Nike had historically been a Product Organization. Year 2006 saw Nike undergo a Corporate reorganization that shifted it to a Matric structure with an emphasis on geographic divisional structure for customers in every region.
The preference of consumers in regional markets differ and as such, the Organization needed a sustainable innovation and product design strategy to meet the need of its regional customers.
With the reorganization starting in 2006, Nike aim to have the flexibility to address consumer preferences for footwear, apparel and equipment in regional markets and as well get to know the culture of people using their product in each region. Nike have a Corporate Leadership functional group comprising of Corporate Managers.
The Corporate Managers help set the Corporate strategy for Nike. Through this Group, Nike’s Corporate Strategy and decisions are easily implemented throughout the company.
Nike’s business unit strategy comprises of a Semi-Autonomous Geographic Divisions optimizing operations in the regional sports shoes, apparel and equipment market. The Market comprise of the six major business categories for Running, Training, Basketball, Soccer, Jordan brand and Sportswear.
This help places each consumer (Men, Women and Young Athlete) into the right Market segment. Nike’s have affiliates that comprises of Converse, Hurley International, Umbro, Cole Haan, Nike Golf and Brand Licensing.
Nike’s functional group manage the operations of the Affiliates as well as licensing Nike’s brand Nike Organization follows a Strategy of Marketing Processes that encourages innovation, emotional branding, value-based and premium pricing strategy.
Let’s look at the growing market for Nike sector categories for Soccer and Sportswear business-line in China, Asia Pacific and Latin America (LATAM). Soccer and Sportwear each make up 7% and 33% of Total Revenue. While China, Asia and LATAM all make up 30% of Revenue. This is a growing market.
In both Geography, Footwear and Apparel make up the largest revenue generating product. Nike should organize the key Marketing processes below for the China, Asia and LATAM region: Product Marketing: Nike should look inward at the life-cycle of a product ensuring right metric is used for consumers in Asia, China and LATAM region.
Product Development process should comprise of New to the World, New Product in an existing market, and an existing product. If price needs to be cut at first or product categories bundled to increase sales, it should be well thought out and a good product strategy should be done.
The product should appeal to current and potential customers being targeted and consistent with company’s brand identity.
Nike should annually assess product life cycle to ensure market share and segment growth is achieved. Brand Marketing: Nike should manage all aspects of Nike Brand, its Affiliates to maintain value over time. A process to manage Its market positioning with competitors like Reebok, Adidas should be developed.
Strategic Advertising to build a strong brand should be used while a tactical advertising to focus on driving sales incentives with value-based pricing and premium pricing should be considered. Customers in the Asia region prefer the premium brand while customers in Latin America can make do with value-based pricing brand for standard products.
Products should be positioned depending on the region and customer needs. A marketing mix of using Direct-to-Consumer selling activities should be explored. A process for digging into consumer emotions to gain its’s attention and create awareness for the product should be developed.
A multi-brand strategy process to go into the markets with Nike and its affiliate brand should be explored. By developing this Brand processes, a way to assess price sensitivities, product positioning and brand identity should be put in place to measure brand identity strength.
Customer/Segment Marketing: Nike should develop processes for segmenting the market. In Asia, consumers should be identified and profiled to understand their preference. Same should be done in Latin America. Data should be gathered on customers in these regions.
Based on analyzed data, market segments can be selected based on metrics (Segment Revenue, Loyalty (Net Promoter Score), Satisfactory (Customer Satisfactory Score) and other KPIs gotten from analyzed results. Nike should also consider bundling products for certain customers or segments of the market.
A process to refine and trim segments with similar characteristics should be put in place to track how segments is evolving and changing over time.
Channel/Field Partner Marketing: NIKE should look at all available channels that are effective in each local market and do a customer-channel mapping to gain understanding of how to shorten sales cycle of a product, increase cost efficiency in developing the product and explore viable channels to distribute products.
A channel-life-cycle management process should be developed. Customer Lifetime Value analysis should be done on potential target customers to understand how much a customer will be willing to pay, the length of business value that can gotten from the target customers. Regional promotions should be done to increase customer awareness for product.
Revenue in each channel segment can then be captured to understand cost-to-serve segments and customers. Nike should also develop a mechanism to determine segment channel preference as well as monitor the competitor channel structure.
When a new channel emerges, mechanisms need to be robust enough to identify new channels and explore it.
To implement the above discussed Marketing processes, Nike should follow steps below: Product Marketing: Nike should look at positioning products by understanding the region customer preference and using its sustainable innovation leadership to capture a good market share.
For product pricing, Nike should build on using their value-based pricing strategy and premium pricing for capturing each segment of the low-end and high-end of the consumers. Nike should capitalize on its successes of using emotional branding for its product. China, Asia and Latin America enjoy soccer, indoor and outdoor sports.
Nike should use that to determine where their strengths in competing for a market share. Brand Marketing: As mentioned earlier, Nike’s measurable advertising uses emotional branding technique of Heroism to strengthen the positioning of the brand, engage and motivate prospective customers globally.
With the slogan “The hero starts from humble beginnings, challenges a foe greater than he, and against all odds, prevails”, Nike can tap into the emotions of buyers to sell its products. There should be a unification of how the brand is seen and shared among leadership.
All leadership must be united as a team, passionate about the Nike brand and share the same philosophy. Customer/Segment Marketing: Building on sustainable innovative product and emotional branding, Nike can use meaningful stories to sell aspiration, not just a product.
Nike can create “Watercooler Moments” that Capture “Phenomenal Shots”. Technology have its place to help spread content on the internet. Data can be captured using Social marketing and analytics.
Community reach program should also be done and socialized on TV and Social media of engaging and responding to the needs of the customers. That can be supported by ads showing constant innovation. Running, Sportswear for yoga (Men and women) are common events in the Asia region.
To target, acquire and retain customers, Nike must develop the ability to anticipate and meet these customers’ needs. This segment of the market is growing and with a lot of disposable income, Nike can understand the customer willingness to pay for a product and have an increased profit margins.
Nike should work with local stars in China, Asia Pacific and LATAM region for ongoing player endorsements and sponsorship deals for sporting events. It should not make it a one-time deal for working with FIFA, Olympic Committee and other Major sporting events.
It should sponsor local events in the region and use its emotional branding strategy to capture enjoyable moments that can be spread on social media and in TV ads. Local content makes consumers see themselves in the player.
By this method, sales can be generated across the regions, keeping the product brand in the heart of customers and enabling it to be a customer preference when compared with competitor products.
Channel/Field Partner Marketing: NIKE mainly distributes its products by selling products to wholesalers, using direct-to-consumer (or DTC) sales and Sales to global brand divisions. Because of laws that exist in Asia on partnering to expand market reach. Nike should look at a formidable partner to distribute their products for maximum reach.
In Latin America, Nike should explore Hyper-Markets and traditional regional stores with expansive market reach to get products out. Sales to wholesalers and Direct-to-Consumers are the largest revenue category.
Nike should use lessons learned from other market to build on its successes Nike pride itself on sustainable design and rapid shipping. With 785 Contract factories, more than 1million factory workers and over 500,000 different products [6], a local distribution center need to be built in each region to meet this promise to consumers
