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Table of Contents TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc493486325 \h 1Company Profile PAGEREF _Toc493486326 \h 2Product PAGEREF _Toc493486327 \h 3Levels of Product PAGEREF _Toc493486328 \h 31)Core Products PAGEREF _Toc493486329 \h 42)Actual Products PAGEREF _Toc493486330 \h 43)Augmented Product PAGEREF _Toc493486331 \h 5Production of Nike Air Max PAGEREF _Toc493486332 \h 6Factors of production PAGEREF _Toc493486333 \h 6Process of production PAGEREF _Toc493486334 \h 7Product life cycle of Nike Air Max PAGEREF _Toc493486335 \h 8Price PAGEREF _Toc493486336 \h 10Pricing strategy of Nike PAGEREF _Toc493486337 \h 10Pricing Objective of Nike PAGEREF _Toc493486338 \h 10Pricing establishment stages of Nike Air Max PAGEREF _Toc493486339 \h 11Place PAGEREF _Toc493486340 \h 141)Direct selling PAGEREF _Toc493486341 \h 142)Selling through intermediaries PAGEREF _Toc493486342 \h 14i.Niketown retail outlet PAGEREF _Toc493486343 \h 14ii.Retailers PAGEREF _Toc493486344 \h 153)Reverse channels PAGEREF _Toc493486345 \h 15Interpretation on the current distribution of channel PAGEREF _Toc493486346 \h 16Promotion PAGEREF _Toc493486347 \h 171)Advertising PAGEREF _Toc493486348 \h 182)Personal Selling PAGEREF _Toc493486349 \h 183)Sales Promotion PAGEREF _Toc493486350 \h 194)Public Relations PAGEREF _Toc493486351 \h 19Interpretation on the current promotional activities PAGEREF _Toc493486352 \h 20Conclusion PAGEREF _Toc493486353 \h 21References PAGEREF _Toc493486354 \h 22 TOC \h \z \c "Figure" Figure 1 Nike's logo PAGEREF _Toc493459625 \h 3Figure 2 Nike Air Max PAGEREF _Toc493459626 \h 4Figure 3 Levels of Nike Air Max PAGEREF _Toc493459627 \h 5Figure 4 Production process of Nike Air Max PAGEREF _Toc493459628 \h 9Figure 5 Product lifecycle of Nike Air Max PAGEREF _Toc493459629 \h 10Figure 6 Establishing a pricing stages for Nike Air Max PAGEREF _Toc493459630 \h 13Figure 7 New channel of distribution for Nike Air Max PAGEREF _Toc493459631 \h 18Figure 8 Nike's types of promotions PAGEREF _Toc493459632 \h 19Figure 9 Proportion of Nike's advertising means PAGEREF _Toc493459633 \h 20IntroductionAs the world moves into the phase of modernization, people have also moved from getting a job to becoming self-employed (starting business). Businesses around the world have performed significantly effective and some of the companies have even made it in the worlds list. One of the most important factors that have contributed for the success of the business is the marketing mix strategy of the company.Marketing mix refers to a set of marketing plans and procedures that a company uses to perform its marketing objectives to achieve the company’s goals and objectives. It includes four components of Product, Price, Place and Promotion which is commonly known as the 4 Ps. Product is a tangible item that can be sold to the customers and it must provide a maximum level of satisfaction to the customers otherwise there will be no impact of other 4Ps even if they work effectively. Price refers to the value that is set for a product and the price must match with the product in terms of its quality, benefits and durability. Prices can be set using different pricing strategies. Place which is also known as the distribution channel in marketing mix helps in reaching the goods to its potential buyers. It is essential for a business to choose a right place for its product and make sure that customers have easy access to it otherwise there will be no point of manufacturing the goods. The final 4Ps is the promotion which means the activities undertaken by the companies to make their product or services known to the people. Promotions include many types such as advertising, direct selling and through public relation.The chosen product for this assignment of marketing mix is Nike shoes and in particular the 4Ps will be based on Nike Air Max which is one of the types under Nike foot wears. Nike Air Max made its world debut in the year 2012 and it is used for the purpose of sports and casual wears. It is known for its comfort level, style and brand. The various terms under marketing mix will be explained through this one product of Nike Air pany Profile520065218440 Figure SEQ Figure \* ARABIC 1 Nike's logoNike Inc. is a multinational company and it is involved in manufacturing and selling of footwear, apparel, equipment and accessories. The company was founded as Blue ribbon Sports (RBS) by Phil Knight and Bill Bowerman in the year 1964. The company officially became Nike, Inc. in the year 1971. Phil Knight was a middle distance runner from Portland who was trained by Coach Bill Bowerman. The main reason which stimulated the existence of Nike shoes was through Bill Bowerman who was looking for a way to improve the performance of his students.The headquarter of Nike is situated in Oregon, United States and have two subsidiaries, Converse Inc. and Hurley International. The CEO of Nike is Mike Parker and it employs more than 44000 people. Nikes brand alone is valued at almost $10 billion which indeed shows its worth in the market. The logo of Nike which makes it unique from rest of the companies is known as “SWOOSH”. Swoosh was designed by Caroline Davidson in the year 1971 when she was asked to design a logo by Phil Knight who was her accounts teacher. The vision statement of Nike is “to help NIKE, Inc. and our consumers thrive in a sustainable economy where people, profit and planet are in balance.”The mission statement of Nike is “to bring inspiration and innovation to every athlete in the world.” Product Figure SEQ Figure \* ARABIC 2 Nike Air Max-8128055880Nike Air Max is one of the many types of shoes that Nike offers for its customers. It is a shopping good as people compare it with other shoes such as Adidas, Puma and Reebok shoes in regards to its quality, price, durability and comfort before purchasing. Nike Air Max provides many kinds of benefits and services to its customers which is exactly what the people want to see in any product before they buy them. This can be understood with the three levels of product which are core, actual and augmented product.Levels of ProductCore ProductActual ProductFree Delivery WarrantyUnique designNike brand Innovative Packaging Prevents foot injuriesProvide supportDurabilityAugmented Product Figure SEQ Figure \* ARABIC 3 Levels of Nike Air MaxCore ProductsIt is the kind of product which cannot be seen or touched but it provides some benefits or satisfaction to the customers. Some of the core products of Nike Air Max are:Prevents foot injuriesNike has claimed that their shoes provide support and helps in preventing foot injuries. This is the most vital reasons for the reputation and fame that Nike has gained in the market. Nike Air Max also has some of the features of lightweight and presence of spring foam which protects the feet of the users and helps in preventing the foot injuries.Provide support/ comfort Nike Air Max is designed and made in a way where it comes with a herringbone pattern and a solid rubber which provides comfort and support to its users.DurabilityAs the price of the Nike Air Max is quite high, the quality it provides is also reliable and durable. It last longer than the other normal shoes that are available in the market.Actual ProductsIt is the kind of product that can be seen and touched. These products are usually associated with the packaging, designing, features, quality and the brand name of the product. Some of the actual products of Nike Air Max are:Nike BrandAccording to Forbes, Nike was ranked as “number one” in the “World’s most Valuable Brands” whereby the company had its market value increased. Nike Air Max being one of the products of Nike also gets to benefit from the brand image and the customers seem to be more interested to buy the shoes.Unique designNike Air Max is designed uniquely and it has become one of the most admired and versatile sneakers ever. Many people have given their opinion on its style for it can be worn both for a sport and for an exclusive night out.Innovative packagingCustomers do want a product which is durable and branded but some of the people may even want an attractive packaging. Nike has always come up with innovative and interesting packaging for its product. Nike Air Max is also packaged in a definite box with the Nike logo on it which makes the shoe look more attractive.Augmented ProductIt is the kind of product which is not a tangible product itself but these are the value added on a particular good. Some of the augmented product of a Nike Air Max includes:WarrantyNike gives warranty to its entire product including the Nike Air Max for the period of two years. The customers can return the shoe within this period of time if they witness any wear and tear but this is applicable to only those customers who have bought from the authorized retailers.Free deliveryPeople can get a free delivery of Nike Air Max till their door step if they purchase the shoe from the official site of Nike. These services are provided to the customers free of cost.Production of Nike Air MaxFactors of production The production process of Nike Air Max can be understood with the elements of four factors of production, i.e., land, labor, capital and entrepreneur. LandLand refers to the place of production and it also includes the raw materials required for the production of a product. Nike has 115 factories in 13 countries around the world and Nike Air max is produced in each of it. The raw materials required for the production of Nike Air Max are rubber, polyester, eva foam, cotton, synthetic leather and leather.LaborLabor consists of the human resources that are required to produce the product. Nike has almost 472577 labors working in the manufacturing unit around the world (Porigow, 2014). For the production of Nike Air Max low skilled labors are required in the factory but a lot of skilled and innovative human capital is required for the designing of Nike Air Max.CapitalCapital represents the monetary resources of the company as well as the major physical assets used by companies to produce goods and services. The various equipments used by Nike to produce Nike Air Max are stamping, stitching, molding, lasting and heeling machines.Entrepreneur An entrepreneur is a person who manages the above mentioned factors and undertakes the risks and uncertainties that will be involved during the production process. The entrepreneurs of Nike Air Max would include the founders of Nike Phil Knight and Bill Bowerman and the current CEO Mike Parker.Process of production A simple process of production for Nike Air Max inclusive of all the four factors of production would start with designing of Nike Air Max which will start with entrepreneur as they are the ones who does all the planning process for the production and without them Nike Air Max would have never come into existence. Firstly all the required raw materials as mentioned under land factor have to be collected and brought into the Nike factory and then the process starts. Figure SEQ Figure \* ARABIC 4 Production process of Nike Air MaxThe materials have to be cut into the required shapes and sizes as per the instruction provided by the entrepreneurs or the designers. After everything has been cut, the upper section of Nike Air Max which is above the sole has to be stitched using the stitching machine available in the factory. Then the labors have to start preparing the sole of the shoe which is indeed the most important part of a shoe. Once the sole of the shoe is ready, the upper section of the shoe which was stitched earlier has to be prepared for the attachment to the sole which is done with the help of lasting machine. Finally the heeling stage comes whereby the heeling machine is used to attach and shape the heel bottom into a final form. The accessories such as shoe lays, Nike logo and designs will be attached to Nike Air Max which is known as the treeing stage. This is a simple and complete production process of Nike Air Max which ultimately ends with packaging and distributing it to the end users.Product life cycle of Nike Air MaxThe product life cycle is an essential part of marketing as it helps in understanding where the company and the product stands and what the company needs to do next. It describes the stages a product goes through from its introduction until it is removed from the market but some of the products still exist. The product life cycle of Nike Air Max can also be described as below: Nike Air Max Figure SEQ Figure \* ARABIC 5 Product lifecycle of Nike Air MaxResearch and DevelopmentIn this stage Nike will do a lot of research and development on the type of shoe they will be manufacturing. They will be doing surveys and review the feedbacks of the customers in order to correct all the deviation the customers have encountered in the previous version of Nike shoe. A proper investment and planning on this stage will lead to the introduction stage.IntroductionNike Air Max was introduced in the year 2012 and the company has spent a lot of money on promotional activities as it was important to create awareness on the existence of Nike Air Max in the market. GrowthAfter the 2nd year since the release of Nike Air Max, the product witnessed its growth stage where in there was increase in the sale of it. Many people were interested in Nike Air Max which facilitated increase in the demand for it. The annual sale of Nike was $27799 million in the year 2014 (Porigow, 2014).MaturityThis is the stage of saturation for the product as the entire world will know about the products existence along with its advantages and disadvantages. Currently Nike Air Max is in its maturity stage as everybody has already bought one of this shoe and the potential buyers of Nike would want to see some unique features or new version of Nike Air Max. If the company does not come up with any additional features then they will lose their customer to its competitors such as Adidas.DeclineThis is the last stage of product lifecycle whereby the product will be completely removed from the market due to the low or zero demand for it. A product witnesses this stage if they are not modified and when they remain in the constant form. But Nike Air Max has not reached this stage as the shoe has modified itself and the new version of Nike Air Max 2017 will be released on 7th November this year (Schlemmer, 2016).PriceAnother 4Ps of marketing is the price which is an important factor for any business as the revenue depends upon the price and the quantity sold. Organizations set the price of their product in such a way that the cost for production is covered while keeping some profit. While deciding on the pricing of a product, companies take up pricing strategies and select a pricing objective. The pricing strategy and the pricing objective help the companies to set a proper price for a product and also ensure effectiveness.Pricing strategy of NikeAs Nike is one of the leading brands in the shoe industry, it also follows a certain type of pricing strategy in aligned to its pricing objective. The pricing strategy adopted by Nike for its product including Nike Air Max is the value-based pricing strategy. Under this strategy Nike sets the price of its products based on the willingness of the people to pay for the product. It is not the company who sets the price but it’s the people who set the price for Nike products. The company takes advantage of their brand image as people tend to pay any amount if it is a Nike brand.In July 2014, Nike began to raise the prices of its footwear while rest of the market was dropping the prices. All the other competitors of Nike such as Adidas, Puma and New Balance were providing a lot of promotional discounts to attract the customers but Nike simply increased its prices. This step was risky but it was worth it because Nike was able to contribute $168 million to the shoe industry with the increase in their selling price (Smith, 2015). This initiative of Nike was a success because they studied the consumers’ willingness to pay for the Nike product which was quite high.Pricing Objective of NikeThe pricing objective of Nike is sales related objectives whereby the company follows a pricing strategy that will help them to increase their sales and market share of their product. As mentioned above, the pricing strategy adopted by Nike for its products which also includes Nike Air Max is the value-based pricing strategy. The company sets a price after analyzing the willingness of the customers to pay for it and it is obvious that the customers are willing to pay a higher amount as Nike is a trusted brand which is why the company sets higher price for Nike Air Max. The current price of Nike Air Max in the market is $160 (Nu.10400). The company also thrives to increase the market share of their product through value based pricing strategy as the worth of Nike Air Max automatically increases when the price and sales increases.Pricing establishment stages of Nike Air Max Figure SEQ Figure \* ARABIC 6 Establishing a pricing stages for Nike Air MaxSelecting the pricing objectivesThe pricing objective selected by Nike is sales related objectives as they focus more on increasing their sales and the value of their product in the market. More of this point is explained under the pricing objective of Nike above.Determining the demandNike takes advantage of their brand image which has already gained a lot of loyal customers. They understand the market and the willingness of the people to buy Nike Air Max through various means such as conducting surveys, giving out questionnaires and through personal conversations. Therefore, the company will get an idea about the demand for the product, whether it is high or low.Estimating costUnder this stage of establishing price for Nike Air Max, the company calculates all the cost incurred for production of the shoe till it is reached to the customers which will include the cost for distribution channel as well as promotion. Estimating cost is really important for pricing as the company has to make sure that they set the right price.Analyzing competitor’s costs, prices and offersAnother important stage in the pricing establishment is analyzing and understanding the prices and the offers that the competitors provide. As Adidas is the biggest and direct competitor of Nike, it is important for Nike to keep an update on the price of Adidas shoes and discounts they provide otherwise Nike may lose its customers to Adidas. Selecting a pricing methodThe pricing strategy adopted by Nike for Nike Air Max is “value-based pricing strategy” whereby company sets its price according to the willingness of the customers to pay for Nike Air Max. More of this point is explained under the pricing strategy of Nike above.Selecting the final priceThe final stage for establishing price of Nike Air Max is selecting the final price of the product which eventually becomes the selling price. This stage is related to the fifth stage and incase of Nike Air Max, the price will be set by the customers as they follow the pricing strategy of value based. The price of Nike Air Max is set at $160 which amounts to Nu. 10400. PlacePlace in marketing mix is also known as channels of distribution and it mainly deals on how the products are reached to the customers. The products can be transferred from the manufacturing unit to the users through many means such as direct selling, selling through intermediaries, dual distribution and reverse channels.Nike as one of the largest business in the shoe industry also has to frame effective channels of distribution to reach its product to the potential customers. Some of the channels used by Nike to distribute its Nike Air Max to its customers are:Direct sellingDirect selling happens when the products are directly sold to the customers without any involvement of the middlemen. This channel of distributed adopted by Nike is usually done through the usage of Nike official online store wherein the company puts Nike Air Max in their online site and customers place their order though it. Once the order is received and approved the company makes sure that the shoe reaches to the customer. It can be observed that there are no middlemen in between.Selling through intermediaries Another distribution channel used by Nike is selling through intermediaries whereby there is involvement of middlemen or intermediaries while reaching its product to its customers. Nike usually has two kinds of intermediaries namely:Niketown retail outletNiketown retail outlets are those shops/ stores from where the customers can purchase Nike Air Max. Nike retail outlets also serves as the branches of Nike established in different regions. These stores only sell those products which have been sent from the head office. Therefore, people can purchase Nike Air Max from these Nike outlets whenever and wherever available. Currently there are about 1,142 retail outlets of Nike around the world.RetailersThe difference between retailers and Niketown retail outlet is that Nike retail outlet sells only Nike products but retailers can sell other brands also. Retailers are the middlemen through which the products are reached to the customers. Nike sells its Nike Air Max to the retailers and these retailers sells to the end users. Reverse channelsA common distribution channel follows the direction of producers to consumers whereby the products are always passed from the manufacturer/ factory to the end users with or without middlemen in between. But the channel of distribution may also happen in the opposite direction whereby the goods flow from consumers to the producers.Nike has a new initiative of “reuse a shoe” whereby the consumers can return the old Nike Air Max to the manufacturing unit or nearby retail store instead of disposing them in the trash can. This initiative of Nike was taken to create less waste and promote recycling for conserving the environment.Interpretation on the current distribution of channelAs mentioned above, the distribution channels used by Nike to reach its Nike Air Max is through the direct and indirect (intermediaries) selling which we feel is effective and the reverse channel that they have initiated to do is also valuable. Nike is able to reach out to every customers through its retail stores around the world whereby people have access to these stores anywhere is the world except some of the under developed or developing countries or districts. They even have their official online store which helps the people to order their choice of Nike Air Max with relevant size without having to waste their time and money on travelling all the way to the store. However our group came up with a new distribution channel for Nike Air Max which is just an extension to the indirect selling. Nike’s distribution channel is really short with just one intermediary in between the producer and customers which is the retailer or Nike outlets. Therefore, we came up with the following channel of distribution where we added one more intermediary of wholesalers. The benefit of having a wholesaler in the distribution channel is that the wholesalers can purchase Nike Air Max in bulk with some discount incentives and these wholesalers can sell to a larger number of retailers. Therefore, Nike can involve more number of channels for distributing Nike Air Max which will ensure more effectiveness in reaching the shoe to its customers. Figure SEQ Figure \* ARABIC 7 New channel of distribution for Nike Air MaxPromotionThe last 4Ps of a marketing mix is promotion which mainly deals with creating awareness about the product amongst the people to increase the sale and profit. There are many types of promotional activities undertaken by the companies such as advertising, personal selling, sales promotion, public relations, direct marketing, sponsorships, guerilla marketing and product placement. Through promotion consumers are made to realize about why they need the product and why they should be willing to pay for a certain price.One of the main reasons why Nike has become the number one brand in the shoe industry is due to its promotional activities which have created a great impact on the minds of the people. Nike is said to have successful promotion as it strives do promotion in such a manner that it is able to create balance between maintaining its existing customer as well as attracting new customers.Some of the types of promotional activities undertaken by Nike to make the consumers aware about Nike Air Max and other products are: Figure SEQ Figure \* ARABIC 8 Nike's types of promotionsAdvertisingAdvertising is one of the most costly forms of promotion but Nike still goes for it as advertising, if done correctly, creates a great impact. This is how Nike is successful in creating a good brand image worldwide and having a goodwill attached to it. Its goal when it comes to advertising is to reach a large number of populations and leave them with a great impact so that the customers look forward to buying Nike products always. Some of the advertising means undertaken by Nike are commercial advertisements on television whereby they use famous celebrities and articles on magazines. Some of the athletes contracted by Nike include soccer superstar Roberto Carlos, Ronaldo and Ronaldinho and basketball legends and superstars such as Lebron James and Jermane O’ Neal. They also advertise through national news and newspapers. Figure SEQ Figure \* ARABIC 9 Proportion of Nike's advertising means Personal SellingNike’s personal selling takes place in its respective stores. Nike tries to promote its Nike Air Max with the help of personal selling as personalized service helps the customers get their hand on the right Nike product which they are looking for. The store people, also referred to as store personnel are the ones who do the personal selling as they are already given good trainings to provide assistance to the customers about Nike Air Max and other products and persuade them to buy these products. The customers feel satisfied and positive about the products when they are provided with better information about the products through personal selling which is why they buy Nike Air Max. While promoting Nike Air Max, it eventually ends up creating improved customer experience and customer relation.Sales PromotionSales promotion is the main driver for demand from new customers as they are convinced and motivated to buy Nike products based on the benefits they receive. Nike mainly focuses on giving discount coupons and special offers to target customer. It persuades its target customers to buy its products by showing the features of its products and showing them how they can benefit if they use discount coupons and special offer as they can save a good amount of money. Nike has also given discounts on Nike Air Max during festive seasons such as Christmas and New Year. This is how Nike manipulates its customers to buy more of its products.Public RelationsNike uses public relations linked to the company to promote its brand image by addressing to the public or social issues. It sponsors some charity events and it also uses green technology for the purpose of public relations. Nike has donated $100 million to Oregon Cancer Institution and they also participate in RED (along with Apple, Inc.) which is an organization that donates money to help combat aids and HIV in South America. With the help of public relations Nike enables its current and potential customers to have a better perception about them which automatically convince the people to buy Nike Air Max and other Nike products as people love to buy those products which contribute to Corporate Social Responsibility (CSR).Interpretation on the current promotional activitiesThe current promotional activities undertaken by Nike to promote its Nike Air Max and other products is effective as Nike has become the world’s number one brand in the shoe industry due to its reach and level of awareness it has created amongst the people. On a general basis everyone knows about Nike brand and its slogan even though people may not be having a full concept about the brand. The biggest achievement that a company could get is them being known to the entire world. If we are the manufacturer of Nike Air Max then we would have adopted the promotional activity of “Direct marketing”. Direct marketing is one of the types of promotions that allow the producers or the company to directly communicate with the customers through various means of sending emails, interactive consumer’s websites, catalogue distribution and outdoor advertising. We would have adopted the means of sending emails whereby we would have sent detailed information about Nike Air Max with all its features, benefits and uniqueness to the regular buyers of Nike products. This way we can make sure that every person is getting the awareness on Nike Air Max. The other means we would have adopted is door-to-door marketing. We would have asked all the retail outlets of Nike to do a door-to-door campaigning on Nike Air Max in its initial stage to create awareness on its existence as much as possible. Door-to-door marketing seems to sound wastage of time and energy with too much of work but it is the most effective promotional activity as there is a direct interaction between the companies (sales person represents the company) and the customers. A clear information can be passed on to the potential buyers of Nike Air Max and the customers can even be pursued to buy the product when face to face conversation takes place.ConclusionIn conclusion, marketing mix is one of the important activities of any business as it helps in formulating plans and procedures for achieving the marketing goals which further leads to the achievement of company goals as a whole. Through the research done on the marketing mix of Nike Air Max which is one of the footwear manufactured by Nike, Inc., it can be seen that a company has to plan all the 4Ps of Product, Price, Place and Promotion accordingly. A product is produced into a tangible state then it is given the value in the form of price. After pricing the product, it is essential to reach the finished product to its potential buyers for them to purchase it. Promotion of a product is important because it is through promotion that the people get the awareness on the existence of the product. Therefore, every business or company has to plan and execute an effective marketing mix for its product to achieve success and to become as valued as Nike in the market.ReferencesBallard, C. (2012). Nike: corporate social responsibility. Retrieved from , L. (2017). Nike Inc. Marketing Mix (4Ps/Product, Place, Promotion, Price) Analysis. Retrieved from , A. Nike, Inc. success story. Retrieved from , C. (2014). Nike sneakers: factors of production. Retrieved from , Z. (2016). An on-foot look at the Nike Air Max 2017. Retrieved from , A. (2015). Nike pricing strategy: cost-plus vs. value equation. Marketing Discussion. Retrieved from . (n.d). Marketing mix. Retrieved from ................
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