The Strengths And Weaknesses Of Nike Marketing Essay
Nike is known by everyone everywhere. They have created dominant brand recognition. Nike is the number one athletic apparel company in more than ten countries. They have distribution centers all over the world. The advertising agency Nike has contracted has grown to three offices, each in different countries, to better reach their target audience on a local level. You can go anywhere in the world with the Nike logo and almost anyone would recognize the brand. This show how their hard work in the advertising department has paid off. In 2006, Nike spent $134 million in marketing. With a revenue total of $16.3 billion in 2007, Nike can certainly afford such a large marketing bill. Nike is strong regarding its research and development department based on its growing and ground-breaking product range. The Nike Sport Research Laboratory is responsible for innovative ideas like the NikeID online store where customer can purchase custom made shoes. Nike started out making only sneakers now makes things from specific sports equipment to performance apparel. Nike defiantly knows how to expand well into the athletic sporting market. Nike has a strong presence overseas and sales their product worldwide. They always have the elite athletes promoting their product. They have Lebron James, Kobe Bryant and before they had Michael Jordan. Those athletes have helped in playing a role in creating brand loyalty. They have achieved this through 40 years of athletic of consistently developing superior products which appeal to consumers both domestically and internationally.
One serious weakness with Nike is that they ignore to see problems in their labor and factory conditions. In the 1980s, Nike contracted most of their manufacturing to factories in poor nations such as China, Vietnam, Indonesia, and Mexico in order to get the lowest manufacturing costs. Instead of paying higher wages, they were able to increase profits by paying lower wages to people in less developed countries. In 1996 Nike was uncovered for child labor laws in Pakistan. This led to a lots of negative publicity. Many people began to boycott their product. Many human rights groups formed alliance to protest the treatment of employees in these overseas factories. Even students at the University of Oregon, a college which depends heavily on the donations of Nike founder Phil Knight, rallied and signed petitions against the company, which put a strain on the relationship between the two organizations. Nike saw a small drop in sales after this scandal broke. Though this scandal has tarnished Nike’s reputation for more than 15 years, they have remained on top throughout it all. Another issue Nike needs to address is that it has such a high price for apparel compared to its competitors, granted the quality is high but many consumers are turned away by the expensive price.
One great opportunity for Nike is to promote their brand as fashion as well as athletic wear. There are many consumers who see some Nike products as a fashion sneaker and wear their sneakers for that purpose instead of just athletic wear. Sneakers like the air force 1’s and sneaker collections like the air maxes, Nike dunks, and the Jordan collection are worn as fashionable sneakers just as much for performance. In celebration of the Olympics’ this summer, Nike revealed a new product line meant to celebrate Nike classics, such as the “Air Force 1”, the Nike “Dunk”. Nike’s greatest opportunity is China’s market which is expanding speedily. China was a $600 million dollar business for Nike and the largest business Nike had outside of the United States in 2006. Nike is the leader in the market for sports apparel in China; it still has the opportunity to grab a larger market share, which could result in hundreds of millions of dollars more. Nike is the first company to work with Chinese athletes and create a look which includes their culture. Nike has created a competitive advantage over its competitors. Nike has an even greater opportunity to take advantage of on the China marketplace when they sponsored the 2008 Olympics in Beijing this summer. This event was watched by billions worldwide and allowed Nike to strengthen their relationship with China by proving their products value. Once China’s marketplace has been established, expansion into other countries can do the same. It has a good judgment of marketing by sponsoring top athletes from different sports. Nike has prominent athletes from all major sports, which allows them to connect with a wide variety of consumers.
Some threats that the Nike Company may have are their competitive brands. Since Nike is the highest priced athletic brand name that puts them at risk for losing many of their customers.
Nike faces a lot of competition. The shoe industry alone is highly competitive. This competition makes it hard for Nike to constantly set themselves apart from their competitors. As an pioneering leader, Nike is regularly the source of replication. For every new improvement, Nike has a very short lead time before their competitors release a similar product. The industry itself is becoming increasingly price competitive. Nike produces a high quality product and sets its prices as a result. Nike is well known as a first-rate priced product. With this sort of replication, competitors can sell similar products for a cheaper price. Price sensitive customers will then go with Nike’s competition. Nike has many competitors, just looking at the shoe industry. While they are currently the best in the industry in terms of market share, in 2005, two of Nike’s largest competitors, Adidas and Reebok, merged into a single company in an attempt to close the gap between themselves and Nike. When Nike became the victim of public scrutiny over its oversea factories, both companies started to make improvements in their oversea factories to improve their image over the industry best. Another strong competitor is New Balance, a privately owned company based in Massachusetts which produces mostly women sneakers. New Balance is dedicated to selling products that are “made in the U.S.”. With Nike’s poor public opinion of overseas manufacturing, this could be a big benefit for New Balance. New Balance’s commitment to customer loyalty allows them to spend less on marketing. Other competitors include Skechers and Puma. Skechers main focuses is on stylish footwear, using popular media personalities such as Carrie Underwood for its marketing. The German based company Puma is also a rapidly growing company. Puma introduced a five year plan starting in 2006 to expand into India and China, as well as launch five new product lines. Companies like these are not big enough to be a threat to Nike’s success now, their swift growth makes them possible threats in the near future, and Nike will need to monitor their success.
Nike is obviously the top of its business, but no company is invincible. Nike has several avenues of advancement. If they want to continue to build on lead and maintain their dominate status in the industry, they need to take a hard look at their mission and define it in S.M.A.R.T terms. This will give the company a constant goal and a direction to move in instead of being complacent waiting for its competitors to catch up. They need to make it clear not only that they want to stay on top, but how they will stay on top. They have a unique opportunity with Google their and Joga.com. The ability to reach some of their target customers in such a fashion could be a huge marketing advantage. The site needs to be finished before other networking sites take over. Nike needs to know what its competition is doing and needs to prepare to counter anything the competition puts up against them. The most important thing they can do is improve labor circumstances in factories. The hard part for Nike is maintaining low costs while still keeping the brand equity they are known for. In order to do this Nike needs to have fewer suppliers and more calculated relationships with the ones they already deal with. Making these adjustments, their reputation will become positive and they can gain back the customers they lost due to negative publicity. Nike has always been associated with high quality retail products. They now need to be associated with the same type quality when it comes to labor and manufacturing conditions.
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