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Running Head: Nike's Marketing Mix

Nike's Marketing Mix

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Nike Company: A Background

Nike's was established in 1962, a product of the thought of Philip H. Knight, a Stanford University business graduate. While traveling in Japan after finishing business school, he got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Co., and arranged to import some of its products to the United States on a small scale. Knight was sure that Japanese running shoes could become major challengers for the German products that controlled the American market. In his agreement with Onitsuka Tiger, Knight had to establish Blue Ribbon Sports to satisfy his Japanese partner's expectations that he represented an actual company, and this hypothetical firm finally grew to become Nike, Inc.

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Nike Company: An Introduction

Nike has established to be the world's largest marketer of athletic footwear, possessing a worldwide market share of just about 37 percent. In the United States, Nike products are sold through about 22,000 retail outlets; All over the world the its products are sold in more than 160 countries. Both domestically and abroad Nike operates retail stores, including NikeTowns and factory department store. Almost all of the items are manufactured by independent contractors, mostly situated out of the country, with Nike involved in the design, development, and marketing. as well as its wide array of core athletic shoes and apparel marketed under the flagship Nike brand, the company also sells footwear under the Converse, Chuck Taylor, All Star, and Jack Purcell brands through completely owned subsidiary Converse Inc. and sells under the brands Starter, Shaq, and Asphalt in the discount retailer channel through another subsidiary, Exeter Brands Group LLC. The firm also sells Nike and Bauer brand athletic equipment; Hurley surfing, skateboarding, and snowboarding apparel and footwear; and Cole Haan brand dress and casual footwear. Nike has relied on constant improvement in the design of its products and strong promotion to fuel its growth in both U.S. and foreign markets. The ubiquitous presence of the Nike brand and its Swoosh brand led to a criticism against the company by the late 20th century, especially for accusations of low wages and poor working conditions at the company's Asian contract manufacturers.

Nike’s 4Ps Marketing Strategy

Nike's marketing strategy is an essential component of the company's success. Nike is placed as a premium-brand, selling ingenious and costly products. Nike attracts customers with a marketing strategy depending on a brand image which is acquired by distinct sign and the advertising slogan as "Just do it". Nike advances its products by sponsorship agreements with prominent athletes, professional teams and college athletic teams. Nevertheless, Nike's marketing mix contains many aspects in addition promotion. These are summed up below:

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Pricing

Nike products are higher priced, although Nike has done a remarkable job of driving the professed value of their products over the years by way of multi-product branding. Consumers can find everything from running shoes to soccer gear to eyeglasses with the Nike brand. Nike has a higher level of consumers who have related themselves with the brand, and will pay the higher price point to own something with the Nike Swoosh on it.

Pricing strategy implies understanding her products, understanding her challenge, and establishing which price point is best for her product, in addition to how she intends to market her product. The better understanding she has about the marketplace and how her product will be accepted, the more likely she will be with successful pricing strategy for her product.

Product

Nike sells a vast range of products, including shoes and apparel for sports activities like road running, basketball, tennis, soccer, American football, athletics, and cross training for men, women, and children. Nike also sells shoes for outdoor activities for instance tennis, golf, skateboarding, soccer, baseball, football, bicycling, volleyball, wrestling, cheer leading, aquatic activities, auto racing and other athletic and recreational uses. Nike recently collaborated with Apple Inc. to produce the Nike+ product which monitors a runner's performance using a radio device in the shoe which links to the iPod nano.

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Place

Nike sells its product to more than 20,000 retailers in the U.S. and in around 140 countries in the world. Nike sells its products in international markets through independent distributors, licensees and subsidiaries.

Promotion

Nike has many famous athletes and professional teams to focus attention on their products. Nike has signed top athletes in many different sports such as professional football players, basketball players, cyclists, skateboarders, golfers, tennis players and car racers.

Nike has sponsored many other track & field athletes over the years. Nevertheless, it was the signing of basketball player Michael Jordan in 1984, with his subsequent promotion of Nike over the course of his storied career that proved to be one of the biggest boosts to Nike's publicity and sales.

Nike also sponsors events like Hoop It Up and The Golden West Invitational, focusing attention on its products. Nike uses web sites as a promotional tool to cover these events. Nike also has several websites for individual sports, including nikebasketball.com, nikefootball.com, and nikegolf.com

Nike Product Mix: An Analysis

Having a strong marketing mix (4 P's) is particularly important for an organization to be thriving.  Nike.com had the top ranking when comparing the marketing mix variables.  For instance, their advertisements and those on their web site, to their strategic alliance partnership with UPS to deliver their packages, were all advantageously planned.

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Corporations should have a mission statement that keeps them focused and directed in the right direction.  Nike.com had mission statements that gave the customer some understanding of what the company is all about.  By definition, a mission statement is a clear and brief statement that explains the organization’s reason for being (Ferrell et al, 1998). 

Nike started in 1964 by Philip Knight has developed to become the leader in athletic footwear and apparel. Nike has been the leader in athletic footwear and apparel for the last couple of decades, once holding 43% of the US market (Anonymous, 2000). 

Nike has been one of the trendsetters in using overseas factories to make products designed and sold in the US.  Regrettably, the product line was extended too far in the early 1990s.  By mid 1990s, sales had seen a severe decline.  Philip Knight has reorganized his company by dismissing 1900 employees, cutting some product lines, and forming a new organizational structure with many Strategic Businesses Units (SBUs).  The past couple of quarters show the reorganization is starting to pay off.  Fiscal second-quarter earnings released in mid-December 1999 beat analysts' estimates, as net income amounted to $107.5 million compared to the same quarter a year ago when earning were $68.9 million.  Profits jumped 8% to $2.1 billion, increased by a 13 % leap in European revenues and a recovery in Japanese sales, from a sharp drop a year earlier (Wrighton & Bleakley, 2000).  Nike does not only sell athletic footwear and clothing; however plays a large part in amateur, collegiate, and professional sports.  Throughout summer camps and team sponsorships, Nike plays a large part an important role in amateur athletics.  In addition, a number of large Division I universities with thriving athletic programs across the country have been sponsored by Nike.  Not only has this increased the athletic funding for the universities, however it has also increased revenues for Nike.  Many NFL, NHL, and NBA teams have a swoosh on their uniform.  Nike has become a major part of the professional sports world and providing many teams more money to play with, in turn, creating more prospects to lour the expensive athletes to their "team".

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Nike started its web site in early 1999, although it did not grow into a functional, interactive web site until six months later.  Most of the items found in stores are also found at Nike.com, with prices being about the same.  Since Nike is using many channels for distribution, it does not want to create conflict by "undercutting their retail partners prices" (Manning, 1999), however wants to give consumers other channels to obtaining their products.  The web site can be seen globally; although only in the US can items be bought. Nike.com has an agreement with UPS to deliver all their products to the consumers' doorway in under three-days. 

The mission statement for Nike is on Nike.com and reads, "To lead in corporate citizenship through proactive programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike" (nikebiz.com). This is both Nike's and Nike.com's mission statement.  If Nike.com continues to have success, like many other organizations, they too will eventually have to have their own mission statement.

Despite the fact that Philip Knight stated in Nike's 1999 annual report that the company has no definite strategy it could discuss for attacking the Internet, they have taken the right steps thus far (Dworkin, 1999).  Customer service is a top priority for Nike.com.  Nike.com has proved this by providing the "Ask Nike" on their site through a partnership with Ask Jeeves, the online leader in customer service (High-Tech Writers, 2000).  This, Nike hopes, will operate much like sales clerks would cooperate with a customer in their store.  The "Ask Nike" ad will be on the home page of the web site for customers to ask questions and get them answered almost immediately.  Moreover, Nike.com has "Nike Id", allowing the customers to design their own shoes and have their name or number put on them.  This helps the consumer to personalize the product, making them feel like the professional athletes with their own shoe.  Besides, the site provides customers with the exact color shoe or design they had been seeking. 

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References

Anonymous (2000), "Adidas stands its ground on Salomon merges" Corporate Finance. 30-31.

Dworkin, A. (September 27, 1999), "Nike prepares to step into e-commerce with acquisition of online firm” The Oregonian.

Ferrell, O.C., Hartline, M.D., Lucas, G.H., & Luck, D. (1998), Marketing Strategy. Dryden Press: Orlando FL.

High-Tech Writers (January 18, 2000), “Nike tells ask jeeves to just do it online" Business Wire.

Manning, J. (February 9, 1999), "Po-Nike" The Oregonian.

Wrighton, Jo, and Bleakley, Fred R. (2000), "Philip Knight of Nike--Just Do It!" Institutional Investor. January, pp. 22-24.

 
 


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