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Marketing plan for the year ending 2012

0.0 EXECUTIVE SUMMARY

Nike Inc. was founded in 1962 by Bill Bowerman and Phil Knight as a partnership under the

name, Blue Ribbon Sports. At that time; the goal then was to distribute low-cost, high-quality

Japanese athletic shoes to American consumers in an attempt to break Germany's domination of

the domestic industry. Today in 2012, Nike Inc does not only manufacture and distribute athletic

shoes at every marketable price point to a global market, but over 40% of its sales come from

athletic apparel, sports equipment, and subsidiary ventures.

Nike maintains traditional and non-traditional distribution channels in more than 100 countries

targeting its primary market regions: United States, Europe, Asia Pacific, and the Americas. It

utilizes over 20,000 retailers, Nike factory stores, Nike stores, NikeTowns, Cole Haan stores, and

internet-based Web sites to sell the sports and leisure products.

It dominates sales in the athletic footwear industry with a 33% global market share. Nike Inc. has

been able to attain this premier position through "quality production, innovative products, and

aggressive marketing." If well implemented; this marketing plan will see the organization

achieving its objectives thereby fulfilling its mission.




1.0 MISSION STATEMENT

Being the center of innovation and bring inspiration to customers across the board.

1.1 VISION

Our vision is to increase market share by 10% by the end of 2012; increase sales by 15% as well

as increase profits by 10% within the same period of 2012.

1.3 CORE VALUES

Innovation

Team work

Customer oriented

2.0 MARKET AUDIT

2.1 INTERNAL ENVIRONMENT

The audit in this regard will focus on the company’s marketing strategies as well as the company

structure.

2.2 ORGANIZATIONAL STRUCTURE

An organizational structure specifies the various job tasks and shows how the same are formally

divided, grouped, and coordinated. It provides an appropriate framework for authority

relationship and indicates the hierarchy of authority as well as the reporting relationships. It is a

means to help the management to achieve the organizational objectives. NIKE’s organizational

structure is a matrix structure which is shown in the diagram overleaf. This structure is likely to

affect the time at which decision is going to be made as there are many hierarchies (diagram for

structure is overleaf).




ORGANISATIONAL STRUCTURE

2.3 EXTERNAL ENVIRONMENT

This focuses mainly on external factors which affect NIKE’s operations such that they hinder the

achievement of its objectives. Such factors are Political, Economical, Technological,

Environmental and Legal factors abbreviated as PESTEL factors.

2.3.1 POLITICAL

Nike trades mainly in America where it originated; the United Kingdom and other European

countries such as France and Germany. All of these countries where Nike sell its products; there

is a stable political environment since the countries are ruled democratically since the

governments in this countries have been elected by the general public in that particular country.

The majority of these countries home and export markets have been boosted with the inclusion

of the euro which makes it easier to trade between these countries. This is an advantage to Nike,

as they do not need to be influenced by exchange rates when exporting goods from one country

to the other.




In both the United Kingdom and The USA general elections are on the horizon they are still a

long way away but the respective governments are now starting to enforce policies with election

in minds. This could influence interest rates meaning that more people will have disposable

income and then Nike may decide to use big advertising campaigns so that this disposable

income can be spent on Nike. Nike has to be aware of pressure groups trying to get bans on

methods that Nike uses. This could be things such as trying to stop Nike from being able to set

up factories in undeveloped countries and also using certain leathers coming from animals to

make football boots.

Nike needs to be aware of any help they could get off the governments such as getting subsidies

for setting up Nike factories in areas of high unemployment like Nissan setting up a major

factory in Sunderland. This could be a big help to Nike as it would mean getting planning

permission for a factory and it would also mean they can import more goods into this particular

countries markets.

2.3.2 ECONOMICAL

The USA has been facing economic recession challenges in recent years, however it is

recovering from that situation and the earnings of potential customers are on the increase. It is

against this background that it is assumed that our products are expected to enjoy better market

attention than before.

2.3.3 SOCIAL

Nike are a multinational company so these affects the decisions that they make when designing a

new product or making a new advertising campaign. A big decision for Nike to consider is how

to make the products available to the customer. To do this Nike must research the buying habits

of a customer. This can mean how much and how often they buy a product and therefore would

is easier for customers to have their goods delivered for convenience.

Nike have to assess the way in goods are purchased. They will have to look at the increase of

Internet shopping and mail order compared to buying products from a shop and then makes the

decision to invest more in these types of shopping.




Another factor Nike need to consider is the lifestyle of the customer and must answer questions

such as the time that people have got to go shopping and whether they work unsocial hours

meaning that internet shopping may be more affective to larger amounts of people.

Nike have to take into accounts religious and political features of the countries they are trading in

such as restrictions on advertising such as advertising unhealthy products to children or religious

restrictions to advertising such as bearing large amounts of skin in advertisements. Nike could

also look at religious beliefs and may be able to make products around these religious beliefs.

They may also need to know that certain religions and social groups may be against wearing a

particular type of material such as fur.

Nike has to consider how many people live in these areas. For example you should not make too

many products for the market they are trading in because the supply will go up and the demand

will go down if the market is price sensitive meaning that Nike has to reduce the price to sell the

product.

When a new product is being made Nike have to evaluate the climates and terrain they are

selling in for example they will not be able to sell a product designed to keep the body cool in an

area that is freezing cold such as Scandinavian countries.

2.3.4 TECHNOLOGICAL

Nike use Technology in a number of different areas to conduct its business. The first area they

use technology for is making the products and they have to be aware of any new advances in

machinery that would make it quicker, easier and cheaper to make the products.

Nike are always trying to make new products with new and unique features designed to do a

specific job, such as keeping the body cool. When these products are created these ideas will be

patented giving Nike an advantage over competitors. Another area to exploit is the internet

which is for internet sales and is a lucrative area for Nike to tap into. Nike will realize that if they

can get into this market they will make a huge profit.

Nike also has to use technology to make their advertisements. Nike will always want to use more

technology in their advertisements along with their stars as they can get a lot more sales from a

good advertising campaign such as the recent ‘Freestyle” campaign.




2.3.5 ENVIRONMENTAL

Nike has to consider a number of factors to do with the environment when making their

products. For example; they have to consider raw materials. Nike has to consider whether the

raw materials that they use to make their products are going to run out or not. The Raw materials

that Nike use are animal skins for leather. Fortunately for Nike these materials will not run out as

long as animals keep on re-producing.

Nike needs to consider whether they could use synthetic materials instead of skins so that they

stop killing animals and reduce the cost of obtaining these materials.

The trends will be changing for the type of materials used for the products and Nike needs to

consider how to obtain these materials while causing as little damage to the environment as

possible.

Nike need to understand that pressure groups will not like them harming the environment and

that if Nike do not conduct good public relations with these groups and do harm the environment

then Nike’s goods could be boycotted resulting in the company making losses.

2.3.6 LEGAL

Legal issues are of key importance to the company as these laws can determine how it conducts

its business. It is essential that Nike comply with these rules or else they will have to pay a high

price or even fold.

The acts that have to be obeyed are the consumer protection legislation, The trade descriptions

act. The sales and supply act, The weights and measures act, the equal opportunities act which is

making sure that nobody gets an unfair chance at the expense of the other.

3.0 SWOT ANALYISIS

This serves to analyze NIKE’s strengths, weaknesses, opportunities and threats which are likely

to affect the attainment of the company’s objectives in either way.




3.1 STRENGTHS

Nike has no factories; rather it uses contract factories to get the work done which makes

it quite a lean organization. It has contracts with above 705 shops globally in about 46

different countries.

Nike’s research and development is quite strong as evidenced by its evolving and

innovative product range.

It has employs about more than 30 thousand people all over the world.

Nike is a worldwide recognized to be the number one sportswear brand in the World.

Nike being a competitive organization has a healthy aversion towards its competitors;

that is during the Atlanta Olympics, Reebok expensed on sponsoring the games; Nike

however sponsored the top athletes and due to this step, it gained valuable exposure.

3.2 WEAKNESSES

Nike was for pretty some time loath to reveal any type of information relating to its

colleague companies.

This company was also accounted to have practical child employment in Pakistan and

Cambodia to produce footballs.

Anti-globalization groups due to its unruly and exploited manner that was quite adisaster for its reputation positioned.

Although it has a wide range for sportswear, however it is still heavily reliant upon its

share of the footwear market which leaves it at a quite defenseless place if for any

reason its market share corrodes.

Every business retail sector is price sensitive that means trader usually have a propensity

to offer a very similar know-how to the customers with a new cheaper product.

The key weakness of Nike, resides in its financial status. While it is not in financial trouble, it

recognize that strengthening the financial well being of the company can only assist the company

in the short- and long-run. It has many areas challenging the continued success such as

increasing profitability and bettering the management of cash, accounts receivable, and debt.

Nike suffered a blow to sales and revenue sparked by bad publicity in 1997 about its




international labor policies. Since then, it has attempted to overcome the bad press by raising and

enforcing minimum age requirements for employees in overseas factories. Nike attempted to

regain its mid-90's momentum as shown in 1998’s recovery, but the loss of Michael Jordan as

the spokesman and the Asian financial crisis put a damper on gains that year. During 1999, the

company made some changes in its products and deeply cut costs. These initiatives, in addition

to the stabilization in the Asian financial picture, will combine to fuel the recovery that Nike

expects in the near future. Nike's recent alliance with Fogdog Sports, an Internet sporting goods

retailer, and our presence in the Olympic games will also aid in sales growth.

3.3 OPPORTUNITIES

A large number of customers put on Nike product just because they develop a fashionstyle rather than to take part in any type of sport. It is mostly seems in young generation.

Nike is a trendy brand, which also provides chances for Nike since its products would

become old-fashioned before even the product wears out that is consumers, will sense the

need to replace the item with a newer fashion.

Nike through the advertisement of corporate brand and sponsorship agreements give a

bunch of effort on its business marketing.

Nike's once loyal market is currently aging. This means that customers are not as athletic asthey may have been in the past. However, this poses as an opportunity for Nike because they

have the ability to influence the next generation of Nike customers. The older generation of

Nike brand purchasers have the power to influence their children - part of the next generation

of Nike loyalists. In addition, by marketing different types of shoes to this market, these

existing customers will continue to be loyal to Nike.

3.4 THREATS

A slump in international economy may lead to job scarcity in most of Nike’s worldwide

shops.

There are heavy competitors of Nike in the market that are always seeking the way to

overtake it by applying new techniques.




Clients which are always shopping around for a better deal that express a good quality &

if one store takes higher price for the products, the buyer would try to seek a better deal

of the same product in any other place that convey the same value but cheaper.

Due to atmospheric pollution, Nike is careworn to maintain its ecological reputation in

the whole world.

The phenomenon of the aging of Nike’s most loyal market segment questions whether there is a

threat that the new generation will not be exclusively loyal to Nike. In the current market there

are a number of other competitors that are not mainly athletically oriented. Examples include

such manufacturer-retailers as Reebok and L.A Gear. Their clothing and shoes are competing

with Nike's. In addition, Nike is not keeping up with the latest trends and styles like some of its

competitors have been. For that reason, the newer generation is attracted by Adidas and Tommy

Hilfiger.

3.5 TOP COMPETITOR ANALYSIS

Distinctive Competency - Marketing (Consumer Loyalty)

Despite the tough times Reebok has recently come upon, reasons for optimism remain. Reebok

has managed to hold the loyalty of a large portion of the industry’s female consumers market.

While Reebok’s spending on advertising has fluctuated, individual product designs have come

and gone, female consumers have, as a group, remained loyal to Reebok and their products.

If Reebok can expand their appeal to incorporate female consumers who are not currently

Reebok customers, Reebok could expand their market share and take customers away from Nike

products. Nike’s sponsorship of the 1999 Women’s World Cup Soccer Tournament was a great

example of how Nike is appealing to female athletes.

Competitor’s Key Weakness – Marketing – (Advertising/Promotion)

The leading cause of Reebok and L. A. Gear’s recent tumbles stemmed from problems relating

to poor marketing. L. A. Gear and Reebok’s shortcoming in the area of marketing is their key

weakness. While other athletic shoe companies bombard the airwaves with commercials pushing

their product lines, Reebok and L. A. Gear remains out of sight and out of mind. While




Reebok’s competitors are known by familiar slogans like Nike's "Just Do It," Reebok’s, "Are

You Feeling It," does not equate to their brand name in the eyes of most consumers.

3.5 SUMMARY OF MARKET AUDIT

STRENGTHS

Reputable brand

Strong research and development

Have a larger workforce

Have a worldwide recognized

sportswear brand over its competitors

Have a valuable exposure over its

competitors.

WEAKNESSES

Poor distribution strategies

Was once blamed for employing

children to produce footballs in

Cambodia

Its reputation was once affected by anti-

globalization groups.

Relies mainly on its market share for

footwear which may affect its existence

if the market corrode

The propensity to offer a very similar

know-how to the customers with a new

cheaper product.

OPPORTUNITIES

Growing market

Have a bunch of effort through

advertisement of corporate brand and

sponsorship agreements.

THREATS

A slump in international economy maylead to job scarcity in most of Nike’s

worldwide shops.

Heavy competitors which are always

seeking for new techniques to overtake

Nike

Customer sensitivity due to availability

of alternative suppliers

Atmospheric pollution which poses a

challenge to maintain its ecological

reputation world wide




4.0 ASSUMPTIONS

In-order to facilitate a proper framework within which the marketing plan can be made, certain

assumptions have been made so as to hold certain dynamic factors constant, their change of

which will neutralize the marketing plan’s effectiveness thus will not be applicable in one way or

the other. The following assumptions have been made:

The economy remains stable for the next twelve months so that the budget will not be

affected by unexpected economic recessions.

Consumers’ spending habits do not change as result of a fall in their income, thus the

market is assumed not to be price sensitive.

No other additional competitor will join the market within the forecasted twelve months.

5.0 MARKETING STRATEGIES

This section explains the broad marketing strategies that Nike will implement in-order to

accomplish the plan’s objectives. The Marketing Strategies will focus on price; product;

promotion and place/distribution.

5.1 PRICE

Since it is the only ‘P’ responsible for the generation of revenue, Nike’s pricing structure must be

designed in a way to make it competitive to other shoe sellers. The major goal is to maximize

profits, to recover costs, and some competitive reasons. The pricing is based on the basis of

premium segment as target customers. Having a competitive pricing structure, Nike as a leading

company in the manufacturing of sneakers needs to take the role of a price leadership. This

means all other competitors like L.A. Gear and Reebok are forced to strategies their prices

basing on what Nike is offering. The prices of products vary depending on the size and type.

Taking for example a comfortable and good pair of shoes would cost from 70 to 150 dollars.

5.2 PRODUCT

Nike’s major focus is athletic footwear, but it offers a wide range of apparel and equipment

products, all of which are currently its top-selling product categories. Nike started selling sports

apparel, athletic bags and accessory items. To increase brand awareness; Nike will also market

head gear under the brand name Sports Specialties, through Nike Team Sports, Inc. In addition to




this; the company will sell small amounts of plastic products to other manufacturers through

Nike IHM, Inc. Bauer Nike Hockey Inc. manufactures and distribute ice skates, skate blades, in-

roller skates, protective gear, hockey sticks and hockey jerseys and accessories. Due to increased

emphasis by consumers on fashion in relation to sportswear, Nike will have to make to make

strides to appeal to a fashion savvy market. The company’s apparel line is not only being

challenged by its typical industry competitors such as Adidas and Reebok, but also by clothing

and accessories retailers such as Old Navy and Abercrombie & Fitch. Continuous marketing

research could prove to be key in assessing the market. Nike will have to plan on initiating five

structures within the apparel division to focus on the following areas:

Women

Men

Kids

sports graphics and caps

strategic response independently

There is also need to spend more time on continuing to support and develop programs to gain a

better understanding of what its customers would like to see in the market through market

research.

Nike will have to collaborate with other companies within the sports and fitness industry as well

as expand into markets for which it is not strategically suited. An example is the decrease in

brands made available due to declining sales of in-line skating and roller hockey products at

Bauer Nike Hockey.

5.3 PROMOTION

Promotional and Communication Strategies Apart from Nike selling quality products which have

lead to a high degree of customer loyalty, the promotional strategies should be improved so as to

achieve the goals. The organization is to contract a number of professional and celebrity

sportsman so as to draw a considerable attention to its products. Some of the sportsmen to be

signed by Nike include soccer stars such as Ronaldinho, Ronaldo and Roberto Carlos,

Basketballers such as Jermaine O'Neal and Lebron James2, triathlete Lance Armstrong and golf

superstar Tiger Woods. This will create a relatively high degree of Nike products’ awareness.




Besides the signing of celebrity sportsmen to promote their products, Nike will also employ a

great deal of advertisements through the mass media and employ a selective- demand

advertisement focused on the high priced shoes used for traditional sports. Nike will also take

advantage of league games to advertise on the media during the course of the games to increase

product awareness. To capture the attention of those who attend these games; Nike will advertise

on billboards mounted in the sports fields. Some potential customers are not interested in

attending games neither are they interested in watching in television but they definitely will

travel or walk along streets; the idea here is ton advertise on electronic billboards mounted along

streets so as to capture their attention.

The internet is also another channel which the company have to exploit so as to reach a larger

number of potential customers. When using this facility; Nike will have to use mass mailing

commonly referred to as spamming by sending advertisements to e-mails of potential customers.

Product promotion will also have to be done through conducting of promotional road shows

which will see offering of prizes to winners after some competition. This will go a long way in

promoting the company’s social responsibility as well as its repute.

5.4 SALES TECHNIQUE

The company sells its products to retail accounts, through its owned retail stores, and through a

mix of independent distributors and licensees, as well as through Internet Web site

‘nikestore.com’. NIKE inc. has major four subsidiaries which are:

Converse Cole

Haan Holdings

Nike Bauer Hockey

Hurley International

5.5 PLACE/DISTRIBUTION

Distribution strategies embraced by an organization can either give them an edge in market or

make them lag behind the winners in the market. The more efficient the product distribution is

the more sales and thus more profits. The delivery of the right product and at the right time to the

consumer not only effects utility but also leads to high degree of consumer satisfaction and

loyalty. Nike distributes its products on level basis. The high priced premium products are given




to certain distributors while leaving the low priced to be sold at highly discounted prices at mega

retail stores such as Wal-Mart. Whereas Reebok embraced a limited distribution strategy Nike

ventured more into a global market capitalization (Jeannet J, 2000, pp 44).

Summary of marketing strategy

Nike has remained and continues to remain at the top of production and distribution of sports

gear and equipment. However, it should be noted that competitive pressure cannot allow Nike to

‘sleep at the top’. The recent Reebok - Adidas merger poses a great challenge to devise new

marketing strategies to continue leading or recede to oblivion. The following recommendations

are suggested in a situation where marketing management is competent. These include:

Increased market share through a new product development, competent pricing strategies,

advertisement and other sound promotional activities. Restructure market dominance by driving

away competitors mainly through fierce promotional strategy coupled by pricing function that

will make the market quite unattractive for the competitors. Increased social responsibility to

strengthen the image of the company Diversification of market through factoring the Asians and

Black Americans in their product promotion besides doing a research to establish the tastes of

these groups. Venture into new distribution channels especially in international markets.

Different pricing strategy so as to open up a new market segments.

All the above show a competent marketing management can hoist organizations top become

market leaders and making the market leaders maintain their competitive edge in the market

through adherence to marketing ethics, marketing plans and well thought out and formulated

marketing strategies.

6.0 ACTION PROGRAMS

Market research

Pricing

Advertising and promotion

Layout of facilities

Sales

Inventory




7.0 BUDGET

Projected Marketing activitiesBudget

Market Research

1. Study the buying habits of consumers and determine what factors

motivate their athletic footwear and apparel purchases.

2. Conduct focus groups in targeted markets to get feedback on

existing products, as well as prototypes.

Pricing

1. Determine price points for product offerings that are properly

adjusted for regional buying power, competition, and currency

valuation.

Advertising and Promotion

1. Sponsor regional sporting events for professional, amateur, and

collegiate teams. Include sponsorship of the World Cups

2. Run advertisements in the most popular forms of regional media:

television, newspaper, magazines, billboards, and/or radio.

3. Offer rebates and discounts for certain late-model shoes to

encourage sales and inventory turnover.

4. Conduct fashion shows at top retail venues to display our latest

merchandise offerings to consumers and the media.

$40,000

$80 000

$500 000

$1 000 000

$100 000

$100 000

Location, Newness, and Layout of Facilities

1. Hire independent industrial engineers and analysts to work with

manufacturing facilities in order to maximize efficiency of

operations: shop layout, processes, etc.

$1 000 000




Inventory

1. Reduce inventory at all levels of production: raw materials, work-in-

process, and finished goods.

2.

Work with 3

rd

party shipping agents to manage the flow of ordersfrom factories to distribution centers.

3. Work with suppliers to implement the next generation of electronic

data interchange (EDI) technology in an attempt to achieve just-in-

time inventory.

$400 000

$1 000 000

$500 000

Focus

1. Shift funding to applied research in "up-and-coming" sports.

Experiment with cutting-edge fashion.

Budget

1. Infuse new funding, in addition to shifting current budgetary

allocations, for researching sports that could be popular in the

future.

$1 000 000

Recruitment and Selection

1. Hire factory workers who express an interest in educational

programs. These employees would achieve the maximum benefit

from educational assistance programs by being more loyal and

productive.

Training and Development

1. Offer general education classes for factory workers who want to

learn how to read, write, or fill any gaps in their childhood

education.

2. Conduct seminars and workshops for supervisors in factories so thatthey may improve their production and management skills.

Compensation

1. Increase salaries of factory workers who are promoted as a result of

completing our educational assistance programs.

$500 000

$300 000

$500 000

$300 000




In the event that the proposed budget does not suffice to sponsor the required activities; we have

made it flexible enough by setting aside an additional $2 000 000 as reserve.

Management of Accounts Receivable

1. Implement stricter credit terms with retailers to minimize bad debt

expense.

2.

Hire 10 additional employees in the corporate Accounts ReceivableDepartment to maintain and collect aging accounts.

Management of Total Assets

1. Sell non-productive equipment or buildings to reduce depreciation

and maintenance expenses.

Reserve

$400 000

$300 000

$80 000

$2 000 000

Total $10 100 000




REFERENCES

1. Abratt, R. (1993), Market segmentation practices of industrial marketers.

2. Baines, P., Worcester, R., Jarrett, D., and Mortimore, R. (2005), ‘Product attribute-based

voter segmentation and resource-advantage theory’, Journal of Marketing Management3. Beane, T. P., and Ennis, D. M. (1987), ‘Market segmentation: a review’, European

Journal of Marketing.

4. Crittenden, V. L., Crittenden, W. F., and Muzyka, D. F. (2002), ‘Segmenting the

business-to-business marketplace by product attributes and the decision proces’, Journal of

Strategic Marketing.

5. Day, G., Shocker, A. D., and Srivastava, R. K. (1979), ‘Customer orientated approaches

to identifying product markets’, Journal of Marketing.

6. Hooley, G. J., and Saunders, J. A. (1993), Competitive Positioning: The Key to Market

Success.

7. Howaldt, K., and Mitchell, A. (2007), ‘Can segmentation ever deliver the goods?’ Market

Leader.

8. Kotler, P. (1984), Marketing Management

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