Nike Corporation is the world’s leading seller in the market of footwear and other sports wear. Nike was founded by Phil Knight who begun by selling sports shoes. Currently, Nike has expanded and is operating in more than 110 countries. The company has an exclusive brand name that is being sold in the U.S markets alone. It is estimated that independent contractors manufacture almost half of the company’s products line in foreign markets.
1) Identify the key reasons why the World Shoe Project failed in the China market by focusing on identifying and discussing the four elements of the marketing mix-product, price, place (distribution), and promotion.
Marketing strategies of Nike
Nike has used a marketing strategy that focuses on the 4Ps of the marketing mix. Many companies around the world are using the same strategy to market its products. All the four elements are extremely influential, and a plays a significant role in the process of marketing.
Product
Nike has a wide range of products, which include shoes, clothes, and other sports wear. The company’s products cater for men, women and children. As compared to its competitors, the company has a hip-hop culture and is committed to supplying clothes to urban fashions. Nike produces unique products. In the beginning, the company manufactured only shoes, but as the competition became stiff, it had to expand and produce other products in order to meet the customers’ needs. Nike believes in quality products and packages its products in a way that attracts the customers. In order to maintain its customers, the company has to maintain the quality of its product line.
Promotion
This includes the different modes of communications that the company uses to market its products. The company has four distinct elements of promotion namely advertising, point of sale, word of mouth and public relations. The company has successfully used this marketing mix and has seen it capture and retain its customers.
Price
This is the amount charged for each product bought. The identity, competition, market share and the perceived value of the product by the customers determines the value of a certain product. Nike has since then been manufacturing excellent products and retailing them at a premium price as compared to the cheap china markets. The company’s products are of exceptionally high quality thus resulting for a higher price. The company produced products that only targeted the high-class consumers who could afford. This forced the middle class and lower class customers to opt for the low quality products from competitors. For the company to be able to penetrate through the market, it started by selling its products at a cheaper price, and once it gained its market share, the company increased its products’ prices.
Place
This is the location where Nike sells its products. It includes the company’s distribution channels for its products. Nike has a wide range of distribution channels, which ensures that its products are supplied in the market. Such channels have ensured that customers can easily access the products from company. The company has licensed independent distributors who retail its products in different countries.
2) Do you think a low priced line such as world shoe could co-exist in a market such as China with their premium line without diluting brand image of Nike? Explain your reason
Nike readjusts marketing strategy
Nike is the world’s best selling in sportswear. It is expected to adopt new strategies predicted to generate a significant increase in sales growth. Nike does not consider withdrawing from the cheap line of China market but is rather working on how it can achieve its market share. The company has collaborated with Chinese retailers in most cities of China. This has been effective because the company has managed to reach all its customers all mover China.
Nike has maintained its strategy, which focuses on spreading the company’s products throughout China. The company’s management is not intending to dilute the quality of the company’s products in any case. They are rather planning to influence the China footwear market by maintaining the high quality and spreading all over the regions of China. Nike intends to bring extra innovative products in order to maintain its customers in China. Despite the company being a premium sports brand, it is producing competitive priced products to a variety of the market segments. The company has committed itself to competing with the low priced products, which have been noted to be growing at a steady rate. This shows how international brands can compete with domestic brands in low-end markets.
In China, most Nike products are not accessible to the ordinary consumers since it would consume almost half of the consumer’s monthly wage. If Nike insists on maintaining the high price strategy in China, it will certainly yield the fast-growing market to its domestic rivals. The company aims to remain in China market through direct interaction with its customers through integrating its online marketing and direct contact with customers at the stores. The company has also adopted the lower pricing for its quality products, which has seen it dominate the rural markets of China.
3) If you were the marketing manager in charge of World Shoe, what would you have done differently to ensure success of this line?
As a marketing manager, I deem that a business succeeds though proper pricing of its products. Managers who fail in creating the right pricing strategy create a chain of problems that their companies can never overcome.
I would recommend my company to consider different strategies of pricing. I would price my company’s products by considering factors such as my target customers, prices for my competitor companies and analysing the relationship between price and quality. This will enable my company to have the flexibility in how we set the prices.
I do not believe that price alone can drive a company’s sales. Therefore, I would hire the right sales people and implement the right sales strategy. I would use the selling price as a function of my company’s ability to sell its products. I recommend that marketing managers should be aware of the risks associated with poor pricing decisions.
Under pricing
It is disastrous for any company to price its products below the expected minimum. However, most businesspersons consider it as the only alternative existing in a down economy. Most of them make the mistake of under pricing their products in order to convince the consumers to buy their products, which are much cheaper in the market. They do this with the hope of expanding their sales volume. I would ensure that my company pricing fully covers all costs incurred in producing any product. It is not in my long-term interest to reduce my products prices to a point where my company will be giving out the products.
Over pricing
On the other side, overpricing can have a disadvantageous consequence on the business as consumers always compare the company’s prices with those of competitor companies. A company can easily decrease its sales volume if its prices are beyond the desires of the consumers. Many marketing managers are always tempted to price their products beyond the expected maximum. They believe that the products’ prices have to be inclusive of all the production expenses including employees’ wages. As a marketing manager, I would first put myself n the customer’s shoes. Then I would recommend what would be a fair price for me as a customer too.
Conclusion
Most critics of Nike Company argue that Nike is only producing products meant for sporting activities. They describe the company’s as being involved in snappy marketing campaigns as its marketing strategies for its products. Despite the criticisms, Nike has passed through an impressive line wining most Chinese youths without committing any offence.
