As a marketing consultant for Nike Inc. you have been asked to recommend 2 international growth markets for it to enter in 2017/18.
Growth markets should be countries or cities where there is currently no presence.
Primary focus for market entry will be through physical store presence but you may recommend that online presence may be required to support this.
You should prepare a report for the board of directors addressing your consultancy brief, this should include:
• An analysis of the macro and micro factors impacting on the sports retail market and the market recommendations
• An analysis of Nike Inc. internal business factors
• An evaluation of market potential, to include an identified shortlist of markets with potential.
• Then using a clear and identified screening criteria, select two recommended markets with clear justification as to why these markets have been selected.
• Recommended and justified market entry strategy to take Nike Inc. into each of these markets
• Recommended adaptations to Nike’s marketing mix for the proposed markets, ensuring differences in culture and consumer behaviour are recognised in their marketing mix activity.
The assignment report based upon global marketing strategy of Nike. There are different layers is done in the assignment to make strong perspective of international marketing. The model company Nike is taken for analysis because it has strong business management strategies for global expansion.
The prime purpose of the report is to analysis the business process of Nike through several theoretical approaches such as porter’s value chain, SWOT analysis. The business growth is also highlighted everywhere in the project to make it authentic. The changes in sales percentage in different countries with different companies is given for better understanding about the business growth made by Nike. Prior that, the discussion is done about market entry strategy taken by Nike for international business expansion (Nike 2016).Finally a conclusion has drawn to complete this assignment with proper referencing.
The situation analysis can be conducted through porter’s value chain and SWOT analysis on Nike’s business process.
Porter’s value chain:
At the earlier part most important micro factors of Nike has taken to analysis. As the subject is about international business expansion, the Macro factors should analyze to learn the practical scenario in relevant industry. Then macro analysis has done to show how the company is doing its business management internally (Bhalla 2011). Strength, weakness, opportunities and threats are also discussed in this assignment to reflect a management theory. Two different countries market is taken to analysis potentiality with two different same industry companies. The business growth is also highlighted everywhere in the project to make it authentic. The changes in sales percentage in different countries with different companies is given for better understanding about the business growth made by Nike (Day 2013). The discussion is done about market entry strategy taken by Nike for international business expansion (Ball 2013). Finally, a conclusion has drawn to complete this assignment with proper referencing. Porter’s value chain consists of two activities such as primary and secondary activities. Primary activities include inbound logistics, operations, outbound logistics marketing and sales, and service. On the other hand, the secondary activities are such as procurement, human resource management, technological development and infrastructure (Borgianni, Cascini and Rotini 2012).
The value chain
Figure 1: Porter’s value chain
(Source: Chandy 2014)
Nike purchases most raw materials in bulk. They are specialized in materials importation. Inbound logistics includes the local logistics in the market. On the other hand, the operation involves outsourcing, manufacturing and assembly. The organization believes in the effective supply chain management. Quality control is the prime factor of their success in the market. The outbound logistics includes the strong control over global distribution channel. The organization delivers the products within the given period (Brands 2011). In the marketing and sales department, the organization prefers high brand recognition and reputation in the market. Nike make the value based pricing strategy for their consumers. In the service category, Nike provides several services such as customers care, pre and after sales services, and value added services. The human resource management has global learning and staff training facilities for their employees (Gong 2013). It facilitates the organization to maintain healthy relationship with the employees in the organization. The firm infrastructure includes IT system supply chain, E-commerce infrastructure and strong financial position and CSR. The technical team of the organization always tries to develop their products to attract more customers in the market.
There are several key issues in the business process of Nike. The global supply chain of Nike is very complex network and it directly connects and influences a wide range of people in the market. There are several groups of stakeholders in the company such as customers, buyers, suppliers, workers and communities. The organization has great opportunity to engage each of these stakeholders in the working to create economic development in the business. The vital issue of the company is to develop proper pricing strategy for the consumer in the market. Without proper pricing model, the organization would not be able to engage large numbers of customers in their business chain. Puma and Adidas are two threats of the organization. hence, Nike has been improving their business model in order to compete with these companies in the global market.
Marketing selection involves seven major steps such as marketing objectives, commercial production, test marketing, evaluation and selection, short-listing the markets, preliminary screening and parameters for selection. The prime objective of the company is to maintain the quality and increase the availability of products in the market. Nike has been focusing on the promotion for sustainable development of the product design and novelty. The organization follows some parameters in order to categorize the potential market. Nike collects feedback from their customers for developing their products in the international market (Connor and Lande 2012). The product demand of the customer changes frequently. Therefore, the company focuses on the product development based on the current market trends. The main strength of the company is their promotional activity. They have been commercializing products to expand the business in the international market. Through the engagement of evaluation and selection, company chose their potential market for brand advertisement. Nike targets the sports section for promotion of their brand. The objective of the company is to spread the products in all sports departments. Nike places strong emphasis on the DTC (direct to consumer) channel in the market. Although, company has the traditional method of advertising in the form of television, radio, news paper, Nike also involves them in using contemporary marketing instruments such as the internet (Grant 2015). Nike has big competitors such as Adidas and puma. Therefore, the organization relies on the strong commercial production. They have engaged several famous sports personalities for targeting their potential market. Nike targets the fitness centric community in the society. Company has started individual marketing for customers in the market. It allows customers to personalize and design their own Nike merchandise. Online services are also a strong weapon for the company to engage large section of community in the society (Healy and Palepu 2012).
Figure 2: Marketing selection process
(Source: Hollensen 2015)
The aggressive pricing of the products does not allow the company to engage more customers in the society. Although the organization focuses on the products quality, they need to focus on their pricing model. If company can make a decent range of pricing of their products, they could increase their customer’s chain in the market. Therefore, it could facilitate them in enhancing their business in the global market. Company could follow a strategic approach for entering into a new market. The strategic approaches involves some steps such as asses the market, asses competition, chose entry option, and chose business model and implementation of strategy (Matsuno and Mentzer 2012). First, the organization must evaluate the size, growth and the demand drive of the new market. In the second step, company must identify the competition through analyzing the current market situation. Nike must choose the entry option whether they want to make business long-term basis or not. Company could collaborate with the local partners for entering into a new market. It makes the entry process easier for the business. Nike needs to choose the proper business model in order to make entrance into new demographic area. Finally, they need to implement actual strategy for the enhancement of the business. Company could face several difficulties in making footstep into the new market (Rothaermel 2015). Through the engagement of these processes, the organization could easily make entry into the new demographic area.
Figure 3: Strategy for entering into new market
(Source: Sadgrove 2015)
Nike founder Phil Knight said ‘Business is a war without bullet’. There must be some exceptional strategy, which is taken by Nike to win the business world and the war as well. From the above discussion, there are different businesses entry scheme is seen in the assignment. These are follows:
Excellent product:
Nike is capturing global sports market by producing excellent footwear (Verbeke 2013). The footwear is stylish and scientific for health so the players easily choose it to use. The management authority of Nike for better production of shoes hires physical expertise and technical stuffs. Therefore the consumer are assured about the product quality and purchasing the sports shoes. The growing phase of business starts from here of Nike. Then the subject of
Product Range
Nike is not only producing better product but also make comparative price respective to other footwear making company’s accords the world. The reasonable priced shoes can be effort by the athletes and they are consuming it (Wetherly and Otter 2014).
Brand Value
Nike Inc has made its brand value from the time of its basketball sneaker. Nike has hired the basketball star Michele Jordan for promotion of its footwear. Finally get goodwill and implemented other products in its business process. Then they started selling other sports equipments throughout the world market.
Utilizing market scope
As it is discussed before that Nike has coached the wind of FIFA world cup 2014 by introducing it different style of footwear models among the sports stars. Adidas was concentrating to sell soccer footwear but Nike launched training and running shoes to catch another scope of business. Finally, Nike succeeded to grow its sales volume than Adidas (Zikmund et al. 2012). These were the strategies taken by Nike Inc for international marketing in sports equipment industry.
Nike is one of the pioneer organizations in marketing. The marketing mix of Nike is one of the strongest parts of their business. The organization believes in the pull strategy to accomplish the business in an effective manner.
Products:
Nike has wide range of products such as shoes, apparels, equipment. These products belong to its top selling category. They have started selling their sports products in 1979 (Nike 2016). Company has established the brand name by manufacturing the superior quality sports shoes. Therefore, the prime product of the company is sports elements.
Price:
Nike has designed the competitive pricing for their customers. The pricing is based on premium segment as target customers. High pricing policy of the company suggests their high brand value in the global market. They have targeted a particular section of community for selling their products. Although the company is pioneer for the sports products, they have been focusing on the new product development (Bhalla 2011). Sometimes, the aggressive pricing model of the company hampers their business in the market.
Place:
Nike shoes are exclusively available in the multi-brand stores. Nike has been selling their products almost 200 countries around the world (Nike 2016). Nike has the independent distributors for selling their products in the international market. The organization sells their products through independent distributors and licensees.
Promotion:
Nike has built their brand value in the global market through their wide range of products. Company has strongly been marketing their products on the online platform to enhance the brand value in the international market. The product promotion of the company depends on the accessible store locations. They also target on the advertising on the printing media such as newspaper, article etc. Nike has a number of famous faces for their promotion in the market. They have engaged famous sports faces such as Ronaldo, Renaldo, and Roberto carlos to promote their products worldwide. Moreover, Nike sponsors many events such as Hoop It Up and The Golden West Invitational (Gong 2013). Through the engagement of their promotional activity, the organization has been enhancing their brand image in the global market.
People:
In this segment, organization engages individuals on marketing activity. They are the target customers of the company. Nike is famous for their sport items, and hence, it targets the sports segment to promote their products. They have engaged some famous sports personalities in order to make healthy promotion in the global market. However, company has been focusing on the other community of the society to promote their products.
Process:
The process of the product is essential in implementing proper marketing. It facilitates in determining the capability of product for supplying the demand of the customers in the society. Through the engagement of proper processing, company can enhance the profitability in the market. Nike has been focusing on their distribution channel in the market so that the product can be delivered in short period. It enhances the business growth in the global market.
Physical evidence:
The physical evidence is the first distinction of a product. Product could be easily recognized by its appearance. The brand value of Nike allows them to engage long chain of customers in the global market. Company has a unique branding logo of their products. Moreover, the stylish sports shoes attract customers to use products for long period. The organization does not compromise with the quality of the products. Therefore, quality is a prime factor of their successful business in the global market.
Figure 4: Marketing Mix (7P’s)
(Source: Meyer and Xia 2012)
Nike needs to evaluate the size of the market in order to make footstep in the international market. Although company has been successfully making business in the international market, company needs to evaluate the size of the new market in order to establish the business in an effective manner.
The organization needs to adapt new market strategy for engaging the local customers. It could be accomplished through collaborating with the local partners in the market.
Conclusion:
Nike remains the dominant characteristic in global footwear market for its product style. Nike’s shoes have heavy demand in developed countries and underdeveloped countries. Two strong points have found form the above analysis i.e. stylish sports footwear production and same kind of product in same range introduced by Nike in global market (Bhattacharya 1977). Further strategies for emerging product market can lead strong growth in coming Years. The Company committed to integrate emerging technologies to its production, which would be an opportunity to growth. It is known to other sports equipment producing brand all over the world that Nike will overcome its threats and weakness by its quality product, strength and opportunities. In the earlier years of 20th century, Adidas was ruling the European market but Nike has made strong footprint with its quality footwear (Dufey and Giddy 1978). Now days, Nike is increasing business than Adidas there. The growing phase of business indicates that Nike will spread its business in Central and Eastern Europe with success. Time management by taking market scope is one of the key success factor taken by Nike for business improvement in the year of 2014 FIFA football world cup. Finally, it can be concluded that Nike is not only the best sports equipment making company but also a threat for other giant footwear production company across the world.
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