Introduction
Nike is the sports retailer brand chosen to be examined. Presently, Nike is one of the world’s largest sportswear manufacturers. In the last few decades, it has become one of the symbols of the athlete world. The sneakers of the company have become the subject of daily wardrobe of many people. Customers enjoy its high-quality products and originality, making the company not just a clothing label but a lifestyle choice. The branding image, established among clients and suppliers, makes Nike the most demanded apparel merchant. Therefore, the company’s unique marketing strategies allow it to sustain its leading position in the market.
Competitive Analysis
Nike’s original goal was to provide professional athletes with specialized products and clothing that would help them improve their performance. Due to its success, Nike has entered the international market as a manufacturer of apparel and accessories for the amateur segment. The company’s global recognition is one of its strengths. The swoosh symbol and the legendary trademark already speak for the brand and its outstanding image and reputation. Moreover, Nike’s client base comprehends millions of loyal customers around the world. The responsiveness and feedback from them allow the company to adjust and offer desirable products. The production, operated in developing countries with lower manufacturing costs, reduces prices in order that products are affordable and inexpensive. Hence, branding image, audience, and pricing strategies are the main strengths of the company.
Despite the abovementioned advantages, there are some weaknesses, which put Nike in a vulnerable position The low cost of manufacture implies cheap labor, leading to the conclusion that Nike’s working conditions are poor. However, a considerable share of its products is purchased via retailers. Therefore, Nike is dependent on suppliers, which possess the power of manipulating prices and quality of goods. Furthermore, the company is heavily reliant on the U.S. market despite worldwide fame and awareness. An economic breakdown in the country may lead to financial collapse, reducing Nike’s sales and growth. Thereupon, inadequate terms of employment, dependence on the American market, and connection with third-party producers problematize the brand’s perspective.
Both rivals possess a set of strengths and weaknesses, which benefit or disadvantage Nike in the market. Puma and Adidas employ substantial Research and Development (R&D) sector, allowing the companies to innovate their product lines. Moreover, the diversification of goods and services allows them to cover a large segment of customers, thus, increasing growth rates and revenue figures. Nevertheless, Puma and Adidas face tough competition in the sports footwear and apparel market, struggling with big players akin to Nike. In addition, the companies’ limited line production with celebrity endorsements and premium prices narrow the potential customer base. Thereby, the competitors’ R&D branch is rife with novelties, while a diverse product range boosts sales. Nonetheless, the rivalry level and top charges are the deficiencies.
Marketing Strategies
The marketing mix consists of four major components: product line, pricing policies, distribution channels, and communication methods. The product element refers to goods and services provided by a business (Thabit & Raewf, 2018). Nike’s merchandise line is comprised of athlete shoes, clothing, and various equipment. The brand focuses on the quality and availability of choice for customers. The most popular product remains to be footwear for all sports enthusiasts. Nike grows and competes by providing special lines, which include a particular set of appliances and apparel for different types of sport. For example, tennis or fencing shoes with lighter weight and durability give athletes an advantage in their fights. Moreover, the brand is flexible in keeping pace with ever-changing and evolving technologies by offering goods with connection to smartphones to assess performance. The introduction of such novelties affects marketing strategies by concentrating on celebrity endorsement and active visual presentations. Thus, the product component involves accent on shoes and persistent innovation and modification of the existing goods.
The next element of the retailer mix is a place. It can be defined as a “series of co-dependent companies” trying to provide a product or service (Kotler & Armstrong, 2010, as cited in Othman et. al., 2019, p. 868). Nike’s distribution channels include online and physical stores together with E-commerce platforms and retailers’ activities. The latter one accounts for the most significant amount of sales, thus, having a presence on a global scale. In order to minimize transportation and manufacturing costs, Nike’s production units are situated in the countries of business operations. Such a tactic increases overall efficiency and maximizes profit levels. Amazon, eBay, and Flipcart are the main trading websites where goods are sold electronically. The portals give access to Internet users and attract them by the fast and easy method of shopping. Lastly, there are exclusive Nike physical shops located in selected regions with a targeted audience. Therefore, the place factor consists of the four delivery channels, by which consumers are able to reach out to the brand.
The price is a subsequent element to be examined in Nike’s marketing mix. Price may be described as a “value” granted to a good or service (Antonella, 2017, p. 637). The dominant status in the market stems from its pricing strategies, which are based on customer value. The tactic implies a client’s willingness to pay for a product so as to maximize profits and sales. Consequently, the obtained figure is used to set a price. The research of the market plays a crucial role in determining major charging tactics considering Nike’s sensitivity to prices. The strategy builds strong relationships with consumers and facilitates further loyalty to the brand. Thus, Nike products can be purchased by people of all income levels. Hence, control over prices and careful attention to the customer base and its financial capabilities put Nike in a leadership position.
Thoughtful marketing activities have built a foundation for the brand’s reputation and image. The promotion factor can be explained as the knowledge given to customers so they can decide on the purchase of products (Antonella, 2017). The traditional methods of marketing indicate old-fashioned ways of offline trading (M. Kim, & J. Kim, 2017). Physical workshops are where Nike provides information on goods and services available. Additionally, print advertisements or banners promoting new sneakers or clothing line is another technique, which is exploited by the brand. Direct mail in the form of brochures and fliers is still a relevant method of advertising the latest offer. At the same time, the company uses digital ways of promotion. Social online platforms such as Youtube, Facebook, and Instagram are where Nike promotions appear as a pop-up sale. The company has its own website with athlete celebrities promoting products to their audience. Finally, Nike’s electronic billboards operate in major cities of distribution such as New York, London, and Paris. Hence, the promotional component includes traditional and digital procedures of advertising.
Competitive Advantages
A competitive advantage (CA) allows a company to dominate the market, build customer loyalty, and earn higher profits. CA refers to “resources and capabilities and external factors,” which are possessed by a business (Syapsan, 2019, p. 7). Generally, Nike does not have a CA in the product element since its merchandise line is not as diverse and unique as its competitors’ one. However, the distribution channels are the reason to have a CA as the company’s global presence allows to outperform Puma and Adidas with less recognition. What is more, pricing strategies are another area of a beneficial position. Compared to Puma, Nike’s prices are flexible and accommodate the needs and abilities of different customers. Considerate advertising strategies give Nike CA in promotion with its connections and platforms. Thereby, the company has CAs in place, price, and promotion, while the product component remains to be a disadvantage to Nike.
In essence, it can be mentioned that competitive analysis demonstrated Nike’s status and position with respect to its main competitors, Puma and Adidas. The strengths and weaknesses display Nike’s original image, faithful consumers, and profitable business operations as well as price sensitivity, poor working conditions, and reliance on the U.S. market. The marketing strategies show that products are limited to differentiation, goods are traded effectively, prices are charged according to customer needs, and promotions are conducted via traditional and digital methods of communication with customers. Comparing to Nike’s rivals, it is evident that the company possesses CA in the last three components with the first one being deficient. To be more precise, goods are not enough diverse in choice as the competitors’ ones. However, distribution channels of physical and online stores are successful in trading activities, prices are flexible and adjustable, and promotions are powerful to build customers’ loyalty to the brand.
References
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Othman, B. A. et. al. (2019). The influences of service marketing mix on customer loyalty towards Umrah travel agents: Evidence from Malaysia. Management Science Letters, 9(6), 865-876.
Kim, M. & Kim, J. (2018). Linking marketing mix elements to passion-driven behavior toward a brand: Evidence from the foodservice industry. International Journal of Contemporary Hospitality Management, 30(10), 3040-3058.
Syapsan, S. (2019). The effect of service quality, innovation towards competitive advantages and sustainable economic growth: Marketing mix strategy as mediating variable. Benchmarking: An International Journal, 26(4),1-22.
Thabit, T. H. & Raewf, M. B. (2018). The evaluation of marketing mix elements: A case study. International Journal of Social Sciences & Educational Studies, 4(4), 100-109.