Macro and Microeconomic Factors
Before any business venture is launched, the influence of macro and microenvironment, as well as financial and economic factors should be considered and analyzed (Gupta & Bojanic 2010). As far as Nike Incorporated is concerned, several factors of paramount influence have been identified.
Concerning the important factors of macro-financial influence, the pervasive presence of cheap Chinese imitations endangers the prosperity of the company in the oriental and Eastern European markets (Nike, Inc. 2011). Currently, no specific legal restrictions are placed on the Chinese exporters to the Russian Federation, Poland, Baltic countries, Ukraine, Romania, the United Arab Emirates and many other countries. The costs of production in China of the fake products are relatively low, while visually, there are significant disparities between the original Nike outfits and shoes, and those that were produced in the sweatshops of China. The financial impact is, however, tremendous, resulting in ten imitations for each original commodity in the discussed countries. Therefore, all the advertising and merchandising companies launched and financed by the Nike Incorporated Company work for the benefit of the Chinese producers.
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Secondly, the activity of the competitors is growing and intensifying. Currently, the athletic and sports clothing market is divided between Nike, Adidas, Reebok, and Fila companies, although the role of small producers should not be underestimated. The following graph demonstrates the distribution of the market shares among the discussed companies.
Consequently, the sales of the company are likely to decrease, if the competitors managed to invent and implement new marketing approaches and strategies (Reid & Bojanic 2010).
Thirdly, many countries have developed and introduced draconian antitrust regulations, which prevent Nike from implementing its conventional practices of small enterprises acquisitions. For instance, the antitrust regulation of Poland directly prohibits international companies from merging with the local manufacturers, leaving the company with pure marketing competition techniques and approaches.
Furthermore, more than 61% of the company’s permanent customers are somehow affiliated with the support units and are either fans or professional or amateur athletes (Nike Official Web-Page 2014). The company associates with the leading sporting institutions and professional teams, making it dependent on the success of the sport of its partners. To illustrate, Cristiano Ronaldo is one of the sponsored celebrities (Nike official Web-Site 2014), who is legally obliged to demonstrate and to play in the sportswear produced by the company. Therefore, he is expected to be regularly exhibited in national and international competitions, in which various football teams participate. The fiasco of the sports institutions to participate in the champions league final rounds automatically annihilate the role of the advertising campaigns of the company, while the commodities of the competitors, which sponsor Barcelona or other teams are likely to be displayed.
The microeconomic factors of particular importance are employee loyalty and the rising research and advertising expenses. In particular, during the recent financial crisis, the company was forced to dismiss a large number of its employees, which resulted in the motivational degradation of the remaining ones. Finally, the sportswear market is very competitive one, and in order to address the interests of the clients, new products should be developed, which require financial investments and clothing design. The industry demonstrates that these expenses are becoming crucial in the paradigm of the company’s financial expenditures.
Nike Products Segmentation Policies
As far as the segmentation policies are concerned, the sportsmen, both professional and amateur, are considered to be the major customers of the company products. Primarily, the focus on these consumers is made through multiple agreements, concluded between the company and the athletic institutions, college athletic associations, and professional sports associations. The company is known to be one of the most financially contributive endorsers and investors of the college athletic sport development. Professional athletes sponsored by Nike are legally obliged to buy the commodities of the company and display them (Marketing in a Changing World n.d.).
Secondly, sports fans are another significant segment of the company’s market share. The firm continually emphasizes that the products it develops are suitable for amateur and professional athletic activities. For instance, Nike Air Max 2014, training speakers have been specifically designed for jogging and running. Considering the affordable price ($220 in the United States market) (Nike Official Web-Site 2014), they are expected to reach the amateur visitors of the gyms and Cross-Fit exercising.
Nike Targeting Strategies
The major Nike targeting strategy is continual and generous sponsorship given to professional athletic teams, college sports teams, and celebrity sports figures. This targeting strategy is considered to be especially successful, since it helps the company to approach the woman, majorly those who are directly or indirectly associated with sport performance on a continual basis. Two illustrate it, a sports manager of Real Madrid has concluded multiple agreements with the company, which resulted in the legal obligation of the first, second, and other teams, as well as a basketball team and children soccer schools to use the shoes and sports equipment produced by Nike exclusively. Under the provisions of these contractual agreements, the institutions are automatically proscribed from using the equipment manufactured by the company competitors.
Secondly, the company is known to pay fees to the top athletic figures for promotional needs, like distance runner Steve Prefontaine, the outstanding basketball player Michael Jordan, the entire Indian cricket team, soccer players Renaldo, Cristiano Ronaldo, Wesley Snyder, Wayne Rooney, and others. These targeting strategies are not aimed at the celebrities themselves, who are not purchasing the sportswear of the company but are paid for its regular displaying, but at their fans who aspire to imitate their idols in every possible way, including the clothing and shoes worn by them during the competitions.
Buyer Behavior Impact
Another important determinant of the company’s effective financial performance is the minor behavior index (Gupta & Lehman 2005). Theoretically, the black box framework is the most illustrative to elucidate the major incentives and constraints which define the process of purchasing decision-making. Firstly, interpersonal incentives (those that are present within a particular group of people) should be distinguished from intrapersonal (those that are present between all people).
As far as the discussed sportswear giant is concerned, the buyers of Nike sportswear are affected and influenced by the three issues. Firstly, they carefully evaluate the usefulness and duration of the products developed by the company for their athletic and aesthetic needs. In other words, the pervasively merchandised Nike Air Max 90 Premium Sneaker boot (Nike Official Web Site 2014) should be fit for jogging and running, while it should be attractive and coherent with the sport outfit of the amateur or professional athlete. Secondly, the fashion requirement should be met. In other words, a particular commodity should meet the fashion expectations of the customers, while fashion itself is determined by the top athletes. Thirdly, the percussive capacity of the ultimate consumers should allow them to purchase the advertised commodity, without being affected financially. Nike Air Max 90 premium sneaker boot is currently sold at $140 (Nike Web Site), which, considering the average income of a typical American family makes them a lucrative purchasing option.
Overall, it can be recapitulated that the buyer behavior of Nike consumers is determined by the fitness and usefulness of the sportswear for athletic purposes, the appearance of these commodities, current fashion trends, and their purchasing capacity. As long as these determinants are reflected in the company pricing and advertising strategies the company’s expected to be successful on this market.
Nike’s Market Position Strategy
Market position strategy is closely associated with the brand name establishment. Generally, positioning is classified as the methods and approaches employed by the company to make a particular impression on the client’s perception and mind. Nowadays, Nike is a widely recognized brand name. The general determinants of the market positioning strategy are price, promotions, distribution competition, and packaging procedures.
The positioning strategy of the discussed company can be encapsulated in its brand logo “athletic shoes for winners”, meaning that sportspeople around the globe are targeted consumers of the company products. To illustrate, Nike FlyKnit AirMax running shoes, sold at $225 on the United States market are specifically designed for runners and joggers. The company website contains full information, while this very commodity is especially suitable for effective performance during amateur running competitions or regular exercising in the gym or outdoors. Finally, the company salespeople are specifically instructed to deliver all the requested information to the potentially interested customers. Even though the price for this commodity is relatively high, compared to the sports running shoes manufactured by the competitors, these sneakers are positioned as professional, although the major targeted audience is the amateur sportspeople.
Overall, the market positioning strategy of Nike can be defined as “bringing the element of professionalism to the practice of amateur sport”. The doubts and problems of choice encountered by the clients should be effectively overcome by continual displaying of the company commodities effectiveness by the top sports stars and athletic teams.
