Analysing the market environment for nike

Nike's geographic market contains major market segments throughout the world. Until 2009 Nike's physical markets contains United States, Asia-Pacific, Americas and an area comprising of European countries, Middle East and Africa. Yet, in March 2009, Nike declared its plan to reorganize its global business in order to bring goods nearer to the market segments and in turn consumers as well as to reduce management overlap. Third, plan Nike then decided to develop its market share in THE UNITED STATES, Western European countries, Eastern/Central European countries, Greater China, Japan and Emerging Marketplaces.

Main Business

Nike Inc. focuses on footwear, garments, equipment and accessory products for men, women and children. The business offers shoes for football, field hockey, soccer, baseball, playing golf, golf, walking, sport-inspired casual shoes, kids' shoes and other athletic and recreational purposes. Along with footwear the business also markets athletics garments and accessories, along with activities inspired attire and athletic luggage. Along with these Nike also offers performance equipments such as hand bags, socks, sport balls, eyewear, electronic devices, bats, gloves, golf clubs, and other tools designed for athletics under the brand name NIKE. Products are largely sold through its retail stores, independent marketers, franchisees, licensees and also through e-commerce.

PEST-G Analysis

Political

The authorities of any country must enforce economic insurance policies that will benefit the progress of establishments and businesses in that particular country. The US policies have thankfully allows NIKE to develop and market its products. The support accorded to Nike by the US government, particularly in the general macroeconomic stableness, low-interest rates, steady money conditions and the international competitiveness of the tax system, form the building blocks critical to Nike's expansion.

Nike's main production faculties lay in the Asian countries where political unrest prevails. The go up and fall of government authorities' brings about change in insurance policies relating to tariff on transfer and export, international direct investment, etc. This political unrest in the creation countries may affect Nike.

There is also the truth of using under aged workforce in the factories positioned in the Parts of asia.

Economic

The biggest danger for Nike is the economic downturn that may lead to the slowdown in acquisitions. Therefore will impact the growth of Nike. Combined with the decelerated sales labor cost and raw materials prices are increasing, which will have an impact on the profit percentage of the business.

Nike is exposed to the international characteristics of trade. It will buy and sells in different currencies and therefore, costs and margins aren't stable over extended periods of time scheduled to changing exchange rates.

Social

People today will be more brand mindful where they want to buy products which have brand value associated with them. However, this is no problem for Nike as it is the number one sports brand on earth. Its famous 'SWOOSH' is instantly recognizable.

Preferences of young consumers are changing. They now want fashion-oriented products for leisure activity rather than sports activities.

Nike also encounters a challenge with the labor and factory conditions in the factories positioned in the Parts of asia. This caused bad promotion which resulted in decline in sales as people and modern culture demand more socially accountable firm.

There are also a growing amount of women consumers in the market due to changing lifestyle and tendencies.

Technological

Nike has included technology to develop its products fast. Since Nike is a fashion brand and fashions keep changing. The merchandise could become unfashionable before it wears out, i. e. , consumers need to displace shoes.

Nike always adopts latest technology for its product processing and development.

Environment/Green

Nike makes every attempt to decrease the impact of each of its products on the environment throughout its Product Life Cycle from design to production, and ultimate removal.

Nike shoes produce solid waste. The greatest of these by weight is healed rubber used in shoes soling. Nike employees made an innovative way to keep it out of landfills and convert it into more outsoles, called REGRIND, and are available to public.

THE COMPETITION

Main Competitors

Nike's main competition originates from Adidas and Reebok along numerous small companies such as New Balance, K-Swiss, etc. Due to Nike's huge brand awareness, its competitors have to put in more effort to sell their products and also new entrants on the market should have huge amount of capital to purchase advertising to generate brand awareness and to become a significant if not a major player. This restricts the quantity of entrants on the market.

Sales and Revenue Trend

From graphs 1 & 2 (refer appendix), we can easily see that from the entire year 2006 to 2008 both Adidas and Puma have growing sales as well as profits. But in the entire year 2009 both companies noticed a drop in sales along with profits. This can be due to the fact that the athletic shoes or boots market is saturated and there is high competition on the market where companies are trying for maximum market share and/or to keep their existing market share.

Market Share

According to graph 3 (refer appendix), Adidas Group & Reebok jointly maintain 22 percent of the marketplace share, followed by Puma 7 percent and New Balance 6 percent. Since the athletic boots market is saturated, there may be a possibility that the business's market share erodes. We can see from the sales and market tendency that sales have been down.

Target Market

All the companies in the athletic footwear market are concentrating on the same type of consumer - those who are interested in activities like the aspiring runners, teams, individual sports athletes, etc. , along with the urban junior.

THE COMPANY

Sales & Earnings Trend

According to graphs 4 & 6, Nike's earnings and net gain are constantly growing from the entire year 2005. This shows that Nike has a solid hold on its market talk about. Consumers like Nike's progressive new products and are prepared to pay an increased price than its competition.

Market Share

Nike is the marketplace innovator in the athletic sneakers industry with a 31 percent market talk about. This demonstrates Nike using its strong research and development and intensive product range combined with the marketing skills have captured the consumer's choices.

Business Sector

Nike is area of the Consumer Goods sector which mostly consists of FAST PACED Consumer Goods such as Cleaning products, milk products, plantation products, etc. in this sector, Nike belongs to the Textile-Apparel, Boots and Accessories Industry.

Project Focus

Nike main focus is on product development and providing its customer with ground breaking and new edge products. The benefits of Nike+iPod establishes this proven fact that Nike desires to cater the customer dependence on new and ground breaking products. Nike also lays heavy emphasis on maintaining it Brand name & value on the market. Because of this Nike invests large amounts of profit marketing and research and development of its products such that it can maintain steadily its position in as the marketplace innovator in the athletic shoes or boots market.

SWOT Analysis

Strengths

Nike is a global brand with strong brand identification. Its famous emblem 'SWOOSH' can be accepted instantly by anyone. Also having a sizable product portfolio gives Nike an advantage since customers can choose from a multitude of products.

Another strength of Nike is its extensive circulation lines. Nike has around 48, 000 retail outlets of which around 18, 000 are in the U. S. only. Nike also functions a 'futures' option wherein the shop can order up to 6 months in advance. They also sell their products through indie distributors all around the world. After that the consumers also have a choice to create their own shoes on the state Nike website where they can pick the look, color, features, etc. for their shoe.

Research and Development is definitely Nike's strong point as can be seen from its ever evolving and ground breaking product range. Since Nike outsources its manufacturing to other manufacturers, it doesn't have any capital tied up in machinery or equipment, which results in fewer expenses.

Weakness

Although Nike has a huge product collection, its income is still profoundly reliant on its share of footwear market. This may leave it prone if the market share for footwear erodes.

Due to the varied product range, Nike is unable to concentrate on one main product. This results in divided attention on each product line. Also the quantity of time and resources in keeping each of its product line is very high.

Another weakness of Nike is the negative image portrayed by reduced working conditions in the overseas factories. This may lead to bad promotion of the business all together and may influence the sales as people nowadays want companies that are socially reliable.

Opportunities

One of the opportunities for Nike is its potential to penetrate a fresh market. Presently Nike is centering more on Generation Y market and women. Nike received Converse to give the increasing demand from Technology Y for retro and classical shoes or boots. Also Nike has started hostile marketing towards women by creating Nike Goddess stored and presenting women's yoga exercises shoes so that they can appeal health mindful women.

Product development is within its own a chance for Nike. Although owners may deny that Nike is a fashion brand but many people think otherwise. This creates opportunities as people may think the merchandise could become unfashionable before it wears out, i. e. , consumer may feel that they need to replace it.

Nowadays people are definitely more brand conscious. This gives Nike an edge over its opponents as its name and custom logo is recognized globally.

Threats

Nike outsources its creation to produces that are in various countries. Nike doesn't have any control over the politics and legal environment for the reason that country. Hence, this poses a danger to Nike.

High degree of competition with Adidas and Reebok is also a threat to Nike as these companies have almost the same product range and concentrate on markets. This is the reason why Nike strives to vary from its competitors.

Changing Exchange Rates also pose a danger to Nike as it deals internationally, i. e. , it will buy and sells in various currencies. Due to this cost and income are not steady over long periods.

NIKE'S MARKETING STRATEGY

Segmentation & Targeting

There a many different facets to consider when deciding how to market something and who to advertise a product to. Nike's marketplace because of its shoes, clothes and other accessories are males and females between the time of 13 and 35 years. Nike sections its markets based on get older, gender, geographic locations, psychographic, benefits looked for, and utilization.

On the basis old, Nike targets a number of age ranges from young adolescent to middle-aged people. Nike has different adverts for men and women of every competition and nationality independently. Nike now is focusing on concentrating on more on women and Generation Y. Also groups of any sport, any size, and anywhere in the world are targeted by Nike.

Nike's purpose is to motivate its products in countries that connect with certain sports, which are popular in that particular country. For instance, Products associated with Rugby are promoted more often in Europe when compared to U. S. , as Rugby is popular in Europe than in U. S.

Nike promotes a good and confidant frame of mind and targets people who wish to attain that frame of mind. In addition, it is targeted towards customers who are considering athletics.

On the foundation of benefits sought, Nike provides shoes, attire and equipment for an considerable variety of activities all over the world. In addition, it offers products to many different people who've different tastes, interests and needs. This is seen from the actual fact that Nike has an online site where consumers can design their shoes regarding to their requirements and tastes. Based on usage, Nike is trying to keep the constancy of purchases being made. There's a theory known as the '80/20 theory' (Czinkota et al. , 2000, pg 200). Which means that an organization derives 80 percent of its sales from 20 percent of its consumers who always choose the product of that particular company or brand. Nike is wanting to maintain these customers who are brand devoted towards Nike by constantly bringing about product advancement.

Positioning

Nike encourages products that ooze with style, attitude and self-confidence. This subject matter is clear in Nike's tagline 'Just Do It' or 'If you have a body, you are an athlete' which is shown in many adverts of Nike. The former note of Nike has been used since 1989, when it was initially unveiled and the second option was developed by Invoice Bowerman when Nike first started. This message clearly identifies Nike's image which is a positive and self-confident aspect.

Porter's Universal Strategy (Differentiation/Low Cost Command/Focus)

Since consumers in the footwear industry are price conscious and the marketplace is highly competitive, companies are striving to provide the best possible bargains to the consumers. This means that companies want to decrease costs out of every point of view. Since Nike outsources its production to other countries, it generally does not have any capital tangled up in equipment, equipment or factories. This implies it doesn't have any bills that may happen out of maintenance of any of the above. Since expenditures are low, Nike is able to enjoy earnings.

Nike also lays heavy emphasis on Differentiation. Nike continuously strives to innovate and develop its products. The benefits of Nike+iPod sports kit in the year 2008. This sports activities kit was released by Nike and Apple Inc. and permits joggers to log and screen their works via iTunes and the Nike+ website.

Growth Strategy

On May 5th, 2010 Nike discovered its Global Growth Strategy to achieve sustainable, long-term expansion across its global portfolio of brands and businesses. Which has a revenue target of $27 billion by the year 2015, Nike outlined each and every category of their product line - from Nike SB to Women's Training - and hoped to attain that goal by using a consumer-focused strategy. This is based on expansion goals across its stock portfolio, which include NIKE Brand, Cole Haan, Converse, Hurley, Jordan Brand, NIKE Golfing, and Umbro. The company also expects to create over $12 billion of cumulative free cash flow from procedures through 2015. Both goals increase NIKE Inc. 's long term financial style of high single-digit revenue growth, mid-teens profits per share development and expanding earnings on capital.

According to Tag Parker, Nike Inc. Leader and CEO, Nike has competitive advantages in its profile with innovative, powerful products that are unique and highly relevant to consumers. The NIKE Brand is the most powerful advantage in the Nike Inc. portfolio which accounts for about 85 percent of total income. Other brands of Nike Inc. also continue to increase their contribution to the company's overall progress strategy. "With this acquisition of Umbro, NIKE has expanded its position as the largest football Company in the world, " Parker said. "Hurley is constantly on the outperform everyone in its market; Cole Haan has great opportunity for development; and Converse, nearly a $1 billion business, is rolling out strategies to double its earnings by 2015. "- (Make Parker, President and CEO of Nike Inc. )

Marketing Mix

Product Mix

Nikes product range includes a variety of goods such as shoes and attire for sports activities such as Field hockey, Football, Combat sports, Tennis, Athletics, Golf and Combination training for men, women as well as children.

Product Life Cycle

The athletic shoes industry and Nike Inc. are both at the maturity stage of the Product Life Cycle. This is proven through graphs 4 & 6. Matching to these graphs Nike's revenue and net gain has been constantly increasing at almost the same rate going back 5 years. However in the year 2009, we can easily see that the pace of growth in earnings and net income has decreased due to saturation and high competition in the market. Nike can maintain steadily its revenue, net income and market show in the shoes or boots market by launching new ground breaking products to keep the consumer platform captivated, extension into new market like India and China and use comprehensive marketing of the product to keep its demand in the market.

Boston Consulting Group Growth-Share Matrix

Source: http://www. flatworldknowledge. com/node/115329#web-115329

Since Nike is the marketplace leader in the sneakers market, it is safe to state that it is very well set up within its market segments. Also the marketplace for sneakers is saturated and there is high competition on the market. This places Nike in the Cash Cows category. Being in the money cows category means that Nike must maintain its sales and hold its position of a market leader on the market. To get this done Nike must spend big money in research and development to provide customers with fresh and original products to keep them dedicated to the brand Nike.

Ansoff Matrix

Source: http://www. anythingresearch. com/Strategic-Planning/Ansoff-Matrix. htm

Since the athletic footwear market is saturated with no scope for much expansion in the market Nike can choose from either Market Development or Diversification Strategies. If Nike opts for Market Development it means that Nike will focus on the emerging marketplaces such as India, China, etc. using its existing products. Whereas if it opts for Diversification, it could mean Nike focusing on new marketplaces with new and impressive products.

Price Mix

Nike Inc. applies a premium prices strategy. This plan implies the product to be priced higher than that of the rival based on the grade of the merchandise. Some critics and people claim that the prices of Nike's product are high. However, the business owners and employees claim that these prices reflect the quality of the product. This strategy seems to be working as consumers who purchase Nike products are prepared because of their prices given that they feel that the costs mirror the high quality of the merchandise.

Place Mix

Nike products are available in multi-brand stores combined with the exclusive Nike stores throughout the world. Nike markets its products to more than 20, 000 suppliers in the U. S. and in roughly 200 countries on the planet. Along with this Nike has its own Factory Shops and 'Niketown' stores.

Nike also sells its products through its established website, where people can also personalize and design their shoes regarding to their choices and directly gives these from the maker to their house.

Nike provides its products in the international marketplaces through independent distributors, licensees & subsidiaries.

Promotion Mix

Nike reinvests around 12 percent of their revenue into marketing, which includes advertising, endorsements and sponsorship offers.

Nike advertises it products through print media, television set and billboards and posters. Apart from this Nike has lots of celebrity sports athletes like Cristiano Rolando for soccer, Lebron James for basketball, PADRAIG HARRINGTON for golfing, etc. , and professional clubs like Manchester United to focus attention on the products. However, it was the putting your signature on of the baseball player JORDAN in 1984, along with his subsequent campaign of Nike over the course of his storied job, which became one of the biggest boosts to Nike's publicity and sales.

Nike also sponsors situations like 'Hoop It Up' (senior high school baseball) and 'The Golden West Invitational' (high school record and field) to focus attention on their products.

Nike also offers several websites for individual sports such as nikebasketball. com, nikefootball. com and nikegolf. com.

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