NIKE is a major company of USA with apparel, footwear and sporting equipments; generating more than $ 15 billion revenues during the financial year 2006 (FY06). This company is headquartered in Beaverton, Oregon with more than 28000 employees in the 160 countries of the world. NIKE is differentiated from other companies of the world due to its innovative products and marketing strategy in the world. The marketing strategy includes the celebrity, brand identity and logos.
NIKE's Supply Chain: In the overseas NIKE contracts many factories for its products. It is known that business model of NIKE was developed by the Phil Knight on consideration that the products can be outsourced on lower prices. NIKE moved its production towards the countries Korea and Taiwan when costs increased in Japan during 1970s.
NIKE started to contract for the shoes production as the Japanese markets matured; a change of supplier was seen there. With the increase in demand these suppliers further subcontracted into other less developed countries of the world like Indonesia, china, Vietnam and Thailand (Parloff, 2002). The brands of the NIKE become so famous that it gained athletic wear from the 500 factories of 45 countries in 1999. (Annual, 2003). As the production level of subcontractors increased the control of the NIKE decreased. However this trend was reversed in 1996 because the NIKE's factories become the hot topic of media.
It is necessary for the contractors to cut down the expenses to stay in the business and must get profit on this investment. Expenses can be reduced either in production chain or supply chain. NIKE wants the quality products and cannot sane in the supply chain. Operation chain is the place where the contractors can save the expenses.
Supply Chain of NIKE
Supply chain is the network of NIKE Company along with the business processes procuring the raw materials and transforming it into intermediate and final products. These final products are distributed to end users. A link is made between the suppliers, manufacturers, distribution centers and retail centers where the goods are supplied from the source through the consumptions. The flow of the material and payment is kept through the supply chain between the both directions (Lauden, ). The products of the NIKE sold throughout the world. NIKE designs and sells the sneakers, athletic clothing, socks and other accessories, equipments internationally. NIKE's finished products are fashioned by the contract manufacturers who are also the primary suppliers of NIKE. Sneakers are not manufactured by the scratch by the Company's suppliers. Sneakers provide the components such as the laces, eyelets and soles from the other suppliers.
They assemble these components into the final products. The suppliers of different components have their own suppliers. For example sole suppliers have suppliers for the synthetic rubbers etc. Following figure depicts the supply chain of the NIKE's Company. It shows the processes of the flow of information and managing the relationships between them. NIKE's efforts to capture the apparel market of women's sports are a good addition because before the 2000 men's feet fold were used for the women's feet. After that NIKE changed its approach towards the women and overhauled the women's apparel line. The purpose was to design and create the better fitting and colorful clothes for the women. In many major cities of the world NIKE has opened the Nikewomen stores.
The importance of the brand positioning is a crucial factor for the business growth of NIKE. Athletic shoes for the winner are a good example of the brand of NIKE. This company has focused from the start on the importance of the brands. Back in 1972, Phil Knight the CEO of the company persuaded the marathons to wear the NIKE shoes during the Olympic trials at Eugene, Oregon. In those Olympics the main four top runners had worn the NIKE shoes. Its products represent the desired potential attributes from the specific brands. NIKE has known its limits. When some enters the shoe markets the brand of NIKE seems naturally fit for the foot. When Phil Knight purchased the Cole-Haan then Company achieved the access to this segment of the business.
People who are involved in the positioning of the brand; its attributes and stir the emotions; which help the brands to be known in a meaningful way; are known as the Brand agents. The concept of the brand agent is used widely in NIKE Company; Michael Jordan and Tiger Woods serve as the spokespeople (Suzanne, 2007). It is known in NIKE that good marketing is more than promises and promotional hype; it means that delivering the good quality products to its customers. Running and basketball shoes are the initial success of the NIKE which resulted due to technical superiority. The top athletes were frustrated by the lack of the innovative equipments necessary for them. Since that NIKE leads in the industry and continually giving its customers more than athletic gear.
This is not true for only shoes; except the shoes other brands equipments and apparel; NIKE markets the sports culture. NIKE does care for its customers in several ways. The entire business of the NIKE depends upon the promoting the sports not the sales. NIKE is considered as not only the best quality producing company but also good caring company of its customers. By caring the customers NIKE has achieved a big share in the market. The flat-out of the NIKE dominates the world's footwear market. It captures the 47% share of the US market for the eye popping while its competitor Reebok takes half of NIKE's shares (27%). The logo of the NIKE is seen on many new sports types of equipment such as baseball, golf, hockey, hiking, wall climbing and in-line skating etc. The success of the NIKE lies in focusing the customer and committed marketing.
Marketing Segmentation and Targeting at NIKE.
Company like NIKE focuses upon the marketing based upon the customer needs; identifying the needs of the customers and then developing the marketing programs and satisfying their customers. There are requirements of different customers and NIKE is acts in multiplicity ways to satisfy their customers; means that NIKE is in a position to serve all its customers in market very effectively. Marketing Segmentation is a process by which clusters of customers are identified which need the similar products and respond the in a unique way by the given marketing efforts. When various segments in the market are identified then NIKE decides to most effective and attractive segments to be marketed. Needs of these segments enforce the NIKE to tailor the marketing efforts (Jobber, 2009).
This kind of segmentation focuses upon the race, gender, age, occupation, income, size of family and level of education. NIKE targets the customers of age ranging from young to adults with middle age. Middle class to upper class is the buyer of the NIKE's products. NIKE does not identify the size of the families but the teams; teams of the any sport in any part of the world. These are the targets of the NIKE in the world.
Marketing Mix at NIKE
According to Kotler and Armstrong (1991) marketing mix is a set of tools used by the enterprises to achieve the objectives of its targeted market. There are many tool developed for the marketing mix but McCathry has classified these tools in main four classes. These four classes are also called as the 4P's terminology. It will be required to know these four classes
Product: It is concerned with right product for the right services and products for the target market. NIKE always designs those products which are in demand of the consumers by using the innovative ways of emerging technologies. Price: It is concerned to ensure that product or service provided is at the price which makes it more attractive for the consumers and ensures the future profit for the organization. NIKE focuses upon this category of 4P's as it recognizes the buying values of its consumers.
Place: The availability of the products in the market where it is wanted is ensued by this class of 4P's. NIKE always selects the markets according to its demands. As told earlier the advance stock for the six month is available on its stores. NIKE has very extended infrastructure to provide its products in the far way countries of the world. Promotion: This type of 4P's concerns with the ways to promote the target market for the existence and benefits of the services and products. It is aimed to grab the hold in the markets and providing the benefits to its consumers. By promoting the value of products consumer feels happier to purchase the products of NIKE.
This 4P's paradigm is becoming the most unchallenged model in the sport market; but sport industry varies from sport team to sport goods manufacturers. Sport consumers get the benefits by the combination of these two services. Therefore the sport industry formulates the different strategies of marketing mix due to dissimilarities. Kotler (1997) has provided the analysis of market environment which is carried out into two levels such as the analysis of the external as well as the internal analysis.
NIKE is known due to well managed brand's strengths. Brands of NIKE are superior in quality, style and reliability therefore consumer pay more for its brands. The owner of the brands expands the share of market, commands the higher prices and creates more opportunities to generate more revenues as compared to its competitors in the market.
Portfolio of brands
NIKE owns the five subsidiaries that reach the segmented product and marketplace of the world. The brands of the NIKE represent a different lifestyle diversifying the long term growth by defining its consumers. This diversification strategy has enabled the NIKE to leverage the core competencies and resources in products, operations in deriving the profits and growth and marketing. NIKE keeps relations with its consumers to maintain its competitive advantage over other competitors. For this purpose NIKE focuses upon the seven categories such as basketball, action sports, men's & women's training, soccer and sportswear. In this way NIKE enhances the brand image by highlighting the sports concerns and connecting more athletes. NIKE has known its valuable and knowledgeable customers as it has more choices of sportswear as they did in past. Company evaluates its products online and finds the weaknesses in sale campaigns and marketing. NIKE knows to extend its business by entering some different categories and sustains to its business competitions. For example NIKE plans to extend the brand name by introducing the new product extension.
Largest company of footwear and Apparels, Nike does differentiate itself from other companies of market. NIKE differentiates in several ways and is known as household in every country of the world. NIKE operates in the major sports of the world and sponsors the popular athletes in different games. This is done to achieve the future growth and confidence by building the brand equity. Retailers of the NIKE order in advance for the products and allowing the substantial use of future ordering programs at the stated prices. Extra cash is saved by minimizing the inventory costs, freeing up the cash and reducing the purchasing costs; these costs are uses in other areas. It allows the manufacturers of NIKE to adopt the lean manufacturing because they know the needs of the customers in advance. Waste resources are eliminated by the cost efficiencies in production of NIKE. A well diversified production mix is employed by the NIKE by the manufacturers of the NIKE's products. It is achieved through specific procedures of manufacturing the products and giving the quality products.
The high quality products of NIKE are sold for the several products as compared to its competitors who cannot replicate it. NIKE is always making appearance in the emerging markets of the world and generally helping in the race. Rivals of the NIKE include the adidas, Puma, Asics and New Balance. The athletic shoes of NIKE are very comfortable for the sportsman; they spend more money because they believe that NIKE's shoes are more favorable in varying playing conditions. People like to purchase the products of NIKE due to its quality and value. NIKE Company has adopted several strategies. The big events of the world are sponsored by the NIKE such as Olympic games, FIFA cup, AC Milan and other many games. An iPod partnership is being expanded between NIKE and Apple to produce the shoe + phone schemes. Other competitive advantages include the NIKE as the local market leader because it is also investing significant amount in research and development. NIKE has been led the football and basketball for the long term because it has acted upon the strategy to provide the players very useful information to improve their performance.
Focusing on Emerging Markets:
Emerging markets in Latin America and Asia can give leverage over the other companies in India and Japan. It has also tied with adidas for the leadership in China. NIKE can grow its business by making the partnerships with the local apparel manufactures in order to control the strength of local manufacturers. It can be achieved by getting the critical information about the local markets. In this way NIKE can become the medium for the sale of the local manufacturer's products. In China NIKE competes with local manufacturer Li Ning and adidas. Small manufactures make it tough for the adidas to compete with NIKE and large amount of share of adidas is eaten by these local companies and NIKE itself. A new market channel is opened for the NIKE by the emerging markets.
In the early part of this paper introductory remarks of NIKE describes the start of NIKE and its development is depicted. Outsourcing and Supply chain system of the NIKE are also part f this part. Overall the paper focuses upon the importance of supply chain of sports and equipments in existing and emerging markets of sports industry. It has been discussed that how the brands of NIKE are more liked by the consumers in the market. It is also defined that NIKE is not only producing the spots products but also sponsoring the sports teams.
For NIKE to gain the big market share and take the lead of the world's sports industry particularly athletic footwear must implement the marketing strategies suggested. It is believed that NIKE can get greater reputation in innovation and technology in comparison to other companies of the world. Athletes strive for the better performance in the playgrounds and NIKE's shoes enhance their performance and reputation of NIKE. Lifestyle will enable the NIKE to gain favorability over the adidas in the market segment that cannot compete with the NIKE. Finally building the relationship with local manufacturers and focusing upon the emerging markets; developing the athletic footwear and other equipments can grab the large piece of adidas market share. Thus, if NIKE implements these strategies it can go ahead of other companies of the world in sports industry.