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Nike’s Marketing in the United States

Nike’s marketing strategies are the key component of its successful management system. One strategic fit applied by the company is its tendency to use professional athletes’ experience to develop products for nonprofessionals. This strategy is based on Nike’s mission to provide people who are not professional athletes with high-quality products that will expand their horizons and help them realize their potential. Another strategic fit implemented by the company’s management team is developing a substantial number of value chains. Some examples include Nike Blazers, Nike Air Max, Nike Free, etc. This strategy allows the company to achieve its goal of expanding influence to more markets and conveying the main messages of its mission. Finally, Nike is also using similar names for many of its brands, which also helps the company to increase and maintain the visibility of its products.

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Although Nike is still the world’s most profitable sportswear brand, it also had its failures. One of Nike’s businesses that can be considered a cash hog is its FuelBands project. In 2015, the company was sued by customers who claimed that Nike’s fitness trackers were giving inaccurate reports. Consequently, the company had to spend a large amount of money to settle the lawsuit (Kim, 2020). It can be argued that the major reason why this project has failed is the fact that it was only aimed at iPhone users. The company launched the app for Android users almost three years after its original launch. Thus, being short-sighted in assessing the target audience led to significant financial losses. In turn, the unit that can be considered Nike’s cash cow is its largest revenue source, footwear. It is the company’s largest business segment which comprises 36% of the total revenue in the US.

With the COVID pandemic striking the majority of businesses worldwide, many companies had to develop new strategic ways to diversify their offerings. One example is Walmart: in 2020, it managed to increase its sales by 97% due to its new e-commerce services. With offerings such as Walmart+ service, it has provided its customers with online purchasing options and same-day deliveries. As for Nike’s diversification strategies, I believe that the company could place more focus on promoting indoor fitness and other sports activities. Since so many people now are recommended to stay home, Nike could make a valuable contribution by providing them with specific gear and other athletic equipment to do sports at home. They could also pay more attention to promoting a positive image of indoor activities in their commercial videos. Such expansion would benefit Nike because more people would stop associating the lockdown with the inability to practice sports at home. Having increased the interest in such activities, the company will also increase its profits and appeal.

When planned thoroughly and introduced at the appropriate moment, diversification strategies can bring many benefits to the company. Over-diversification, however, can be dangerous in many respects. For example, the majority of people associate Nike with sportswear and athletic equipment. If the company started to produce items that are not in any way related to sports, customers could stop trusting the brand as they would not think that it possesses sufficient specialization in those fields. Moreover, the competition in the new markets would be too high, and Nike would spend much more money on promoting the product than it would eventually gain.

One good example of a failed strategy to diversify is Cosmopolitan, a magazine for women. When the management of the magazine decided to launch a yogurt range, they did not analyze the synergy between these products and their main business orientation. As a result, there was no brand credibility, and the attempt eventually failed. In general, before making decisions about diversifying their offerings, companies should analyze their business orientation, as well as the changes and challenges that the pandemic has posed. Some industries are more likely to benefit from diversification during this time, and others are at risk of losing resources without gaining any substantial benefits.

Reference

Kim, M. (2020). How Phil Knight made Nike a leader in the sport industry: Examining the success factors. Sport in Society, 23(9), 1512-1523. Web.

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