1. How has the industry in which Nike resides been doing over the last 5 years?
ID: 2441449 • Letter: 1
Question
1. How has the industry in which Nike resides been doing over the last 5 years? 2. What are the pros, cons, and risks associated with Nike’s core marketing strategy? How have they managed to develop a strong customer relationship with their target market? 3. Who are the top three competitors of Nike, and what are their advantages/disadvantages with respect to their product/service development? 4. Looking at the competitors you discussed in question #3, what would you recommend as being the next steps for these competitors and subsequently the next steps for Nike to combat these competitors?
Explanation / Answer
1. It is observed in the last 5 years that people belonging from middle-age groups have become health conscious and are following healthy routines. More and more people are participating in marathons, jogging and daily walks, which has increased their need for athletic outfits while exercising. Exercise has become a part of their daily routine and today’s generation does not see physical activity or yoga as a one-time or a boredom activity. Whether going to gyms or taking a walk, jogging or working out to maintain a healthy body has also become a status for people to flaunt about. In that case, Nike and its competitors have given a definition to the outfit to be worn while exercising. The industry has gained a boom in last five years due to more awareness and desires among individuals to stay fit and healthy.
2. Nike is a niche, developed brand which is strong in maintaining its brand image by celebrity marketing. Using sports stars and bollywood actors as ‘fitness symbols’, Nike relates with the common population and encourages them to achieve a healthy body. This core marketing strategy of Nike has its own pros, cons and risks:
Pros – Nike relates well with its target market, the sports enthusiasts, athletes, well – off customers, brand conscious customers – which makes it easier for them to make ad campaigns which target such groups easily. The phrase ‘Just Do It’ is a motivational slogan to encourage customers to build the body shape they want to be in. Also, the consumers’ trust is built and stays with the brand because of the quality and loyalty it delivers.
Cons – Nike is a well-established brand. The brand is mainly afforded by people belonging to the higher income groups. Here, Nike fails to associate with the general, middle and lower income strata of the society due to its high rates. Nike’s main focus has been on the production of high-quality products with cutting edge technology and selling these at high and competitive prices.
Risks – The consumer’s tastes and preferences keep on changing from time to time. In such a dynamic environment, keeping a place and hold of the brand with its customers is a big task. Along with, international expansion makes it riskier. The competition the brand Nike faces is intense. In addition, the influence of spokespersons poses more risk for their strategies.
With this, Nike has been rewarded with strong customer-built relationships. Nike follows the transaction marketing (following 4Ps – Price, Place, Promotion and Product) as well as relationship marketing (maintaining a healthy relationship with its customers by providing them a variety of services). Nike produces a variety of new products, which are in the initial introduction stage of the product life-cycle, in which case, transaction marketing is more suitable. It is also a global established brand in the latter, maturity stage of the product life-cycle, in which, building customer relationship, customer retention and the customer trust is the most important thing. It believes in building connections with its consumers. Nike is good at winning trust among the customers. The phrase ‘Just Do It’, is catchy and encourages an individual to achieve what they target for, fitness.
3. The three main competitor of Nike are: Adidas, Reebok and Puma.
Adidas: Adidas is a sports apparel brand, manufacturing comfortable products, very light weight and temperature. It focuses on comfort more than any other factor, which makes it stand out but at the ss, it lacks in design and fashion as compared to its competitors. It operates vis Adidas brand and as a strong subsidiary in Reebok, which gives it a strong value in the market. It is a strong competitor of Nike for footwear as well as for clothing and accessories.
Reebok: It is a subsidiary company of Adidas but operates independently. It is a brand associated with trendy designs for sports footwear. It always aims to lead through its creativity. Its main focus is to be a consumer-friendly brand which promotes individuality.
Puma: Puma is a brand well known for its running shoes, clothing and apparels. The founder of Adidas and Puma were brothers and Adidas being older than Puma, is far ahead of it. But, Puma still accounts as one of Nike’s strong competitors. Puma has not restricted it as only a sports brand, but, has emerged as an independent clothing brand too.
4. Nike is a strong competition for these brands – Adidas, Reebok and Puma, but it only deals with a wide range of products in sports category. The footwear market is the major for Nike, which is risky for the brand to diversify only in one domain. Nowadays, lifestyle and status is directly related to the brands one wears. This growing brand consciousness has made brands like Puma and Adidas to diversify into more areas than only shoes. People want fashionable outfits, which are provided by the competitor brands easily. It is observed that women spend a lot on athletic footwear although the majority of income for these brands are generated in unisex and men’s categories. However, the competitive brands like Adidas provide a variety in women apparels and sportswear. Keeping in mind the growth in this area, Nike should take a step forward in expanding its business in women’s sportswear too.
Since, Nike is already an internet friendly brand and using web as a mode of marketing and selling its products, it will continue to expand its consumer base with the same. Nike should note that the people’s tastes and preferences have changed in past few years and customers focus more on style statement along with comfort and status. Thus, Nike should also focus more on trend along with comfort and quality, which is already a marketing strategy for some brands like Adidas and Puma. Nike should come up with some unique market trend in the future in order to be a game changer in the market.
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