Major assignment of principles of marketing

Introduce about Nike Company An overview of Nike The world’s largest athletic apparel company, Nike is best known for its footwear, apparel, and equipment.. • E Economic Nike sells a we

FACULTY OF BUSINESS ADMINISTRATION

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Major Assignment of Principles of Marketing

Teachers : Hoàng Th ị Bảo Thoa

Lê Thanh Hương Class of subject : 212_BSA2002- E* 3 Student : Lê Quyền Giang ID’s student : 20050239 Class : QH – 2020- E QTKD CLC 1 Gmail : quyengiang.jizh@gmail.com

Hà Nội – 2022

Table of contents

I Introduce about Nike Company 3

II Analyze factors related to marketing environment 5

PEST(LE) Analysis of Nike 5

SWOT Analysis of Nike 8

Five Forces Analysis of Nike 16

III Analyze the process of market segmentation, choosing targeted market and identifying product 19

Market Segmentation of Nike 19

Targeting of Nike 19

Identifying products of Nike 20

IV Analyze customer’s behaviors to the product 20

V Create a marketing mix strategy and analyze that strategy 21

Product Strategy of Nike 21

Price Strategy of Nike 22

Place Strategy of Nike 22

Promotion Strategy of Nike 23

I Introduce about Nike Company

An overview of Nike

The world’s largest athletic apparel company, Nike is best known for its

footwear, apparel, and equipment Founded in 1964 as Blue Ribbon Sports, the company became Nike in 1971 after the Greek goddess of victory One of the most valuable brands among sport businesses, Nike employs over 73,000 people

worldwide It sells its apparel through the Nike brand, as well as its Jordan Brand and Converse subsidiaries The company specializes in athletic wear, providing footwear, apparel, athletic equipment, and accessories Its sponsors top athletes and sports teams around the world, including LeBron James, Serena Williams, Rafael Nadal, and Alex Morgan In 2021 the company announced plans to begin

refurbishing returned sneakers to sell at a lower price as part of an attempt to

reduce consumer waste and combat climate change

Nike’s primary goal is to supply athletes with exceptional products and

wearable that aids them in better sports performance However, due to the success, Nike has gotten the company now provides athleisure wear as well Currently, Mark Parker is the CEO of Nike

Company type Public

Nike ’s main production

Footwear Among the company’s products are shoes for basketball, football, golf, soccer, baseball, snowboarding, hockey, tennis, and volleyball, among other sports

II Analyze factors related to marketing environment

PEST(LE) Analysis of Nike

• P (Politicial)

Political factors are especially important to the backend of a company - the part we don’t normally see Most of today’s political changes only affect how a company can produce their goods or how much profit they make, for example This may seem insignificant, but Political factors decide the survivability of an organization For Nike, some of these are:

- The United States, Nike’s ‘home country’ so to speak, has fantastic

policies for growth which are especially valuable to this corporation These include low-interest rates and well arranged international tax

• E (Economic)

Nike sells a well-respected medium range product, so they are less vulnerable to economic factors than others, but nevertheless here are some of the Economic variables:

- A market collapse could mean bad news for Nike, along with many other big brands Consumers may choose to switch to lower-end, cheaper products if this were to occur, or even just as a decent level of quality becomes easier to produce

- Nike’s revenues are to some extent dependent on the low cost of labour

in Far Eastern countries This is changing, though, which might mean higher Nike prices across the globe come with the development in Less Economically Developed Countries

- With its ‘deep pocket’ of finances, Nike has the resources to chase after small emerging markets in which they could sell products

• S (Social)

Public Relations has never been more relevant than today A good social status means a lot for modern corporations, so it’s definitely worth considering these factors:

• Worldwide increases in ‘health consciousness’ means that more and more individuals are moving towards better lifestyles These people will undoubtedly buy plenty of sports apparel, something which would make Nike very happy

• T (Technological)

Technology gives companies the ability to innovate in so many different ways From interacting with customers to designing products, technology provides value to organizations just like Nike Here are some of the Technological factors affecting it:

• Social media allows things to blow up or whittle away faster than ever Nike is doing well with using social media to build their brand, but it can be a double-edged sword if used incorrectly

• Nike also gets the opportunity to use valuable information based metrics thanks to technological advances, allowing for them to optimize targeting and production, and maximize revenue

• L (Legal)

Legal factors are sometimes grouped together with Political factors in

‘PEST’ analyses, but in a PESTLE analysis, the two are separated There aren’t many legal variables which affect Nike

• It shouldn’t surprise to hear that, like most massive corporations, Nike also dodges substantial amounts of tax In recent years, there hasn’t been too much of a crackdown on this, but it’s still valuable to consider

• Also, Nike occasionally meets legal repercussions for its shady marketing practices, which include false discounts

❖However, Nike also shows promise of a change in their current practices, with a strong resolve to become more ‘eco’

 That’s a wrap for this PESTLE analysis of Nike They may have a strong brand and healthy finances, but they need to pay careful attention to the morality of their practices and watch out for other growing, cheaper outlets

SWOT Analysis of Nike

1. Strong Brand Awareness and Brand Value

Nike is one of the most recognizable brands in the world as its name alone is memorable, easy to pronounce, and very unique Its swoosh symbol is easily recognized by everyone According to Interbrand, Nike has a brand value of

$42.5 Billion

2. Huge Customer base

Nike has millions of customers from around the world who loyally follow Nike’s trends, participate in Nike events, and even provide customer

feedback Due to its huge popularity, Nike’s market cap has grown to $232 billion as of Jan 2022

3. Aimed For Sustainability

Nike’s CEO Mark Parker has addressed that they will continue to

acknowledge the environmental issues in the communities The CEO

ensures that Nike will help to contribute in finding a solution against these environmental issues

4. Iconic Relationships

Nike’s long-term partnership with Michael Jordan has proved to be

beneficial in terms of sales for the company Their collaboration resulted in

“Air Jordan 1 Shoes” Additionally, Nike teamed up with the famous

basketball player to help design the “Air Jordan 1 Shoes”

5. Side Brands

Nike’s ability to maintain and enhance its side brands such

as converse and Hurley have enabled it to enjoy unparalleled success for decades

6. Low Manufacturing Cost

Most of Nike’s footwear is manufactured in foreign countries In the fiscal year 2021, Vietnam produced 51%, China produced 24%, and Indonesia produced 21% of total Nike’s footwear Other operations are in Argentina, Brazil, India, Italy, and Mexico

7. In-house Professionals

Nike has a team of professionals that design its shoes and other athletic accessories Nike believes that their business has flourished due to the thorough research that is conducted for each product

8. Superior Marketing Capabilities

Nike has excellent marketing campaigns The brand heavily relies

on demand creation expense, which includes advertisement, promotion, endorsement contracts, media print and complimentary products In the fiscal year 2019, 2020 and 2021, Nike spent $3.7 billion, $3.6 billion and

$3.1 billion respectively The brand has successfully utilized social media and marketing campaigns to target more customers

The brand has excellent marketing campaigns and recently released “Don’t

Do It” ad campaign in support of Black communities against racism

Nike is a market leader in footwear industry Nike has captured

approximately 39% of the global athletic footwear market and 13% of global athletic apparel market

❖ Nike’s Weaknesses – Internal Strategic Factors

In the last 20 years, Nike has been consistently targeted regarding their poor labor conditions These issues include forced labor, child labor, low wages, and horrific working conditions that were deemed “unsafe

Nike’s retail sector makes Nike weak due to its sensitivity against

pricing 65% of Nike products are sold directly to wholesalers or retailers With retailers serving as their core customers, Nike does not put up a fight against their pricing structures whatsoever

Although Nike’s income statements prove to be prosperous, a quick glance

at their balance sheet could paint a different picture Nike is still facing

financial threats As of FY21, Nike’s total long term debt was $9.4 billion

Even after having established itself globally, Nike still relies on the U.S Market in terms of sales and revenue In the fiscal year 2021, about 39% of Nike’s sales came from the North America, while the rest of 61% came globally Despite its fame, Nike depends on the U.S for substantial sales and growth

company culture for women The women filed their case against

the sportswear company claiming that the company violated the Equal Pay Act The women said the company engaged in systematic gender pay bias where men were paid more than women for the same amount of work

6 Lack of Diversification:

Nike’s over-dependence on sporting apparel or lack of diversification is a major weakness The pandemic has discouraged physical interaction and gathering with sporting events canceled or postponed Several sporting

teams are on the brink of collapse If the crisis discourages sporting events for longer, Nike’s losses can be catastrophic

7 Contradicting Strategies:

Nike pledged to shift all its facilities to 100% renewable energy with zero carbon emissions under the “Move to Zero” scheme While the strategy

net-is great and welcomed, it contradicts Nike’s strategy that favors innovation over sustainability This creates the perception that Nike is not committed to addressing climate change and its pledge is just a marketing stunt

Former female employees also pointed out that sexual harassment and

misconduct was very common in the company The New York Times

conducted interviews with 50 former and present Nike employees to

investigate the company culture Through the interviews, it was established that Nike did have a toxic working environment, where sexual misconduct was rampant Multiple female employees reported that they had complained

to the HR but saw no action being taken from their part The women were left devastated and felt unsafe while working at Nike Some even left their jobs The entire controversy has significantly affected the company’s image

is the first step in building innovative technology products Combining technology with athletic wear can prove to be beneficial as it is an aspect of the fashion industry that still hasn’t been explored much

The supply and production of Nike’s products depend on independent

manufacturers The brand can either acquire a few of these or make some of its own for a more efficient and streamlined supply chain

4 Cutting ties with big retailers:

Nike has decided to cut ties with some of the biggest multi-brand retailers and wholesale partners According to the report, Nike will no longer work with wholesale retailers such as Zapoo’s, Dillard’s, Fred Meyer, Bob’s

Stores, etc The step is taken for better product positioning and greater customer experience

5 Acquired Artificial Intelligence Start-up

With its vast financial resources, Nike can acquire small or medium

companies or startups It recently acquired predictive analytics platform – Celect to expand its online sales capabilities and predict

customer’s shopping behavior

Recently, Nike acquired RTFKT, a digital shoe-making company Yes, you heard that right, the company designs shoes, but for the virtual stratosphere only However, RTFKT also claimed that it partnered with FEWOCiOUS (a young artist) to sell real shoes along with their digital versions Nike is

banking on the opportunity to market their digital shoes on the Metaverse,

where players can use their Metamask wallets to purchase different types of in-game merchandize

Recently, Nike announced it’s going to be exiting the wholesale distribution market in the U.S The company plans to only market its products at Nike

stores, app, and websites According to Nike, the move away from

distributors is going to help them double their profit margins Moreover,

Nike will also have the opportunity to spearhead the customer shopping

experience as well as control prices

Nike has accelerated the consumer-direct strategy, which means shifting its focus to digital business and subsequently closing physical stores In fiscal year 2021, 38.7% of its Nike brand revenue comes from online sales

Clearly, the pandemic is shaping up how Nike interacts with its customers

1 Counterfeit Products

Counterfeit products can significantly affect the revenue and reputation

of Nike The company deals globally and the risk of counterfeit products has become higher A number of merchandisers and retailers offer

counterfeit Nike products at lower prices The low-priced products are made from low-quality materials but still have the Nike label This

can tarnish the image of the brand as the customers might feel that Nike has started producing low quality products

Although, Nike is a dominating the athletic industry, competition, and new emerging brands are still potential threats to the company With higher competition ratio, Nike has to spend more money on marketing and advertising Nike spent $3.5 Billion specifically on marketing and demand generation in fiscal year 2020 To overpower competition Nike’s safest bet is to design innovative products that are tailored according to the needs of athletes

Companies like Under Armour , Adidas and Lululemon are spending more on marketing and advertising campaigns, increasing the pressure on Nike

Since the brand operates globally, it is affected by fluctuating foreign exchange rates Nike reports its financial earnings in U.S dollars This affects its revenue as the U.S dollar is exposed to volatility against other financial currencies

Regardless of whether a company is wrong or right, patent disputes are hotly and fiercely contested in the public domain and expose some dirty secrets about sides in the dispute Nike and Adidas have been engaged in

a fierce patent disputes over Primeknit and Flyknit shoes in U.S and