed world. Nike has always paid attention to this concern. In case the government is too pleasant or strict with them, they always prefer to take one step at a time. Nike Company is involved in much corporate social responsibility in different countries (Wetherly & Otter, 2011, p.487).
Boston Consulting Group’s Product Portfolio Analysis
Boston Consulting Group’s Product Portfolio Analysis In order for Nike to be a successful company it is supposed to produce a collection of products with different growth rates and market shares. The portfolio analysis is a function of the balance between different cash flows (Carbasho, 2010, p.193). High growing products require growing cash inputs. Low growth products should thus generate excess and extra cash. There exist four rules in order to determine the cash flow of the products which Nike as a company should use. These laws include: margins and cash generated are a function of the market share, thus high margin and high market share go together and vice versa. This is well explained by the experience curve effect which is commonly observed. Another law is that growth requires cash inputs in order to finance the added assets. The added cash is required to hold share in the function of the growth rates. In addition, big market share must be earned or even bought which requires a supplementary increase in the investment. The company has impartial collection has cash flow that supply funds for the upcoming development and also has got stars whose large share and development has assurance of the future. Lastly is that there should be no product market to grow indefinitely and it has developed good strategies which address issues related to creating stronger Brand, financial turnarounds, producing diverse products, globalization, developing better marketing strategies competition, organization change, hiring people with right skills, public affairs, adapting latest technology and strategic planning (Lussier, Kimball & Lussier, 2009,p.100). On the BCG matrix index Nike is regarded to be a cash cow based on the economic index standards. Cash cows generate more revenue to the company making more huge profits therefore remaining important to be maintained in the company for success purposes. Dog brand products are the products that bring less profit and income to the company and are not worth in the company. Lower production costs enables less dogs thereby increasing more cash cows and in turn result to more profits and revenue for the company.
The 4ps to explain this Ansoff growth matrix are discussed as follows. They include price, products, placements and promotion.
Products
These are the goods and services offered by the manufacturers to the consumers in exchange of cash. Products as part of the mixing in the market involves a number of factors which include quality, design of the products, features, packaging of the product, the brand name and the physical appearance of the product.
Price
This is the amount of cash various products and services amount to (Baker, 2011 p.189). The price is determined by the manufacturers and is affected by a number of factors which include the list price, available discounts and allowances, the time of payment and any credit services if necessary.
Placement
This is the method followed so as to distribute products until they reach the targeted markets. Placement as one of the market mix consists of transport, medium of distribution, exposure and the destination required.
Promotion
This is the process of informing and persuading customers to buy the available products. It is also one way of reminding customers on already existing goods and new goods. Promotion as one way of marketing mix includes adverts required, sales marketing and promotion.
Ansoffs growth matrix for Nike Company
The Ansoffs growth matrix is very crucial to Nike as the matrix helps the managers reflect on how their businesses can grow through the use of existing or new products or in existing new markets. Through the use of matrix the managers are able to evaluate the opposed degree of the risks being associated with moving their organization in a forward way. Ansoffs matrix provides several alternatives and marketing strategies which give an overview about the products and markets are new or existing and this attributes to enhancing new strategies that are made from the series of analysis that is done every time. However n every strategy there is an opposing level of risk that is being attributed and the Nike Company depicts the four strategies and this includes the following; Market penetration which is involves increasing market share within the already existing market segments (Baker, 2011, P.156). Through the selling more products and services to the established customers and also through finding new customers within the already existing markets they achieve their obligation. Thus the Nike Company is advised to entail on that in order to increase its sales all over the world since it’s the best strategy that should be entailed on. Ansoff growth matrix deals with product development, diversification and market segmentation. Advantages offered by a geo-demographic segmentation in approach to Nike Company
4 Ps of football market based on customer segmentation
The customer segmentation depends on four Ps namely price, product, promotion and placements which are discussed as indicated below.
Price
The price is determined by the manufacturers though customers decide whether the price is favorable for them or not. Price is determined by several factors including the economic conditions of the buyers and the allowances the company will give them.
Product
This involves what the manufacturer is offering and whether the product is favorable and acceptable to the consumer. Products depend on quality and the brand of that product.
Promotion
This process involves motivating customers so that they can buy the product. It involves giving out promotions and gifts as a way of attracting customers. Advertising the products also make customers aware of the products and services being offered.
Placement
This involves where to locate or find the products. It includes the location favorable and means of distribution of that product.
Shoes and other products from Nike Company are manufactured for both young and old people. The products favor both genders male and female. All ethnic groups are entitled to wear products from Nike Company. Nikes products cater for people’s income since the prices are economical and affordable by most people globally. There are products to cater for high class as well as low class people thus making them readily available. The family sizes do not matter. The products are made to fit in all types of families whether big or small sized companies. The products can fit people in any occupation but mostly favor the people in sporting industry. Sporting materials are readily available in all Nike’s stores and leading supermarkets globally. The products favor both educated and non educated people. They are manufactured regardless of the education standards of people. The products favor both married and single clients and are not based on marital status of clients. The products are based on geodemographic segmentation which caters for all types of clients inclusive of the family life cycle. Nike manufactures its products which are widely enjoyed by many customers regardless of the social class and family cycle but those who want to live in the modern lifestyles.
Market segmentation is important in making sure that a company has a good and inventive market strategy. The segmentation done can be based on the company’s marketing mix. For one to target a group with the intentions of it remaining a population, one must use the market segmentation. Market segmentation has a number of advantages which are much elaborated below.
Segmentation contributes to increase in customer retention, brand recall, brand equity, competition, communications and increase in the profits obtainable. There are no negotiations in Nikes showrooms thus they target segments which have no need or for bargaining and negotiations. By doing these bikes profits are always so high. The profits increase yearly as a result of this strategy of not providing any room for bargaining.
Segmentation is a successful method to increase the focus of a company on the market segments. Enhanced returns together with the better focus. Nike should thus change its focus for better returns thus for it to increase its focus and profitability, it should base its strategy totally on a new segment. This will increase its sales and improve its image since it is well known as a multinational company.
Expansion is immediately possible with geographic segmentation. The Nike company can simply expand to a nearby territory if it basis its market strategy on the basis of geography. (Dawes, 2009, p.243) If the targeted customers are based on their demography then comparable goods can be extended and thus segmentation plays an important role in expansion. In order for Nike to expand in a territory it has to know the segment of the customers it will be meeting and the various strategies of attracting more customers. Advertising can greatly improve the sales of Nike as a great company.
The company’s communication strategy needs to be spot on for its target market thus segmentation goes hand in hand with the target market. Communication is possible with knowing the target market. Good communication strategies should be encouraged in order to attract more customers.
Market segment greatly increases with an increase in the number of competitors. If Nike is focusing on youngsters then its brand and equity with the youngsters will be high. The market might increase and the chances of the new competitor entering will be low. Thus market segmentation will increase the competitiveness of the Nike Company from a holistic view. Thus competition is highly important if the market is to be maintained in a positive direction.
Nike should use necessary strategies for it to retain its customers for example offering special offers and discounts regularly .Through use of segmentation, customer retention is encouraged throughout the life of a customer. Nike should make sure it retains its customers.
From the above it is clearly seen that Nike is a growing multinational company with its products being preferred the most by a large number of people. It is important to conclude that Nike is one of the largest suppliers of athletic shoes and clothing in the world and also a main manufacturer of sports equipment. Nike promotes its products by venturing into sponsorship agreements with celebrity athletes, professional teams and also the athletic teams. Nike pays the performing athletes in most sport functions in order to utilize their goods and thus support and publicize their technology and skills.
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