Running Head: Week 1 Case Study-Nike

Week 1 Case Study-Nike

Tracy Hoffman
MBA 5501-160-5A18-S2, Advanced Marketing
Columbia Southern University

Introduction
 This case study will look at the industry where Nike does business and how they have
been doing and where they stand after the last five years. It will also look at the pros and cons of
their marketing strategy and what their competition in the market is doing as well and what Nike
can do to combat anything that is in the works with their competition. An examination of the
companies relationship with their consumers and target audience will also be discussed to form
an overall picture of Nike.
How has the Industry been Doing the Last Five Years
Harvard Health Publishing (2014), writes that running, even short distances improves
your health. A study of men and women between the ages of 18-100 showed that a quarter of
them were runners. People are becoming more conscious and are looking to ways to stay healthy
and fit. Marathons are becoming the thing to do, just for fun or to see if they can beat their
previous time. Society has a whole has started to look at ways to feel and look more healthy.
With the rise of the healthy minded people who are seeking exercise comes the need for new
running shoes or fitness apparel. This has allowed Nike and the other athletic wear companies to
find a new avenue to target and advertise to. Society goes through phases but the health crave
has really emerged in recent years and Nike has always been on the forefront of running shoes
and invested in them early on in their business and now the running shoe is a hot commodity.
Social media has become a huge part of everyday life and this has helped to expand many
companies because an ad can reach millions in minutes versus what a television ad or billboard
could take more time to reach. Social media is becoming very important to people in charge of
marketing for many companies. There is a platform already in place and a target audience is
already in place because of likes or shares of a companies products.
Pros, Cons and Risks of Core Marketing Strategy
“Nike believed in a “pyramid of influence” where the preferences of a small percentage
of top athletes influenced the product and brand choices of others. Nike’s marketing campaigns
have always featured accomplished athletes.”(Kotler & Keller, 2016, p.31) Nike has always
used the same core marketing strategy so this allows for fine tuning and their skills and the
process. Nike also knows their target audience well which makes for easier for them when
producing their marketing campaigns. Their ads are emotional and hits on the important aspects
of their consumers and continues to promote brand loyalty.
Nike produces their products products with competitive prices but those prices are not
aimed at the middle and low class. Even with brand loyalty if a consumer can’t afford to
purchase their products their loyalty means nothing to the company. With the economic ups and
downs our society has been through in recent years, affordability is key to consumers.
Nike has intense competition from other athletic shoe and apparel companies. Some of
the companies that have emerged in the last decade have now become a big hit on the market and
are giving Nike a run for their money. While using athletes to appeal to the consumers, those
same athletes can sometimes do something that makes a company question their contract with
them. For Nike, the Lance Armstrong situation would be an example. Nike had been using
Armstrong as a face for their brand and then he tested positive for doping and was stripped of all
his accomplishments. Nike then pulled out of an endorsements and contract they had with
Armstrong. While Nike has had their fair share of athletes doing questionable things and have
usually stuck with their endorsements, this is something that could be a risk to the company.
Development of a Strong Customer Relationship with Target Market
“Knowledge of the customer is valuable in order to identify and select target
customers.”(Neuhausen, n.d, GRIN - Marketing of Nike. An Analysis of Relationships with
Customers and Suppliers. Retrieved from http://www.grin.com/document/318400). Nike has
grown to be a huge hit world wide and they know that not everyone is an athlete and they have
made products for people that just like their clothing or the look of their shoes. They have used
social media to stay in tune with their target audience and they also use their social media
platform when doing product design and even knowing how many of a certain product they need
to produce. Nike’s retro Jordans is an example, they knew that they were a huge hit when they
were first released in the 90’s and they used that success when they brought the “retro” back in
recent years. The customers that bought them 20 years ago are rushing into stores to buy them
now. Keeping a finger on the pulse of their consumer is what helps them keep that strong
relationship with their consumers.
Adidas, Reebok and Under Armor
Nike is the biggest and largest of the athletic apparel companies currently, but that
doesn’t mean that there aren’t companies out there trying to knock them off their top spot.
Adidas is probably the next in line for the top spot. They rival Nike in footwear and apparel.
Adidas also has hold a strong subsidiary in Reebok who is also in competition with Nike.
Adidas has diversity and legacy as an advantage in the competition with Nike. Adidas also uses
celebrity endorsement and they sponsor major sporting events. Disadvantages for Adidas are
high prices and limited product lines.
Reebok is considered the 2nd biggest competition for Nike. They have a subsidiary with
Adidas that has increased this competition. Reebok has some really cool designs and there is
recent talk about bringing back their Reebok Pump which was a big success for them in the past.
Reebok does a lot of sponsorship kits for various sports such as football and soccer. Reebok
prices their products so that the middle and lower classes can afford to purchase them and the
also use celebrity endorsement like their competitors. They have good branding and the excel at
advertising their products. Reebok seems to have problems with fake merchandise and
controversy that could be damaging to their brand.
Under Armour is becoming a strong competitor. They have great sales in the United
States and make the official uniforms for football, basketball and soccer. They use great product
placement and have their products in television series and in movies. They have shown steady
growth and continually launch new products. The biggest disadvantage for Under Armour is that
they don’t have the international presence that Nike and Adidas have already achieved. The
economic downfall seems to hit them as well because they cater to the higher end products.
Currently they are working to expand in the United States which they consider their strongest
market.
Next Steps for Competitors and Nike
 Nike needs to continue with their winning strategy. They have a lock on the industry and
have been on top for years so what they are doing must be right. They could look into product
development that would appeal to the lower economic classes in society. Adidas needs to also
appeal to the lower economic classes and expand their product line. Reebok needs to add to their
product line as they seem to have the smallest options available. Under Armour will need to
bring more focus on their international markets. They outfit many professional sports teams so
expanding international should not be a big task with soccer being one of their big supporters.
They seem to want to expand in the United States but the other three companies have a big
presence international and to stay in competition the focus should be on expansion there.
Conclusion
The industry of sports footwear and apparel is huge. There have been many advances in
recent years and the companies are keeping up with the paces. All three companies in this case
study have already shown that they have what it takes to stay relevant in the market and some
have shown that they have the capabilities of taking over the top spot. Nike will continue to
reign with their marketing strategy and with the loyalty their consumers show them for many
years.

Reference
Pendick, D. (2014, July 30). Running for health: Even a little bit is good, but a little more is
probably better. Retrieved from https://www.health.harvard.edu/blog/running-health-even-little-
bit-good-little-probably-better-201407307310
Kotler, P., & Keller, K. L. (2016). Marketing management [VitalSource Bookshelf version]
(15th ed.). Retrieved from https://online.vitalsource.com/#/books/9781323591512

Neuhausen, F. (n.d.). GRIN - Marketing of Nike. An Analysis of Relationships with Customers

and Suppliers. Retrieved from http://www.grin.com/document/318400