Market Growth Strategies For Nike Marketing Essay

2519 words (10 pages) Essay

1st Jan 1970 Marketing Reference this

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Nike is designed, developed and marketed for athletic, casual footwear, active sports, sports equipment and other accessories. Nike was the largest seller for athletic foot wear around the world. In 20th century Nike will be pronounced as NI-KEY, initially Nike began as a very small distribution company in the back side of knight’s car. Nike originally is also known as Blue Ribbon Sports. The founder of the BRS is

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Bill Bower man field coach in the University of Oregon and his partner Phil Knight in 1964.At initial stages the BRS operated as a distributor for Japanese shoe company Onitsuka Tiger, making most sales out of Knight’s vehicle. In 1966 the company profit grew quickly and opens its first retail store, located on Pico Boulevard in Santa Monica, California by 1971, at that time the relationship between BRS and Onitsuka tiger. In 1971 they started manufacturing their own line of shoes, BRS first introduced shoe is soccer shoe with brand name Nike, referring to the Greek Goddess of victory and the swoosh trade mark. In 1971, the swoosh logo is created and designed by a lady student Caroline Davidson is a student at Portland state university.BRS soon changed its name to Nike and its tagline is “just do it” in 1980.The world head quarters of Nike was established in Portland,Oregon,where it had all began. After 2000s to present Nike is the largest manufacturer and supplier in the world.


The basic business activities are design, development, global marketing of high quality of foot wear and other accessories products. The Nike swoosh logo is the one of the famous logo in the earth; it is the symbol of great marketing on the earth. Nike goods are mainly depends up on the various fitness activities. The main goal of the P.Knight and B.Bowerman is to win for the “ultimate victory”, they succeed his policy day by day.

Nike offer the products in footwear like



Basket ball


Casual shoes

Skate boarding


Volley boll

Further the company offers other equipment like bags, socks, electronic devices, and golf clubs and other accessories under the brand of Nike. In May 31, 2010, it operated more than 360 stores in United States as well as 343 retail stores internationally. In worldwide they have totally 23,000 retail accounts.

The total number of full time employees working in the Nike are 34,000

The major competitors of the Nike are Adidas and Reebok

Market Share

The present market share of the Nike is 47% in domestic footwear industry with sales of $37 billion, throughout the Asian region the Nike was manufactured from 25years and over 500,000 people directly involved in the production of their products. At present situation the output of the Nike in China, Indonesia, and Vietnam, but they also have factories in Italy, Philippines, Taiwan, and South Korea.

Generic Strategy

Initially the generic strategies were used in the early 1980’s, and seem to be more popular today; they focus on mainly three strategic options that wish to reach a competitive level advantage. There are three types of generic strategy using Michael Porter in 1980.The three types of generic strategies are

Cost Leadership



The below figure shows the Porter generic strategies are

The Porter Generic strategies describes the competitive advantage in the case of low cost and higher cost and it describes the competitive scope, overall cost leadership, cost focus and in differentiation focus.

Cost Leadership Strategy

Nike is the number one footwear brand works with different top suppliers. The main of the Nike Company is to produce lowest cost and distributes to suppliers in the industry. The strategy of Nike is to controlling the marginal customer accounts, reduction of input costs and tight control of labour costs, lower distribution costs. Disadvantage of the cost leadership strategy is lower customer loyality, the reputation of the company may also result in the producing low quality of the product and rebrand itself with a good reputation with leadership.

Competitive advantage through Low Cost Leadership

As shown in the below figure they describes the competitive advantage firm and may supply through cost leadership.

Co represents the original cost of the production.

Cn represents the new cost of production.

SP is nothing but the original selling price

Po is the original profit margin

Pn is the new profit margin

Differentiation Strategy

The second type of generic strategy is the differentiation strategy. Differentiation strategy is nothing but to differentiate the product or service.

Differentiation strategy also has many features that make the product or service unique, the possible features that may include


Example: sear tools

Brand image

Example: coach handbags, Tommy Hilfiger sports wear


Exampl: Hewlett-Packard laser printers


Example: Jenn-air ranges, Whirlpool appliances


Example: Makita Hand tools


Walt Disney Company

Dealer network

Example: caterpillar construction working equipment

Focus Strategy

The final type of generic strategy is also known as focus strategy. The focus generic strategy can be focus on a particular customer, channel of distribution, market niche and geographical area. The Firms which are using focus generic strategy simply apply to an other two generic strategy principles to a segment of the large market. When the customer has different preferences or some specialized needs they effective on focus strategy. In the case of focus strategy firms can design new products especially for customers. The focus strategy is always creating problems for firms in the case of Market size and another problem is competitors may find within the target market. In olden days United Parcel Service is the unique one dominated in the delivery business. Later they facing new competitor such as Federal Express and Road way packaging service.

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Strategic Scope and Strategic Strength

The main strategic scope of the Nike is to supply athletes and aspiring athletes to all over the world that will be characterised by the features from the shoes and gears. At present in markets they will not provide the limited athlete people from all type of walk for doing exercises and having just fun. The strategic strength of the Nike is created for the people especially for the athletes, sports and show off.

Mission Statement

“To be the world’s leading sports and Fitness Company”

Mission statement is very similar to vision statement but slight difference in weakness. The purpose of the mission statement is broadly identifies the business were we are in such as sports, fitness and industry, but it does not specify any products and service we provide. Nike mission statement also fail to mention the distribution of channels and customers and the mission statement is create for both social responsibility and for market share. The Nike’s campaign “just do it” continues their inspiration for sport and creates meaningful change.

Pest Analysis

It mainly looks at the political, economic, social and technological influences on the company. The employees in the Nike are both traditional and in-traditional distribution channels in almost 200 countries with primary region markets such as United States, Europe, Asia specific, and the Americas. Nike is an international organisation and they need to focus on environmental factors and macro environmental factors such as political, Economics, science and technology.

Political analysis

The economic policies created by the government are to foster the growth of business. Fortunately the US policies helped to provide advance for its products. The US government supported Nike particularly in low interest rates, Stable currency conditions and the tax systems.

Economic Analysis

In the case of economy the biggest threat of the Nike is economic recession during this the growth will be adversely affected. The material prices and labour cost are growing up and consumer purchases are slowing down. The growth of the Nike was not just affected by the local companies but also international companies. The overall results generated in the sales by Nike in athletic footwear and remained stable. The variances occur in the global market sales between peak and lean seasons.

Society Analysis

Now a day’s people are very health, diet and getting more prominence and joining in fitness clubs. There is an heavy demand for fitness products like exercise apperal, sport shoes and other equipments. However Nike failed to

Foreknown the problems by factory conditions and at product locations in Asia.

Technology Analysis:

The IT technology used by marketing information systems very effectively. Nike applies the technology to the innovation, segmentation and differentiation for its business. In athletic foot wear industry Nike becomes a world leader. This strategy has translated in to huge sales of Nike’s products.

Porters five forces model

The Porter’s 5 forces model is used to describe the sources of competition and how to gain advantage over them.

Potential Entrants

Few other sportswear manufacturers like Reebok and Adidas expanding their portfolio

Few of the products available for cheaper prices from the Far East.


In past decade the buyers of sportswear have changed

They increasing in Purchasing Women shoes

In generation Y they have different tastes and purchasing methods


For the purpose of professional goods there is no substitute goods but in the case of fashion item there are many other goods that can be purchased


We can provide the Nike economies of scale using production facilities in the Far East and the problems arising this factory are switching to make their own goods, labour, political and shipping of the goods.

Competitive Rivalry

The major competitor of the Nike is Reebok, they offering more choice of shoe, sports personalities and sponsoring sporting leagues.

Adidas have good product mix, covering a wide range of sports and they have ability to recover the problem.

Inbound and Outbound Logistics

The main aim of logistics is to increase growth in revenue and units while decreasing emissions and they need to take climatic responsibility of its logistics. They use in low production cost and non-core activities. The Inbound logistics is mainly concentrated on the core-competences of product design, Marketing and technology like AIR SOLE tech.

Logistics is nothing but the management of the flow of goods including energy and people in order to require their requirements of consumers and they involve the combination of information, transportation, warehousing and packaging.

Outbound logistics is nothing but the activities required to deliver the product to customer include warehousing order fulfilment e.t.c, the activities means to maintain the product value, customer support.

Operations Technologies

The technologies used by the Nike are, initially the first advantage used is Ecommerce and the variety of products offer on the web, products like footwear, apparel, sporting equipments e.t.c.Only the Nike company gives best opportunity to the customer to design their own shoes online.The another special technology used is AIR SOLE technology. The operations that are covered by the Nike are Process, Materials, Machine tools, packaging, inform systems and maintenance

Building design e.g.

Value Chain

Value chain means to understand what the activities through which firm can develops a competitive strategy and creates a shareholder value and it is used to separate the business system in to series of several business activities is known as value chain. The main aim of the value chain is to bring the products to markets and produce raw materials to retailers and delivers the finish products to consumer. Value chain means different companies work together to satisfy the market demands.

The Generic Strategy of Porters Value chain

The primary value chain activities are inbound logistics, operations and out bound logistics, marketing and sales is to identify the customer needs and the generation of sales.seevices provided to the customers.

These primary activities are supported by infrastructure of the firm, organizational structre, control systems and company structure.

Human resource management means comes under employment recruitment,hiring,training.t.c

Technology development and procrumentmeans purchasing materials, supplies e.g.


Nike is one of the biggest company in the world and always be a competitor for other competitors in the case of athletic wears. They continuously improve the financial performance from equipping athletes with the sport equipment in the world.. They keep on going on the product lines and they became a most powerful global brand.

The basic strategy of Nike is to provide the customers with good quality products.

Nike always was the good competitor for the other companies continuously. Nike mainly concentrates on the sportswear for the sports person and also concentrates on the style of the product how it looks!

Also to introduce new models to into the market.


Sales and income trends:

At the end of the of May 31st 1999 the fiscal revenue was ended by then, and declined by 8% and prior year was $8.777 billion. This graph depicts the marked since the first time of 1994 has declined since then. Considering this year’s revenue nike have achieved around 300% revenue over a period of 10 years span of time.

The final revenue declined in the year 1999 is the net income is increased 13%.The above graph describes the net income trends in millions by the ending of facial year per the above graph the income decreases in 1998 and 1999.The largest growth was 43% in 1977.

Strategic growth of competitors

The above mentioned graph depicts increase of Nike among various competitors.

During the time there sneakers were sold like hot cakes in the market which were manufactured by Nike Company. For the year 2009.the sneakers which are manufactured by Nike are sold around 192 which were collected from shoe source. Comparing with the other competitors number of shoe sold by Nike are high.

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