Nike’s Marketing Strategies
In light of Nike’s recent marketing campaign which featured the controversial Colin Kaepernick, a short report into their marketing strategies and consumer behaviour.
Nike Inc, is a global sports brand based in the United States that focuses on footwear, apparel and other services in the sports industry. Nike was originally known as the Blue-Ribbon Sports, and was founded by Phil Knight and Bill Bowerman in 1964. Since its foundation, the organisation has become America’s leading sportswear brand and in 2018 was the “most valuable apparel brand in the world” (Brandirectory.com, 2018). Nike is a global brand and has adapted and been the pioneers towards change in the market. Nike’s marketing decisions and strategies have led the way for other sports brands to imitate, as they are the leading in market share in the world with global revenues of “more than 34 billion U.S dollars” (Nike News, 2018) in the year ended May 2018. Nike’s closest challengers are long-time rivals Adidas. They are based in Germany and in recent years have shown signs of catching up with Nike (Garcia, 2018). Nike in 2018 spent 3.5 billion U.S dollars on advertising and promotion, this just shows how important marketing is for them (Statista, 2018). The goal of a marketing strategy/campaign is to “teach the buyer the ideas and values of any given brand” (Milan, 2016).
This report will be evaluating the marketing strategies used by Nike and draw upon key consumer research theories. Lastly recommendations will be given for its marketing strategies.
Firstly, it is important to look at Nike’s marketing mix, this looks at what Nike is offering to its consumers, the 4P’s are “Product, Price, Promotion and Place” (van Waterschoot et al 1992). Also, to look at what their key rivals — Adidas are implementing too. The Marketing Mix is “a conceptual framework that identifies the principal decision-making managers make in configuring their offerings to suit consumers’ needs” (Goi, 2009).
Nike vs Adidas
Product
Nike offers a wide range of products which includes shoes, apparels, equipment and accessories. Has a hand in most major sports from Football, Basketball, Tennis to Golf.
Adidas similar to Nike, offers a wide range of products in the sports industry. Although the main product offering from Adidas is its footwear which is heavily focused on. Adidas was born out of its founder making trainers for athletes.
Price
Depends on the type of product on offer. The Nike brand means a high premium price. Nike uses competitive prices, although as market leader can dictate the market prices in some occasions — this is also due to the brand power it possesses.
Adidas uses competitive pricing to match its competitors, similar to Nike the prices range for the product offered. Adidas offers high quality products therefore it commands a premium price.
Promotion
Nike attracts new customers and retains old customers by promoting key products via channels such as online, instore, public relations, tv, word of mouth and sponsorships. Nike has huge sponsorship deals with the likes of Ronaldo and Michael Jordan who are the top athletes in their sport (Football and Basketball)
Adidas concentrates on tv and sponsorships. Although it does have online presence and instore. Sponsoring the likes of Messi, and some of the world’s biggest football clubs is their method of promotion.
Place
Nike sells products worldwide, in almost 200 countries and is truly a global brand. Huge online presence and ‘flagship’ stores in certain countries.
Products are sold throughout retail outlets, and online, however Adidas have recently closed down stores to shift towards online.
In reference to the forementioned 4P’s, Nike do not have much room for complacency as Adidas are very close in similarities between the two organisations. These 4P’s are critical in Nike’s marketing strategies.
The Nike Brand
The ‘Nike’ brand is a very useful strategy that Nike have, it is powerful and as it is one of the world’s most valuable brands (Brandirectory.com, 2018), that means it is known throughout the world. The “Nike swoosh is a commercial symbol that has come to stand for athletic excellence, determination and authenticity, the logo carries the weight of the currency” (Goldman and Papson, 2004). Kazi mentioned that, brands are “built in the mind and bought by the consumer” (Kazi, 2011). The brand is associated with high quality products that are durable and is built with the end user in mind. Nike has used emotional branding in order to persuade customers and create some sort of emotional attachment between the consumer and Nike. “Emotional branding is widely heralded as a key to marketing success” (Thompson, Rindfleisch and Arsel, 2006). “Emotional branding is defined as the engagement of consumers in a deep, long-term, intimate emotional connection with the brand” (Morrison and Crane, 2007).
A Nike story has a hero pitted against a struggle and the hero comes out on top by using Nike’s products (BrandPsyche Strategies, 2017). A consumer behaviour theory which outlines this is called The Theory of Reasoned Action (TRA). A consumers’ attitude is key here, and especially of the brand. Fishbein and Ajzen developed the model in 1975. “It is believed that an attitude towards a brand is based on a set of beliefs” (Fishbein and Ajzen, 1975). It is important to know that the TRA has the assumption that humans are rational and will make decisions based on information given to them (Glanz, Rimer, & Viswanath, 2008). Nike uses TRA to persuade the consumer to have positive thoughts of Nike, in which there will be a positive effect on their life once they buy a product that is from Nike. Nike make the most of their brand power, and use it as an emotional tool to engage with consumers. It is a vital marketing strategy that has been used in many Nike case studies, for example — “I Have Thunder Thighs”, “Joga Bonito” and most recently “Nike London Ad”. All these had a hero in which the consumer could relate to, and using the Nike brand/swoosh symbol there was an emotional link between the consumer and Nike. Therefore when the time came to purchasing a product, a consumer would think of Nike, as firstly they have that emotional link (hero story) and secondly they have a positive perception of the brand. Having a positive brand image is critical as “Consumers are said to eliminate brands during the decision-making process based on negative evaluations of brands on key attributes, or by assessing brands and excluding them based on the fact that they do not meet selection criteria” (Laroche, Kim et al. 2003).
Sponsorship
A marketing strategy that Nike use is sponsorship. “Corporate sport sponsorship is becoming increasingly attractive in the United States and Europe because the value that these cultures place upon entertainment, competition, and accomplishment” (McCook, 2004). Nike sponsor some of world’s biggest sports stars in order to “gain brand awareness and affinity” (Cave and Miller, 2016). Cristiano Ronaldo (Football) and Lebron James (Basketball) are the biggest starts on Nike’s books at the moment. Both have signed “lifetime” deals with Nike which means their partnership will be in place even after they retire (Nike News, 2016). No other company can match Nike’s spending on sports sponsorships (Isidore, 2015).
Although a sponsorship can be negative and affect the brands image. Being associated with someone who has for example done something wrong, or is having negative PR can have huge effects on the brand that is sponsoring them or when information comes out regarding the sponsorship. “Negative sponsorship information released after the sponsorship announcement unfavourably affects the sponsor´s brand image” (Schnittka et al, 2013). Nike have been quick to pull out of sponsorship deals when this has happened, for example when Lance Armstrong (Cycling) was caught using drugs, Nike immediately pulled out (Nike News, 2012). Nike’s brand image was associated with a negative story therefore they had to pull out. Sponsorships affect consumer’s attitude towards the brand and is linked with the Theory of Reasoned Actions as mentioned before, however this time for a consumer there is another factor, which is the sponsored athlete. A positive image of the athlete can mean a positive image of the brand. This is what Nike are aiming to do, and when a consumer is choosing the product to buy this can be very critical. A consumer can choose to buy the product in a matter of seconds and this is also known as Impulse Buying.
Impulse Buying is a consumer behaviour theory in which a consumer chooses to buy the product without any pre-shopping objective (Beautty and Ferrell, 1998). Stern in 1962 outlined theory and classified it as a “sudden, strong and irresistible urge to buy” (Stern, 1962). Linking in with sponsorships, a consumer instore or online from seeing their favoured athlete with these products can initiate an urge to buy. Nike looks to draw the fans of the sponsored athletes in order for them to buy their products thus an unplanned Impulse Buy.
Recommendations
Using the Nike brand for collaborations
Nike is in an ever-changing industry. Nike as well as its competitors needs to keep up to date with consumer taste especially in a market as volatile as the fashion industry. In recent times both Nike and Adidas have teamed up with high-end fashion brands such as Off-White, Yeezy and Raf Simons to build up their brand in those markets (Nike, 2018),(adidas-group, 2016). Nike should continue collaborating with these high-end brands as it can be an efficient way of marketing for the Nike brand. Brands have power, which can dictate a consumer, Nike is the same bracket as Google and Apple in which the brand itself can be classified as being alive. Consumers can “feel the brand as a singular, monolith entity, for example Nike, Google, Samsung etc., and in life speak of it in third person singular” (Milan, 2016). Brands play a big role in the lives of many, “brands are omnipresent in human environment and it is expected that people react and identify with them” (Milan, 2016). Nike must use its brand power/image to engage with other brands, like they have done recently.
Nike can possibly enter new markets such as high-end fashion. As mentioned by Han in 1991, fashion is a reason for Impulse Buying, “fashion orientated Impulse Buying” (Han et al, 1991). Therefore, Nike to increase its marketing activity should increase their collaborations, but not only focus on one market. Perhaps look at engaging with other brands from different sectors, this will increase their brand awareness, and market share.
As mentioned by Kotler and Keller, in the purchase decision, two factors can affect the process — which are the attitude and unanticipated factors (Kotler and Keller, 2009). Therefore, it is key for Nike when choosing to collaborate with other brands that they have a positive image. Brand collaborations do not always work, such as Lego and Shell, which Lego drew negative reception for being a toy company which partnered with an oil corporation (Vaughan, 2014) as it was deemed unethical. In the end Lego decided not to renew its contract with Shell.
New/Emerging Markets and using social media
A sport which is undermined by Nike is cricket. Cricket has over one billion fans, and although 90% are from India alone, it is a global sport. Matches between India and Pakistan can command viewing figures in the hundreds of millions. Nike and Adidas have been competing in the Chinese market — where there is huge potential but if Nike could infiltrate the Indian/Pakistan market they could potentially increase their foothold as the number one sports brand in the world. Currently Adidas are the number 1 sports brand in India (Adidas-group, 2018). India is an emerging economy and is tipped to be one of the biggest by 2050 (Hawksworth and Audino, 2017). India is a very attractive market, from instore shopping to online, by “2025, online spending will be $550 billion” (Singhi et al, 2017) and that is just online itself. Also, consumption is increasing in India, affluent households are increasing, meaning more is available for spending. “Emerging cities will be the fastest growing, while consumer spending in India’s biggest cities is increasing at about 12% a year” (Singhi et al, 2017). Therefore, Nike must make the most of the opportunities it has.
India also has the “Indian Premier League” which commands higher average attendances than Spanish’s La Liga Football (TOTAL SPORTEK, 2016). With around over 100 million online consumers in India (Statista, 2017), Nike should focus its attention on social media, consumers like to engage with their brands and can be pivotal in the decision-making process. Social media is all about “giving out, receiving and exchanging information” (Smith and Zook,2011). Important to note, in recent times, and referring to Table 1, Adidas have chosen to close down stores and shift towards selling more online (UK Reuters, 2018). Millennials are heavy users of the internet, and “47% of millennials are influenced by social media in their purchases” (Lobaugh et al, 2015). As mentioned before, online is where Impulse Buying can take place, as all it takes is a few clicks. This shows the usefulness of social media. As well as the “hero” theme in Nike’s marketing projects, if it could bring this to the social media side, it has the potential to be compete with Adidas in India.
Nike has an excellent marketing strategy in place and are the pioneers for their sector, every year they release new ideas and at the time of writing this report, Nike opened a new concept store in Los Angeles. The new store utilises the Nike app and makes judgements on the consumer behaviour in the local area using algorithms from the app. Nike is focusing on “reinventing itself as a data-driven, direct-to-consumer brand” (Gagne, 2018).
Nike has the resources to be the best in its sector for a long time to come, but must continue to look forward at the new challenges ahead. The recommendations made are in line with what they can do and have the knowledge and expertise to implement these marketing strategies.
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