In January 1964, University of Oregon track athlete Phil Knight and his coach Bill Bowerman established Nike Inc. as Blue Ribbon Sports (BRS). It is considered the largest sportswear organization, and its headquarters are in Beaverton. The organization initially worked as a distributor for Japanese shoe maker Onitsuka Tiger, which meets Knight’s automobile (Mahdi, Abbas, Mazar & George, 2015). Nike has made itself as a prominent brand in U.S. athletic market and secured half of its market share. In addition, Nike has made a relationship with Wieden Kennedy made several marketing communication means to reach the consumer and to make them responsive of products. Nike has made its own variety of footwear line, which incorporated the Swoosh intended by the Carolyn Davidson. So, the Swoosh was used by Nike and then was listed by the U.S. Patent and Trademark Office (Burgelman, 2017). In the following, an effort has been made to discuss to develop sales strategy and management plan of the company by describing the analysis of consumer, competitor, industry, sales approach and sales management. It is to be done to understand the analysis of market opportunities utilizing appropriate sales methods.
Industry Analysis
Size of the industry
Australia is a core market for Nike, as the industry produced approximately 42 percent of the overall revenue in 2018. They paid $38 billion to acquire more than 1.1 billion pairs of footwear. As per Sporting Goods Manufactured Association, athletic footwear encounters for nearly 35% of all footwear purchases (Rahman & Areni, 2014).
Recent Trends
Nike expands its target customers from teens to young customers due to intense rivalry with Reebok and Adidas. With the rising need for the preservation of the environment, most customers have started challenging sustainable products. Nike has established a recycling program, which targets to decrease the carbon footprints of its products. As competition is rising at a very fast pace, it is paving the way towards the expansion of athletic footwear with an emphasis on enhancing user experience. Consumers purchase athletic footwear seek high-quality and cost-effective products that can enhance their playing and running skills. The manufacturers of Nike have launched NikeID are currently focussing on customization (Singh, 2016).
Industry Potential
Nike already gets more than half of its sales growth internationally. The industry has a positive growth of 16.60% in the approaching year and a strong short-term growth of 25.54 over the next couple of years. Nike is at the stage in which it offers the company a competitive advantage over the competition (Stoneman, 2015).
Nike concentrates on quality in its progressions and products. The goal in this strategic decision area is to fulfill customers’ expectations about product quality (Payne, 2014).
Competitive Analysis
Key Players
The main competitor of Nike are Adidas, Puma, and Reebok which tried to capture its enormous share for a long time and adopt strategies to keep up with the super brand and promoting the athletic footwear and apparel but Nike is having distinct competency and differentiation in the extent of publicizing. They are in the 1st position which cannot be substituted by any of the competitors definitely as of its Slogan “Just Do It” as distinguishable for the target audience (Giannoulakis, 2016).
Positioning Strategy of Competitors
Adidas used to tap a distinctive image in the minds of the customers. They emphasize the value of quality products, which is able to maintain its brand essence. Reebok has also achieved to hold the loyalty of a huge portion of the industry’s female customers. They are giving tough competition to Nike as they have to concentrate on creating a brand image in the minds of customers (Heuzenroeder & Bennett, 2014).
Communication Strategies
Adidas is using T.V advertisement to communicate with customers. They use to pop up its ads on various sports channel such as Star Sports, ESPN, Star Cricket etc. The main objective behind this to attract the customers who spend more time in watching T.V. Reebok is utilizing the Internet to reach its target audience where they can find the information regarding company product new launches, price, size, sales, etc.
Sales Approach
Adidas is adopting the Buddy approach to sale the footwear and maintains a relationship with customers. They show the interest in the customers and try to connect and build an emotional level and trust. Reebok is using Guru approach as when dealing with intellectual customers which cannot be persuaded by an emotional connection (Siali, Jiayi, Shakur & Ya’kob, 2016).
Consumer Analysis
Consumers
Demographically Nike primarily targets consumers who are between 18-25 and covers both men and women footwear athletes equally to develop long-term brand loyalty. They use psychographic basis to target the individuals by distinct personalities as fosters the attitude of the customers. They use Geographic basis in U.S. focus is on football and baseball so they prefer to use footwear which is strong. Behavioral seeks to build customer loyalty as Nike participates to make customers feel good about describing the various use of athletic footwear (Hartmann, Rutherford & Park, 2017).
Issues facing Consumer
Consumers faced issues are that Nike overcharges their consumers to make their profits other than they also want that the athletic footwear should be long-lasting. Consumers complaints continue for a long time as this can harm their relationship with the industry (Vrontis, Thrassou & Amirkhanpour, 2017).
Factors while making a purchase decision
The important factors while purchasing the footwear are its price which influences the most as it is based on the income of the consumer. Next is the design of the footwear which is according to today’s fashion as females are more concerned about their choice as it should match with their outfit. The brand name also plays a huge role as it is Nike so consumers know that this is attractive and technological friendly (Teichmann, Stokburger, Plank & Strobl, 2015).
Influence of consumers and their needs
Yes, they are influenced by others as they purchase the footwear by taking suggestions from family and friends especially. There are customers which are not targeted by Nike and needs to be targeted of age group 40-50 and above that (Kozlowski, Searcy & Bardecki, 2015).
Sales Approach Analysis
Strength and Weakness of Consultative sales approach
Consultative sales approach is a best sales approach for Nike to engage with potential customers and understand about the needs and perceptions towards buying the footwear. This approach builds and maintains a relationship of trust with customers to analyze the issue and deliver solutions frequently (Cuevas, 2018).
This approach may take days or months to close a sale deal. This can also be possible that the deal may be canceled as because of the defect of the footwear product and which is taking time to resolve it than the customers switch to other brand or product (Lisun, 2017).
The focus of the approach
Consultative sales approach primarily focusses on experience that the potential customer feels and sees during the interaction. It is about making the customer comfortable and provides the leads with value. They have to provide the customer with the best footwear which is suitable to them with size and convenience. This approach is profitable for Nike as by focussing on this approach it pays more emphasis to the value which suggests that customer should be satisfied. Sales professionals following this approach observe the increasing number of deals, greater customer satisfaction, and loyalty. It will provide benefits to Nike as leads to development, success, and profitability (Marx & Wouters, 2016).
Sales Management Analysis
Strength and Weakness of Advertising and promotion
The most effective sales management strategy is advertising and promotion. Nike makes deals with some celebrity athletics which can make attention to their footwear products. This can generate a relatively higher level of awareness of Nike. They also engaged a large number of advertisements through offline media. Their aggressive celebrity endorsements, advertising campaigns, and quality products enhance their brand image (Kumar & Deodhar, 2017).
This strategy is the short-term motive as induces customer for a short span of time but they did not become a loyal customer as they afterward switch to other brands. The customers feel that the offers which are given at times create an impression in the mind that these are done to sell a poor quality product (Craik, 2017).
The focus of this strategy
It focusses on high-profile celebrity endorsers, such as sports teams and professional athletes. Nike offers discounts and special inducements to attract customers towards footwear so that more and more sales generated. It builds public relation in encouraging the business and footwear products to the international sporting goods market. This strategy is profitable for Nike as they are pursuing people who are active and appreciate high-quality sporting products especially footwear. They focus on the athlete and that make this strategy profitable of its ability to reach a huge number of athletes (Warren & Gibson, 2017).
Analysis of market opportunities
Continued international growth
Nike has continued its worldwide development by offering and promoting the product as fashion as well as athletic wear. There are various consumers who see some Nike products as a fashion and wear their footwear instead of just athletic wear. It has a very strong brand image and high-income group to purchase the footwear for the sake of status and therefore Nike has the opportunity to make expansion in the footwear products like fashion and sports wears as well as to come into the new market like that of jewelry and sunglasses. For example, they should focus more on international development because some evolving markets like Australia have a richer customer to spend excessively on athletic footwear products (Craik, 2015).
Digital Investments
Nike is focussing on enhancing its online sales strategy to produce through Nike.com. Online sales have many advantages, involving the capability to meet with more consumers who may not be in a Nike store and they also get to retain all of that respected data about the consumer. In addition, it has the advantage of greater gross margin by permitting Nike to create modified gear and other higher-priced footwear products, as well as retain the complete sale. They incorporate mobile check-in and shopping facilities, as well as touchscreens on the walls to permit customers to order and shipped till home if they desire. For example- Nike has launched a Nike+ smartphone app which has a mobile shopping part that provides customers personalized recommendation and alerts for new advancements (Weller, Kleer & Piller, 2015).
Manufacturing Revolution
Nike is having a new concentration on changing its manufacturing procedure by making it broad-based and technology-driven value maker. Flyknit in specific helps lower production costs by decreasing material waste from unused scraps, as well as establishing customizable design to provide differentiated, premium products. For example, Nike has labeled its company advantage for manufacturing revolution as the ManRev project, which obtains finance as part of the business’s capital expenses. By modernizing the role of innovation in manufacturing, the organization intends to reinvent a footwear product which will help in modernizing it effectively and efficiently (Gibson, 2016).
Health and Wellness
Nike should focus on the health and wellness as Nike should create sustainable products which do not give harm to customers. It can be seen that the number of people contributing to running events which have developed on an average of 9% every year since 2005, as per Morgan Stanley. Information also states that millennials consider exercise is critical for wellbeing, while their parents only concentrated on a diet. Improved activity prompts to improved athletic apparel and footwear expenditure. They see athletic footwear and apparel more than as a fashion trend. For example, Nike’s Flyknit shoes have been violently successful. These opportunities are helpful in building a profitable venture (Cherikoff, 2017).
Consultative sales approach
Nike has broadened its product range and maintains its international growth as this approach to engage with customers and identify the needs and focussing on providing the best quality products. It can have an expansion and cooperation with Apple for advancing the innovation in respect of gamepads featuring soccer, Golf etc. It helps to maintain the success of the company by satisfying consumer needs. It creates a tone of helpfulness that fosters trust. It builds and serves customers’ needs. It does not cost a huge amount and producing greater benefits of the footwear product to reach with every customer (McGann, Ong, Bowman, Duncan, Kimberley & Biggs, 2016).
Advertising and promotion
Nike own target is to accomplish the greatest digital sales strategy to enhance sales, which has a potential influence on large populations of the target audience. It should enhance its marketing communication ways by utilizing social media to connect and associate with customers. Nike utilizes celebrities to signify the product to the client or ideal user. Extremely prevalent personalities such as professional athletes utilized as proposing Nike’s products. They should innovate their brands as apply shopping feature on mobile to connect with customers digitally. It cost around $30 billion as on celebrity endorsements they need to pay a higher amount (Burchielli, Delaney & Coventry, 2014).
Push and Pull strategy
Nike should utilize push and pull promotional strategy, which includes taking the product straight to the consumer and safeguarding that they are aware of price, size of footwear. A pull strategy includes inspiring consumers to seek out the brand in an active process. It is associated with providing sustainable products and secures the health of the customers. It incorporates direct promotional strategies such as boosting retailers to stock the product, designing of footwear and even selling face to face. A pull strategy needs a highly visible brand which can be advanced through mass media advertising. The cost of the factor is depending upon budget, target audience, type of the product, and competition Baumann, Lehner & Losbichler, 2015).
Direct selling, Cross Selling or Up-selling
Nike is trying to become the next great direct-to-consumer brands to direct sell the footwear product as it revolves the manufacturing process. Digital business will be the main part of the footwear product of Nike as it grows 18% in the first quarter and now wants to get more worth out of each of its digital customers. The cost effected will be $50 billion as it is intended to include data analytics and digital transformation. It providing important benefits to people who want a prospect to earn success and maintain a business of their own, to customers as a substitute to retail stores, and a cost-efficient way for an industry to bring footwear products to market (Nossar, Johnstone, Macklin & Rawling, 2015).
Conclusion
Nike, Inc. is an organization which is deep-rooted in competition. From athletes’ footwear with the best sports apparatus in the world to continuously enlightening own financial performance. Bill Bowerman and Phil Knight probably could not have believed in 1962 to what extent their $500 investments would yield in 2000. They did recognize that product quality and modernization would assist participants to attain greater goals. Nike still works on this philosophy today. It is one that has assisted athletes and stakeholders alike to understand athletic and financial greatness. Although a shifting marketplace for athletic footwear continues to rise their product lines and marketing reach to become a more influential worldwide brand. It is seen from market and market analysis that Nike has the possibility to implement its aims and can provide new products and increase its share so by looking at Nike’s overall approaches. So everything has been done in the report just to understand more consumer behavior and the positioning of Nike footwear product which are very essential for Nike to create an appropriate and various advertising and promotion to induce the more female customer to build up the image positioning of Nike in the future.
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