MEDITERRANEAN COLLEGE

SCHOOL OF BUSINESS MANAGEMENT

YEAR 2

ASSIGNMENT TITLE: Principles and Practice of Marketing In Course

Assignment 2010/2011 about Nike

STUDENT NAME: Ioannis Chatzidis

MODULE LEADER: Mr. Sioulis
MODULE TITLE: Principles and Practice of Marketing
 Above, there are two diagrams in the past four-year period. Both diagrams
were designed according to clues from the case study that was provided with this
specific assignment. In the first diagram, it can be seen that Nike holds a 40% share of
the United States athletic footwear market share. Nike’s biggest competitor is Reebok
with a 13% market share and all the other brands which hold the rest 47%.
On the other hand, on the second diagram, it can be seen that Nike holds a
35% share of the top football marketers share in Europe. Something that is really
remarkable is that Nike is relatively new to football. Nike also managed to really
quick drop to the second place Adidas, which holds a 30% share and it was the top
football marketer for a lot of years. All the other companies hold the rest 35%. Nike’s
founder, Phil Knights, is now one of the richest people in the world.
To continue with, Keller and Kotler (2006) mention that every company,
especially if it is an international corporation, needs to make a macro environmental
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analysis in order to grow further than the current point that it is. The best tool of a
macro-environmental analysis is the PEST Analysis. Thus, there will be provided a
thorough PEST Analysis and some other analytical models, such as a BCG Growth
Share Matrix. The charts that will follow can be found in the annual report of nike in
www.nikebiz.com

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Resource of Figure 4.7: Lussier & Kimball (2009), Applied Sport Management Skills

To continue with, Kotler ét al (1999) state that PEST Analysis is comprised of

four type of environments. The letter “P” refers to the Political environment of the
company, “E” refers to the Economic environment, “S” refers to the Social-Cultural
environment and the letter “T” which refers to the Technological environment. Taking
every chart from above into account, there will be given a thorough PEST Analysis.
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 Firstly, there is the political environment. In accordance with the charts above
and Messner, A.M. (2002), every government has to help the companies to grow by
the economic policies it creates. Nike, Inc. was always helped by the policies that are
created by the governments of the United States of America.US policies help Nike,
Inc. to have a general macroeconomic stability, low interest rates, stable currency and
to be competitive at an international level. Finally, if somebody take into account the
case study that we were given, the growth of Nike, Inc. is absolutely understandable.
Secondly, there is the economic environment. According to the case study of
Nike that was given to us and clues from www.nikebiz.com and the matrixes above,
the biggest threat for the Nike’s economy is the economic recession which still exists.
Thus, it is most certain that Nike’s growth is still affected by this global
economic recession. The economy of the United States of America is in a bad
situation. It can be said that Nike has just started to feel this economic recession, due
to clues from the annual report of Nike and because of the decrease in Nike’s sales.
Nike’s products are manufactured in Asia. Because of the Asian economic recession
the prices of the materials and the labor costs are increasing and this also affects Nike.
Thirdly, there is the social-cultural environment. According to Cuizon, G.
(2009), people are now more concerned about their health. As a consequence, fitness
clubs are going better and better. More and more people purchase fitness products,
such as apparel, footwear and several types of equipment. In the case study that was
provided to us and at the matrixes above, it is mentioned that Nike, Inc. is the
business with huge market shares not only in the Unites States of America but
internationally as well. However, in the case study there is a statement about the labor
and factory conditions under which a big amount of people work in Asia. As a result,
Nike’s publicity got worse, the sales declined and Nike’s customers now demanding
from Nike to be more responsible to the global society.
Finally there is the technological environment. Cuizon, G. (2009), claims that
Nike uses Information Technology in its marketing systems. Nike uses information
technology in order to be more innovative, segmented and differentiated than its
competitors. Besides, according to information accessed in www.nikebiz.com , Nike’s
leadership is an outcome of a very well-applied information technology, which is
applied at every stage of the product, from its development to its distribution. What is
more, taking a good look to the matrixes and diagrams provided, it can be said that
Nike is definitely the global leader when it comes to the athletic footwear. As a result,
Nike is able to affect the way that its environment will develop.
To continue with, there will be created a profile of the company’s target
customer. A broad range of segmentation variables will be used. Beginning, a profile
of Nike’s target customer can be created through a geographic variable.

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 1600

1400 North America (-2%)

1200
Western Europe (+2%)
1000
Central and Eastern Europe
800 (+16%)
Greater China (+34%)
600

Japan (+15%)
400

200 Emerging Markets (+12%)

0
2008 (mil. $) 2009 (mil. $)

The chart above was created with data taken from http://invest.nike.com , in
which Emerging markets refer to South Europe, Americas, Africa and the Pacific. In
the chart above, it can be seen every geographic area in which Nike, Inc. has
businesses. It can be seen that, the first in the sales in 2009 comes North America with
$1429.3 mil. Continuing, there is Western Europe with $939.1 mil., Central and
Eastern Europe with $415.1 mil., Greater China with $575.2 mil., Japan with $205.4
mil. and the emerging markets with $342.6 mil.

Thus, it can be concluded that, geographically, Nike, Inc. does business in a

global range, in almost every country of every continent with Northern America
market being the a highest-income customer and Japan with the emerging markets
being the markets with the fewest sales. However, it can also be said that, because of
the high raise in the sales in Central-Eastern Europe, Greater China, Emerging
markets and Japan, Nike, Inc. is focusing more on these markets as a target customer
rather than the markets of North America and Western Europe.

To continue with, according to information taken from

www.nikebiz.com/customer_service , the following tables can be created, which will
help in segmenting demographically and behaviorally;

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 According to the tables above, it can be mentioned that when it comes to the
demographic variable of selecting a market, Nike, Inc. can sell products for every age
and gender of either boys/men or girls/women. Moreover, it can be said that Nike
provides its customers products for almost every type of sport and activity.
Furthermore, as it can be seen through a research on
www.nikebiz.com/customer_service about the prices of Nike’s products, it can be
concluded that Nike mainly focuses on middle and high income families. New Nike’s
products are expensive. However, Nike very often does discounts on its products and
sometimes even people from low-middle income families can afford Nike’s products.
Yet, a company’s market can be segmented by a behavioral or a
psychographic variable. As it can be seen in the tables above, Nike has products for
sports that focus on different social classes. For example, golf or lacrosse is
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considered to be the sport of the rich people. However, basketball is a sport which is
played by every social class. Thus, it can also be mentioned that Nike has a wide
range of products which can satisfy almost every people who may and will have not
only a different lifestyle, but a different personality as well. On the other hand, a
certain product may be used in different occasions and it may has a different usage
rate of it may benefit different people in different ways. However, Nike’s products
can cover almost any type of these behavioral factors.
In continuance, there will be provided a BCG Growth Share Matrix and a
SWOT analysis of Nike, Inc. which were all created by information taken by the
balance sheet and the annual report of the corporation and www.nikebiz.com ;

It is stated by Kotler & Armstrong (2001), that by using a BCG matrix, a

company can categorize every strategic sector of the company’s activities that are
used in accordance with the growth share. In the vertical axis there is the market
growth rate and in the horizontal axis there is the relative market share. In the upper-
left box there are the stars, which are the business activities or the products with a
high growth rate and a high market share. It is often important for the company to
make huge investments to further grow. Eventually, their growth rate will decline and
stars will be transformed to cash-cows.
It can be seen in www.nikebiz.com and in the annual report of the company,
that the marketing strategies that Nike uses, takes into consideration a lot of other
factors except for the market growth rate. Nike, Inc. uses a market elasticity indicator
which takes into account the market size, the market growth rate, the profit margins of
the market and the size of the competition.
Moreover, as it was mentioned above in the PEST analysis of the company
and due to the marketing strategies that are applied, Nike, Inc. has been helped by the
policies of the countries that has expanded (especially from the US policies). Also,
Nike Corporation has been helped by a very helpful socio-cultural and technological

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environment. What is more, Nike has managed to come over a really bad economic
environment.

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 Moreover, Nike has taken into advantage the development of the international
trade, the general increase in the demand for clothing/footwear for leisure activities,
the women demands for clothes and footwear and the growing e-commerce. Thus,
Nike has developed certain marketing strategies that help the corporation to further
expand its strengths. Nike has a wide global range of distribution networks (and
online networks) and invests on them to accomplish an increase at the company’s
sales and market share and the satisfaction rate of the customers. However, there are
also some weaknesses that have risen up because of these strategies. Despite of the
increase of women demands for clothes and footwear, Nike has a lack of stores
catering exclusively women. What is more, despite the global distribution network of
the company, there are poor employment practices at their international
manufacturing sites. Also, a big weakness that comes up because of these strategies is
that Nike, Inc. becomes more and more heavily depended on the footwear sales.
Furthermore, as it can be seen in www.nike.com and www.nikebiz.com , Nike,
Inc. through its official website has managed to come into contact with its customers
with a more personal and personalized way.
What is more, Nike, Inc. besides its strong brand recognition and a superior
research and development department, it has also managed through its marketing
strategies to be really competitive. However, there are two big threats for the
marketing strategies that are used and those are Nike’s biggest competitors. Reebok
has a really strong presence in the global market with more than 200 factories and
Adidas, which is Nike’s biggest competitor in the European market.
All things considered, it can be concluded that Nike, Inc. uses mainly two
specific marketing strategies. One is a pull-oriented strategy and the other one is the
sports promotions and sponsorships. According to Jeannet and Hennessey (1998), the
main characteristic of the pull strategy is that the company is heavily depended on
advertising a product directly at the final user of this product (or service in general).
Campaigns which use a pull-oriented marketing strategy, are mainly a marketing
solution for firms (especially the international ones) that approach a really large
segment of the market.
Finally, the other marketing strategy that is used by Nike is the sports
promotions and the sponsorships. One of the most competitive of Nike’s strengths is
the investments in great celebrities and major athletic events. As it is mentioned to the
case study that was provided, Nike had signed in the past the basketball phenomenon
LeBron James to a $90 million contract. Moreover, in the Athens Olympics, Nike’s
investments in athletes brought the company back, 50 gold medals and many other
silver and bronze medals. Furthermore, Nike has been for many years the main
granter in the English football Premier League and also major granter in the Spanish
football league. Nike, Inc. has also invested in many other phenomenon athletes, such
as Michael Jordan and Tiger Woods.
As it is mentioned by Jeannet and Hennessey (1998), has moved beyond
sponsoring individually athletes. Nike, Inc. has started to sponsor entire teams. Nike,

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Inc. had spent more than $200 million to be the only sponsor of the Brazilian national
teams at any sport for a ten-year period (1997 – 2007).
Moreover, since Nike now sponsors the national football team of the USA, the
Netherlands, Italy, Brazil, Russia, etc. Nike has started sponsoring matches between
these teams outside the formal championships. A great outcome of this marketing
strategy as it can be seen in the charts in the beginning of this assignment, Nike has
managed to be more competitive against its biggest rivals, which are Adidas and
Reebok. One final thing that Nike must take into account from its product mix is the
high level of its products’ prices.

Word Count: 2198

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 REFERENCE LIST
BOOKS
1. Armstrong, G. and Kotler, P. (2001), Principles of Marketing, 9th Edition.
New Jersey: Published by Prentice Hall, Inc.
2. Hennessey, D.H. and Jeannet, J.P. (1998), Global Marketing Strategies.
USA: Published by Houghton Mifflin Company, pp. 481, 501, 502.
3. Keller, L.K. and Kotler, P. (2006), Marketing Management, 12th Edition.
New Jersey: Published by Pearson Prentice Hall, pp. 88-90
4. Kimball, C.D. and Lussier, N.R. (2009), Applied Sport Management Skills.
USA: Published by Human Kinetics, p. 100.
5. Kotler, P., Armstrong, G., Saunders, J. and Wong, V. (1999), Principles of
Marketing, 2nd European Edition. New Jersey: Published by Prentice Hall
Europe, pp. 127, 168-192
6. Messner, A.M. (2002), Taking the Field: Women, Men and Sports. USA:
University of Minnesota Press. Available from:
http://site.ebrary.com/lib/teesside/docDetail.action?docID=10151221&p00=ta
king%20field
7. Assignment’s Case Study about Nike

FURTHER READING
1. Annual Report of Nike 2010, Available from http://media.corporate-
ir.net/media_files/IROL/10/100529/nike-ar-20100804/index.html
2. Ashford, R., Drummond, G. and Ensor, J. (2008) Strategic Marketing:
Planning and Control, 3rd Edition. Oxford: Published by Elsevier, Ltd.
3. Cuizon, G. (2009), Marketing Audit of Nike’s Strategies. Available from:
http://www.suite101.com/content/marketing-audit-of-nikes-strategies-a94402
4. Daniels, D.J., Radebaugh, H.L. and Sullivan, P.D. (2011) International
Business: Environments and Operations, 13th Global Edition. Published by
Pearson Education, Inc.
5. Kerin, A.R. and Peterson, A.R. (2010) Strategic Marketing Problems: Cases
and Comments, 12th International Edition. Published by Pearson Education,
Inc.

WEBSITES
1. http://site.ebrary.com/lib/teesside/
2. http://www.nike.com
3. http://www.nikebiz.com/
4. http://www.nikebiz.com/customer_service/
5. http://invest.nike.com/phoenix.zhtml?c=100529&p=irol-finReporting

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