Nike Marketing Strategy

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Contents
Table of contents

    - Nike Inc.

    Nike – a history

    Today, we all know Nike as a global leader in sporting goods, but do you know how it all started? Well, the concept of Nike originated way back in the 1950s. It was formerly known as Blue Ribbon Sports, an American sportswear and footwear company with its headquarters in Beaverton, Oregon. It was founded in 1964 by Bill Bowerman who was a track coach at the University of Oregon and his ex-student named Phil knight. The first retail store was opened in 1966 and the launch of the Nike brand shoe was in 1972. The company was renamed from Blue Ribbon to Nike, Inc., in 1978 and it went public after two years. Over the years Nike has undoubtedly become the world's biggest athletic shoe manufacturer.

    Nike produces an extensive range of sports equipment, athletic footwear, apparel, athletic and recreational products, etc. Now, Nike follows the world fashion trends and is famous and recognized within younger demographics. Lately, Nike teamed up with Apple, Inc. to create Nike + products that can track a runner's performance through a wireless connection. Nike uses different marketing strategies to promote their products to the customers.

    So what are these marketing and promotional strategies? Are Nike's products only for a specific segment? What are its targeting, pricing, and distribution strategies? Let's find out.

    The majority of the customers for the products of Nike are sports enthusiasts or individuals wanting to do some sort of physical activity, be it a walk or soccer match. This is due to the utility that its products offer. Nike targets these customers with product sponsorship and promotions through contracts with athletic teams. In this manner, Nike is able to reach out to a greater number of potential customers. Although others are expected to purchase the products, Nike gives special attention to targeting the athletes over any other group of individuals, seeing them as the trendsetters.

    Nike targeting strategies

    The second strategy used by Nike is associating the product with successful athletes, thus linking the success with the product or the brand. This psychological influence is supported by advertisements that confirm this position. In addition, Nike targets the consumers who give more attention to the quality of the product instead of the price. Like this, price doesn't get affected too much while accommodating a greater number of consumers.

    As a reminder, check out our explanation on Market Segmentation , Targeting and Positioning.

    Nike pricing strategies

    Distribution strategies applied by a company can provide them with a competitive advantage. The greater the efficiency in distribution, the greater the sales and hence profit. The distribution of the right product, at the right time and at the right place will result in customer satisfaction and eventually customer loyalty. Nike's distribution is on a level basis. The premium products are given to specific distributors whereas the low-priced products are sold at mega stores with greatly discounted prices.

    Make sure to check out our explanation on Distribution Decisions for more insight into this topic.

    Besides Nike selling high-quality products which result in customer loyalty, the strategies used to promote the products are effective. Nike has contracts with several professional and celebrity athletes who have succeeded in drawing significant attention towards the brand. Some of them include football players like Ronaldinho, Ronaldo & Roberto Carlos, basketball players like Jermaine 0'Neal & LeBron James. Apart from the agreements with celebrities, Nike has used a considerable number of ads via mass media.

    Analysis of Nike's marketing strategies

    While Nike's marketing strategies show optimistic implications for the company, nonetheless, it brings negative implications as well. Some of them include the following:

    Costly

    As Nike has employed various marketing strategies, it has incurred high costs in the handling of inventory, production, design, and promotion of the products. Besides that, inflation has increased the cost of raw materials and transportation. To solve this issue, Nike has increased the prices for its products and lowered its marketing budget. Thus, this can affect the long-term growth of the company. Nike had also been criticized for employing child labor to reduce its production and labor costs which had affected the image of the brand.

    Impact of spokespersons

    Extreme competition

    Nike faces extreme competition from Adidas, Reebok, Puma, etc. Nike majorly concentrates on footwear for men and women between the age of 15-45, whereas Adidas specializes in footwear for men, women, and children between the age of 10-30. This indicates that there will be little diversification in its marketing strategies of Nike. Nike can offer more footwear options for kids to entice more parents who might turn into their potential customers.

    Take a look at our explanation on Strategic Direction to learn more about competition.

    Risks of Nike's major marketing strategies

    There are several risks faced by Nike when applying their main marketing strategies in order to accomplish their objectives. These risks may originate from both internal and external environments. These risks will have a negative impact on future developments, market share, image & reputation, and customer loyalty.

    Fluctuations in market trends, tastes, and fashion

    Changes in trends

    Considering the above-mentioned risk, changes in fashion and customer preferences can have a negative impact on marketing strategies. Nike's products focus on athletic shoes, apparel, and equipment, however recently global trends emphasize fashion and personality. So, Nike has to respond to the changes in consumer preferences and purchase decisions to stay relevant to consumers.

    Nonetheless, despite the risks and other problems Nike has stayed and will continue to stay at the top in the production and distribution of their sports apparel, footwear, and equipment. But, Nike should take into account the competitive pressure and should, therefore, constantly find effective marketing strategies in order to maintain their position as leaders.

    Nike Marketing Strategy - Key Takeaways

      • Nike's marketing strategy greatly depends on the brand image and has a strong connection with its logo which is unique and the slogan 'Just do it'.

      • Nike is also known for investing greatly in ads and brand promotions.

      • Nike has contracts with several athletes and professional teams for the promotion of its products.

      • Nike was founded in 1964 by Bill Bowerman who was a track coach at the University of Oregon and his ex-student named Phil knight.

      • Nike was originally known as Blue Ribbon Sports, Inc.

      • Nike's market segmentation is for sports enthusiasts or individuals wanting to do some sort of physical activity.

      • Nike's target strategy among others consists of sponsorships by college athletic teams, celebrity athletes, and professional athletic teams.

      • Nike targets individuals who develop product intimacy and therefore, do not care much about the price.

      • Nike's premium products are distributed to specific distributors whereas the low-priced products are sold at mega stores with greatly discounted prices.

      • Nike hires professional and celebrity athletes and uses mass media for promotional and communication strategies.

      • The negative implications of the marketing strategies are that they are costly, the attitudes and actions of spokespersons can influence the customers, and there is intense competition.

      • The risk of Nike's marketing strategies is changing in taste and market trends.


    References:

    Nike: About Nike. https://about.nike.com/

    Nike's marketing strategy lay completely on its promising brand image, allowing it to grow into a huge multinational enterprise with time. The brand image kept floating because of the strong connection with its logo which is unique and the slogan 'Just do it' that is repeatedly used in advertisements. Nike is also known for investing greatly in ads and brand promotions. It believes in the idea of pyramid influence, meaning that the influence of some best athletes will inspire consumers and influence their choice of brand. Therefore, Nike has contracts with several athletes and professional teams for promoting their product. In order to maintain their supremacy in the industry and sustain their competitive advantage, Nike diligently responds to changes in customers' tastes and demands by modifying their marketing strategies.

    Nike market segmentation

    Nike applies a range of strategies to target its current consumers. The targeting strategies consist of sponsorships by college athletic teams, celebrity athletes, and professional athletic teams. This strategy is particularly a success as it is able to reach a wider audience. If the athletic team manager suggests a particular kind of track shoes manufactured by Nike, then the trainees will be influenced to buy them. The teams can bulk buy the shoes and give them to their team members.

    As mentioned, Nike targets individuals who develop product intimacy and therefore, do not care much about the price. This has allowed Nike to set a comparatively higher price than its rivals. It is also recognized that consumers who view a product of high quality are expected to pay a higher price frequently and habitually. Once product intimacy is embraced by consumers, they will relate themselves with the product and will be willing to pay the price whatsoever provided there is a Nike logo on it.

    Nike distribution strategies

    Nike promotional and communication strategies

    One of the main marketing strategies is to promote the products with a group of athletes. Nike selects top athletes with high profiles to endorse its products who can have a positive impact on changing consumer likings, tastes, and purchase decisions. The actions of the spokesperson could have an influence on the promotional strategies of Nike. For example, it will entice the athlete's followers to buy the product, however, if the athlete was caught in an immoral act, then it will negatively impact the consumer to purchase a Nike product. This will influence sales and eventually profits.

    Nike faces the risk of fluctuations in consumer trends, tastes, and fashion. If the company does not react to the rapid changes in trends , then it will lag behind its competitors. For instance, social changes whereby women are increasingly becoming more conscious about their fitness and are considered as a growth and opportunity potential in the sports apparel and footwear industry. As a result of fluctuations in consumer tastes and preferences, these industries are constantly changing. Hence, if Nike cannot change according to the fitness trends it will risk losing its market share . Therefore, in order to deal with the risks, Nike should be the trendsetter instead of a trend follower.

    Frequently Asked Questions about Nike Marketing Strategy

    What are the advantages and disadvantages of Nike's strategies?

    Advantages of Nike's marketing strategy:

    1. Better brand image

    2. Product intimacy for customers

    3. Premium products

    Disadvantages:

    1. Cost

    2. Impact on sales due to actions of spokespersons

    What is Nike's marketing strategy? 

    Nike's marketing strategies are

    • Nike sponsors college athletic teams, celebrity athletes, and professional athletic teams. 
    • Nike targets individuals who develop product intimacy and therefore, do not care much about the price.
    • Nike's premium products are distributed to specific distributors whereas the low-priced products are sold at mega stores at greatly discounted prices.
    • Nike hires professional and celebrity athletes and uses mass media for promotional and communication strategies.

    What competitive strategy does Nike use? 

    Nike has an efficient distribution channel that provides it with a competitive advantage.

    What segmentation strategy does Nike use? 

    Nike's market segmentation is for sports enthusiasts or individuals wanting to do some sort of physical activity.

    What is Nike's best marketing strategy? 

    Nike's marketing strategy greatly depends on the brand image and has a strong connection with its logo which is unique and the slogan 'Just do it'.

    Test your knowledge with multiple choice flashcards

    What are the negative impacts of Nike's marketing strategies?

    Nike targets individuals who develop product intimacy and therefore, do not care much about the price.

    The risks faced by Nike when applying their main marketing campaigns come from...

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