Nike Marketing Mix

Overview of Marketing Management

According to the module, the marketing management processes begin with the effort of the marketers to understand its internal environment, vis-a-vis the external market to get the best strategic fit for its product(s). The success of the marketer in creating an efficient and effective marketing process will benefit the marketer’s organisation by increasing financial  profit and reducing production cost (operation), and getting the best ROI for the company’s investments.

Marketing Mix tries to match customer's satisfaction and organization's business objective. Basically, there are four (4) main factors namely, product, price, place, and promotion which  plays an important role in ensuring the successful launch of a product product (Porter, 1980). Whether it is a pull or push strategy, marketing mix represents how the organization plan to  position its product in the market. The marketers must first identify what is their target market, how long is the life cycle of the product, and what would be the most effective medium to promote the product. Marketers must also find the right moment, and sometimes the right alliance (co-sponsor of a box office movie maybe) to launch a product campaign, and ascertain whether the duration of that campaign is enough to leave a lasting impression to the consumers. These four P's are the internal building blocks that the marketing manager can control, with the given constraints in its corporate environment in terms of resources. The manager's goals is to make informed business decisions that allows them to design their four P's to fit nicely into the organization's business objectives, and the potential market preference. Ultimately, it is every marketing manager dream to develop a successful brand, by creating positive  perceived value of their products, which sustains the demand for the product(s) and keeps customers coming back for more (Culliton, 1948). According to the module, marketing mix or better known as 4P’s refers to the marketing factors that need to piece together by marketers to create value products, in order to maximise the benefit to consumers and at the same time ti me meeting the company's profit objectives. For the services industry, there are three thre e (3) additional marketing elements (Tracy, (Trac y, 2013). 

Trade presence, Service contracts, project records of accomplishment, presence of  corporate offices, etc.

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Human resource, which consists of the human element like sales staff, and current customer. Standard Operating Procedure and Service Level Agreements.

The Marketing Mix

Basically, when we refer to marketing mix, we would be talking about products, price, place, and promotion. Let us discuss in detail of these four (4) marketi ng elements. Product

The term "product" can refer to goods and services. The specification of the product is one of  the variables that a marketer/manufacturer can control. For example, the product(s) can have colours, taste, design, material, and other features. In a broader sense, features can also include warranty and after sale service (Borden N. H., 1942). All products have a life-cycle comprised of growth phase, followed by maturity phase, and finally declining phase. In this digital age, marketers must do careful research to determine how long the life cycle of a product can last, and is it worth to spend an 'X' amount of money to promote the product. Is the return on investments (ROI) worth it? This is not the only question marketers have to answer. Marketers also have to look at the dynamics of the technological advancement, analyse competitors' products, do PESTEL analysis and forecast future trend. Usually, we can see some products become obsolete when a new technology is introduced in a particular industry. For instance, in the sports shoe industry, the newly technological designed soles used by 'Air  Jordan' range of shoes, was said to give the wearer the extra comfort and the ‘imaging this’ the extra lift off the ground when they play basketball, which renders all other so call ‘traditional basketball shoes’ boring and unattractive. This is the sneaky gimmick used by  Nike when it designs its new shoes. Nike’s use of technology and clever ‘quotes’ lifted  Nike’s image a notch up. Coupled with celebrity star athlete like MICHAEL JORDAN, nothing can beat the allure of owning the AIR JORDAN. The marketer must also consider the product mix. Marketers can expand the current product mix by increasing the depth of the product or by increasing the number of products to offer  its customers. In general, product mix strategy deals with: (1) The Product Life Cycle (2) Brand Name (3) Packaging (4) Design (5) Quality (6) Safet y and (7) After sales service.

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Price

The price refers to the amount a customer pays for the product. The pricing mechanism is very important as it determines the company's profitability and survival. Sensitivity to price movements has a profound impact on the market demand for the goods, and this is normally called price elasticity of the product. When setting a price, the marketer must also be aware of  the customers’ perceived value for its product, the costs of producing that product, and lastly the margin it requires to make it all worthwhile (Borden N. H., 1942). Sport goods producer companies have two options for manufacturing their products. They can own and operate factories, or look for the ways to outsource certain production and marketing functions. This all depends on the how the corporation creates it s strategic business objectives. Manufacturing outsourcing gives advantage of easy monitoring, getting skilled workforce it doesn’t want to hire, go around stringent laws, etc. It is in many ways costs efficient rather than having to spend on CAPEX and labour costs. It is relatively inexpensive for Nike to outsource its manufacturing functions to developing countries, and this strategy adopted by Nike has paid handsomely. By manufacturing products overseas, particularly in the third world economies like Indonesia, China, and Vietnam, it achieves tremendous advantage in terms of production costs, because of the low salary expense and low tax  bracket in these countries. Using the above efficient costs strategy, Nike can determine its products price in many flexible ways, to help marketing and promotion and distribution/placement. Nike can enter a market with any of these pricing strategies: (1) Retail price (2) Wholesale price (3) Special offers (4) Penetration pricing (5) Neutral pricing (6) Price skimming (7) Optional product  pricing (8) Geographical pricing. Placement

Placement represents the location where a product can be purchased. It can also be referred to as the distribution channel. It can include physical store as well as virtual stores on the internet. Distribution is about getting the products to the customer. Therefore, placement marketing mix is nothing more than the tasks of distributing the product to the retailers and enabling customers to purchase the products conveniently (Borden N. H., 1942). Tasks that form the distribution chain can be as follows: (1) Retailers (2) Channel Distributors (3) Warehouse (4) Logistics (5) Transportation (6) Inventory Management.

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 Nike shoes are sold in the exclusive Nike Town (own stores), and also in many of its distribution channel multi-branded stores. Nike sells its product to about 20,000 retailers in the U.S. alone, and its global presence is felt in almost 200 countries around the world. In the international markets, Nike sells its products through independent distributors, licensees, and monitored by its regional offices. Globally it has established a sprawling distribution channels/partners, and has site offices located in 45 countries to monitor the distribution of   Nike's products regionally. One of Nike’s magnificent strategies is outsourcing. In order to control costs, most of  the Nike's outsourced factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia because it is cheaper to  produce the goods in these regions. Nike would then control the design section and quality aspects of the manufactured goods to meet Nike’s high quality and design standard. It is said that Nike did not fully own a factory of its own, but merely outsource its manufacturing operations to factories in the third world countries, while controlling certain section like quality control in the manufacturing facility. Nike's sports products are shipped out to warehouses which are strategically located all over the world to meet its customer's demand.  Nike's strategic marketing and logistics were immaculate, and in no-time at all Nike was able to capture the international market with its quality products and at the same time making tons of profit. However, in the recent years human rights groups have disclosed that some of the 'contract factories' in the third world countries operates like a sweatshop, employing children, provide  poor working condition, and paying meagre salary to local workers, and so forth. This has hurt Nike's reputation. Due to intense pressure from the Human Rights Group, Nike has disclosed information about its contract factories in its annual report under the corporate governance column, and is now exercising its corporate social responsibility to encourage these contract factories to follow the acceptable 'standards' in these countries, and eventually mend its reputation back on the right track. Promotion

Promotion refers to the various aspects of advertising and promotion. It is an important marketing strategy to generate the desired positive outlook of a product, or what is called the  perceived value in the mind of the consumers. Product promotion can be done in short burst,

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or conducted in longer period of time, depending on the marketing strategy (Borden N. H., 1942). Before embarking on any strategic promotional plan, marketers must conduct an in-depth study of the market. Marketers may choose the regular media of promotion, which can be TV, radio, the internet, social/sports events, sponsorship, and news print. In order to show case its products they can opt to do the following: (1) Advertising (2) Public relations (3) Sales promotion (4) Sponsorship (4) Competition (5) Coupons/Discounts (6) Loyalty  programs etc.  Nike marketers had cleverly targeted the sports industry to develop its brand name because they first started with sports shoes. The company spent a lot of money to sponsor top class athletes to display Nike's logo on their attire and to wear and display Nike's products while the games were aired on TV. This marketing tactics implied to the audiences that successful athletes wear Nike products, and to be successful in sports you must wear Nike products. This strategy works well for Nike and eventually, everybody from various demographic and lifestyles wants to wear the Nike branded shoes/apparels. Thus, Nike become household items, and a well-known sports brand in the world.  Nike's impressive line of sports star include, the Brazilian Soccer Team (soccer), Roger  Federer (tennis), Michael Jordan (basketball), Lance Armstrong (cycling), and Tiger Woods (Golf), just to name a few. The tag line 'just do it' has become a cliché, and it actually inspires  people to know that there is no boundary to achieving success. All they need to do is ‘Just Do It’ (http://nikeinc.com/). However, one aspect of promotional aspects that cannot be discounted is the informal advertising called 'word of mouth'. This is actual human experience, comprise of retailers,  promoters, shop attendants, and consumers themselves, whom actually go around telling  people and disseminating information on the products they sell, bought, and use. The recent marketing strategies of Nike like all other companies have trended towards the digital super highway, internet, websites, social networks, you tube, e-bay are just the kind of  cheap advertising Nike is waiting for all this time. With the introduction of these medium,  Nike’s consolidated revenue has reached an outstanding USD265 billion in 2012. The age of  newspaper advertisement is declining, and the digital dominance of social networking and online advertising is taking over with greater outreach and greater impact to the global

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audience. For example, China a new market with a liberalised economy and more than a  billion population and rising income has become one of Nike’s gold mine due to its aggressive marketing campaign and sponsoring of Chinese women tennis stars and football teams.  Nike's marketing model has successfully created the desired impact it wanted for its brand and corporate image. The long term effect of its advertising effort has allowed it to charge a  premium price for its goods, due to higher perceive value from the public, of its branded quality products. Nike has created a differentiation, and niche market for its products. Marketers in Nike have successfully pieced together a wonderful buying experience; not only for professional athletes, but this wonderful feeling can also be shared by ordinary people on the streets when they put on Nike’s quality products ranging from sportswear, bags, and sports accessories. Nike gives its customers the comfort, satisfaction and sense of pride. However, the promotion's selection process is also very important. Nike must avoid any risk  that may tarnish its image. For example the sex scandals that hit 'Tiger Woods', could have damaging effect on Nike's corporate image. Nike must be careful of whom it chooses to be its  product ambassador. End

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