Marketing Management For Markets Segments Assessment Answer

Answer:

Introduction:

Marketing audit can be referred as systematic examination of marketing environment of a business organization to identify the major areas of opportunities and threats. It is a strategic tool of an organization used for identifying the market segments and developing effective marketing strategies to reach the target audiences by an organization (Beamish, 2006). The present report aims to carry out the market audit of ‘Nike’ for identifying the target market segment and examining the opportunities and threats present in the external environment. The report, in this context, provides a detailed analysis of the growth, profitability and macro-environmental factors of Nike. The major primary and secondary market segments are identified in the report with the discussion of the level of involvement of primary segment in decision-making of the company.  Also, it includes competitor analysis and demonstrates the positioning map for the company depicting its competitive position in the marketplace.

Marketing Audit for ‘Nike’

Industry Market for ‘Nike’


Nike, Inc.’s (NKE) is involved in designing, developing, marketing and selling of athletic footwear, apparel and equipment globally. The company presently operates its business operations mainly in North America, Western Europe, Greater China, Central and Eastern Europe, Japan and emerging markets in less developed countries (Soni, 2014). The current trends in the industry market of the company are examines as follows:

  • Growth: Nike is regarded as one of the best recognized brands in athletic and apparel industry across the globe and is considered a market leader. The growth and popularity of the brand internationally is responsible for its dominant position as a market leader worldwide. The significant increase in the sales and revenue of the company since its establishment has caused its unprecedented market growth worldwide (Hill & Jones, 2008).
  • Profitability: The Company is believed to have large market capitalization and is believed to sell about $ 12 billion worth shoes in $35 billion worth sports apparel and equipment industry (Hill & Jones, 2008). The company has largest market segment in North America that contributes to about half of its sales and revenue. The aim of the company is to enhance its annual revenue through increase in the direct sales for sustaining its position of market leader in the sports equipment and apparel industry (Soni, 2014).
  • Macro environment ‘PESTLE’ Analysis: The impact of external environmental factors on company’s performance can be examined through PESTLE analysis as follows:
  • Political: Nike operates in a global environment and thus its growth and profitability is mainly impacted by the governmental policies and regulations. The company has to comply with taxes and manufacturing laws operating in varying countries. As such, the company has extensive support from the US government that has maintained low interest rates and currency exchange stability (Bush, 2016).
  • Economic: The Company sells medium range products and hence is less impacted by the economic conditions of the countries where it operates its business functions. However, its operations can be impacted by the cost of labor and switching to cheaper products by the consumers in less developed economies (Bush, 2016).
  • Social: The growth of the company also depends on social factors such as lifestyle habits of the people in different countries. The people worldwide are emphasizing on staying healthy and fit through adoption of better lifestyle habits such as practicing exercise and going to gyms. This has increased the demand of sports apparel and equipment in the countries worldwide thus enhancing the revenue generation for the company (Bush, 2016).
  • Technological: Nike has incorporated latest technological advancements in its business model for increasing its sales and profitability. The company utilizes latest technologies such as social media for strengthening their brand image by reaching to the customers globally instantly (Bush, 2016).
  • Legal: The Company has to abide by all the legal laws of the varying countries where it operates its business functions in order to support its international expansion plan. The most critical challenge that exists before the company in this regard is complying with various types of labor laws in developing countries (Bush, 2016).
  • Environmental: Nike has also to abide by the environmental laws such as related to emission of green-house gases to ensure protection of environment. The company has to protect the environment from any of the adverse impacts of its operational activities for its sustainable growth and development (Bush, 2016).
  • Major Market Segments of Nike

    The major market segment for Nike comprises of athletes that are mainly involved in purchasing of company’s products. The company has identified appropriately its primary and secondary target market segment. The primary market of the company is referred to as target market where the company is currently focusing to deliver its products and services (Soni, 2014).   The other brands of the company such as Jordan and Hurley targets market segments of golfers and young people involved in skateboarding and surfing. The primary target audience of the main Nike brand is professional athletes. Nike brand design and manufactures its products such as shoes, sporting equipment and clothes as per the needs and demands of its primary target market. The Nike Golf brand mainly targets golfers while its Hurley International LLC brand mainly targets surfers. The company serves its customers with huge passion by meeting their needs and requirements appropriately. Thus, these all constitutes the major primary market segments of the company (Soni, 2014).

    The secondary target market of the company mainly includes women customers, young athletes and runners. The secondary market of an organization is referred as the target market that it is aiming to focus in the future period of time (Lutz, 2015). Nike is emphasizing on designing training and running sports apparels for women’s. The company believes that inclusion of women apparel’s in its product line would cause an increase of about $ 2 billion of its annual sales in the future period of time. The next secondary target segment of Nike are young athletes involved in playing sports such as soccer and basketball. The company aims to target this market segment through sponsoring of local leagues, clubs and federations and demanding the young athletes to wear the company’s products.  The company also aims to target distance runners in the future context and thus it also constitutes its important secondary market segment. The company is designing its new shoes in accordance with the needs and demands of distance runners. Also, it is actively involved in sponsoring of running events for gaining attention of its secondary target market towards the company’s products (Lutz, 2015).

    Level of Involvement of Primary Segment Towards the Decision Making of Nike

    ‘Nike’ is recognized all over the world as engaging its customers in each and every type of its business activity. The company gains a proper understanding of the changing needs and expectations of its customer through encouraging the feedback from them (Tierney, 2015). The target market segment of Nike is the professional athletes and the company has implemented effective strategies for enhancing the level of involvement of athletes at all levels of its decision-making process. This helps the company to develop proper insights into the changing needs of customers for driving innovation in its sports products. Nike aims to enhance customer value by engaging them in all their business processes involved in the designing of its products. Customer value is defined as the difference between the actual products received by customers to that demanded by them (Tierney, 2015).

    The website of the company provides a platform to the sport athletes to upload data about their performance; incoming events and can easily connect with their friends. Also, the website of the company provides useful information to the customers regarding their fitness regime and the benefits that they can gain through utilizing Nike’s sports products. Thus, Nike website provides an active platform to the company to interact with its customers so that they can deliver innovative and quality products in accordance with the consumer’s desire. In addition to this, the company involves its consumers through introduction of various health campaigns. The campaigns facilities company to gain a proper understanding of the health needs of its target market so that they can bring new and innovative products for them (Petro, 2016).. The company also incorporates the use of social media channels such as Facebook, Twitter and Instagram for interacting with its target audiences. The company makes use of all these social media platforms to connect with people worldwide and strengthen its brand image. The establishment of such communicating platforms has facilitated Nike to engage with all its consumers through implementing their views and opinions in manufacturing its products (How Nike Uses Social Media, 2016).

    For example, Nike has established a social networking site ‘Joga.com’ during the world cup of the year 2006 to upload videos displaying soccer skills and inviting the comments of professionals for generating user-generated content. The development of such social media channels enables the company to connect with millions of soccer fans quickly and instantly (Ramaswamy, 2008). The active involvement of consumer in the decision-making process of the company has proved that customers are no longer a passive recipient of value propositions of the organizations. The company has also launched effective communication platforms through the use of latest technology devices for interacting with its consumers. ‘Nike Plus’ platform of the company is a collaboration between Nike and Apple that involves iPod of Apple and a wireless device that established connection between music player and the running shoes. Thus, the adoption of such innovative and creative measures by the company to enhance the involvement with its primary market demonstrates the ‘best practices’ of co-creation value with customers (Ramaswamy, 2008).

    Nature of Competition in the Sports Apparel & Equipment Industry

    The athletic apparel and equipment industry is highly competitive in nature involving large number of global players. ‘Nike’ is a market leader in its industry but faces stiff competition from international players such as Adidas, Reebok, V.F. Corp, Puma and Under Armour (Nike Inc’s Competitiveness, 2016). The high competition in the industry among large global giants poses a significant risk on long-term growth and development of Nike. Nike is recognizes as largest seller of athletic footwear, apparel and equipment globally but need to gain a proper understanding of the business operations of its competitors for ensuring its sustainability. The leaders in the industry are very well-established such as Reebok and Adidas and thus there is high entry barrier in the industry (The Business Of Sportswear: NIKE Vs. ADIDAS, 2014).

    The main competitor of Nike can be regarded as Adidas, involved in designing and manufacturing of sports shoes, apparels and accessories headquartered in Germany. Adidas also owns the brands such as ‘Reebok’ and ‘TaylorMade’, widely recognized player in the sports apparel and equipment industry. Adidas has good brand loyalty in European markets and also has large market share in the sports apparel industry. The company is actively involved in manufacturing of accessories sports products such as bags, watches and shirts that have made it second largest sportswear manufacturer behind Nike (Joseph, 2016). The enhanced revenue generation of Adidas in recent years is posing a threat to the dominant position of Nike in recent years. Nike, still dominant to Adidas, needs to enhance its strengths and overcome its weaknesses for sustaining its market leader position in the sports apparel and equipment industry (Haig, 2006).

    The main strength of the company lies in its product differentiation that sets apart its sports products from other global players in the industry. Nike is known worldwide for designing and manufacturing technologically advanced products through incorporation of all the needs and wants of the consumers. The active involvement of the consumers in the strategic decision-making process of the company at all levels enables it to meet effectively the customer expectations (Galbraith, 2014). On the other hand, Adidas still lacks behind from Nike in developing technologically advanced products. Adidas is also recently emphasizing on implementing innovative technologies for designing new products and processes for overcoming the competition level in the industry (Leach, 2015). The level of customer involvement in the decision-making process of the organization is also lower in Adidas as compared to that of Nike. The main competitive weakness of Nike as compared to that of Adidas are relative higher prices of its products. However, the company is currently emphasizing on maintaining a low price strategy so that its products are readily available to all the economic sections of a country. The company always strives to offer best quality products to the customers through incorporation of all the consumer wants and desires. This causes a relative increase in the price of its products as compared to that of Adidas (Lussier & Kimball, 2013).

    Nike is a dominant player in the global footwear market. However, the company needs to continually monitor and review its business practices and procedures for maintaining its competitive position in the industry. It needs to implement latest technologies in designing of its products for meeting effectively the preferences of the consumers (Dalavagas, 2015). The demand of the company’s products mainly depends on the increasing popularity of various sports and fitness activities and thus major changes in the consumer trends towards utilizing these products can negatively impact its performance. The success of competitors in attracting more customers through incorporating latest technological advances ahead of the company can negatively impact Nike’s sustainable growth (Dalavagas,2015).

    Positioning Map for the Market Place of Nike

    On the basis of level of involvement of primary segment and competitive position of the company, its positioning map is depicted as follows: 

    Low Quality

    Nike is positioned as topmost in the positioning map on the basis of its high level of consumer involvement and designing high quality products. The company has sustained its dominant position in the sports apparel and equipment industry. The level of consumer involvement and quality of products is lower in case of Adidas as compared to that of Nike. Puma, on the other hand, is ranked lower than Nike and Adidas on the terms of consumer involvement and quality of products. Under Armour is positioned as lowermost in terms of quality and level of consumer involvement as compared to that of Puma (Wong, (2012). Thus, Nike produces relatively high technology products through incorporation of all the needs and wants of the consumers that is responsible for high value delivered to the customers by the company.

    Conclusion

    Thus, it can be inferred from the overall discussion held in the report that ‘Nike’ is a market leader in the global sports apparel and equipment industry. The company mainly operates its business operations in developed countries such as United States. However, it is also presently emphasizing on carrying out its business operations in developing countries. The primary target segment of the company is professional athletes that have a major demand of its sports apparels and equipment. The level of involvement of primary targets segment in decision-making process of the company is high responsible for its huge growth and success. The company face’s stiff competition from other established global players such as Adidas but has till now sustained its dominant competitive position in the market place.

    References

    Beamish, K. (2006). Marketing Planning. Routledge.

    Bush, T. 2016. A Pestle Analysis of Nike. Retrieved August 30, 2016, from https://pestleanalysis.com/pestle-analysis-of-nike/

    Dalavagas, J. (2015). Nike: Analysis of Strengths, Weaknesses, Opportunities, Threats. Retrieved August 30, 2016, from https://www.gurufocus.com/news/325905/nike-analysis-of-strengths-weaknesses-opportunities-threats

    Galbraith, J. R. (2014). Designing Organizations: Strategy, Structure, and Process at the Business Unit and Enterprise Levels. John Wiley & Sons.

    Haig, M. (2006). Brand Royalty: How the World's Top 100 Brands Thrive & Survive. Kogan Page Publishers.

    Hill, C. & Jones, G. R. (2008). Strategic Management Series. Cengage Learning.

    How Nike Uses Social Media. (2016). Retrieved August 30, 2016, from https://linkhumans.com/case-study/nike

    Joseph, U. A. (2016). The 'Made in Germany' Champion Brands: Nation Branding, Innovation and World Export Leadership. Routledge.

    Leach, A. (2015). Nike vs. adidas: Who Owns the Market? Retrieved August 30, 2016, from https://www.highsnobiety.com/2015/11/09/nike-adidas-market-shares/

    Lussier, R. & Kimball, D. (2013). Applied Sport Management Skills 2nd Edition With Web Study Guide. Human Kinetics.

    Lutz, A. (2015). Nike is going after 3 kinds of customers. Retrieved August 30, 2016, from https://www.businessinsider.in/Nike-is-going-after-3-kinds-of-customers/articleshow/46844244.cms

    Nike Inc’s Competitiveness. (2016). Retrieved August 30, 2016, from https://csimarket.com/stocks/compet_glance.php?code=NKE

    Petro, G. (2016). Nike Just Does It - Keeping An Eye On The Customer. Retrieved August 30, 2016, from https://www.forbes.com/sites/gregpetro/2016/07/08/nike-just-does-it-keeping-an-eye-on-the-customer/#4687ccb86ecf

    Ramaswamy, V. (2008). Co-creating value through customers’ experiences: the Nike case. Strategy & Leadership 36 (5), 9-14.

    Soni, P. (2014). An Overview of NIKE’S Brand Stable. Retrieved August 30, 2016, from https://marketrealist.com/2014/12/an-overview-of-nikes-brand-stable/

    The Business Of Sportswear: NIKE Vs. ADIDAS. (2014). Retrieved August 30, 2016, from https://fashionbi.com/insights/marketing-analysis/the-business-of-sportswear-nike-vs-adidas

    Tierney, J. (2015). Brand Loyalty for Nike Starts with Placing the Customer First. Retrieved August 30, 2016, from https://loyalty360.org/content-gallery/daily-news/brand-loyalty-for-nike-starts-with-placing-the-cus

    Wong, G. M. (2012). The Comprehensive Guide to Careers in Sports. Jones & Bartlett Publishers.

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