A Case Study: Nike's Marketing Strategy

6 Nov

Nike's marketing strategy rested entirely upon a brand image that is favourable and has evolved into a great multinational enterprise over time. The brand image has been kept afloat due to the strong association with Nike's logo which is quite distinctive and the slogan “Just Do It” which has been used in advertisements for quite some time. The company has been known to invest heavily in ads and brand promotion.

Market Segmentation

Most of the consumers of Nike's products are mainly sports enthusiasts or people intending to carry out some form of physical activity, be it a long walk or football match. This is the case because of the utility that comes with the products. Nike targets these consumers by agreements between them and athletic teams for product sponsorship and eventual promotion to the members of these teams. In this way, Nike is able to reach a wide number of consumers and consumers who are more likely to buy. Even though others are likely to buy the products, Nike pays specific attention to targeting the athlete more than any group of individuals, viewing them as the light bearers of trends.

Targeting strategies

Nike uses a number of strategies to target their immediate consumers; athletes and other sportsmen. The targeting strategies include, among others the sponsorship of products by professional athletic teams, celebrity athletes and college athletic teams. This strategy is specifically successful because of its ability to reach a large number of athletes. If the athletic team manager prescribes a specific type of track shoes made by Nike, the trainees have no option other than to buy them. The teams can as well buy the track shoes in bulk and supply them to the team members.

The second strategy that Nike applies is the designing of a product destination. It does this by associating success with the product. For example, when a celebrity athlete sponsors a specific brand of athletic shoes, the brand will be associated with success. This psychological effect is reinforced with ads that affirm this position.

Next up, Nike targets the consumers who are likely to develop product intimacy; those who care more about the utility and quality of the product than the price. In this way, the pricing is not affected too much in a bid to accommodate a large number of consumers. However, price, amongst other things has also been factored into Nike's marketing strategies.

Pricing Strategies

So we already know that Nike targets consumers who embrace product intimacy and thus care less about the product. This has enabled Nike to set relatively higher prices than its competitors. This is a strategy that calls for higher pricing points so as to push the perceived product value. It has been established that consumers who consider a product to be of high quality are likely to pay a higher price more often and consistently. Once consumers develop product intimacy, they come to associate their person with the product and will pay whatever price quoted on the product provided it has the Nike logo on it.

Another very important thing to note is the fact that Nike uses the vertical integration pricing strategy in which they take ownership of the participants at channel levels that differ and they also engage in multifarious channel level operations both in a bid to control costs and thus influence pricing function.

Distribution Strategies

Distribution strategies embraced by an organisation can either give them an edge in the market or make them lag behind the winners in the market. The more efficient the product distribution is the more sales and thus more profits. The delivery of the right product and at the right time to the consumer not only effects utility but also leads to a high degree of consumer satisfaction and loyalty. Nike distributes its products on a level basis. The high priced premium products are given to certain distributors while leaving the low priced to be sold at highly discounted prices at mega retail stores such as Wal-Mart. Whereas Reebok embraced a limited distribution strategy Nike ventured more into a global market capitalisation.

Promotional and Communication Strategies

Apart from Nike selling quality products that have to lead to a high degree of customer loyalty, the promotional strategies that the company employs are simply superb. Nike has contracted a number of professional and celebrity athletes who have managed to draw considerable attention to their products. Some of the sportsmen signed by Nike include football (or soccer) stars such as Ronaldinho, Ronaldo and Roberto Carlos, basketball players such as Jermaine O'Neal and Lebron James2, triathlete Lance Armstrong and golf superstar Tiger Woods. This has created a relatively high degree of Nike products' awareness. Besides the signing of celebrity sportsmen to promote its products, Nike has also employed a lot of ads through mass media. Nike employs a selective-demand advertisement focused on the high priced shoes used for traditional sports.

Nike has remained and continues to remain at the top of the production and distribution of sports gear and equipment. However, it should be noted that competitive pressure cannot allow Nike to ‘sleep at the top'. The recent Reebok- Adidas merger poses a great challenge to devise new marketing strategies to continue leading or recede to oblivion. The following recommendations are suggested in a situation where marketing management is competent. These include:

Increased market share through new product development, competent pricing strategies, advertisement and other sound promotional activities.
Restructure market dominance by driving away competitors mainly through fierce promotional strategy coupled by pricing function that will make the market quite unattractive for the competitors.
Increased social responsibility to strengthen the image of the company
Diversification of market through factoring the Asians and Black Americans in their product promotion besides doing research to establish the tastes of these groups.
Venture into new distribution channels especially in international markets
Different pricing strategy so as to open up new market segments.

All the above show competent marketing management can hoist organisations to become market leaders and making the market leaders maintain their competitive edge in the market through adherence to marketing ethics, marketing plans and well thought out and formulated marketing strategies.

Happy Small Business Marketing!