Work: A Marketing Mix and Nike
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A price, product, place and promotion analysis for NIKE sports retailer
Although Nike owns several brands including Umbro, this discussion will focus on Nike’s main business and its premium products. Nike claims “to represent the highest service standards within and beyond our industry, building loyal consumer relationships around the world” (Nike Inc. 2012). However, there have been problems with the implementation of this mission statement.
The price of the sports goods is important because it is this, which generates revenue for Nike. Nike’s prices can lead to high profits, as they can control costs by buying from countries which offer cheap labour. High prices and low costs have led to criticism. Nike needs to make sure that it is not criticised for exploiting ‘cheap labour’ (Hodal 2012). Nike’s use of the marketing mix could be criticised here. The four p’s has been challenged for being production-oriented rather than customer-oriented (Lee Goi 2009:4). The marketing mix has also been criticised for being too internally orientated (Constantinides 2006:426). Nike could be overlooking customer concerns over labour standards. Perhaps, it has been too ‘internally occupied’ with high profit margins.
The pricing level depends upon the socio-economic characteristics of the buyers. Pricing policy reflects the market at which it is aiming (Hall et. al. 2006:172). Nike’s products are often aimed at the premium section of the market, so its pricing is directed at well-off consumers. Nike does well to implement a policy of ‘price skimming’. It could sell pioneering expensive trainers to affluent consumers for a short period; when the product is first launched on the market. The aim is ‘skim off’ the business of prosperous customers. These consumers are willing to pay more money to have the product at an earlier stage; before the product is seen as ‘less pioneering’. When the product is perceived as ‘mainstream’, then the price will have to be reduced to encourage purchases from consumers who are unwilling or unable to pay the initial high prices. Nike will have to attract these customers to maintain its large market share.
The marketer needs to make sure that pricing complements other aspects of the marketing mix. In terms of price, this means selling expensive sports products, to people who want high quality sports goods. Nike needs to make sure its products justify the generally high prices.
Nike’s ‘product’ can be seen as a single item or a wide range of products. Nike has to “make sure that their products are meeting the needs of their consumers” (Hall et. al. 2006:172). It successfully offers clothing and trainers given that its worldwide profits were £300 million, in the last quarter of 2011 (BBC 2011). It has a training-shoe product which is well designed and can be ‘customised’ for different runners. The sophistication is evident with advanced cushioning in the trainer’s heel. Nike also claims that its shoe is very responsive to an athlete’s running action (Nike 2012). It therefore differentiates its products, from other more mass market products. Nike does well by making sure that its products go beyond basic running shoes. Its products are manufactured in an augmented form with additional features provided (BPP 2004:255).
The effectiveness of Nike’s products can further be seen as its products are manufactured to be durable and to last. This makes them environmentally acceptable, as consumers would need to purchase fewer pairs of trainers compared to other brands. This means that there is less impact on the environment. Another way that Nike could be strong environmentally is to use recycled material, such as waste rubber, in the manufacture of their trainers.
The ‘place’ aspect of the marketing mix is about the “means by which the product will be distributed to the consumer” (Hall et. al. 2006:173). This will often involve a retail outlet. It will need to collaborate with retail outlets, such as Sports Direct in Britain, to make sure that its products can be sold to a wide variety of people. Retail outlets are useful to exhibit trainers in an environment where customers can choose before they buy. Nike has done well by using ‘factory outlet shops’. Such factory stores can help reduce the prices of Nike products to consumers by reducing retail costs. Nike is successful with outlets which are accessible to the public.
Alternatively, products can be sold directly on the internet; in which case the distribution needs to be acceptable. Clothing retailers, such as Nike, will need to choose appropriate courier services. Sales through the internet could reduce its dependence upon sports shops. The internet is an important distribution channel for Nike. It is a good way of displaying the ‘advanced characteristics’ of its products. Nike has invested significantly in a wide variety of websites; including its football website which makes full use of social media (Nike Football 2012).
In terms of promotion, Nike chooses methods which are “likely to be most effective in the market in which it operates” (Hall et. al. 2006:172). Nike promotes, or advertises, the characteristics associated with high quality running shoes. Nike wants to connect success with its products. It wants its brand to be associated with success. It uses high-profile award winning athletes, ‘wearing Nike’ to achieve this aim.
Nike emphasises quality and success with its recent endorsement of Manchester City football club. Nike’s marketing success can be seen with a statement released from Manchester City. They stated that Nike has “global retail distribution networks” (Drum 2012).
Nike’s brand is one of the most well-known labels in the sports retail industry. However, some of its advertising and public relations initiatives appear to be of a poor quality. They have been criticised for producing T-Shirts which could be interpreted as promoting drugs (Telegraph 2012). Also, they seem to have inappropriately named a brand of trainers (Gani 2012). This suggests a lack of thoroughness, with their marketing, which needs to be improved. Nike needs to think more clearly about the “official corporate message” that it wants to convey; given that it is such a large multi-national company (Dann 2011:4).
However, in general, Nike’s advertising is successful. Its large market share means that its advertising spending is spread across a wide range of products. Therefore, its advertising spending per product sold could be seen as ‘value for money’ compared to other similar companies.
References
BBC, (2011), Nike profits from increased sales
BPP, (2004), HNC HND Business, Mandatory Unit 4: Business Environment Course Book: First Edition, London: BPP Professional Education
Constantinides, E. (2006), The Marketing Mix Revisited: Towards the 21st Century Marketing, Journal of Marketing Management, Vol. 22, No. 3-4, p. 407-438
Dann, S. (2011), The Marketing Mix Matrix, Conference Paper, Australian National University, p. 1-11
Drum, (2012)
Gani, A. (2012), Nike puts foot in it with 'Black and Tan' trainers
Hall, D., Jones, R., Raffo C., Chambers I., and Gray, D., (2006), Business Studies: Third Edition, Harlow: Pearson Education
Hodal, K. (2012), Nike factory to pay $1m to Indonesian workers for overtime
Lee Goi, C. (2009), A Review of Marketing Mix: 4Ps or More? , International Journal of Marketing Studies, Vol. 1, No. 1, p. 2-15
Nike, (2012), Nike Zoom Mogan Mid iD Shoe Men’s
NikeFootball, (2012)
Nike Inc., (2012)
Telegraph, (2012), Nike 'not taking drug use seriously'