Introduction to Company and Product
Nike is an international company that is well-known for the design of Footwear and similar apparel (“Air Max Shoes”). The company was launched in 1964 and is headquartered in Washington, DC. It is arguable that Nike is one of the biggest brands in Footwear in the world today. Whereas the company initially only focused on sports footwear, it has adjusted due to the diversity of the market to also offer street fashion footwear (“Air Max Shoes”).
This evolution was necessary due to the change in market trends and also the heavy competition. Ideally, the company seeks to reach all its potential consumers with its products. It is for this reason that it has a robust exporting plan to ensure that all its consumers get all the Nike products they need easily, despite where their location is.
Nike has more than 20 different products. The identified product is the Nike Air Max 2018. The product’s HS Code is 64021990. The shoes, as the name suggests, were launched in 2018 and come in both male and female design. The shoes are very common among athletes as they have a very comfortable inside with a sophisticated and bouncy feeling. Many critics have agreed that the shoes have a good grip on the ground, as well making them a reliable option for any sport.
The Nike Air Max 2018 has added the street fashion element to the Air Max technology (“Air Max Shoes”). As the International Marketing Manager, it is my duty to monitor the market and come up with ways the company can record more sales by reaching more of its target market. I conducted this market research to find new and viable markets that Nike can penetrate using the Nike Air Max 2018. The company’s normal markets are currently saturated with both international and local competitors.
Foreign Market Analysis
Currently, the largest importers of Nike products are the UK, Germany, and India. However, in search of new markets, the company can also target South Africa, France, and India (again).
South Africa
South Africa is one of the largest countries in Africa in terms of geographical size, population, and economy. The majority of the country’s population is between the ages of 15 and 64 years. One of the reasons the country has been identified as a potential market for the Nike Air Max 2018 is the importing nature of its citizens. Footwear Industry Profile: South Africa confirms that South Africa footwear imports contribute over the US $ 900 million per year to the country’s GDP. Additionally, the fact that a big percentage of the country has access to both electricity and the internet makes it easier for consumers to purchase products online (Footwear Industry Profile: South Africa). All this shows the potential for recording significant profits through the export of the Nike Air Max 2018 into the country.
The best strategy for use in the South African market is partnering (Fish 29). Footwear Industry Profile: South Africa explains that partnering involves the identifying of a local business or individual that will act as a proxy for the multinational company in the new market. This strategy is crucial due to the culture of the region. The selling strategy should incorporate the endorsement of the brand by famous South African celebrities.
Due to the target market in the country, it would be prudent for the company to modify the shoes to encompass more street fashion. One of the challenges the company might face is local competition. South Africans are known to prefer their own local brands. However, the given marketing strategy that uses local partnerships should mitigate this challenge. Additionally, the duty rate is at 30%, which is significantly high and might affect the price of the shoes.
France
France is a good choice for a new market due to the fact that citizens have easy access to money. This means that they can purchase products more freely. One reason why the Nike Air Max 2018 can record significant sales in France is the rise of gym lovers in the country. Many young people in France have taken up sports as a hobby. This means that they need merchandise, including Footwear, for their sports activity.
Additionally, as Footwear Industry Profile: France notes, many schools in the region are also embracing sports and other outdoor hobbies. It is suggested that Nike target school-going children and youth as they have not been fully targeted by either the local or the international brands yet (Footwear Industry Profile: France). The company might have to modify some of the shoes to fit a much younger target market made up of school children.
Due to the nature of the target market identified, the company can employ endorsement marketing strategies. The youth are heavily influenced by celebrities. Being the first world, the target market is influenced by both local and international celebrities. On the same note, France is considered the cornerstone of fashion. The shoes have to be presented as both convenient for sports and gym and are also fashionable.
Interestingly, Nike has not put much focus on France as a region of interest. One of the reasons for this, which will also prove a challenge for penetrating this market, is the fact that the region has been saturated with both local and international products. One way of mitigating this challenge is ensuring the brand is of high quality. The general duty rate is 8% which is relatively low compared to other countries.
India
Nike currently exports to India. However, the company has not targeted the sports-loving Indian community. Healthy living has become a common trend in the country (Global Footwear). The idea is being embraced and promoted by both local and international celebrities. Global Footwear explains that the market in India is expansive due to the large population. The country has a population of approximately 1.4 billion people.
Thus, the product has potential for sales as there is a lot of demand. Since the company already has captured the Indian market, selling the product will ride on the company’s country marketing strategy. However, some of the strategies that have worked in this particular market include social media marketing, traditional marketing, and word of mouth. Digital marketing has been very influential in India due to the fact that a large number of the target population can easily access the internet, either through a computer or a mobile device.
One significant feature that has to be considered for modification of this product is its durability in hot areas. Indeed, the materials used can withstand the heat of up to 36 degrees Celsius. India experiences several months of heatwave. The target market would mainly avoid closed shoes during such periods. However, the company can modify the Nike Air Max 2018 to withstand such heat and remain cool so that it attracts the target market even during such hot days.
One of the biggest challenges the company will face in marketing the product is poor infrastructure. The country does not have a reliable transportation infrastructure. Considering that the target population is spread across all of the countries, the company will spend a significant amount of money ensuring that the brand reaches everyone in need. The duty rates for shoes in the country is 21% which is also relatively high and will affect the overall pricing of the product.
Supply Chain
The Nike Air Max 2018 shoes are made up of six main raw materials. The six raw materials are leather, rubber, polyester, cotton, EVA foam, and synthetic leather. All the raw materials are easily accessible in the US. However, as “Nike Shoes” notes, the company has been keen on getting similar raw materials whose production does not enhance climate change. For example, EVA foam is very environment-friendly. Whereas there are some producers of the foam located in the US, the company still imports the raw material from China (“Nike Shoes”). This is due to the safe production of the product in the latter country compared to the US.
Cotton is imported from China, India, and Turkey (“Nike Shoes”). However, the company still maintains some US-based local suppliers of cotton. On the same note, synthetic leather is imported from China and Taiwan, while leather is imported from Vietnam and China (“Nike Shoes”).
The company uses the same supply chain management process across is different country offices. The process has eight phases. The eight phases are strategic planning, demand planning, supply planning, procurement, manufacturing, warehousing, order fulfillment, and transportation. In the strategic planning phase, the company identifies the locations of its partners and clients. A clear framework is then made on how these partners and clients will be approached.
The demand planning then focuses on the target market. Here, the company identifies the trends and needs of the market and how the Nike Air Max 2018 caters to these needs. Additionally, supply planning focuses on the stock based on the target market. How much stock should be produced to ensure that the Indian market has all the products it needs? Such questions are posed in this phase.
The procurement phase focuses on the purchasing orders and receipts system. It is only after these processes that the company starts the actual production of the Nike Air Max 2018 in the manufacturing phase. The warehouse phase involves the storage and physical inventory after the production of the shoes. The order fulfillment phase looks into the sales and billing processing, while the last phase, transportation, looks into how to get the shoes from point A to point B, where the client can easily access it. It is important for the company to consider both long and short-term transportation and logistics needs.
The company currently has several vehicles it can use for both. However, it is prudent to also seek local transportation partners for the three countries mentioned. Each of the partners involved in the phases plays a role in the distribution of the finished products. Each phase leads to the next one. Thus, one failed phase will affect the whole process.
It is important to note that the company will have to adapt the product to fit its consumer needs from an international marketing perspective. Indeed, marketing can, at time, be specific to the region. For instance, in India, word of mouth is one of the strongest marketing strategies. However, in France, celebrity endorsement is more effective. These concerns have to be considered when making marketing plans for these countries. One of the Incoterms rules Nike will attempt to utilize when selling the Nike Air Max 2018 is the cost of shipment (Hou 10). The company can negotiate its terms of sale with international buyers in the three mentioned countries in several ways. One such way is through offering commissions.
Action Plan
The following table is a summary of the action plan that the company can use for the realization of this marketing plan.
Summary
Nike seeks to reach each one of its target audience with his or her preferred choice of product, wherever he or she is at any given time in the next 3-5 years. In order for the company to achieve this marketing goal, it has to develop a comprehensive marketing plan. This marketing plan should not only cater for the marketing needs the company needs today, but should also be flexible enough to cater for the needs of the future. Indeed, marketing strategies change very often and the plan should be flexible enough.
I learnt several things related to exports through this research project. One such area is the strategic process. The process is essential as it is used to lay out the plan and how the marketing department will implement the said idea. The strategic process has to be the initial stage. I have also learnt that the export process heavily affects the pricing of products once they enter a market. Due to this, it is common to find similar products having different selling prices in different countries. In some countries, the product can be affordable while in other countries it might be expensive. This is based on issues such as duty tax. The third thing I learnt is that some markets are easier to penetrate than others due to culture and legal policies.
Overall, Nike has a significant hold of the sports merchandise market. However, the rise in competition and the changing market have forced the company to also consider venturing into new markets. Whereas the quality of the products is essential, the marketing plan also has to be comprehensive to ensure that the target market appreciates the value of the product.
Works Cited
“Air Max Shoes”. Nike, 2018. Web.
Fish, Paul. Practical Guidance Note: Training Manual for Implementing Property Tax Reform with a Points-Based Valuation. International Centre for Tax and Development, 2018. Eldis E-book. Web.
Footwear Industry Profile: South Africa. MarketLine, 2016. Web.
Footwear Industry Profile: France. MarketLine, 2016. Web.
Global Footwear. MarketLine, 2016. Web.
Hou, Hsin-Ya. “ICC Publishes Latest Book in Best-Selling Series on INCOTERMS® Rules.” Managing Imports & Exports, vol. 2013, no. 49, 2013, pp. 10.
“Nike Shoes”. The Ohio State University. 2018. Web.