Marketing Final Paper
Marketing Plan: Final Paper Team A MKT/421 17 September 2012 Marketing Plan: Final Paper Marketing Mix In today’s marketplace, a company cannot be too careful when preparing to introduce a product to market. Considering and developing plans for the following will assist Nike to introduce successful product. Marketing Segmentation The Nike Company will consider the segmentation criteria that affect their target market. “Consumer value and relationships are at the center of marketing strategy and programs.
Through market segmentation, targeting, differentiation, and positioning, the company divides the total market into smaller segments, selects segments it can best serve, and decides how it wants to bring value to target consumers in the selected segments” (Armstrong & Kotler, 2011) . Nike will create a marketing mix that allows them to produce the desired response in the target market. Nike’s desired market consists of different types of consumers with different needs. The segmentation criteria will uncover, which markets offer the greatest opportunities.
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First, Nike must decide who it wants to serve; this is accomplished by dividing the markets into target consumers and selecting the desired segments. Marketing management of segmentation criteria is a combination of customer management and demand management (Armstrong & Kotler, 2011). Understanding how to serve the desired segmentations is essential to Nike’s success; Nike must position the product correctly to the specific marketplace. Market segmentation creates the ability to market one product in different ways to reach multiple consumers.
Each segmentation Nike creates will have been \up of consumers who respond similarly to a set of marketing efforts. For example it would not be in Nike’s interest to segment their markets based on income. The knee warmer will remain a constant price and will create the same benefits for a user no matter of his or her financial status. Nike is more interested in marketing to different level athletes. Nike will market the knee warmers to extreme athletes wanting to compete year round highlighting the endurance and resilience. If this were Nike’s only marketing strategy they could lose potential markets and many consumers.
Nike will market to injured individuals and people who have chronic knee pain as a separate market. The previous marketing plan can deter these consumers from believing the knee warmer is a product suited for them. Nike can create a second marketing strategy outlining the benefits for everyday use by lower intensity athletes. Target Market Nike is the largest sports apparel company in the world, but in recent years has reached a plateau. In the last year, the company’s net worth has dropped 10%, and in the few years before had increased marginally (“Forbes” 2012).
Nike appears to be in the maturity stage of the lifecycle and should consider developing and marketing one version of the electric knee warmer to minimize research and development cost. Differentiated marketing is the best bet for Nike’s goals of distributing the knee warmer to a large market. By using this strategy, Nike can offer the knee warmer for a lower price to professional groups, and a higher retail price to the masses. Recreational athletes will be the target market for Nike because these customers make up the larger majority of the market.
By enlisting the help of Nike’s extensive spokespeople who have had injuries, Nike can appeal to the average athlete trying to stay healthy. Offering the product at a lower cost to semi-professional organizations will offer advertising to those recreational athletes working their way up to a more exclusive level. Consumers One of the biggest parts of developing a successful organization is reaching consumers to buy the products that a manufacturer is making. Nike will always target athletes and athletic programs as their target market.
The direction that the company goes is not always toward what the athletes want but what the fans of the athletes and the sports they play. Nike has moved from the athletic market to the style and high fashion market. The way that Nike targets their consumers is not unique in this market, but they are often copied. Nike has a strong network of retailers in 200 countries worldwide through distributors, licensees, and subsidiaries. Within the USA there are 18000 stores that retail Nike products, which are well established channels (Johnson & Scholes, J 2004).
Nike made itself heavily dependent on one retailer Footlocker, representing 10% of their revenue. When Footlocker reduced their purchasing form Nike, it created a reduction in turnover in the short term. Over dependent organizations on one retailer are open to cash flow problems. If the retailer switches suppliers, reduces purchasing or ceases trading, an organization could lose a large portion of its cash flow. Nike uses psychographics to identify personality characteristics and attitudes that affect a person’s lifestyle and purchasing behavior.
Psychographics are psychological profiles of potential customers in a market that focus on attitudes, interests, and personal opinions or perspectives. Jeff Jensen’s writing in “Advertising Age” suggests that Nike’s success is no accident. Since the late 1980s, Nike has been using psychographic and sociographic analysis of data to help transform the company from a brand of sneakers to a premier brand that has become integral to the sports culture it targets in the United States and elsewhere around the world.
Nike promotional messages target every possible market niche and every demographic in society. Nike markets to inner city children as well as children from the suburbs, weekend athletes, and serious athletes, people who want to look like athletes, female athletes, and people of all sexes, ages, and sizes. So by taking the examples Nike has set forth and using them to compare how any other comparable organizations do the same type of research. The way that Nike has singled out and defined its target market has become the basic strategy of almost all major clothing suppliers in the world today.
The ability for Nike to be such a market leader has pulled this organization has risen above the pack and continues to drive the organization into the future. Competition Every company in business to make money should include a complete summary of the competitive landscape. Every business has some sort of competition. Competition means there is a demand for a product or service, and despite what many people may say it is healthy to have some competitors. Any business that provides the same service or product, whether it is regional or global is considered a competitor.
Competitors allow organizations to stay focus and innovative so that they do not become stale and outdated. Nike’s business needs to highlight and build upon the weaknesses of its competitors to increase its profitability and market share. Nike is considered the number one sports apparel company in the world. Nike’s major competitors are Adidas, Reebok, and Under Armour. Nike currently controls 32% of the market share, which means one in three people own a product which represents the Nike Swoosh.
Adidas is the closest competition with 25% of the market share whereas Reebok and Under Armour have a combined market share of 20%. The rest of the market share is represented by several smaller companies. Nike, like many of its competitors, has branched out into several ventures. Nike is no longer only competing for the basketball, football, and soccer markets. They have also started to compete in the golf market, which means they are currently competing against golf supply giants like Titilest, Taylor Made, and Calloway.
What helps Nike stay competitive in the golf market is that they have one of the best golfers ever representing their products, Tiger Woods? Currently, Nike is third in the golf equipment marketplace, which is respectable considering they entered the market in the mid-90s. What makes Nike number one in the world compared to their competitors is there aggressive marketing style. Nike is not afraid to get the best athletes and sports teams in the world to represent their products. Nike sponsors more than 100 college teams, and hundreds of current and former athletes.
Adidas, Nike’s closest competitor, has far less sponsored organizations and athletes than Nike, which makes Nike the number one sports apparel company in the world. Through analysis of the market factors, targeting, consumers, and competitors, Nike is poised to corner the market of electronic joint heating for athletes from amateurs to professionals. The budget for the initial marketing plan will have largely been centered on the cost of the pull strategy. The majority of initial cost of the electric knee warmer is related to the research and development cost.
The knee warmer is an innovative product which should help keep the marketing costs down. Because the new knee warmer is a unique and the most effective comparable product in the market segment, the pull strategy will allow Nike to use major advertising avenues to” get the word out”. The next most expensive portion would be the sponsorships offered to Nike’s spokespeople. As the product is the most innovative available, retail organizations will purchase it. To examine and evaluate the effectiveness of the marketing of the electronic knee warmers, Nike will need to evaluate quantitative elements.
By analyzing the profit margin beginning a month or so after the release and continuing to do so on a monthly basis will provide a good baseline for where the product stands. The Market share is another portion of the equation. By collecting data showing how much of the market the product owns and how the percentage changes month to month. The market share is a spectacular evaluation tool because this product’s sales will fluctuate with the seasons. By changing the advertising some from month to month, it is possible to evaluate the most effective advertising means.
The market penetration can be evaluated by analyzing the market share as well as the total sales of the segment by compiling total units sold by all competitors. Channel Management Decisions To build marketing a company can uncover opportunities in a buyer’s needs and interests; finding, developing, and profiting from these opportunities will help build profitability as well as customer satisfaction (Kotler & Keller, 2011). Nike must choose how to market the electronic knee warmers and get the vital information about their new product to potential customers.
The marketing of electronic knee warmers requires Nike to make appropriate decisions regarding channel management. Channel management decisions are used to create an effective route to market Nike’s new product. Nike analyzes these channels to measure appropriate financial resources and product distribution. While analyzing the effects of their channel management Nike considers the sales associated with each channel, market costs of each channel and how the channels succeed in terms of customer satisfaction.
In 2009, “Nike invested $225 million to review its entire supply chain in an effort to increase business efficiencies” (Nikes Blueprint, 2009). This review started at the supply chain and continued all the way to individual retail stores. Nike’s channel management decisions allow them to streamline the knee warmers delivering the product more quickly to the market creating a more scalable cost structure. Differentiated marketing is the best bet for Nike’s goals of distributing the knee warmer to a large market.
The decision to market the knee warmers at a discounted price to professional groups and a higher price to the retail market allows Nike to ship larger amounts to one place. This channel management saves the company money on transportation and packaging, making the price cut irrelevant in terms of profit. Nike’s decision to use to interactive and experimental marketing techniques such as sports competitions, online communities, and workout advice has increased profits. ‘Measured’ marketing techniques such as TV, radio, print magazine are a traditional approach.
The electronic knee warmer will have promotions considered ‘non-measured’ such as events, web search ads, and creative product placements. Nike has reported that their ‘non-measured’ marketing accounts for nearly double the amount spent on ‘measured’ methods. Nike has always been a leader in the athletic market; appropriate channel management decisions along with a solid marketing plan can create a successful journey for the electronic knee warmer product to reach the public. Distribution Channels Nike’s desired market consists of different types of consumers with different needs.
The use of segmentation criteria uncovers, which markets offer the greatest opportunities. First, Nike must decide who it wants to serve; this is accomplished by dividing the markets into target consumers and selecting the desired segments. Marketing management of segmentation criteria is a combination of customer management and demand management (Armstrong & Kotler, 2011). Understanding how to serve the desired market through channel management decisions is essential to Nike’s success; Nike must position the product correctly to the specific marketplace and choose the appropriate distribution channels.
Along the channels of distribution there can be many middlemen between manufacturing and reaching the consumer. The channels include storage in a warehouse, transportation, retailers, wholesalers, and agents. “Nike employs both traditional and non-traditional distribution channels in almost 200 countries with primary market regions in the United States, Europe, Asia Pacific, and the Americas…Nike has about 20,000 retailers worldwide including Nike factory stores, Nike stores, Nike Towns, Cole Haan stores, and Web sites which sell Nike’s sports and leisure products” (Nikes Blueprint, 2009).
The distribution channels for Nike include international, national, and regional distributors making the process slightly different for each. The distribution channels of the electronic knee warmer will begin at the manufacturing stage. The manufacturing stage will take place in warehouses chosen geographically to maintain low costs. The preferred distribution channel for Nike uses an innovative communication method, the Internet, which allows a direct sale from the manufacturer to the consumer.
The orders placed on the Internet by-pass the middlemen; Nike uses this method to offer their products at a discounted price to consumers making the method more valued by the consumer. This distribution channel creates greater customer loyalty while earning the company a larger profit. The orders placed in retail stores have the added costs of transportation and profit margin of the store. The distribution channels involved if the product is not directly sold to the consumer are greatly affected by marketing and advertising. Decisions on target markets must consider transportation costs to and in these markets.
Transportation is an additional cost that can decreases profit, making sure this channel is running efficiently is vital to the company. Distributors who sell the Nike knee warmers are going do so to also turn a profit. The cost of the knee warmers in these outlets and retail stores must compensate the seller while advancing their productivity. Marketing and advertising the product creates a greater demand allowing the distributors to sell more products at a favorable price. Nike’s effective management of the distribution channels will make the knee warmers a valuable product to both the company and consumer.
Sales Promotion Schedule Sales promotion for any organization is about dealing with marketing communication activities and setting a schedule to launch the promotion. In business a sales promotion is considered everything from television and print advertising, personal selling, and good public relations. The key to a successful promotion in a great organization is determining what schedule you will use so the public is anticipation each sales promotion. Once you have identified the target market then it is the responsibility of the organization to set a schedule for the sales promotion.
Developing along with implementing a successful sales promotion schedule and advertising plan takes many carefully planned maneuvers. Each maneuver plays a key part in determining the results and also the effectiveness of the companies advertising campaign. The first step is to establish some sort of guideline for what you want to expose in the initial sales promotion. The first step you want to pre plan to make sure you are using your entire budget for the promotional launch. Setting a timeline is crucial in the planning phase. Sometimes working backward can help.
If you are considering a date to launch the promotion make sure there is enough time to put the advertising and promotion together. The most successful companies are can forecast months ahead of a promotion. If you establish a budget for the promotion it should include cost of media and adverting, along with talent you may want to hire. For example Nike’s most effective sales promotion and advertisement are using famous athletes, such as Michael Jordan and LeBron James. Nike’s marketing team fits the cost of the talent into the sales promotion budget.
The reason many sales promotions are not successful that its target audience. If you will promote children’s cereal it is a good idea to buy media during the time slots children are watching television. The best way for Nike to key the target audience for the knee warmers is by buying the correct media timeslots. Buying time on media at 12:00 am is not an effective tool in your sales promotion. To avoid such mishaps from occurring an initial sales promotion schedule give you the flexibility to first work out the bugs in the new advertising campaign, and to determine how well your message is received by the public.
Permit some flexibility in your schedule in the event one media message outperforms another. If the brand is strong that is a good indication that promotion will be strong. Advertising the brand along with the message by writing copy, developing graphically design print and web ads along with produce video commercials can help the promotion and build on sales. One way to help with the promotion of the Nike knee warmers is by unveiling the initial scheduling of the marketing plan at once, or unveils the plan step-by-step. Once all the steps are complete it is time to launch the advertising plan for the knee warmers.
You should be doing this within your initial sales promotion schedule timeline. To be effective you must establish some sort of tracking system to measure the effectiveness of your advertising plan. If you decide it is not working the best alternative is to tweak the advertising along with the message delivery tools slightly until you reach the desired audience and achieve firm responses. Use what you have learned in your first sales promotional step to improve your secondary sales promotion schedules and advertising plans. Advertising Plan
Creating a marketing plan about knows the product introducing it to the market and preparing consumers. Once the product is launched, the manufacturer will develop an advertising plan to reach potential customers. To be a great marketer a company should oversee the advertising expansion because the marketing plan sets the attitude for the product’s introduction. The most effective step to a marketing plan is to first setup some sales goals and an advertising budget. The expectation of an advertising plan is to develop some measurable sales goals.
One example of this is the time Nike sets a sales goal from $28 billion to $30 billion in five years. This is because of the increase of sales with the brand new Air Jordan’s, which retail at $150 a pair. The sales goals should reflect the product’s style such as luxury versus necessity. Another factor is to determine the economic environment and if it is a feasible item to purchase. What an advertising campaign should do is realistically divide your sales goals by an acceptable criterion. To be more effective you should list the product’s attributes and benefits.
Create your target market profile by gathering detailed information about your target audience. Learn about the potential customers’ by discovering their ages, education levels, and potential income. Once you have gathered the information determine which media is working and which media the customers are responding to the most. One common mistake that many companies do is ignoring social media. Social media has represented a surprisingly formidable advertising medium. Social media has expanded in the last five years.
With the help of Facebook and Twitter you can bring your product into the mainstream faster, and that will allow Nike to have a leg up on the competition for knee warmers. One suggestion is offering coupons on Facebook, which will prompt many sales and also start using this as a trend. In May 2011, 88% of businesses marketing by way of social media reported additional exposure from the social media platform. 72% of online marketers reported better than higher traffic as a result of the business’s social media presence.
The best way to improve your standing on social media is to conduct research and to analyze your relationship between social media and your target audience. Once all the data is collected, and you have set a good marketing and advertising plan wait and determine if the plan is working. If it is working continue to use it. The reason Nike is so successful with their advertising plan is that they learned year in the process that using star athletes was a winning formula. Imagine a successful company like Nike abandoning their advertising plans and starting new.
It is like the saying, “if it ain’t broke don’t try to fix it”. Attribute Attributes are the properties of Nike knee warmers and what attracts the buyers to the product. Electronic knee warmers have many attributes from physical appearance to consumer cost. Nike considers attribute-based research to address key properties important to their target markets. The physical attributes of the knee warmers are designed to meet the many needs of an athlete. The movement involved in the typical use of the knee warmer requires the product to have elasticity and to flex repeatedly.
They can maintain shape and tightness during constant motion while previous products may become loose fitting or shapeless. The seamless design allows the knee warmers to fit closely and comfortably over the bare skin or athletic wear without the risk of chaffing. The knee warmer is designed to stay confidently in place through an elastic cuff with silicone grip. The attribute that meets the consumer demands directly is a reflective piping as an additional safety feature. The cost of the knee warmers is a benefit to the consumer as this is a permanent replacement to a previously disposable product.
The attributes of the Nike knee warmers are what, “the product occupies in consumers’ minds relative to competing products” (Armstrong & Kotler, p. 193, 2011). Pace The pace in which the Nike knee warmers will move through its life cycle will be brisk. The market for the item will be very narrow and direct. The product will move through its expected life cycle akin to any other sports product, such as leg warmers and sports gloves. The factors that will affect the pace of the product’s life cycle will be the season that the product is debut. The common factor of the products pace will have to do with need.
The weather being cold will definitely affect whether or not people will buy the knee warmers. Another part of the pace puzzle will be to discover the target market for the item. The introduction of the Nike Knee Warmers will be the most expensive part of the whole marketing process, the market for the item will need to be created, and the product will most likely not make money at this point. As the product grows the next stage is marked by public awareness and profit growth. These two factors make for increased profitability. The timing will allow for the items along with competition in driving the price to allow demand to skyrocket.
Finally we come to the next stage, and this stage is where the product will mature and become more common with less demand. This could equal to lower profits. This is the time when the competitors will saturate the market with the same type of product with most likely poorer quality. The market becomes saturated, and the cost begins to outweigh the profits of the item. This is the time the price will be the lowest as well as the demand for the product. In the end the product will have achieved its life cycle and could be placed at the bargain store like TJ Max and Marshalls.
Positioning and Differentiation With Nike’s already famous slogan “Just Do It,” the electronic knee warmer finds its position in the market easily. When training, athletes must overcome or work through various situations to increase or maintain their fitness level. Cyclists often resort to spinning, or using a stationary bicycle, to train during the colder months. One of the main reasons the organizations do this is because of the wear on the knees in cool weather. “It’s the time of year when many cyclists’ knees begin to protest the combination of increased mileage and cold temperatures.
Some may take the knees for granted, but many experience knee pain at one time or another when cycling, especially in winter,” (Fredrick, 2009). The electronic knee warmers position will be the product for athletes whom want to train as much as possible, and keep themselves healthy. To differentiate themselves from its competitors, Nike needs to consider the differentiating strategy it will use. Nike can use its undeniable market share, customer satisfaction, or heritage as a company started by athletes, for athletes. The differentiating focal point for this product should be innovation, however.
Because Nike is the first sports apparel and equipment company to develop and release the electronic knee warmer, Nike needs to focus on the advantage it provides over any of its competitors’ products. Through its famous spokespeople, and sponsored teams, Nike will show that the knee warmer that adjusts heat can help its consumers gain a competitive advantage, much like the competitive advantage this product gives Nike over its competitors. By offering a superior product, and possessing a stellar image, Nike will stand out from others in the industry.
Nike’s innovation is worth using to differentiate itself with because; it is important because it helps customers train safer and more often; distinctive by being the only electronic athletic knee warmer; superior because it automatically adjusts the temperature throughout a workout; communicable because it possesses obvious advantages to competitors; affordable as the cost will be kept low in favor of selling more for less, rather than fewer for a higher profit, becomes more profitable as the product sells (Armstrong & Kotler, p. 97, 2011). The more-for-more position is used because this is a new, more technologically advanced knee warmer than previously available. The slightly higher price offers athletes additional training time through technology. The positioning statement will be “To athletes looking for every competitive advantage, Nike’s electronic knee warmer makes it possible to train safely through cooler months of the year. ” Price Leader is defined as a guiding or directing head. Nike has been leading the field in sports apparel for more than 25 years.
When it comes to price there is no other company that does what it needs to do. Nike will use the Price Leadership strategy along with value based pricing when it comes to their electronic knee warmers. Price Leadership is how a company like Nike sets there prices based on what they believe the value of their product is and also what they believe consumers also place on the product. Through marketing Nike has spent a ton of money to promote their other brand. This includes explaining how they are the best in the business, and no other company can compare. Most Customers don’t care about omfort or if they will need a pair of knee warmers. Nike customers will buy their product for purely the Nike symbol, and they are willing to pay absorbent prices. This flies in the face of conventional pricing strategies. Nike’s latest product the $220 Nike Galaxy Air Foamposite Ones caused many riots around the country. The reason for the riots was because many stores ran out o the expensive shoe along with long lines and people trying to keep their place in line. Nike’s pricing for the knee warmers will be aimed to be competitive to the other sports apparel companies.
These companies will find a way into the market, and compete with Nike. Their pricing foundation is based on knowing their premium target customers, which are cyclist and dancers. Because of Nike kasha as a brand the company can command high quality and prices for the product. Nike’s main pricing strategy makes use of vertical integration in developing pricing. By developing pricing along with cost inside the company will help Nike expand costs, by developing different product and influence product pricing. Conclusion
The Nike Company has learned from their previous marketing mistakes and with the advances in the marketing of new products the mistakes of the past will be rectified. We have witnessed the life cycle of this new Nike product from inception to discontinuation and all the marketing ups and downs in between. The continuation of this marketing cycle is unending and new products are being introduced daily. We will take from this the ideas that what Nike does and will continue to be a fore runner in the marketing of new designs and ideas throughout the sporting goods market segment that it has carved out for itself.
Most if not all companies in any market today would do well to emulate and take the examples that Nike has provided and use them for the future of their own business. We have taken an imaginary product from the beginning to the end of its life cycle the product has a viable cycle and is a big part of the market segment.
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