Nike is an American company which is engaged in the manufacturing, development, design, sales and marketing of apparel, footwear, accessories, various equipments and services. The company tried to focus on the culture of invention. Nike manufactures products and services for the athletes. The company has various ranges of sports equipments. Recently, the company has introduced cricket shoes and it is trying to develop and expand in this segment. Nike also has a wide collection of sports products and assortments. The company has also collaborated with Apple Inc to produce Nike+ product. The company has it’s headquarter in Washington. It is a global leader in sports and other assorted sports product. The company has expanded its business and diversified its product line through various kinds of acquisitions such as Converse Inc, Cole Haan, Canstar Sports and many more. The company also sells sports technology accessories such as high altitude wrist compasses, portable heart monitors and many more. The success of the company is owed to endorsements by different athletes such as Roger Federer, Michael Jordan, Mia Hamm, Tiger Wood. The chainstore of NikeTown was opened in the (Nike, 2017). The company has expected 80% of the growth from certain cities such as Mexico, Barcelona, Paris, Milan and Seoul. This paper will highlight the sales and growth of the company. The target customers and the competitors of Nike alongwith the 7Ps of marketing are discussed in the paper. Nike has also conducted research and development to identify the various changes in the development of new product, redesign and improve the existing products and adjust according to the preference of the customers.
Nike wanted to expanded its business on two core items i.e. tights and sports bras. It has also planned to debut a new technology in the footwear section by the end of 2017. The growth of Nike implies that athleisure is the main trend of the company and this will help in the expansion of its business. The company is also trying to focus on international sales especially from the BRIC country (CNBC, 2017).
The brand value is the most powerful asset of Nike. According to the data of 2015 the revenue generation of NIKE was $1 billion. The recent profit strategy is to double this profit by 2017. However, this organization aims to increase their fiscal property by $23 at the end of 2017. Gross profit margin refers to revenue percentage that is used to cover the business operations and other expenditure. In the context of NIKE their gross profit margin was 45.97% in the year 2015. In the year 2016 it has increased to 46.24%. However, in the year 2017 it is decreased by 44.58%. On the other hand, operating profit margin of NIKE was 13.64, which has improved in the year 2016 that was 13.91%. On the other hand, this is deteriorated in the year 2017. Net profit margin is the vital part of the profit margin that indicates the net profitability of the company. In order to calculate the net profit net income needs to divide by revenue. In the year 2015 net profit of Nike was 10.7% and in the year of 2016 it increased to 11.61% and by 2017 it is improved to 12.34%. This ensures the significant growth of NIKE (Stock-analysis-on.net, 2017).
An organization sets their pricing strategy in order to obtain their particular objectives (Kireyev, Kumar & Ofek, 2017). In the year 2014 NIKE has introduced a new pricing strategy to enhance their sales in the global market. This organization has conducted a market analysis in order to identify the brand value of that is given by the customers. However, this organization follows the premium strategy and has introduced a high pricing strategy in the year 2014. They have raised their price by 4% to 5% per year. Rising price ensures the long-term advantages in footwear industry. This pricing strategy is helpful for such organization to gain profit from the U.S. NIKE has a good understanding about the customer value. This is suitable for the company growth and statistical data shows that their athletic footwear sales sale is increased by $168 in every year (News.nike.com, 2017).
NIKE focuses on development of high quality products. They incorporates unique feature in their products. However, their shoes are unique from other companies. Quality of the product is a big thing of any organization. However, based on this the success of the company varies (Nike’s Revenue, 2017). NIKE shoes include solid rubber and herringbone pattern that gives comfortable to the customers. It is important for an organization to give comfort and satisfaction to the customers. NIKE shoes are durable and lightweight that provides flexibility and comfort. Customers get long term benefit from their products. On the other hand, such shoes are beneficial to reduce the foot injury. This organization aims to provide innovative product feature and high quality product to the customers. However, it is crucial to understand the current market demand and provide products based on the customer demand (Baker, Collier & Jay
NIKE is a global manufacturer and supplier of the shoes and accessories. It operates UK, U.S., China and many other countries. In the year 2017 it this organization has operating 1.142 retail stores worldwide. According to the statistical data NIKE has 22.9% of the share market in the global footwear industry in year 2015. This organization is considered as the largest supplier of the shoes and apparel in the world. This leads a good position in the athletic footwear market. This organization comprises 23% of the global athletic footwear market share in the year 2015 (Statista.com, 2017). However, it is crucial for an organization to increase their market share in the global market. NIKE includes a good market share in the international market that ensures their rapid growth and size in the global market.
Sales revenue ensures the success of the organization (KIM et al., 2017). In the context of NIKE their sales revenue generation is 34.35 billion U.S dollar in the year 2017. This ensures their highest growth in the global market. This organization sponsors several high professional athletes. This is a big part of their revenue generation. In the year 2015 their revenue generation was 31 billion U.S dollar. However, NIKE has increased their sales per year, which is a big opportunity for such organization. This organization expands their market share due to their high profit. According to the data NIKE’s sales revenue generation has been increasing since 2015 in proper manner that highlights their increased sales and customer number. In the year 2016, their fiscal report was strong in the fourth quarter. At the end of the year they had good fiscal property. However, the diluted earnings per share was $ 0.49. This is increased to 17% that is $2.16. In the year their sales revenue increased from 6% to 9% based on the currency neutral. They got double digit growth in China, Western Europe and Japan. This ensures their high sales revenue generation (News.nike.com, 2017).
Sales and social trend focuses on the sales revenue per year and the popularity of an organization. As per the statistics Nike, in the year 2015 their net profit was 10.7% while it is increased in the year 2016 and the sales profit becomes 11.61. In the year 2017 their net sales profit is 12.34%. Such profit is suitable for the growth of such organization (Stock-analysis-on.net, 2017). Based on the sales revenue generation it can be said that the sales trend is good in this organization. However, a sales trend is generated through such data that focuses on the high growth of NIKE. Based on the analysis of the yearly data the sale trend is addressed in an organization. This organization has a growing trend in the global market. That ensures the high profit of NIKE. On the other hand, the social trend focuses on the social media marketing. However, NIKE has high popularity on the social media marketing. As for example, 29, 226,287 people have visited their page and 29, 981, 144 people follow them. This ensures that this organization has high popularity in social media (News.nike.com, 2017).
Demographic refers to the age of the target customers (Berger, 2017). In the context of NIKE they mainly focus on the athletes as they are the main target customers of such organization. The age of their focus group ranges from 18 to 35. In the recent years they give their concern to women athletes. Apart from this they produce products for men, women and children.
Targeting is one of the most important activities for a brand while entering into the market. This is because; through effective targeting the customer streamlines its customer and carries out the marketing strategy accordingly targeting those potential customers. The products are also designed according to the needs of the potential customers. Similarly, Nike too has a targeted market for its products. The main targeted market of Nike is the professionals that are athletes and normal consumers. The brand targets market according to their psychographic components and demographic segmentation (Annual Report: Nike, 2017).
Demographic segmentation is done to target the market according to the age, gender and occupation of the customers and on the category of products that the company manufactures. As Nike is a well known shoes brand it targets customers mainly according to gender and occupation. The brand ha mainly targeted two types of customers for their products such as men and young athletes that takes part in various kinds of sports. This is because the brand has portrayed itself as a sports shoe company. However, there are other accessories as well that the brand manufactures for sport events. This made the company to take part in various kinds of sports events and carry out sports sponsorships. However, the company has recently started targeting the women customers by offering then various kinds of apparels and footwear. Nike also target their customers according to their occupation such as sport persons that require good quality shoe to run and jump (Hollensen, 2015).
Psychographic segmentation on the other hand, targets customers based on the thinking such as brand lovers, quality shoe lovers and others. Nike also forms their target market for such customers that have a passion for such good quality sport shoes and love to own high quality brand in their wardrobe. Thus, the company targets the lifestyle and personality of their customers. This is because people having passion for high quality shoes will be ready to buy them at any price just for their comfort. Moreover, it will be easy for the brand to cut down its customer types in better-streamlined way and carry out their marketing strategy accordingly. Thus, Psychographic segmentation and targeting is very effective for the company while analyzing their potential market for growth. Nike thus, presents its name in the market as one of the premium shoe brand even though it has started manufacturing some women apparel too. (Pitt & Berthon, 2016).
Competitors play a great role while formulating strategy because they are the one that take away the potential market share of the company. Thus, this makes it necessary to analyze the strategy and the growth path of the competitors before formulating own goals. Nike too faces severe competition from the sport shoes and footwear industry from other top and known brands producing similar products and target similar customers. The main competitors of Nike are Adidas and Reebok. Given below is the business profile analysis of the competitors that will help Nike to improve their marketing and product goals. (Hill, Jones, & Schilling, 2014).
Adidas
Adidas offers a tough competition to Nike as it is a well known sports shoe brand with a market value of $7 million and a revenue of $16 billion. Adidas also manufactures various types of sports shoes, footwear and clothes. Every product has unique design that can suit the lifestyle of all kinds of people. The brand also offers ranges of accessories and apparel such as jackets, sweatshirts and others to the customers just like Nike. Adidas sells their product at low prices compared to Nike and are affordable to upper middle class people. Thus, the brand uses competitive pricing strategy to be in the business. The brand offers its products through various distribution chain such as retail outlets, franchisee and online. Marketing activity of Adidas includes television advertisements, sponsorships and product placement. Thus, such a strong marketing hold and strategy of Adidas offers a tough competition to Nike (shop.adidas, 2017).
Reebok
Another tough competitor of Nike is Reebok, which is also a sports shoe brand and mainly target the niche customer base in the market. However, the price of shoes of Reebok is less compared to Nike and is affordable to the upper middle class people. The brand manufactures products for men, women and children. This offers a wide customer range for the brand. There are wide varieties of footwear that the brand offers to its customers such as Reetone, ReeGym, ReeZig and ReeTrain. Each of these categories of shoes is meant from different activities according to its material. The distribution of Reebok includes stores, outlets and dealers. It also offers products through online channels. The brand is recently planning t change its pricing strategy to reasonable pricing. Promotional activity of Reebok includes television commercials with cricketers (shop4reebok, 2017).
From the above analysis it is seen that Nike faces a tough competition from these types of brands as both the brands holds a strong position in their respective types of market. However, Nike has certain competitive advantage over these brands as it has a financial strength then its customers. This allows the company to maintain a hold in the market and carry out any marketing strategy it wants to defeat its competitors. However, the brand is recently trying to enter the women apparel and footwear market as well, which will again increase its potential customers. It holds this competitive advantage.
Product
Nike portrays itself as a premium brand in the market of sports footwear by selling all kinds of sports footwear at premium prices to the customers. There are wide range of products that Nike offers such as Shoe, accessories and apparel. Further, it apparel includes sports apparel and sport bags. However, the brad can start manufacturing women sports apparel as the number of women are also including in the sports industry. This will help them to capture that section of market as well (Editorial, 2017).
Price
Nike carries out a premium as well as value based pricing strategy for its products. This is done by the brand to attract niche customers easily as well as some upper middle class customers and increases it sales and profit. This is because the brad understands the value that the products hold for the customers. However, it should try competitive pricing strategy for some of its new women ranges that it is introducing in the market. This is because competitors of Nike follows competitive pricing strategy and attract middle-income customers.
Place
Nike already sells its products through various channels such as retailers, Nike’s own outlets and franchisee. They operate their stores all over the world through various venue channels. Among all the channels retailers are the major distributors of Nike products. However, it also offers products through online sources. The company can thus increase their online distribution channel for their new product range of women apparel and footwear. This is because online channel can allow the brand to capture a wide range if market easily (Nagle, Hogan, & Zale, 2016).
Promotion
As the company already carries out promotion through channels like advertising, direct selling, public relations ad personal selling. Thus, it will be profitable for them to extend its promotional activities to online channels such as social media and online advertisements. This is because people are becoming very active in online media and women are increasing shopping from online sources (Dinner, Van Heerde, & Neslin, 2014).
People
The people of the company include the sales staffs, the in-store marketing professionals, marketing managers and others that handle all the sales activities of the business. However, the brand can still employee certain marketing managers or experts that can help them in carrying out traditional way of marketing.
Process
The business process of Nike previously included manufacturing premium quality shoes that they aimed to sale to the rich and middle-income customers. However, it is recently targeting the women customers and trying to focus on using a new business model. This will include introducing new cost effective techniques so that it can charge competitive price from the women customers that mostly take part in sports.
Physical evidence
The physical evidences of Nike include putting its brand as a premium brand, which is known for its rich quality and comfort for sports persons. Customers usually view the brand as a footwear company focusing at quality. However, it can try to change its physical evidence by manufacturing lightweight shoes and apparel for women sportsperson. This will help them cover market for both the genders and all kinds of sports. This is because customer’s preference depends on quality for footwear and it is better to target the quality of all types of customers.
The business information tactics has revealed that the company is trying to expand its business by developing women products. Nike holds more than $6 billion in cash and investments. The company is trying to fend off its competition in the coming years with much financial flexibility. The revenue performance of the company is shown in the graph below:
The diluted earnings per share during the last quarter i.e. April-June 2017 rose by 22% and this was driven by administrative expense and revenue growth. The fiscal diluted earnings of Nike per share also rose by 16% i.e. by $ 2.52 and it reflects the revenue growth of 6%. A lower amount of tax rate and average share count also rose by a small amount of lower gross margin. Nike will continue to grow in this rate and become a leading brand in the dynamic environment. The gross margin declined by 44.1% because the higher average selling prices are more offset by certain unfavorable changes due to higher cost of the products and foreign currency exchange (Nike News, 2017). The revenue growth was driven by the growth in every geography and certain key categories such as Jordan Brand, Sportswear and Running. With the development of women product, the company will increase its market share and revenue. This will help them gain a competitive advantage over its competitors and help them gain a good growth in future. The financial position of the brand is also estimated to improve with such kinds of strategy.
Conclusion
From the above analysis it can be deduced that Nike has been able to capture a wide range of market and is a well-known brand in the sports footwear industry. However, it is seen that company faces tough competition in the market from its competitors such as Reebok and Adidas that offers similar kinds of produces and target the sportsperson. Thus, it is necessary for Nike to increase its target market to women sportsperson as well as women are increasingly being active in sports. Thus for the purpose various business model has been taken by the company to target the women customers including competitive prices, online promotion and others. Thus, it is seen that such kind of strategy will help the company to increase its financials further and become offer tough competition to its competitors.
References
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