Introduction
Nike, Inc. is one of the leading manufacturers and distributors of sports apparel, footwear, and equipment. The company was founded in January 1964 by Phil Knight and Bill Bowerman, and was initially known as Blue Ribbon Sports (Kim, 2020). Headquartered in Beaverton, Oregon, the company has become the world’s largest supplier of sports apparel and shoes (Eyada, 2020). The firm has distribution centers in various cities in North America and Europe. It also has specialty shops in different countries across the Asian and African continents.
Despite its market dominance, the company faces stiff competition in the sports footwear and apparel industry (Rodrigues et al., 2021). Some of the major competitors in this industry include Adidas AG and Puma of Germany, Under Armour, Inc., New Balance Athletics, Inc., and Reebok International Limited of the United States, LululemonAthletica Inc. from Canada, and Asics from Japan. The industry is highly competitive, and firms from various countries employ different strategies to gain market share. In this paper, the researcher seeks to analyze marketing strategies at Nike Inc. using various sustainable marketing principles and models.
Analysis of the Organization
The sportswear industry has become highly competitive due to the emergence of large companies eager to expand their operations beyond national borders. Nike, Inc. is currently one of the leading companies in this industry. It has dominated the North American market and achieved immense success in Europe.
The management has been keen on expanding the firm’s market coverage to the emerging markets in Asia, South America, and Africa (Bahrainwala & O’Connor, 2019). The firm must use various marketing strategies to achieve sustainable growth in the competitive business environment. This section evaluates how the firm utilizes various marketing tools and models to achieve success.
Marketing Mix Elements
The marketing mix is a commonly used tool when assessing a firm’s ability to achieve a competitive edge over its rivals. Morgan et al. (2019) define it as a set of tools that enables a firm to pursue specific marketing goals. The 4Cs (customer value, cost, convenience, and communication) are directly related to the 4Ps of product, price, place, and promotion, as shown in Figure 1 below. Addressing the 4Ps also means addressing the 4Cs in the process.
Nike’s products include footwear, equipment, apparel, and accessories. The firm is known for its high-quality sports equipment and apparel. The firm settled on premium pricing for its products because of the value it offers.
In its promotion, it has taken a unique proposition as a firm offering premium sports apparel and footwear products. The company has been keen to ensure that the place element in the marketing mix is handled effectively. It has several retail outlets across North America and Europe. Its specialty shops are also present in Asia, Africa, South America, and other parts of the world (Newcastle, 2017). The firm is also currently selling its products on online platforms.
Handling people has become a significant concern for Nike’s management. The firm has created a human resource management system meant to protect the interests of employees and enhance their productivity. Its employees are also prepared to address customers’ complaints and public concerns.
The process element is another critical issue at the firm. Factors such as standardization, customization, and performance tracking have been traditionally used at the firm. Nike is embracing machine learning, big data, and artificial intelligence to improve its performance.
Physical evidence is the eighth element in this marketing model. At Nike, the company has remained committed to ensuring that its shops are clean and well-organized to make the shopping experience pleasant. Figure 2 below identifies the expanded seven elements of the marketing mix.
Although the firm has used this tool effectively, the location element remains a concern. According to Knight (2018), Nike has been criticized for failing to ensure that its specialty shops are spread worldwide. Some of these products are not readily available in parts of Africa, Asia, and South America. It is strongly suggested that this firm consider making these products available in emerging markets.
Differentiation and Competitive Advantage
Differentiation is one of the competitive advantage strategies commonly used by firms operating in a highly competitive environment. According to Tiffany (2021), it involves making a firm’s product and offering something unique. Porter’s generic strategies have often been used when defining the competitive strategies a firm can use. Nike can employ a cost focus, which emphasizes setting the lowest price in the market, or a cost leadership, differentiation, or differentiation focus, depending on the marketing goals it seeks to achieve. As shown in Figure 3 below, Nike is a firm that uses differentiation to gain a competitive advantage over rivals in this industry.
Using these strategies involves developing products that meet the unique needs of customers in the market. Its sports footwear, apparel, and equipment are considered premium products. As Arslan (2020) observes, customers are often willing to pay higher prices when convinced that the company offers the best quality in the industry. Nike has avoided pricing as a competitive strategy and instead focused on quality. The strategy has enabled it to succeed in North American and European markets.
A marketing strategy that works in Europe and North America may not be effective in the Asian or African markets. Nike has failed to understand the unique characteristics of the markets in emerging economies worldwide. As such, strategies have yet to be developed that can enable it to achieve success in these markets. It is suggested that the firm also consider developing new, more affordable products that can be sold in these emerging markets (Tiffany, 2021). It should not disregard the focus on cost in these new markets.
Coping with Commoditization Through Total Product and Solution Offering
When operating in a highly competitive environment, a firm should find ways of coping with commoditization. Tiffany (2021) defines commoditization as a process in which products are converted into standardized, marketable objects. Nike sells highly specialized sports apparel and sportswear (Grawe, 2021).
When seeking to expand the market size, it may be necessary to consider ways of coping with commoditization. There is a constant fear that Nike’s products can easily become generic, leading to the loss of their unique market position. To address this challenge, the firm should maintain regular communication with customers, constantly reminding them of the market position and purpose of its products.
Total product offering, also known as value packaging, is a strategy the firm can utilize. It involves emphasizing a product’s specific value to avoid becoming a generic item in the market. It reminds customers of the uniqueness of the product when compared with what rivals offer.
Critiques agree that Nike has done a great job when it comes to coping with commoditization. It has succeeded in ensuring its products are known for their unique attributes in the industry. It has achieved this marketing goal by constantly promoting its products (Arslan, 2020). However, the company can improve its communication with customers on this issue. This paper suggests that the company should invest more in emerging marketing platforms, particularly social media.
Segmentation
Segmentation is another popular strategy when targeting specific customers in the market. Segmentation refers to dividing customers into groups based on common characteristics (Knight, 2018). As shown in Figure 4 below, one can use geographic, demographic, psychographic, or behavioral segmentation strategies.
Geographically, Nike has segmented its markets into three classes: North America, Europe, and other regions. It sells directly to its customers in North America and Europe (Grawe, 2021). However, it relies on specialty stores outside of these two geographic regions. The selected two regions have the highest concentration of customers willing and capable of paying for this firm’s products.
Demographic segmentation is another area that this company emphasizes when defining its customers. According to Balasaygun (2022), Nike often targets the middle-class and wealthy clients. It has positioned its products as offering premium products. As such, most of its products are priced slightly above the market average to help emphasize their premium quality. Its products are available for customers of different age groups and genders. It is worth noting that the firm does not emphasize the use of psychographic or behavioral segmentation strategies.
Nike’s segmentation strategy has enabled it to reach out to customers willing and capable of paying premium prices for its products. However, the firm can consider making some improvements to increase its sales volume and profitability. One possible change would be to reconsider its geographic segmentation strategies. The firm should consider selecting specific cities in the other markets, such as China, India, Saudi Arabia, South Africa, Brazil, Nigeria, and South Korea, that it will target directly. In these emerging markets, wealthy individuals are steadily growing capable of affording the firm’s premium products.
Branding
Defining a firm’s brand is a critical marketing process. It refers to how a firm creates a powerful perception of its image and products in the market using a specific name, design, logo, and related elements to create a lasting memory in customers’ minds. Nike has one of the most popular brand images in the sportswear industry. It utilizes the swoosh image, shown in Figure 4 below, which has become the primary identifier for its products. Its simple but powerful image makes it easy for customers to distinguish the firm’s products from its rivals. In most of its brand images, the name is shown to remind new customers that the image is for Nike.
The firm has successfully ensured its brand is associated with quality products. Customers are assured that purchasing a shoe with the logo below guarantees that they will get lasting products that also offer superb comfort. Its brand motto, ‘Just Do It,’ promotes confidence and determination among its customers (Grawe, 2021).
It further indicates that the firm targets those interested in sporting activities. It is a message that they need the confidence to engage in their desired sporting activity once they have Nike’s sportswear. The brand color of Nike varies from black with a white background, red on a white background, and blue on a white background, depending on the product’s color.
Critiques agree that Nike has one of the most recognizable brands in the world. The company’s management spends millions of dollars yearly to promote this brand. The marketing unit of this firm has also been keen to understand emerging market trends locally and internationally.It has been adjusting its promotional message while maintaining the message (Knight, 2018). The only suggestion is that this firm maintain its dynamic approach to meeting customers’ needs. Figure 5 below shows the brand logo and name that the company is currently using.
Managing Service Element
A firm’s success largely depends on the leadership strategies that the management embraces. Service management is the aspect that focuses on offering the best value to customers and maintaining a positive customer relationship (Tiffany, 2021). Naturally, a firm will be interested in maximizing its profit from its customers. However, the sustainability of such profits relies on the relationship the firm creates with its clients.
Nike has understood this principle and remains committed to offering unique service to customers. It has developed mechanisms to ensure a unique customer experience in the market. Its employees are trained on how to handle customers in an effort to create a lasting relationship. Nike has also remained active on its social media platforms, which are meant to facilitate communication with its customers. A buyer can contact the firm through Facebook, WhatsApp, Instagram, or Twitter accounts before and after purchasing to seek clarification or register a complaint.
The service element of Nike’s management has generally overlooked markets in Africa, parts of Asia, and South America. In these emerging markets, the company uses specialty shops instead of having retail outlets (Sichol, 2019). This means that the experience that customers have in North America and Europe when purchasing a product differs from that in other parts of the world. It is suggested that this firm reconsider this strategy and ensure that the service that its customers in North America and Europe receive is the same as that available for its customers in other parts of the world.
Experiential Marketing, Customer Relations, and Experience Management
When a firm operates in a highly competitive business environment, it should embrace experiential marketing, customer relations, and experience management. Experiential marketing involves the creation of an innovative and memorable customer experience to create an emotional connection between a brand and customers (Andrén, 2022). At Nike, it involves offering customers a unique experience every time they visit the firm’s retail outlets.
The sales team assists them in ensuring that they get the exact item they need. The concept closely relates to customer relations, focusing on inculcating a positive customer relationship (Kim, 2020). The attention and care offered to Nike’s customers help to nurture customer relations.
Experience management is the other marketing strategy related to the abovementioned strategies. According to Kim (2020), experience management involves tracking, analyzing, measuring, and improving people’s interactions in the organization. Customers, vendors, suppliers, and employees are essential organizational stakeholders.
Nike has developed a marketing system to ensure the firm’s customers feel respected and valued when interacting with its employees. At the same time, the human resource department has put in place a system meant to meet the needs and interests of employees to ensure that they are satisfied and happy. Kingsnorth (2019) explains that satisfied employees are likely to offer superior services to customers.
Nike’s customer relations strategy is superior to that of most of its rivals in the market. Although its current strategy does not attract criticism, it should consider monitoring and responding to emerging trends. The needs of Generation Z are significantly different from those of the older generation (Sichol, 2019). Technological and socio-economic changes are also redefining customers’ needs. The management should ensure that it monitors these changes in the market and responds to them effectively.
Role of the Internet in Marketing
The internet has become a critical platform through which firms reach their customers. Internet marketing uses platforms to promote a firm’s products and brand (Rutz & Watson, 2019). Traditionally, firms relied on mass media platforms to ensure they could reach their targeted audiences. They used newspapers, television, radio, and magazines to pass promotional messages to customers.
However, some of these platforms have become less effective. Moeller (2017) explains that large corporations like Nike no longer rely primarily on traditional mass media platforms. They no longer find newspapers and magazines reliable because of the reduced readership, especially among the younger generation.
Digital platforms such as Facebook, Instagram, Twitter, YouTube, and TikTok are critical in promoting a brand. According to Rajagopal (2019), many people spend several hours every day on these social media platforms because of the entertainment that they offer. They have become the best platforms enabling companies to reach out to the targeted audience because of the time people spend on them. Arslan (2020) explains that platforms like Facebook and TikTok enable a firm like Nike to promote its brand and products and sell directly to customers. They enable a firm to list products they sell and facilitate customers to purchase such items without needing to visit a retail store.
Nike currently uses its website to sell directly to its customers worldwide. However, its geographic coverage remains an issue that needs improvement. In the Middle East, the firm’s website only offers products to customers in the Kingdom of Saudi Arabia and the United Arab Emirates. In Africa, the website offers products to customers in South Africa, Egypt, and Morocco. This means potential customers in other countries are disenfranchised (Li, Larimo, and Leonidou, 2021). This is a significant concern that, if addressed effectively, can help increase this firm’s revenues.
Pricing and Cost Structure
Pricing of a product is one of the challenging marketing tasks, defining a product’s success in the market. Mota and Guarda (2020) define pricing as setting a price for a product, considering the total cost and profit margin. Nike invests in developing high-quality products for its targeted customers. It also sets premium prices for its premium products. It has selected a market segment capable of paying high prices for these products.
Sichol (2019) explains that Nike products are priced slightly above the market average because of their quality. The pricing strategy has helped to emphasize the perception that the company offers high-quality products. The firm has been keen on lowering the cost of its products. It has embraced the use of emerging technologies to help improve efficiency and lower the overall cost of production. Such efforts help in increasing the profit margin for the company.
Despite these initiatives, the firm can still make some adjustments to help improve its profit margin in the market. Ali and Anwar (2021) explain that the cost of production is significantly lower in emerging economies such as India and South Africa. Nike should consider having its production plants in these emerging economies. Doing so will lower the cost and make it easy to enter these new markets.
Stakeholders, Sustainability, and Triple Bottom Line
Achieving sustainable growth is an essential requirement for any firm. According to Tien et al. (2020), the ability of a firm to achieve sustainable growth depends on how well it handles its stakeholders. Nike’s management has been keen to protect the interests of all its stakeholders. The firm has embraced unique strategies to meet the needs and expectations of its customers. Its human resource strategies, such as attractive remuneration and an open-door policy, are meant to attract and retain top talent in the industry. It has also maintained a close working relationship with its suppliers and government entities.
The sustainability of a firm can be assessed using the triple bottom line. Ramaswamy (2020) explains that the three pillars of sustainability include people, planet, and profit, as shown in Figure 6 below. The section above explains the firm’s steps to meet the people’s interests.
Nike’s management has invested millions of dollars in corporate social responsibility programs to protect the environment. It is also using sustainable production means to lower its greenhouse gas emissions and pollution on the environment. The firm has been keen on protecting its profits despite its challenges. It has been promoting its brands through celebrities, especially top athletes (Creswell & Holman, 2022). These strategies are meant to enhance sales revenue.
Nike has been criticized in the past because of its impact on the environment. The firm’s strategy of promoting new products has forced many customers to dispose of their shoes and apparel, which are still usable but considered out of fashion (Razzall, 2022). These products would end up in landfills, leading to massive pollution. It is suggested that the firm find strategies for dealing with the problem of pollution.
Conclusion and Recommendations for Improvement
Nike Inc. is one of the dominant players in the global sportswear industry. Founded in January 1964, the company has been keen on achieving sustainable growth in the current competitive business environment. The paper has used various marketing tools and models to explain how the firm has overcome stiff competition and other challenges to emerge as the dominant player in the industry. The analysis demonstrates the management’s commitment and the firm’s unique capabilities to adjust to emerging trends in the industry. The management should consider the following recommendations:
- The company should consider exploring new markets in Africa, South America, and Asia to expand its market share.
- The firm’s management should ensure that strategies used in the foreign markets reflect the local socio-economic and political environment.
- When using the above models, the management should ensure that its employees are adequately trained and motivated to handle the required tasks.
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