1.

0 INTRODUCTION OF NIKE
Nike is a major publicly traded sportswear, footwear and equipment supplier based
in the US which was founded in 1962 originally know as Blue Ribbon Sports. Nike
is the world leader in the manufacturing of sportswear and gear with more than 47
market shares across the global (Nike.com, 2011).
Nike produces a wide range of sports equipments such as running shoes,
sportswear, football, basketball, tennis, golf, etc. Now Nike follows the global
fashion trends and is well known and popular in the youth culture and hip hop
culture to supply some fashion products. Nike recently teams up with Apple
Company to produce the Nike+ products which can monitor a runner's
performance through a radio in the shoe that can link to the iPods. Besides that,
Nike also becomes the top of three companies which are climate-friendly
companies which build better image to customers.
Nike's excellence marketing strategies are their energy to achieve their market
goals. Nike believes the "pyramid influence" that the preferences of a small
percentage of top athletes influence the product and brand choice. So Nike
contracted with many athletes' spokesperson, professional teams and college
athletic teams to advertise and promote their products to customers. Nike seriously
pay attention on the technology producing, design and selling such as e-commerce,
high-tech running shoes, Nike+ with Apple, etc. Nike outsourcing their products
most of the factories are located in Asia such as China, Indonesia and India.

2.0 PROS OF NIKE'S CORE MARKETING STRATEGY

Nike put heavily proportion in their marketing strategies and products deign. In
order to sustain their dominance in the industry and retain their competitive
advantages, Nike actively responds to the market trends and changes in consumer
preference by adjusting their marketing strategies, the mix of existing product
offerings, developing new products, styles and categories, and influencing sports
and fitness preferences through various marketing strategies. Now we discuss the
pros of Nike's core marketing strategies and related them to the relevant marketing
theories help us to depth understanding.

2.1 Distribution
More efficient product distribution is the more sales and thus more profits. The
delivery of the right products and at the right time to the customers is not only
effect the utility but also leads to high level of consumer's satisfaction and loyalty.
Nike distributes its products on different level basis. The high premium products
are given to a certain distributors while leaving the low priced to be sold at highly
discounted price at the retail stores such as Wal-Mart (Jeannet J, 200, pp 44).
Nike has become the leader in the e-commerce by being the first to the market with
its e-commerce website. Nike launched its e-commerce site in April 1999 by
offering 65 styles of sport shoes to the US market for purchasing (Nike, 2000).
This program represents the first time a company has offered mass footwear
through the Internet and provides competitive advantages to Nike.

2.2 Advertising and Promotion

Nike makes contracts with some celebrity athletes which can draw attention to
their products such as TigerWoods, Ronaldo. This has created a relatively high
level of Nike's awareness. Besides that, Nike also employed a large amount of
advertisements through the mass media (Goldman S, 2000, pp 154). Nike's brand
images, including the Nike's name and the trademark are considered to represent
one of the most recognizable brands in the world. The Nike name and associated
trademarks have appeared from players' shirts, pants and everywhere. Their
aggressive advertising campaigns, celebrity endorsements and quality products all
enhance their brand and image. For example, when a celebrity athlete sponsors a
specific brand of athletic shoes, the brand will be associated with success.
2.3 Price
Nike targets on the consumers who care more about the utility and quality of the
products rather than the price. In this way, the price is not affect too much (Frank,
2004, pp173). This has make Nike to set relatively higher price than its
competitors. This strategy focuses on the consumers who like Nike and pushes the
products value to a higher level. The customers who consider a product to be high
quality are likely to pay the high price more often and consistently. Once the
consumers develop the product intimacy, they come to associate their person with
the products and will pay whatever price quoted on the products.
Nike use vertical integration price strategy in which they take ownership of the
participants at channel level that differ and they also engage in various channel
level operations both to control costs and thus influence the pricing function
(Goldman S, 2000, pp154).

2.4 Market Segmentation and Target

Most of the consumer of Nike's products is mainly athletic. Nike is the master of
segmentation, their segmenting market typically target's athletes, both women and
men from the age 15 to 35. Nike's targeting market is active people who enjoy high
quality sporting goods, especially footwear. Nike focuses on creating premium
consumer experiences on product innovation, brand leadership and elevated retail
presence. Nike targets on these customers by agreements between Nike and athletic
teams, college's athletic teams for products sponsorship and eventual promotion to
the members of these teams. Even though others are likely to buy the products,
Nike focuses on the athlete more than any group of individuals even though it also
target on the youth. This strategy is especially successful because of its ability to
reach a large number of athletes.

3.0 CONS OF NIKE'S CORE MARKETING STRATEGY

Although Nike's marketing strategies had brings lot of positive implications to the
company, but it will bring negative implications to Nike too. The negative
implications that will identify in this assignment are high cost incurred, influence
of spokesperson, and competitors.

3.1 Costly
Since Nike has implemented several marketing strategies, it had incurred high
costs in producing and promoting its products. The costs are increase among
handling inventory, designing, advertising and production. (Abhiroopsur, 2009)
Beyond that, the inflation had raised the costs of raw materials and transportation.
To deal with these problems, Nike has increased the products' prices and reduces

its marketing budget. Therefore, this could hurt the long-term growth of the Nike.
(Taulli, 2011) According to Boggan (2001), Nike had also employed child labor in
Cambodia to reduce its production and labour costs. This had affected its brand
image, and it might have many people boycott Nike and stop to buy anything from
Nike. (Boggan, 2001) Furthermore, Nike has been using child labour in the
production of its soccer balls in Pakistan. (TED, 2011)

3.2 Influences of spokesperson

One of the Nike's core marketing strategies is depend on a group of athletes to
promote its products. Nike prefers to have high profile athletes as its endorsers,
like Runner Steve Prefontaine, Michael Jordan, and LeBron James. The athletes
had positive and negative influence on changing consumer preferences, changes in
consumer tastes and priorities, and also consumers' buying decisions. The action
and attitude of Nike's chosen spokespersons could bring the impacts on its
promotional strategies. For instance, it will attract the athlete's idolater to purchase
the products if Nike using a popular athlete as endorser. On the other hand, if the
athlete were caught in drug addicted or any immoral attitude, it will affect the
customers not to buy Nike's products, thus will affect Nike's sales, revenue and
profit. (Cloke M., 2011)

3.3 Intense Competitors

There is intense competition faced by Nike. Their competitors are Adidas, Reebok,
Puma, and so forth, whilst competition is tighter with the coming of Adidas. More,
the product line is slightly different between Nike and Adidas. Nike is mainly focus

on footwear for men and women who between 15 to 35 years old, while Adidas is
specialize in footwear for men, women and children between the age of 10 to 30.
This had shown that there is less diversification of Nike marketing strategy. They
could also provide footwear for children to attract more parents to become their
potential customers. Additionally, Nike distribution strategy is mainly focus in
domestic market which is United States of America, whilst Adidas's main office is
located at Germany, but it focus in European market. Therefore, Nike should
distribute its products to more region and countries in order to capture more
potential customers and achieve greater reputation. (Allick et al., 2000)

4.0 RISKS OF NIKE'S CORE MARKETING STRATEGY

Nike faces many risks when they use their core marketing strategies to achieve
their goals and these risks can come from both internally and externally
environmental circumstance. The risks will have a negative influence about Nike's
future development, for example, the market share in the world, reputation, brand
image and customer loyalty.

4.1 Changes in Market Trends, Consumer Tastes and

Preferences
Nike needs to stay on the top of changes in consumer taste and preferences as
evidenced by changes in fashion. So Nike face the risk that fashion trends may
change so fast that Nike fails to follow. For example, for a period, the global
athletic sportswear is focus on personality and Nike's products still be general to
the customers this will lead Nike go behind of their competitors if their competitors

can follow the trends. For another example, such as the social changes, women are
becoming more fitness-conscious and are increasingly being targeted as growth
potential in the sporting apparel and footwear industries. Due to constant changes
in consumer tastes and fashion, these industries are always changing. If Nike
cannot follow the fitness trends in the market they will face risks of losing market
shares. To compete with this risks and problems, Nike should position it as a
trendsetter and not a trend follower and be responsible to their customers. (St. John
University, 2004)

4.2 Fast changing of Nike's products

From the above risk, the changing in fashion and customers' preference had brings
negative effect on its marketing strategies. Hence, Nike should introduce new
products to maintain its customer loyalty as well as attract new customer markets.
However, it will also have negative implication if Nike's implement new products
rapidly.
As we know, Nike's products are focus on the athlete's shoes, apparels and
equipments and their target consumers are for the athletes. But now the global
trends are to be fashion and personality. So Nike change its marketing strategies
and products design to become more fashion and focus on the youth consumers. It
brings risks to Nike because in the traditional mind of customers, they consider
Nike only sell the athletic products. The fashion or the changing style products is
unimaginative for customers to purchase. Not all the customers can follow the
changing of Nike. Sometimes customers maybe feel fed up because they cannot
follow the changing of Nike's products will lead Nike lose customers which drop
down the customer loyalty and market shares. (St. John University, 2004)

Therefore, Nike should analyse the market and customers' preference as well as
customers' buying behavior from time to time. Nike could prepare survey form to
their customers in order to have more understanding on customers' taste,
requirements when buying sportswear or footwear, and also collect the feedback
and recommendation from consumers.

4.3 Expanding to the Overseas

One of Major Nike's marketing strategies is to expand to overseas and become the
leader in the world. It also will bring risks to Nike when they expand their business
globally. For example, Nike outsources their products to developing countries such
as China, Indonesia, and Thailand. Currency exchange rate fluctuations can disrupt
the business of the independent manufacturers that produce Nike products by
making their purchase of raw materials more expensive and more difficult to
finance. Besides that, the global economic recession influence the overall business
operation in the outsourcing countries. For example, inflation rate too high in an
outsourcing country will increase the cost and reduce the profits for Nike. What's
more, the war and fuel price fluctuations also can lead to unstable situation for
Nike over the long period. (Florzak, 2011)

5.0 COMPETITORS - ADIDAS

5.1 IFFICULTIES FACED BY ADIDAS WHEN COMPETE WITH NIKE
5.1.1 Marketing Strategies
One difficulty most likely to be faced by Adidas is in its marketing, compared to its
competitor Nike, Nike spends more money on advertising and promoting their

products reputation, Nike spend about $1.13 billion as of 1998 involving

celebrities like Tiger Woods, Micheal Jordan, Carl Lewis etc. while paying these
celebrities large amount of money (Bedar, 2002), as of 2010, Nike spent about
$800 million on Nontraditional advertising by using other medium of advertising
their products other than TV and has reduce TV and Print advertising by 40%, and
in 2006, Nike introduced the Nike + Platform which is a multi-channel, multisensory integration between apple and Nike technologies that allows persons to
track performance (Fluffylinks, 2012) in essence, Adidas will have a hard time
trying to compete with Nike in terms of advertising and promotion, considering
Nike's utilization of low labor cost of production, Nike can afford to spend so
much money in creating awareness for their products and gaining consumers
loyalty by utilizing celebrities. Adidas will have to invest more money on
advertising and create innovative means of advertising their product, having
consumers in mind and following the trends of technologies, for example, Adidas
can collaborate with IT companies such as Samsung to create innovative means of
advertising their products.
5.1.2 Adidas and Reebok Reputation on Its Finances
Adidas and Reebok joining up together as a merger would be a good deal for
leading over Nike but the two companies have a bad reputation due to financial
problems which almost led them to bankruptcy and since they are to work together.
The expansion of their business will take a while to develop because they have to
have strong advertising strategies until the Asians .If the Asians like their ideas
then they might as well adjust to the culture in countries like china since it has the
biggest population. In the long run Asian countries like China might as well take a
long time to work with the company in terms of coming up with factories in china.
This might be one of their biggest problems which will enable them take a long

time to lead Nike in terms of their market Nike. To go through all that they will be
a lot of expenses thus the company might run bankrupt again. (Adidas-Rebook,
2011)
5.2 HOWADIDAS COMPETE WITH NIKE?
5.2.1 Develop the Small Computer "Smart Shoe" Product Line
The development of a product line of smart shoes will build on this reputation and
show buyers that Adidas is humorless about innovation and using technology to
advance athletic accomplishment. The line of smart shoes combines a
microprocessor or implanted controller, sensors, and tiny motors along with
memory and battery. The sensors work to steadily monitor, measure, and supply
data looking at the landscape, impact of each step, athlete's body temperature,
environment temperature, and athlete's heart rate. This data can steadily be fed to a
microprocessor which agent motors to adjust padding and airflow within the shoe.
(Dogiamis et al., 2009)
Wireless GPS system is another feature on the small computer production line that
enables runners to decide their accurate location, distance traveled, and speed from
the shoe's GPS by wearing a small wireless GPS wrist strap. The shoes implanted
memory can keep data about workouts such as average heart rate, body
temperature, calories burnt and force of each step. For situation, in basketball the
micro can watch how high the athlete jumps and how hard of a landing they make.
As many athletes demand goods created that can deliver

both watching and

accomplishment bettering capabilities, they will find Adidas the solution thus
leading to much higher revenue, profit, and market share in sports that Adidas
already leads and in sports where Adidas lags in revenue, profit, and market share
(Dogiamis et al., 2009)

5.2.2 Implementation of Rebranding Reebok Program

Adidas Group should phase out its high accomplishment athletic shoe line and
reposition itself in the casual footwear and active footwear market within the next
years. The high accomplishment athletic shoe line can be sponged up into the
Adidas brand. Adidas It should consider opening Reebok retail outlets that market
Reebok as well stylish Reebok at more upscale department stores such as Macy's
and Nordstrom. Reebok should ensure keeping up a very high level of quality and
durability of its shoes. However, it should work with major fashion designers such
as Calvin Klein to come up with a well stylish product line of shoes meant for
active, casual use, gain brand image as an upscale and more cultured shoemaker.
Reebok should first come up with a line of casual but well stylish shoes designed
by Calvin Klein that blend quality and style. (Dogiamis et al., 2009)
The rebranding of Reebok can help Adidas to make larger advancements with
women. They want a shoe that can be useful for all visible feature of an active
lifestyle. Therefore, marketing Reebok as a well stylish line of shoes meant for
active lifestyle might allow Adidas to make larger in roads with women. Reebok
should start a line of well stylish shoes prepared toward women with active
lifestyles. (Dogiamis et al., 2009)
The overall rebranding of Reebok should be finished to avoid internal competition
within Adidas Group where the Reebok division is seen as the less profitable
sibling of Adidas and to keep buyers from believing that Reebok is not an
expensive substitute for an excellent Adidas product. (Dogiamis et al., 2009)
5.2.3 Expand Its Sponsorship Program (Marketing)
Adidas mainly focuses in the European market even though it is known in other
parts of the world, which is because of its collaboration with soccer events all over

the world and football associations with bodies such as FIFA, UEFA, leagues,
clubs and individual players, in 2010, Adidas experience its most successful year in
the history of football with sales above 1.5 billion Euros. It also had a sure climax
during the 2010 FIFA World Cup of which it sponsored the wining team Spain and
the adiZero F50 which is also an Adidas product had the top scoring boot in the
event, lastly, Adidas Football group on Facebook massively increased from
100,000 members to over 6 million members presently. Adidas has been an official
sponsor of the Olympics and has also been included as a sponsor of the 2012
Olympics; this gives it an edge over its competitor Nike. (AdidasGroup, 2011) It
should use this opportunity to carry out precise marketing, by focusing on its
segment market which includes the soccer, tennis and athletics teams and probably
expand its focus to the up and emerging local teams in the grassroots, because, this
group of people are keen about sports and spend time watching them on the TV but
hardly get access to them unless they purchase the product themselves.
5.2.4

Change in Consumer Perception to Products

Adidas can also change the consumer's perception about its products, most
consumers perceive Adidas product as being too stiff and therefore are
uncomfortable with it, Adidas can come up with a durable but use soft materials for
its product as well as rebrand it product as not just a sporting shoe but also a
fashionable shoe which consumers can wear on a casual basis example for outings,
parties etc. when this is instilled in the minds of the consumers, more of Adidas
product will be purchased by consumers as it will be perceived as durable and
fashionable.
5.2.5 Encourage Product Customization

Adidas can also make provisions for consumers to customize their products online
before it is delivered to them, this will give customers unique and a wide range of
their products to choose from and will also allow them to understand what their
consumers really want and focus on satisfying their consumer. With each consumer
trying to be very creative and unique in their way, Adidas will shift its focus on
their consumers from how much they are to pay for the product to how much they
can benefit from the product. Adidas can promote this feature through its Facebook
page which has over 6 million members.
5.2.6 Focus on Emerging Market
Adidas can capitalize on Nike's weakness which is its focus on local market,
Adidas can capture emerging markets, and already it has a lead in market such as
India and Japan. In Latin America, it experiences a growth sale of 38% in 2007.
(ReComparison, 2012) Although it is competing with Nike in China, it should
focus on ranking its investment solely on markets which offer superior channels to
long-term growth and profit prospects and should also focus on expanding its share
to unreached areas especially in China, Russia, Africa and the United States. It
should also ensure that it differentiates consumers' buying behaviors as it differs in
different regions and countries and understanding this will be an added advantage
to Adidas.
6.0 CONCLUSION AND RECOMMENDATIONS
From the above analysis, we had understanding about the pros, cons and risks of
Nike's core marketing strategies with relevant marketing theories. Besides that, the
difficulties Nike faced when they competing with Adidas. We discuss from the
distribution, price, products design, promotion and advertising, market
segmentation to analysis Nike's competitive advantages in the global market. We

also find that the other side influences of Nike's core marketing strategies such as
costly advertising, raw materials costs affected by the global economic, the
spokesperson's behaviors which has negative influences to the Nike's brand
images. What's more, the risks of Nike's core marketing strategies such as Nike
cannot follow the world fashion trends, the profits has affected by the currency
exchange and economic recession when expand to the global.
Nike has remained and continues to remain at the top in producing and distributing
their sports clothes and equipments. However, Nike should consider the
competitive pressure is very heavy and not allow the "sleep at the top". So Nike
should continuously find efficient marketing strategies to keep their top leaders
positions.
The following recommendations are suggested in a situation where marketing
management is competent. Nike should increase their market shares through issue
new products, competitive pricing strategies, and advertisement and promotions
activities. Nike also should restructure market dominance by separate themselves
from the competitors mainly through mass promotion strategies and pricing
strategies which make Nike more attractive to customers. Besides that, Nike must
increase their awareness of corporate social responsibility to strengthen their image
of themselves. What's more, Nike should pay much attention to their R&D
department to research out different kinds of people with different taste to get the
market diversification goals.
All the above show a competent marketing management which can help Nike Keep
their top market leaders and keep their competitive advantages.
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