Marketing Plan for Nike’s Senior Management


Executive Summary

The purpose of the report in context is to present a Marketing Plan proposal to Nike’s senior management on how to market the modified sneakers for the elderly. In order to make an effective marketing plan, findings indicate that marketing research and information is imperative for both environmental and competitor analysis. So to speak, the report has delved deeper to present how the 4Ps of marketing mix would be utilized for better marketing of the product. Equally important, the report has presented a marketing plan budget as a percentage of the total production cost while presenting both control and evaluation procedures to ensure the success of the marketing plan. Accordingly, the report has provided a contingency plan in case the marketing plan failed while at the same giving remedies for each unforseen event.

Product Overview

The footwear industry has witnessed continued development of innovative products meant to address the needs of consumers on the market (Perazza & Rodrigues, 2010). As a result, Nike, Inc. faces stiff competition from other players in the market such as Reebok, Adidas, among others. The development of modified sneakers for the elderly will therefore enhance the competitive ability of Nike, Inc. on the market. To begin with, modified sneakers are designed in such a way that they offer comfort to the elderly people (Branthwaite & Chockalingam, 2010). Apart from comfort, the sneakers are also designed in such a way that they offer stability, thus preventing falls. In line with this, the modified sneakers for the elderly will contain an integrated microchip that has capabilities of detecting and analysing the ground surface and activate the safety options of the shoes thus averting possibilities of falls. Similarly, these shoes have the capability of providing therapeutic and health benefits to the users. This is coupled by the fact that the shoes are designed with fashion in mind, thus remaining fashionable for the elderly.

Industry Analysis

There are notable aspects of the footwear industry/market across the globe. According to Gibson (2010), throughout the world and more particularly in the United States, the footwear industry is highly competitive with the main key players being Nike, Puma, Adidas and Rebook, just to mention a few. Recently, the competition in the industry has been accelerated by rapid technologies and increased innovation brought about by research and development in the respective companies.

Market Summary

Market Features

There are significant features that have been observed in the footwear industry. First, the market is characterized by rapid expansion across the globe. Arguably, the footwear industry has continued to expand to different markets such as Europe, Asia, and South America (Lipsey, 2006). In this case, most products are distributed through retailers across the globe and they are marketed as either sports or fashion products. This is coupled by the fact that the market has witnessed increased demand for innovative and fashionable products. It is also important to note that the market continues to target the young people as its main consumers across the globe.

Macro Environment (PEST)

Political, economic, social, and technological factors affect businesses across the globe. In this regard, different markets across the globe have witnessed reduced trade barriers as economies seek to embrace the concepts of globalization. In reference to Knight and Cavusgil (2009), organizations such as WTO have successfully convinced most countries across the globe to reduce trade barriers, eliminate most tariffs and taxes that otherwise made it difficult and costly to conduct business in their environment. This implies that there has been an increase in free movement of goods and services across the globe. Furthermore, “government stability is not an issue in the western markets” (Henry, 2008, p.52). However, this is challenge in the Asian, African and the South American markets.

Whereas this is the case, one of the greatest challenges that Nike, Inc. faces on the market across the globe is economic in nature. Notably, most markets across the globe are yet to fully recover from the impact of the 2007/08 global economic crisis. This implies that most consumers have reduced their spending on products that were considered as luxuries. In addition, increased unemployment rates in different markets across the globe have affected consumer spending (Henry, 2008). Whereas this is the case, social factors continue to challenge the slowdown of the market. For example, the association of fashion with Nike’s product on the market has enhanced its sales across the globe.

Similarly, it is important to mention that technology plays a significant role in this industry. Therefore, apart from driving innovation and development in the industry, it also plays a significant role in enhancing sales and distribution of Nike’s products across the globe (Ofek & Johnson, 2011). For example, online sales have proved to be an important tool not only in increasing revenue but also in serving consumers in remote parts of the globe (Henry, 2008). In addition, competition in the industry is an important tool for enhancing competitive advantage of companies in the footwear industry.

Competitor Analysis

The apparel and footwear industry is characterised by increased competition. Whereas Nike has maintained strong competition, various companies in the industry threaten its position. Among these are Puma, Adidas, and New Balance. According to Ofek and Johnson (2011), Adidas is a strong competitor of Nike, especially after purchasing Reebok in 2007. Arguably, Adidas is the second largest sports apparel and footwear company in the world. By 2008, it had a total of 38,982 employees worldwide as compared to Nike’s 34,300, and recorded sales of approximately US$15, 012 million (Ofek & Johnson, 2011). Puma on the other hand is renowned for integrating lifestyle and sports to deliver fashions and fun to its customers across the globe. Notably, the company ranked third worldwide with respect to its market share. In 2008, the company had 10,069 employees and recorded sales of approximately US$3,509 million (Ofek & Johnson, 2011). During this period, Nike had overall sales of approximately US$ 19,083 million. Importantly, these companies had a quest to capture both the fashion and sports market across the globe. As such, they posed a challenge to Nike in regard to competition.

Issues analysis

Various issues have emerged so far. First, fashion is or is going to be one of the major competitive aspects in the footwear industry. An analysis of Nike’s competitors reveals that rather than eyeing the sports market alone, they have ventured into the fashion industry to capture the unexploited market. In this case, they have developed market segments to market their footwear products, with a major focus on fashion. Another issue that has been observed is the importance of technology in the industry. In this case, technology plays a significant role in enhancing innovation in the industry. In addition, technology such as the internet is a critical tool used on the market to reach to customers across the globe. For example, the competitors of Nike rely heavily on the internet to market their products, increase sales, as well as distribute their products. Therefore, whereas the modified sneakers target the elderly consumers, their development should be integrated with technological innovations and fashion aspects.

SWOT Analysis

The modified sneakers have various strengths, weaknesses, opportunities, and threats on the market. One of its strengths is implanted in Nike’s market share. Debatably, Nike is the leading sports apparel and Footwear Company and the leading brand across the globe. Therefore, it can successfully market the sneakers in its existing market. Nike too has an established global distribution channel (chain), strong market strategy, a leader in technology and design and it is believed to be a brand that value quality that could help in distributing these sneakers. Furthermore, the company has a strong financial status, critical in enhancing innovation and development of these sneakers. However, its major weakness is that it is highly priced just as other products of Nike on the market.

One of the opportunities for these sneakers is embedded in the fact footwear market for the elderly is untapped. In addition, there are few companies that have ventured into the development of therapeutic and health footwear products on the market that target the elderly in the society. On the contrary, most competitors of Nike target the young people in the society. Its threats include challenges of counterfeit products on the market and allegations of unfair labor practices. Furthermore, there is likelihood that after launching the sneakers into the market, Adidas and Puma too will launch similar sneakers, thus increasing competition.

Marketing Research and Information

According to Kolb (2008), marketing research is an important role in the development of a marketing plan for all businesses. It is through marketing research and information that Nike can carry out both environmental and competitor analysis. Along with this point, Nike can use such information to position itself in a competitive advantaged position to market its modified sneakers. At the same time, marketing research, and information will help Nike to understand buyer’s motivation in order be in a better position to meet the needs of the target market. Such information can be realized through surveys, news articles, visiting stores for companies such as Adidas and Puma among others as such in the same industry.

Marketing Strategy

The marketing strategy of products and services on the market plays a significant role in capturing the market. For new or modified products, marketing strategy determines whether these products receive positive attention from consumers on the market or not. In reference to Ferrell and Hartline (2010), a marketing strategy is all about people. When developing a marketing strategy, it is important to consider the following factors;

Marketing objectives (SMART)

The development of modified sneakers will seek to achieve various marketing objectives. To begin with, the introduction of modified sneakers on the market will seek to increase the amount of sales for Nike by 5% worldwide during its first year on the market. It is expected that the modified sneakers will capture 75% of its target market within the first year of its introduction on the market. This will enhance the overall sales of Nike because the market is yet to be fully exploited. Similarly, the modified products target to enhance Nike’s brand recognition worldwide, and promote Nike as an all-age brand. In addition, the company targets to further modify these modified sneakers within the next two years to produce sneakers that are made specifically for deformed feet.

Financial objectives (SMART)

In respect to finances, the marketing of the modified sneakers is expected to bring a 5 percent increase in revenue in the first year. Accordingly, the modified sneaker is expected to bring 3 percent profitability within the first one year. The financial objectives given are specific, measurable (in percentage), attainable, realistic and timely (within one year).

Target market(s)

The target market for the modified sneakers is the elderly population in the society. To begin with, the target market will include the United States, Australia, United Kingdom and some other parts of Europe, Japan, and China. Research indicates that by 2009, the United States had 39.6 million individuals over 65 years, Australia has approximately 4,000,000 people over 65 years, and the UK had approximately 10.3 million people over 65 years in 2011 (Central Intelligence Agency, 2012). On the other hand, China had 118.3 million people over 65 years while Japan had 28.9 million people (Central Intelligence Agency, 2012). The target market for the modified sneakers is dominated by baby boomers (generation born between 1946 and 1964) and this population is likely to increase tremendously in the next few years. Similarly, it is important to note that the safety standards and the therapeutic nature of these sneakers will make them the most demanded products among the elderly. According to Rhoda (2009), 3.5 million falls among the elderly were reported with an approximated rise to 80 million when baby boomers come of nursing home age in 2003. Therefore, there is a need to develop sneakers that help the elderly to address their safety issues, especially with regard to falls.

Fashion trends on the markets have also changed. Arguably, the elderly in the society too have embraced new fashion trends even though this is still at a slow pace. In reference to Michman, Mazze and Greco (2003), there is increased influence on the consumer market by the elderly with respect to fashion trends. Therefore, presenting the sneakers as safe, therapeutic and healthy footwear will attract the attention of the elderly in the society.

Positioning

Another aspect that plays a significant role in enhancing the competitive capability of products on the market is positioning. The sneakers will focus on various factors to enhance their positioning on the market. Arguably, the positioning aspect of the sneakers will be built on three main factors namely; fashionable, therapeutic and health, and safe.

Broad overall strategy (Push or Pull)

Overall, the push strategy will be employed in marketing these sneakers to consumers across the globe. Arguably, rather than promoting the sneakers to consumers on the market and hope that the customers will request them (pull strategy), the company will concentrate on pushing the product to the customer. In reference to Welsing (2006), “…push is most suited to standards products or services, while pull is more for customized offerings” (p.78). In this regard, the push strategy is more suitable for marketing sneakers. Whereas these products target the elderly in the society, they are not tied completely to the elderly market. On the contrary, other consumers who were not categorized as the elderly on the market could comfortably use these sneakers. Similarly, pursuing the push strategy will play a significant role in achieving marketing and financial objectives that have been set for these sneakers.

Marketing Mix

Marketing mix refers to controllable set of marketing tools utilized by a company to realize the desired response from the target market or audience (Kumar, 2010). In order to tap into the target market, the senior management of Nike should blend the 4Ps of marketing mix (product, place, price, and promotion), which, for a product innovation are known as, product, process, positioning and paradigm (Mayle, 2006).Such a blend is achievable through product mix; the Shoe’s design, modified sneakers ensuring that it is of good quality, convenient and well packaged. Nike should provide an assortment of such shoes in terms of quality, design, and accessories (a cell phone) that can blend with the shoes to fit for the elderly. Equally, Nike should ensure reliable and convenient means through which the customers can acquire the shoes, that is, place mix. As such, the shoes should be distributed through direct sales, shops, over the internet through the company’s webpage and in the warehouse. Additionally, Nike should adopt profitable prices that allow for discount offers and credit to customers, that is, price mix. Again, Nike should employ displays, advertising, trade promotions, coupons, samples, and premiums along with trade shows as a form of promoting the shoes to the elderly, that is, promotion mix.

Due to technology development, 4Ps of marketing mix have evolved and therefore, besides the traditional 4Ps mix, Nike’s senior management should ensure that the shoes for the elderly meet, environmentally and socially friendly, health and safety requirements for the product’s validity. Nike as well, would be required to sell the shoes at the lowest possible price while at the same time creating value for the money. Besides, Nike as a company should consider home delivery of the shoes for the elderly owing to the status of the elderly in the society. More to this point, Nike should allow feedback from the customers in order to measure up the customers’ satisfaction with the shoes in order to make the necessary adjustments.

 According to Papastathopoulou and Avlonitis (2007), product marketing life cycle take in the development, introduction, growth, maturity, and decline stages. During the development stage, Nike’s action program can take three months while researching, studying, and analysing the expectations of the elderly (target market for the modified sneakers). The results of the target market analysis can then be measured through a review of the feedbacks collected from them through sales and marketing representatives. The marketing team can as well introduce a sample to the target market in order to measure up the response of the market to the new product. So to speak, the company can spend about 25 percent of the overall budget for the product production to this effect. Following the introduction, growth and decline stages of the modified sneaker shoe marketing cycle, Nike should utilize the strategic windows concept for its marketing (Proctor 2000).

Financials

Marketing Plan budget for the modified sneakers

Activity

Personnel

Market Research

Market Communications

Marketing Channels

Customer Acquisition and retention

Others

Total percentages

Expenditure ( as a percentage of the overall production budget) 7% 10% 20% 10% 10% 5% 62%

The marketing budget plan for the modified sneakers for the elderly will cost 62 percent of the overall production budget. Marketing communications (Sales promotion, advertising, branding, publicity, packaging, online marketing and trade shows, just to mention a few) will take the highest percentage.

Implementation of the Marketing Plan

Control and evaluation procedures for the implementation of the marketing plan are meant to ensure the success of the marketing plan. The latter has to do with the analysis of the success in achieving marketing objectives along with the entire efforts by the organization. Nike’s senior management will be required to set up standards to be met by the marketing plan, for instance, the 3 percent increase in profits anticipated in the first one year. Accordingly, the management should be able to measure up the marketing plan performance against the set standards in order to make corrections to any deviations from the set plan.

On the other hand, Nike’s senior management is expected to implement evaluation procedures such as market share and sales analysis; marketing audit; review of the marketing effectiveness, marketing cost, and profitability analysis together with the use of efficiency ratios for analysis in order to ascertain the success of the marketing plan.

Contingency Plan

Although the set controls and procedures towards implementation of the marketing plan may bring about desirable results, it is important for the management to ensure a contingency plan. Contingency plan in this case will minimise the impact of unforseen events.

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