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Assignment Name Student Name Student ID

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HND IN MARKETING PRINCIPLES IGOR XXXXX

Semester CONTENTS

XXXXX PAGE

Introduction...................................................................................................................................02 A Brief Overview of Nike, Inc.....................................................................................................02 A Brief History.............................................................................................................................02 Section LO1 - Process of marketing............................................................................................03 Elements of marketing process.................................................................................................03 Costs and benefits of marketing................................................................................................04 Section LO2 - Segmenting, Targeting and Positioning...............................................................05 Macro and Micro environments factors that influence marketing...........................................05 Segmenting strategies................................................................................................................05 Targeting strategy......................................................................................................................06 Buyers behaviour activities that affect marketing...................................................................07 Positioning strategy...................................................................................................................07 Section LO3 - Marketing Mix......................................................................................................08 Extended marketing mix...........................................................................................................08 Product development and sustainable competitive advantage.................................................09 Distribution strategy..................................................................................................................09 Pricing strategy..........................................................................................................................09 Promotional strategy..................................................................................................................10 Section LO4 - Marketing Mix in different context (activity)......................................................11 Planning marketing mix for two different segments in consumer markets..............................11 Marketing products and services for B2B markets...................................................................11 International marketing strategy................................................................................................11 Credits and references..................................................................................................................12

A BRIEF OVERVIEW OF NIKE, INC. Nike, Inc. is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered near Beaverton, Oregon. It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment with revenue in excess of US$18.6 billion in its fiscal year 2008 (ending May 31, 2008). As of 2008, it employed more than 30,000 people worldwide. Nike and Precision Castparts are the only Fortune 500 companies headquartered in the state of Oregon, according to The Oregonian. The company was founded in January 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight, and officially became Nike, Inc. in 1978. Nike markets its products under its own brand as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding and subsidiaries including Cole Haan, Hurley International, Umbro and Converse. Nike also owned Bauer Hockey (later renamed Nike Bauer) between 1995 and 2008. In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name. Nike sponsors many high profile athletes and sports teams around the world, with the highly recognized trademarks of "Just do it" and the Swoosh logo. A BRIEF HISTORY The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger (now ASICS), making most sales at track meets out of Knight's automobile. The company's profits grew quickly, and in 1966, BRS opened its first retail store, located on Pico Boulevard in Santa Monica, California. By 1971 BRS prepared to launch its own line of footwear, which would bear the newly designed Swoosh by Carolyn Davidson. The Swoosh was first used by Nike in June 1971, and was registered with the U.S. Patent and Trademark Office on January 22, 1974. The first shoe sold to the public to carry this design was a soccer shoe named Nike, which was released in the summer of 1971. Beginning with Ilie Nstase, the first professional athlete to sign with BRS/Nike, the sponsorship of athletes became a key marketing tool for the rapidly growing company. By 1980, Nike had reached a 50% market share in the U.S. athletic shoe market, and the company went public in December of that year.[9] Its growth was due largely to 'word-of-foot' advertising (to quote a Nike print ad from the late 1970s), rather than television ads. Nike's first national television commercials ran in October 1982 during the broadcast of the New York Marathon. Together, Nike and Wieden+Kennedy have created many print and television advertisements and the agency continues to be Nike's primary today. Throughout the 1980s, Nike expanded its product line to include many other sports and regions throughout the world.

SECTION LO1 - PROCESS OF MARKETING Elements of Marketing Process Under the marketing concept, the firm must find a way to discover unfulfilled customer needs and bring to market products that satisfy those needs. The process of doing so can be modelled in a sequence of steps: the situation is analyzed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are made, the plan is implemented and the results are monitored. The marketing process: Situation analysis Marketing Strategy Marketing Mix Decisions Implementation & Control. Situation Analysis: A thorough analysis of the situation in which the firm finds itself, serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. In addition to identifying the customer needs, the firm must understand its own capabilities and the environment in which it is operating. 5C Analysis: Company, Customer, Competitor, Collaborators, Climate PEST Analysis: for macro-environmental political, economic, societal and technological factors. A PEST analysis can be used as the climate portion of the 5C framework SWOT Analysis: strengths, weaknesses, opportunities, and threats for the internal and external situation. A SWOT analysis can be used to condense the situation analysis into a listing of the most relevant problems ad opportunities and to asses how well the firm is equipped to deal with them.

Marketing Strategy: Once the best opportunity to satisfy unfulfilled customer needs is identified, a strategic plan for pursuing the opportunity can be developed. Market research will provide specific market information that will permit the firm to select the target market segment and optimally position the offering within that segment. The result is a value proposition to the target market. Marketing Mix Decisions: Detailed tactical decisions then are made for the controllable parameters of the marketing mix. The action items include: Product development specifying, designing, and producing first units of product Pricing decisions Distribution contracts Promotional campaign development

Implementation and Control: At this point in the process, the marketing plan has been developed and the product has been launched. Given that few environments are static, the results of the marketing effort should be monitored closely. As the market changes, the marketing mix can be adjusted to accommodated the changes. Often, small changes in consumer wants can be addressed by changing the advertising message. As the changes become more significant, a product redesign or an entirely new product may be needed. The marketing process does not end with implementation continual monitoring and adaptation is needed to fulfil customer needs consistently over the long-term.

Costs and Benefits of Marketing Spending on advertising is huge. It is estimated that worldwide companies spend over $400 billion dollars advertising each year. Most companies large or small, rely on marketing to create customer interest. For some businesses, little advertising may be done. Instead money is spent on other promotions such as personal selling through a sales team. For others, advertising may consist of an occasional advertisement in the local newspaper. Before beginning any marketing campaign, one must find out an essential fact about advertising and promoting efforts. Are these efforts for this marketing campaign worth the time and the money involved? Cost can be measured monetarily, while your benefits can be an immediate return or long term benefit. Examples of cost and benefit/drawback factors are given below: Nike Corporation employs various marketing strategies that have managed to keep the company at the top. This must be a challenge for most organisations as Nike is a premium company that sells well branded and expensive products that are known for their superior quality. Nike is well known for the trademark just do it and it relates to the sporting spirit. This company has more than 500 factories in over 45 countries that are contracted to manufacture these products. With this extended production capacity, the company has elaborate marketing strategies that has made it possible for the company to realize its goals and objectives. The company has adopted a marketing strategy whereby, it sponsors well known players in various sporting fields such as Ronaldinho, Tiger Woods, and Lance Armstrong among others. Nike has adopted marketing mix, which is marketing strategy employs the use of 4 Ps that is product, promotion price and place. Each aspect is important and plays a big role in marketing processes. Marketing is a wide area in the company and Nike has managed to take full advantage of it in as a world number one company in sports wear.

SECTION LO2 - SEGMENTING, TARGETING AND POSITIONING Macro and Micro Environments - Factors That Influence Marketing The Macro-Environment: The term macro-environment denotes all forces and agencies external to the marketing firm itself. Some of these forces and agencies will be closer to the operation of the firm than others, e.g. a firms suppliers, agents, distributors and other distributive intermediaries and competing firms. These closer external constituents are often collectively referred to as the firms proximate macro-environment to distinguish them from the wider external forces found, for example, in the legal, cultural, economic and technological sub-environments. This consists of people, organizations and forces within the firms immediate external environment. Of particular importance to marketing firms are the sub-environments of suppliers, competitors and distributors (intermediaries). These sub-environments can each have a significant effect upon the marketing firm. The Micro-Environment: The term micro-environment denotes those elements over which the marketing firm has control or which it can use in order to gain information that will better help it in its marketing operations. In other words, these are elements that can be manipulated, or used to glean information, in order to provide fuller satisfaction to the companys customers. Segmenting Strategies Market segmentation is a two-step process of: (1) naming broad product-markets and (2) segmenting these broad product-markets in order to select target markets and develop suitable marketing mixes. This two-step process isnt well understood. First-time market segmentation efforts often fail because beginners start with the whole mass market and try to find one or two demographic characteristics to segment this market. Customer behaviour is usually too complex to be explained in terms of just one or two demographic characteristics. For example, not all elderly men buy the same products or brands. Other dimensions usually must be considered, starting with customer needs. The rst step in effective market segmentation involves naming a broad product-market of interest to the rm. Marketers must break apart disaggregate all possible needs into some generic markets and broad product-markets in which the rm may be able to operate protably. No one rm can satisfy everyones needs. So the naming disaggregating step involves brainstorming about very different solutions to various generic needs and selecting some broad areas broad product-markets where the rm has some resources and experience. This means that a car manufacturer would probably ignore all the possible opportunities in food and clothing markets and focus on the generic market, transporting people in the world, and probably on the broad product-market, cars, trucks, and utility vehicles for transporting people in the world. Disaggregating, a practical rough-and-ready approach, tries to narrow down the marketing focus to product-market areas where the rm is more likely to have a competitive advantage or even to nd breakthrough opportunities. Assuming that any broad product-market (or generic market) may consist of submarkets, picture a market as a rectangle with boxes that represent the smaller, more homogeneous product-markets. Targeting Strategy

Who are your customers? Who will buy your product? Often it would be surprising that otherwise savvy small business people either have no idea who will buy from them, or they assume that 'everyone' will. Assumptions like this can lead to wrong decisions, wrong pricing, wrong marketing strategy and ultimately, business failure. The most successful small businesses understand that only a limited number of people will buy their product or service. The task then becomes determining, as closely as possible, exactly who those people are, and 'targeting' the business's marketing efforts and currency toward them. You must identify and serve a particular customer group your target market. One of the first things you need to do is to refine your product or service so that you are NOT trying to be 'all things to all people.' Become a specialist! For example, an eco-tourism company, can make specific decisions early in their market planning. There were plenty of fishing charter operators and party boats on the seas. So clever targeting strategies would help identify how a boat would better offer its services, ie. May be sightseeing or special event charters that would not allow alcohol on board, or fishing rods. Of course, such a decision would eliminate a percentage of the market but it would also give a 'niche' that could be capitalized on, and expanded in a way that other charter operators could not take advantage of. Next, you need to understand that people purchase products or services for three basic reasons: 1. To satisfy basic needs, 2. To solve problems, 3. To make themselves feel good. You'll need to determine which of those categories your product or service is the solution to, and be prepared to market it accordingly. Nike's marketing strategy is an important component of the company's success. Nike is positioned as a premium-brand, selling well-designed and expensive products. Nike lures customers with a marketing strategy centering around a brand image which is attained by distinctive logo and the advertising slogan: "Just do it". Nike promotes its products by sponsorship agreements with celebrity athletes, professional teams and college athletic teams. However, Nike's marketing mix contains many elements besides promotion. In 1982, Nike aired its first national television ads, created by newly formed ad agency Wieden+Kennedy, during the New York Marathon. This was the beginning of a successful partnership between Nike and W+K that remains intact today. The Cannes Advertising Festival has named Nike its 'advertiser of the year' on two separate occasions, the first and only company to receive that honour twice (1994, 2003). Nike also has earned the Emmy Award for best commercial twice since the award was first created in the 1990s. The first was for "The Morning After," a satirical look at what a runner might face on the morning of January 1, 2000 if every dire prediction about Y2K came to fruition. The second Emmy for Nike was for a 2002 spot called "Move," which featured a series of famous and everyday athletes in a stream of athletic pursuits. In addition to garnering awards, Nike advertising has generated its fair share of controversy: Beatles song Nike was the focus of criticism for its use of the Beatles song "Revolution" in a 1987 commercial, against the wishes of Apple Records, the Beatles' recording company. Nike paid $250,000 to Capitol Records Inc., which held the North American licensing rights to the Beatles' recordings, for the right to use the Beatles' rendition for a year. Hence, what we can learn from Nikes experience is that a certain amount of caution and awareness is imperative if advertising campaigns are to be a success. If youre ad campaign

was a hit, but you still had to pay all the proceeds against a law suit, the purpose and success of the campaign would be lost. Buyers Behaviour Activities that Affect Marketing Importance of understanding customer motives: The task of marketing is to identify consumers' needs and wants accurately, then to develop products and services that will satisfy them. For marketing to be successful, it is not sufficient to merely discover what customers require, but to find out why it is required. Only by gaining a deep and comprehensive understanding of buyer behaviour can marketing's goals be realised. Such an understanding of buyer behaviour works to the mutual advantage of the consumer and marketer, allowing the marketer to become better equipped to satisfy the consumer's needs efficiently and establish a loyal group of customers with positive attitudes towards the company's products. Consumer behaviour can be formally defined as: the acts of individuals directly involved in obtaining and using economic goods and services, including the decision processes that precede and determine these acts. These goals are ultimately satisfied by passing through a number of problem-solving stages leading to purchase decisions. The study and practice of marketing draws on great many sources that contribute theory, information, inspiration and advice. Positioning Strategy In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. A product can be positioned based on 2 main platforms: The Consumer and The Competitor. When the positioning is on the basis of CONSUMER, the campaigns and messages are always targeted to the consumer himself (the user of the product). A product can also be associated with an attribute, a product feature or a consumer feature. Sometimes a product can be positioned in terms of two or more attributes simultaneously. The price / quality attribute dimension is commonly used for positioning the products. A common approach is setting the brand apart from competitors on the basis of the specific characteristics or benefits offered. Sometimes a product may be positioned on more than one product benefit. Marketers attempt to identify salient attributes (those that are important to consumers and are the basis for making a purchase decision). Nike is among the few brands that have successfully achieved the tour de force on a large scale. The brand positioning strategy has been remarkably well delivered 360 degrees over a long period of time. For instance, its 1990s dark gothic theme portraying man overcoming nature could be found all at once in its TV commercials, in its merchandising at the Atlanta Olympics, on its website, and at its Niketown stores. As a result of that marketing rigor, Nike and its fancy swoosh have joined the top global brands in less than two decades.

SECTION LO3 - MARKETING MIX

We touched on this briefly earlier, but now lets take a closer look: Elements of the marketing mix are often referred to as the "Four P's": Product: A tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are service based like the tourism industry & the hotel industry or codes-based products like cell phone load and credits. Typical examples of a mass produced tangible object are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system. Packaging also needs to be taken into consideration. Every product is subject to a life-cycle including a growth phase followed by an eventual period of decline as the product approaches market saturation. To retain its competitiveness in the market, product differentiation is required and is one of the strategies to differentiate a product from its competitors. Price: The price is the amount a customer pays for the product. The business may increase or decrease the price of product if other stores have the same product. Place: Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet. Promotion: represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements: advertising, public relations, personal selling and sales promotion. A certain amount of crossover occurs when promotion uses the four principal elements together, which is common in film promotion. Advertising covers any communication that is paid for, from cinema commercials, radio and Internet adverts through print media and billboards. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations (see Product above).

Any organization, before introducing its products or services into the market; conducts a market survey. The sequence of all 'P's as above is very much important in every stage of product life cycle - Introduction, Growth, Maturity and Decline. Extended Marketing Mix This has an additional 3Ps People, Process and Physical Evidence. People: All people involved with consumption of a service are important. For example workers, management, consumers etc. It also defines the market segmentation, mainly demographic segmentation. Process: Procedure, mechanism and flow of activities by which services are used. Also the 'Procedure' how the product will reach the end user. Physical Evidence: The marketing strategy should include effectively communicating their satisfaction to potential customers.

Distribution Strategy

It is defined as a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user. Channels: A number of alternate 'channels' of distribution may be available:

Distributor, who sells to retailers, Retailer (also called dealer or reseller), who sells to end customers Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc. If we mention in a single sentence: the distribution channel is nothing but it is a process of transfer the products or services from Producer to Customer or end user. There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas. Pricing Strategy There are several factors determining the ultimate price tag that will be placed on each product: Competition-based pricing Setting the price based upon prices of the similar competitor products. Competitive pricing is based on three types of competitive product: Products have lasting distinctiveness from competitor's product. Here we can assume The product has low price elasticity. The product has low cross elasticity. The demand of the product will rise. Products have perishable distinctiveness from competitor's product, assuming the product features are medium distinctiveness. Products have little distinctiveness from competitor's product. assuming that: The product has high price elasticity. The product has some cross elasticity. No expectation that demand of the product will rise. Promotional Strategy

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A successful product or service means nothing unless the benefit of such a service can be communicated clearly to the target market. An organisations promotional strategy can consist of: Advertising: Is any non personal paid form of communication using any form of mass media. Public relations: Involves developing positive relationships with the organisation media public. The art of good public relations is not only to obtain favourable publicity within the media, but it is also involves being able to handle successfully negative attention. Sales promotion: Commonly used to obtain an increase in sales short term. Could involve using money off coupons or special offers. Personal selling: Selling a product service one to one. Direct Mail: Is the sending of publicity material to a named person within an organisation. There has been a massive growth in direct mail campaigns over the last 5 years. Spending on direct mail now amounts to 18 bn a year representing 11.8% of advertising expenditure ( Source: Royal Mail 2000). Organisations can pay thousands of pounds for databases, which contain names and addresses of potential customers. Direct mail allows an organisation to use their resources more effectively by allowing them to send publicity material to a named person within their target segment. By personalising advertising, response rates increase thus increasing the chance of improving sales. Listed below are links to organisation who's business involves direct mail.

SECTION LO4 - MARKETING MIX IN DIFFERENT CONTEXT (ACTIVITY)

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Each of these elements will be important in its own way but for some products the emphasis on one or more may be stronger. This will depend in part on the nature of the product or service and the objectives of the business concerned. The aim of this Activity is to encourage you to use your knowledge of the 7 Ps and apply them to a selection of products and services, taking into consideration the relative importance of each element in the mix to those products. You will need to think of what role each 'P' plays in the overall marketing strategy for the product and offer a brief explanation for your reasoning. Planning Marketing Mix for two Different Segments in Consumer Markets A consumer market consists of fast-moving consumer goods and durables, which requires a coordinated marketing mix to achieve objectives. These can be classified into two segments: Organisational markets: differences from consumer markets, adding value through service; industrial, non-profit making, government, re-seller International markets: globalisation, standardisation versus adaptation, the EU, benefits and risks, market attractiveness, international marketing mix strategies Marketing Products and Services for B2B Markets Business to business (B2B) research is inevitably more complicated than consumer research. The researchers need to know what type of multi-faceted approach will answer the objectives, since seldom is it possible to find the answers using just one method. Finding the right respondents is crucial in B2B research since they are often busy, and may not want to participate. Encouraging them to open up is yet another skill required of the B2B researcher. Last, but not least, most business research leads to strategic decisions and this means that the business researcher must have expertise in developing strategies that are strongly rooted in the research findings and acceptable to the client. There are four key factors that make B2B market research special and different to consumer markets: The decision making unit is far more complex in B2B markets than in consumer markets B2B products and their applications are more complex than consumer products B2B marketers address a much smaller number of customers who are very much larger in their consumption of products than is the case in consumer markets Personal relationships are of critical importance in B2B markets.

International Marketing Strategy Two aspects of international marketing strategy standardisation are process and program standardisation. A framework for determining marketing program standardization is introduced. Factors affecting programme standardisation are examined critically. In an attempt to establish a research agenda on the standardisation issue, the author develops research positions for each factor. Global marketing is much on the minds of academicians and practitioners today. It has been argued that the worldwide marketplace has become so homogenised that multinational

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corporations can market standardised products and services all over the world, by identical strategies, with resultant lower costs and higher margins. Interestingly, the standardisation issue is not new. Whether to standardise or to customize has bee a vexing question with which international marketers have wrestled since the 1960s. The world went on without the issue being fully resolved. Recent resurgence of interest in the international standardisation issue is attributed to such global influences as TV, films, widespread travel, telecommunications, and the computer. Though much has been said and written lately on globalisation of marketing, we are nowhere close to any conclusive theory or practice. This situation is not surprising as empirical studies in the area of international marketing are limited. Because empirical detection requires a theoretical base. Hypotheses are presented in the form of propositions. The process of penetrating and then developing an international market is a difficult one, which many companies still identify as an Achilles' heel in their global capabilities. Two aspects of the typical approach are particularly striking. First, companies often pursue this new business opportunity with a focus on minimizing risk and investment the complete opposite of the approach usually advocated for genuine start-up situations. Second, from a marketing perspective, many companies break the founding principle of marketing that a firm should start by analyzing the market, and then, and only then, decide on its offer in terms of products, services, and marketing programs. In fact, it is far more common to see international markets as opportunities to increase sales of existing products and so to adopt a "sales push" rather than a market-driven approach. Given this overall approach, it is not surprising that performance is often disappointing. Nike has positioned it as a global premium brand which is selling designed and expensive products for customers who cannot compromise with quality. The company is using an international marketing strategy with no local incorporation and it is evident from the same logo of the company and the same advertising slogan for all international ads with its slogan "Just do it". The pricing strategy of the company is also premium and the company is charging premium prices all over the world. Nike products are same and are distributed all over the world under the same brand name and without any incorporation of local features. For its promotion company is using extensive advertising in print, television and other media. The same international ads are broadcast in all of the counties where Nike supplies its products. Today Nike is the number one brand of celebrity, athletes, professional teams and customers. CREDITS AND REFERENCES http://www.docstoc.com/docs/6464965/nike-international-marketing http://www.gatherthepeople.org http://www.new-paradigm.co.uk/internaltional marketing.htm http://en.wikipedia.org/wiki www.uwex.edu/ces/pdande/planning/pdf/target strategies ww.time-management-guide.com

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