Nike Inc is the world’s largest company founded by Bill Bowerman and Phil Knight in January 1964. It is manufacturing different kinds of sports wear and footwear. Nike
air 09 is the new product which Nike Inc has introduced in Jan 2009. Therefore the purpose of this report is to assess the PESTEL analysis, market opportunities and threats which Nike are facing and competitor analysis. After that plan the introduction of our new product (Jordan Air 09) by providing the ACME trading corporation directors with target market and how we will apply efficiently our marketing mix for our new product. Jordan
This part of the report will look on the external environmental influences as a means of identifying the threats and opportunities that will affect marketing planning and implementation of the Air Jordan 09 within the organization.
It is important to look on social analysis because it helps the company to understand customers and things which drive them (Brassington and Pettitt, 2003). Nike inc. has been affected both positively and negatively by social factors. Keynotes (2008) suggested health consciousness to be a positive effect to Nike in
footwear and cloth industry because most of the people starting to join health clubs or jogging in order to make themselves healthy. This will lead to increase in demand for sports wear and footwear. On the other hand Knife murders across the UK have a negative effect to Nike and hence leads to the removal of shoes called Nike air stab (stability) due to the fact that people were arguing that is encouraging crime issues. UK
This part of analysis covers conditions which affect the structure of competition such as macro and micro economics (Brassington and Pettitt, 2003). Recession affected Nike negatively; according to Keynotes this is due to the fact that most of the people do not have money to buy leisure goods or being engaged into leisure activities. Furthermore, Keynotes (2008) argued that, consumers tendency have changed, they are now consuming small percent of their income in staple items such as food and clothes. This will have an effect to Nike because when people stop consuming a lot on cloth, demand for cloth and footwear will fall which leads to fall in Nike’ sales and revenue.
It is important to look on technological environment in order to be aware of innovation and improvements made for the benefit of the organization (Brassington and Pettitt, 2003). Improvement in technology has a positive effect to Nike because it enables the company to manufacture footwear which will provide better protection from all kind of weather, and provide better kicking, jumping and running. Moreover this innovation helped Nike to produce high quantity efficiently at low cost and time which will lead to increase in profit.
Political and legal Analysis
It is important to look on external forces controlled by the government or external forces in order to be aware of the laws, rules or regulation improved or changed which might affect the organization strategies (Brassington and Pettitt, 2003). Political attention has moved from job losses in the well developed countries to the operational of multinational apparel companies which has been attracted many protesters against the use of cheap labour in developing countries. According to Keynotes, (2008) this is due to the fact that developed countries will be unable to compete with those multinational companies operating in developing countries due to their low production cost which will enable them to offer products with low price.
Global warming is one of the factors which have affected Nike. This is because of world’s response to global issues by requesting companies to reduce the amount of carbon emitted. Therefore Nike is trying its best to make sure that is producing low amount of carbon in order to meet environmental regulations made by united nation by installing new machines which produces low amount of carbon (keynotes, 2008).
In sport clothing and footwear industry Nike Inc is the market leader because of its high market share represented by its sales of $14.96 million in 2006 and its relatively high rate of market growth of 8.8 percent in 2006. (Keynotes, 2007). The closer competitor of Nike is Adidas group which had turnover of Euro 7million in 2006 and it has a plan of increasing its growth rate and market share up to 20 percent after acquisition of Reebok. After Nike and Adidas, Puma follows as another Nike competitor due to its sales of Euro 2 million in the same year 2006.
This part of the report looks on strengths, weaknesses, opportunities and threats of sport clothing and footwear industry. It is important to look on SWOT analysis because is the way of auditing the organization and its environment. Moreover it helps marketers to plan and focus on key issues for effective marketing of their products.
Nike Inc. in its footwear industry has many opportunities such as increase in demand for sports footwear and clothes. The demand increases due to consumer’s need of becoming fit and healthy, therefore this gives an underlying solidity to sports goods manufacturing. Moreover, Keynotes, (2008) stated Nike as a multinational sportswear company; therefore it will continue to diversify the market into branded sports equipments and hence it will increase its revenue. Another opportunity is that, fashion is among factors which provides opportunity to fast moving companies which are producing equipments for those sports which are coming into fashion.
According to keynotes, (2008) Globalisation is among factors which are considered to be a threat to
UK sports footwear and cloth industry due to removal of some restriction on imported goods from Europe and other countries which has agreement with to do so. Therefore this is a threat because if competition increases price will fall, and if the company which imports its goods is from Asia or Africa where they are paying low wages compared to UK UK, it will destroy the companies market by cheap products. Another threat is that, due to recession there is possibility of price fall due to many stores competing for the same customers. Price fall may also be caused by low demand compared to supply (oversupply) because companies continue to produce regardless the fall in demand caused by recession. One more threat is that, UK UK manufacturers lost their ability to compete with the Far East companies due to the availability of low-cost sourcing in the Far East and in other regions.
According to keynotes (2007) sports clothing and footwear as a whole have strength of availability of low cost sourcing such as cheap labour in Far East however this is a threat to
manufacturers. Furthermore, through participation, media coverage and fashion sport industry have high profile in modern society. Both are strengths because they will help Nike to maintain and even increase their demand and sales by being able to charge low price due to low production cost and use media to persuade prospective buyers to buy their products or attract fashion conscious buyers. UK
According to keynote (2007) most of sports clothing and footwear appears to be narrow because most of the people who wear them are youth especially boys even though sports appear to be popular. This is weakness because it narrows the market and make difficult for companies to increase their sales through establishment of other segments such as elders and female. However if they decide to include older people, they might have another weaknesses of losing youth because they will not want to look same as elders.
Segmentation is important for an effective marketing of the product. This is because by dividing prospective buyers into groups a marketer can be able to apply its marketing mix effectively because some segments need different mix compared to others (Baker, 1996). Target market for our product which is Jordan Air 09 is divided into two main segments which are basketball players and fashion buyers for both men and women. First segment for our product is basketball players because this product has been designed to meet their needs by providing better jumping and running in their pitches. Moreover, Jordan Air 09 will also be sold to those consumers who want to buy it for fashion or those who have aspiration of looking like basketball players, and this will be our main target for this product. This second segment we will divide it into further two segments which are youth (15-25) and elders (40-60). This is because most of the companies in this athletic industry prefer to target only youth, but we want to establish a new segment which is elders because they are now conscious about health issues and they want to make their bodies fit, so by targeting them, we are expecting to have positive reaction from them due to their demand for sports cloth and footwear.
falls under shopping goods because it represents more of a risk to consumers. There fore we have decided to manufacture it in high quality inclusive of air bubble and breathable materials which will provide better jumping, running and less ankle injuries. Moreover due to technology used our product guarantee durability because it has been produced to be used in all kind of weather. Furthermore we have decided to call our product Air Jordan 09 as the way of communicating features of it such as better jumping which is represented by word Air. Moreover we used Jordan ’s name to create interest and characters to our product. Jordan
The aim of every marketer is to deliver the product to the consumer at the right time. According to Brassington and Pettitt, (2003) explain four different types of channel of distribution which are used by different organization. We have decided to use one stage channel in order to be able to deliver our product to consumer on time. Moreover, we will use one stage channel in order to control increase in price because if we use four stages channel in each stage there is commission added by the middlemen and the whole burden will fall to our consumer. Therefore we will open our Nike shops in order to have direct selling and ignore those middlemen.
It is the way of communicating with the target market. According to Brassington and Pettitt (2003) promotion mix includes advertisement which is non personal, personal selling which is face to face communication, sales promotion which aims to encourage buyers to buy the product and public relation.
In this segment we will use personal selling because we believe it will be suitable for professional basketball players. This is because it has higher impact than advertisement by being able to engage buyer’s attention (Brassington and Pettitt, 2003). Therefore, we will face them face to face and give them description of our product and its advantages such as provision of suitable running, jumping and durability due to its materials and technology used. Moreover we will ask them to wear it freely as part of advertisement to other players’ especially local ones. For local basket players we will use advertisement on sports channel such as sky sports and Setanta to persuade them to buy it. This is because Advertisement is used to compare brands in competition, inform, persuade, remind buyers and build the image of the company (Brassington and Pettitt, 2003).Furthermore we will use Michael Jordan who is a basketball legend in our advertisement in order to attract those local players.
Fashion conscious buyers
In this segment we will use advertisement on television and sports magazine to advertise our product. We will use both sports and normal channels because our prospected buyers should not only be basketball fans, therefore we will use sports channels such sky sports and Setanta sports and normal channels such BBC to inform and persuade both basketball and non basketball fans who will buy due to either aspiration to look like Michael Jordan because we will use Michael Jordan in our advertisements or fashion. Moreover the purpose of using Jordan in our advert is to show elders that even old people can wear Jordan Air 09 because Jordan is old as they are and he is still wearing Jordan Air 09 why not them.
According to Brassington and Pettitt (2003) there are internal and external factors which are influencing price decision. Internal ones are those which are within the organization such as firm’s objectives, marketing objectives and cost. External ones are those which are outside the firm’s control such as competition, demand and price elasticity, consumers and customers, legal and regulatory and channel of distribution. We decided to look on both of them in order to have effective price for our product Air
09. The objective of the company is to increase market share by stimulating and increasing the demand for our product. Therefore we will charge a relative low luxury price on our product but not below cost (production cost plus marketing cost) in order to increase demand since the price elasticity of our product is relatively elastic, therefore the small change in price leads to relatively high change in quantity demanded. Moreover we will charge low price by ignoring long channel of distribution by opening our own Nike shops. Jordan
Based on the discussion on PESTEL, SWOT and competitor analysis and our marketing strategies Nike will have an effective introduction of this new Air
09. However the budget limit can be a threat to our plan especially in this recession era. Jordan
Baker, M. J. (1996) Marketing: An introductory text. 6th ed.
, Macmillan press ltd London
Brassington, F. and Pettitt, S (2003) Principles of marketing. 3rd ed.
Harlow, Pearson education limited
Keynotes, (2007). Competitor analysis. Available at: http://0-www.keynote.co.uk.brum.beds.ac.uk/kn2k1/CnIsapi.dll?nuni=23885&usr=11354srv=02&alias=kn2k1&uni=1240279548&fld=K&noLog=1&frompage=Summ&key=4961 (accessed on 20th April 2009)
PEST analysis. Available at: http://0-www.keynote.co.uk.brum.beds.ac.uk/kn2k1/CnIsapi.dll?nuni=78536&usr=11392srv=01&alias=kn2k1&uni=1240222128&fld=K&noLog=1&NotInWorkset=1&key=2330 (Accessed on 27th March 2009).