Nike, Inc. is engaged in the design, development and worldwide marketing of footwear, apparel, equipment and accessory products. It sells its products to approximately 18,000 retail accounts in the United States and through a mix of independent distributors, licensees and subsidiaries in nearly 200 countries.
Despite the fact Nike carry’s out everlasting, basic research that benefits a number of facets of the sports and fitness industry, their primary focus is to deliver which in turn is directed towards applied research. Applied research emphasises on short-term action such as successfully bringing about a new product lines. This proves to be a strength as this method of research is less costly than basic research and less risky due to the short-term nature. Successful projects can feature instant profitability while unsuccessful projects may be abandoned without facing large losses.
Focus – Weakness
Applied research can be a weakness as well. Many new, inventive ideas come into existence as a result of basic research. Nevertheless more risky and expensive, Nike would gain from the rise in the basic research which would strengthen the organization with potential opportunities and proper discoveries of which Nike could take advantage.
Posture – Strength
Nike as a brand gives its posture a cutting edge over its other competitors, at the same time adapting to securing a place and at other instances to make an approach to secure a position. Nike self-satisfaction is of late being a premiere provider of high quality sports footwear and apparel. Variation in the product has been the key to support Nike in achieving its position as the leader in the market. Due to this very position of Nike in the footwear industry, it can afford to look ahead giving more emphasis on new products it wants to develop as compared to other companies with attempt to improve upon existing products and services. From time to time, it needs to adjust its posture in relation to a particular product line or area of products. Nike may also choose a defensive strategy to find a solution of some problem at that instant it may might as well use the strategy of using an idea which is well worked out for other companies and may implement the same for its own which in other words is mimic what is working well for other companies in the industry.
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Marketing Research
Strength of Marketing Research
Nike’s core is depended on marketing research on a continuous basis to benefit in keeping up the company’s position as the leader in athletic footwear and apparel industry. The result of such analysis enables Nike to make decisions regarding its different divisions. Its decision is benefitted to recondition the apparel division, an area where the company offers a number of possibilities. Nike will be arranging the internal business by gender instead of the sport category they are using now. They also plan to carry out more experiment concerning the buying habits of men, who are frequently item-driven and women who are more collection-driven.
Limitations of Marketing Research
Focusing on applied research can be a weakness as well. Many new, innovative ideas come into existence as a result of basic, unspecific research. Though more risky and expensive, Nike would benefit from increasing the amount of basic research we conduct with hopes of uncovering potential opportunities of which Nike could take advantage.
Accurate, up-to-date information obtained by marketing research can be of enormous value to Nike as an organization in gaining and/or maintaining its competitive edge. However, there are a number of reasons why, in reality, these potential benefits may not be realized:
Budgetary constraints – gathering and processing data can be very expensive. Nike may lack the expertise to conduct extensive surveys to gather primary data, whatever the potential benefits, and also lack the funds to pay specialist market research agencies to gather such data for them. In these cases, Nike may be forced to rely on data that is less than ‘perfect’ but that can be accessed more cheaply, e.g., from secondary sources.
Time constraints – Nike are often forced to balance the need to build up as detailed a picture as possible regarding customer needs etc. against the desire to make decisions as quickly as possible, in order to maintain or improve their position in the market.
Reliability of the data – the value of any research findings depend critically on the accuracy of the data collected. Data quality can be compromised via a number of potential routes, e.g., leading questions, unrepresentative samples, biased interviewers etc. Efforts to ensure that data is accurate, samples are representative and interviewers are objective will all add to the costs of the research but such costs are necessary if poor decisions and expensive mistakes are to be avoided.
Legal & Ethical Constraints
The Data Protection Act (1998) is a good example of a law that has a number of implications for market researchers collecting and holding personal data. For instance, researchers must ensure that the data they obtain is kept secure, is only used for lawful purposes and is only kept for as long as it is necessary. It must be made clear as to why data is being collected and the consent of participants must be obtained. In addition to this, there are a number of guidelines, laid down by Nike as the Market Research Society, that, although not legally binding, encourage Nike to behave ethically when dealing with members of the public.
Recommendation to Improve Market Research:
Nike should make a make a proper budget before implementing a market research.
Nike should be give appropriate time to each market research.
Nike should follow all the legal rules laid down to improve the market research.
Nike should stay away from un – ethical marketing research.
Nike should identify it target market before each research.
SWOT Analysis of Nike
Strengths
Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that ‘Business is war without bullets.’ Nike has a healthy dislike of its competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike sponsored the top athletes and gained valuable coverage.
Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organization. Nike is strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.
Nike is a global brand. It is the number one sports brand in the World. Its famous ‘Swoosh’ is instantly recognizable, and Phil Knight even has it tattooed on his ankle.
Weaknesses
The organization does have a diversified range of sports products. However, the income of the business is still heavily dependent upon its share of the footwear market. This may leave it vulnerable if for any reason its market share erodes.
The retail sector is very price sensitive. Nike does have its own retailer in Nike Town. However, most of its income is derived from selling into retailers. Retailers tend to offer a very similar experience to the consumer. Can you tell one sports retailer from another? So margins tend to get squeezed as retailers try to pass some of the low price competition pressure onto Nike.
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Opportunities
Product development offers Nike many opportunities. The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need to replace shoes.
There is also the opportunity to develop products such as sport wear, sunglasses and jewelry. Such high value items do tend to have associated with them, high profits.
The business could also be developed internationally, building upon its strong global brand recognition. There are many markets that have the disposable income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of consumers. There are also global marketing events that can be utilized to support the brand such as the World Cup (soccer) and The Olympics.
Threats
Nike is exposed to the international nature of trade. It buys and sells in different currencies and so costs and margins are not stable over long periods of time. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands.
The market for sports shoes and garments is very competitive. The model developed by Phil Knight in his Stamford Business School days (high value branded product manufactured at a low cost) is now commonly used and to an extent is no longer a basis for sustainable competitive advantage. Competitors are developing alternative brands to take away Nike’s market share.
As discussed above in weaknesses, the retail sector is becoming price competitive. This ultimately means that consumers are shopping around for a better deal. So if one store charges a price for a pair of sports shoes, the consumer could go to the store along the street to compare prices for the exactly the same item, and buy the cheaper of the two. Such consumer price sensitivity is a potential external threat to Nike.
PESTLE Analysis of Nike
Political Analysis
The government must create economic policies that will foster the growth of businesses. Nike, fortunately, has been helped by the US policies which enable it to advance its products. The support accorded to Nike by the US government, particularly in the general macroeconomic stability, low interest rates, stable currency conditions and the international competitiveness of the tax system, form the foundation critical to Nike’s growth.
Economic Analysis
In economy, the biggest threat for Nike would be economic recession. During recession, Nike’s growth will be adversely affected. The US economy is experiencing a downturn right now. Consumer purchases are slowing down. Currently, Nike’s feeling the pinch of the economic recession. The Asian economic crisis also affects Nike since its goods are manufactured in Asia. The labor costs socially responsible and material prices are going up.
Nike’s growth is not just affected by the local economy but also in the international economy. A weak Euro and an Asian recession could mean weak sales for Nike. The overall results in the sales generated by Nike in athletic footwear, however, remained stable. The global market makes up for the variances in sales particularly between peak and lean seasons.
Society Analysis
People are more health conscious nowadays. Diet and health are getting more prominence. Consequently, more and more people are joining fitness clubs. There is an accompanying demand for fitness products particularly exercise apparel, shoes and equipment. Nike is at the forefront of this surge in demand as people are looking for sports shoes, apparel and equipment.
Nike, however, failed to foresee problems brought about by a sweatshop expose pertaining to labor and factory conditions at production locations in Asia. This caused bad publicity and declining sales as society and consumers demand more companies.
Technology Analysis
Nike uses IT in its marketing information systems very effectively. Nike applies marketing information systems to the economics of innovation, segmentation and differentiation for most of its businesses. Nike’s leadership status owes in large part to the use of extremely valuable Information Technology, and applying it to every aspect of the product from development to distribution.
Nike, being the world leader in the athletic footwear industry, is able to effectively harness its environment to boost its marketing efforts. This strategy has translated into robust sales of Nike’s products.
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