Executive Summary
The marketing objective for the Nike+ Sportwatch GPS is to sell 500,000 units in Australia. The profit expectation for the first year is AUD 20,000,000. The product will be similar to the ones sold all over the world. Nike will use television, the internet, and sports magazines to promote the watch.
The company will use the port of Sydney for all imports. The local distribution will be by road and by local shipping routes. The company will open one regional center in each urban area with a population of more than 500,000 people. This will serve as a retail outlet and as a distribution point for the watches.
The development of a marketing plan is a very tricky affair. It involves a delicate balance of resources aimed at creating maximum opportunities to sell a product in a given market (Walker, Walker, & Schmitz, 2003). This marketing plan addresses how Nike plans to sell the Nike+ Sportwatch GPS in the Australian Market.
The Marketing Plan
This section focuses on the marketing strategies that Nike will use to sell the Nike+ Sportwatch GPS in the Australian market.
Marketing Objectives
The target market for the Nike+ Sportwatch GPS is adults aged 25-65 (ABS, 2014). This age bracket consists of people who are health conscious and are able to afford the watch. The product is likely to appeal more to people who live in urban areas because their lifestyles require additional exercise.
In the first year of operations, the expected sales volume for the next year is 500,000 units. Each unit costs $150 AUD. If the company can meet this target, then the total revenue per unit will be $75 AUD. This figure will justify the investment.
The profit expectation for the first year is $20,000,000 AUD. This figure will increase over the years. Nike needs to set up a distribution infrastructure before selling the watch. Any new business needs sufficient capital to meet start-up costs (Bryman & Bell, 2011). Start-up costs include the cost of equipment, promotion, and acquisition of services.
In the first year, Nike expects to launch stores in all parts of Australia. The product must overcome competitive pressure to win a viable market share. Nike will set up the main distribution center in all the major cities of Australia to ensure that all retailers selling the watch have access to the product.
Product Adaptation
The product sold in Australia will be the same as the product sold to other parts of the world. There is no need for specific adaptations for the Australian market. The only variation that the company may consider at a later point is using straps that have the Australian national colors. At this point, the company sees no reason for developing a market-specific version of the watch.
The main packaging components for the product will be as follows. First, the product will need a robust cardboard box to protect it during shipping. This will ensure that the watch does not get scratches and other forms of damage resulting from abrasion. Secondly, the watch will come with a plastic stand that will make it easy for owners to store the watch when not in use, and during charging.
Other components that will come with the watch include replacement straps and USB cables. Customers can buy a number of components that are compatible with a watch to complement its functions. However, these components do not come as part of the watch.
Promotion Mix
The advertising objectives for the company will be to raise awareness regarding the benefits of the watch. In addition, the company will be advertising its availability in the Australian market. The company cannot assume that the market is aware of the existence and the benefits of the watch despite the prevailing media attention given to the watch.
The three main media outlets that the company plans to use to advertise this product include television, the internet, and in selected sports magazines. Television will help to create a general awareness of the product (Dalal, 2007). An online marketing campaign is inevitable for the success of new products in Australia. This is because at least 75% of Australians carry out some form of online shopping (ABS, 2014).
The main message of the advertising campaign will be to show potential customers that they can get accurate data relating to their bodies and exercise routines. The watch measures the heart rate, distance covered, as well as speed. This should appeal to the need to keep track of one’s routine.
The cost of one watch is $150 AUD. While this price seems high for a single gadget, it compares favorably with other gadgets that people use when exercising. In fact, the watch is superior to other products because it is the first device to lump all the features it carries on a single device (Nike, 2014).
Sales promotion for this product will take place mainly via the internet. The internet is an effective medium for sales promotion because of the high degree of interaction it affords users (Cruz & Mendelsohn, 2010).
The main objective of the sales promotion exercise will be to make the watch the highest selling item in its category. Users will get coupons from the product website and in magazine advertisements. The cost of sales promotions will be $10,000,000 AUD in the first year.
Personal selling will also form part of the promotion mix for the product. This watch is an intimate product. It is likely that a potential customer who talks to a user of the watch will buy the watch. In this regard, the company will ensure that it places the watches in the hands of opinion leaders and salespersons. The company will also look for opportunities to sell the watch during sports events around the country.
Distribution
Nike will use the port of Sydney as the main port of entry into Australia. The port has good international connectivity and runs efficiently (Forsyth, 2005). This will ensure that no time is lost in the distribution of products. After the watches arrive in Sidney, the company will distribute them via local road and rail networks. Local freighters will ship the watches meant for distant markets.
The company will also use several modes of transport to ensure that it serves the market well. Table 1 below shows the comparative advantages and disadvantages of each mode.
Table 1: Comparative Advantages and Disadvantages of Transportation Modes
Channels of Transportation
The packing of the watches will conform to all regulatory requirements imposed by national and regional governments. The packaging materials will also conform to all environmental standards in the country. The watches will come into Australian ports in shipping containers. Shipping containers are easy to carry on railroads and trucks (Mongay, 2011). The cost of transport constitutes 10% of the final cost of each watch.
The company will need several documents to ship watches from South East Asia to Australia (Mongay, 2011). First, the company will prepare a Dock Receipt showing the transfer of the goods from Nike to the shipping company for transportation. Secondly, the company will receive a Bill of Lading for every shipment. The Bill of Lading will originate from the offices of the carrier based in the country manufacturing the watches.
In situations where Nike opts to bring the watches to Australia via air transport, the airlines will issue an Air Waybill to show that the airline is carrying Nike’s Watches.
Nike must also prepare a Commercial Invoice for every shipment into Australia for regulatory purposes. Nike, being a US Company, will also need to send Shipper’s Export Declaration forms to US regulators. The company must also prepare Certificates of Origin because of its importance in calculating tariffs across borders.
It is vital for Nike to buy insurance cover for its products while in transit. The products have very high value, and loss or damage can lead to immense losses (Daniels, Radebaugh, & Sullivan, 2011).
The company must ensure the products against loss at sea, and damage and theft while in transit. Nike will use a freight forwarder to handle the logistical aspects of its business. Agility Logistics will handle the freight needs of the company (Agility, 2014).
Channels of Distribution
Nike will open one central retail store that will also serve as its distribution center in every urban area that has more than 500,000 people. This central store will serve the network of distribution partners in the country.
Nike will focus on shops that sell sportswear, and those that sell electronic products such as phones, iPods, tablets, and computers. Customers will buy the products in cash. However, distributors may qualify for credit facilities not exceeding AUD 5,000. This will enable them to stock their stores as demand increases.
Nike will not use any wholesale intermediaries in its Australian operations unless it becomes necessary. If projections for a particular city show that a fully-fledged distribution center is not economically viable, the company will collaborate with an existing distributor in that territory. The company will maintain its warehouses in its central store. The watches are not bulky. Therefore, they do not require large warehouses.
Price Determination
The following factors will influence the price of the product in the market. First, the cost of shipment of the goods, including port charges, will account for 10% of the product price.
Secondly, insurance costs will come to 2% of the overall cost. Statutory costs such as customs duty, import taxes, and value-added taxes will account for 20% of the cost of the goods. The company expects that the gross margin for the products will be about 50% of the landed cost. After factoring in all these costs, each watch will cost AUD 150.
Methods of Payment
The company will use various methods of payments. It will use consignment sales for retailers working under each of its regional stores. This will increase the effectiveness of record keeping. The company will also use credit notes whenever its retailers need more stock.
Proforma Financial Statement and Budgets
Marketing Budget Table 2 shows the marketing budget for the financial year 2014-2015
Table 2: Marketing Budget
Proforma Annual Profit and loss Statement
Table 3 shows the projected profit and loss account for the company in the financial year 2014-2015.
Table 3: Profit and Loss Account
Resource Requirements
The resource requirements for this venture are as follows. Nike needs to invest AUD 37,500,000 in the coming financial year to bankroll the venture. The company may invest a lower amount in stock and use proceeds from sales to pay for more stock. Secondly, the company needs to hire regional managers to spearhead its marketing campaign in Australia.
Each regional center will also require supply chain professionals, store attendants, and other business managers to ensure that the business operates well. Nike does not carry out any manufacturing activities. The company must find producers who can manufacture the watches to meet the projected demand.
References
ABS. (2014). Australia Bureau of Statistics.
Agility. (2014). Case Study Retail – Nike Indonesia. Web.
Bryman, A., & Bell, E. (2011). Business Research Methods (3rd Edition ed.). Oxford: Oxford University Press.
Cruz, B., & Mendelsohn, J. (2010). Why Social Media Matters to your Business. New York: Chadwick.
Dalal, S. (2007). Creativity And Innovation Driving Business. Mumbai: Creativity Innovation Books.
Daniels, J., Radebaugh, L., & Sullivan, D. (2011). International Business. London: Prentice Hall.
Forsyth, P. (2005). Competition Versus Predation in Aviation Markets: A Survey of Experience in North America, Europe and Australia. Hampshire: Ashgate Publishing.
Mongay, J. (2011). Business and Investments in Asia. Madrid: ESIC Editorial.
Nike. (2014). Nike+ Sportwatch GPRS. Web.
Walker, D. M., Walker, T. D., & Schmitz, J. T. (2003). Doing Business Internationally: The Guide to Cross-Cultural Success. New York, NY: McGraw-Hill Professional.