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Nike Marketing Strategy

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Business Studies

We dare to design the future of sports.

- 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.

Nike Marketing Strategy

Nike's marketing strategy is to invest greatly in marketing, utilise emotional advertising with which everyone can relate, offer high-quality products at premium prices, and distribute its products with the help of third-party stores.

Nike's competitive strategy is product differentiation, concentrating on a market niche, and strengthening its customer and supplier relationships.

Nike uses demographic, geographic, psychographic, and behavioral segmentation.

Nike promotes its product with famous sports celebrities and athlete endorsements that have become increasingly popular and well-received by customers.

Nike responds to changes in trends and customer behavior in an effective manner by adapting its marketing strategies and product mix. Nike's increasing sales and revenues are greatly accredited to its distribution channels, where premium products are given to specific distributors and non-premium products are distributed to local retailers. Promotions with celebrity athletes have created greater awareness among customers. So, Nike's products are priced at a higher range so that it matches the company's positioning of a high-quality provider. 


Despite the positive influence of Nike's marketing strategies, there are some drawbacks as well which involve high costs, less diversification in strategies, the negative impact of celebrities, and costly promotional strategies.

Final Nike Marketing Strategy Quiz

Question

What is Nike’s original name?

Show answer

Answer

Blue Ribbon Sports

Show question

Question

Who was the founder of Nike?

Show answer

Answer

Bill Bowerman

Show question

Question

What is Nike’s marketing strategy?


Show answer

Answer

Nike’s marketing strategy lay completely on the brand image that is promising and has grown into a huge multinational enterprise with time.

Show question

Question

What is Nike’s Slogan?

Show answer

Answer

Just do it

Show question

Question

What is market segmentation?


Show answer

Answer

Market segmentation is to divide the target market into sub-groups.

Show question

Question

What is Nike’s segmentation?


Show answer

Answer

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.

Show question

Question

What is the target market?


Show answer

Answer

A target market is a specific group of people identified for selling products and services.

Show question

Question

What is Nike’s target market?


Show answer

Answer

Nike majorly concentrates on footwear for men and women between the age of 15-45.

Show question

Question

What is Nike’s target strategy?


Show answer

Answer

Nike’s targeting strategies among others comprise sponsorships by college athletic teams, celebrity athletes, and professional athletic teams.

Show question

Question

What is the importance of distribution strategies?


Show answer

Answer

The distribution of the right product, at the right time and at the right place will result in customer satisfaction and eventually customer loyalty.

Show question

Question

What is Nike’s distribution strategy?


Show answer

Answer

The premium products are given to specific distributors whereas the low-priced products are sold at mega stores with greatly discounted prices.

Show question

Question

What is Nike’s promotional strategy?


Show answer

Answer

Nike has contracts with several professional and celebrity athletes who have succeeded in drawing significant attention towards the brand.

Show question

Question

Is the promotional strategy to hire athletes beneficial for Nike?


Show answer

Answer

Nike selects top athletes with high profiles to endorse its products who can have a positive or a negative impact on changing consumer likings, tastes, and purchase decisions. The actions of the spokesperson could have an influence on the promotional strategies of Nike. 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.

Show question

Question

Mention one negative implication of Nike’s marketing strategy?


Show answer

Answer

Nike 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.

Show question

Question

What are the risks faced by Nike?


Show answer

Answer

Fluctuations in market trends, tastes and fashion, and outsourcing problems.

Show question

Question

The distribution of the right product, at the right time and at the right place will result in customer satisfaction and eventually ...

Show answer

Answer

customer loyalty.

Show question

Question

What are Nike's distribution strategies to premium and low-priced products?

Show answer

Answer

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

Show question

Question

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

Show answer

Answer

Costly promotion

Show question

Question

What are the major risks to Nike's marketing strategies?

Show answer

Answer

Changes in taste and market trends

Show question

Question

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

Show answer

Answer

True

Show question

Question

What is Nike's market segmentation?

Show answer

Answer

Sports enthusiasts or individuals wanting to do some sort of physical activity

Show question

Question

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

Show answer

Answer

only internal environment

Show question

Question

Fluctuations in market trends, tastes, and fashion are ... affecting Nike's marketing strategies.

Show answer

Answer

external factors

Show question

Question

Nike does not face extreme competition in the footwear segment. 

Show answer

Answer

True

Show question

Question

Nike only market premium products to high-income individuals. 

Show answer

Answer

True

Show question

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