Sportswear and Nike Marketing Approach Analysis

Table of Content

The report looks into the changed of sportswear market over the last 10 years . The reports also include the analysis of BCG matrix and Ansoff’s Growth matrix for Nike new product- casual footwear. This report is supported by my personal experience, publicised and factual situation. Introduction: Sportswear market is one of the most-price competitive markets in the United Kingdom. The UK sportswear market is boosting more and more every year. Nike which is famous for sportswear products, is one of top sports brand in the world and British market holds a great repute for Nike product.

The success behind Nike is strong market analysis, customer focus, product development, strong brand image. (Www. Nike. com) Sportswear market: In 1970s, athletic sportswear started to changed from a product line aimed at tiny and distinctive into a typical fashion product. The difference between performance and fashion, formal and informal, function and style that one existed have become unclear. In 1980s, the sportswear market changed into the clothing market. The tendency was changed by boosting of sports participation. Approximately 70% of athletic footwear is bought for leisure, casual and normal use.

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In the United Kingdom, 20% of sportswear items is used for real sports or exercise. Most of the consumer purchases the sportswear items to use as leisurewear and not for which it was initially designed, the inspiration for “sports fashion” however comes from particular sports and the technical needs of clothing for these sports. A host of sports are engaged, grouped mostly into team sports (e. g. cricket, rugby), fitness activities (swimming, working out) and outdoor recreation. Examples of most markets produced by these activities (whether for “function” or for “fashion”) are model football shirt, sports shoes and fleece tops.

Branding is very essential in sportswear both for fashion and for function. Nike and Adidas are global leaders in sportswear. Nike and Adidas are dominating the world sports market by their brand image. Nike had global sales of £19. 63 billion and sponsored at the Beijing Olympics in 2008. Nike bought the united kingdom football brand Umbro. There are several sportswear companies in the united kingdom for example, Pentlands group which owns a portfolio of sports brands such as Speedo, Berghaus, Mitre and the controller of JD sports retail chain and sports direct, other famous brand as Dunlop, Slazenger and Kangol.

Like Nike and Adidas, they produce all of entire sports product outside the United Kingdom to save the manufacture cost. As a result, United Kingdom sportswear market entirely depends on imports, mostly from Far East, where the people’s republic of china is currently the largest exporters of textiles. In recent year, the global recession and economic uncertainty have been the greatest threat for sportswear as the market suffering a decrease in sale in 2009. After 2009, sales have increased as customers are buying the sportswear more cautiously due to fear of another recession.

Besides other factors which have affected the sportswear market such as the sportswear cost, global shortage of cotton, mounting the transportation cost, import and labour cost etc. (lussier and Kimbal. 2004) Pestle analysis: pestle analysis of Nike described below- Political: In the United kingdom, the political condition is enough favourable for business. As the political situation is stable, so its better for business to invest money in securely. In that case, there is no political bad affect in Nike business in the united kingdom. Economical: Global economic recession also effected in the united kingdom.

As a result Nike business is affected for the recession . it is noticible that nike business has falled down in 2009 for the economic recession. But 2011-2012 Nike business again doing performance due to improving the economical condition. Besides increasing the labour cost, increasing the product material cost also affected the Nike business. Social: social factors have affected in Nike business in the last decades. As people life style is changing everyday, Nike is continuously developing their product according to customer choice. Besides online shopping , emphasis of safety safety, increasing litigation also affected the Nike business.

Legal: In the united kingdom , there are lots of rule and regulation about in business policy and strong taxation policy. Taxation policy also affected the Nike business in the United Kingdom. Besides, they have to maintain proper employment law, age law, environmental law etc. Environmental: Now a days people are more conscious about environmental issue. So environmental issue can affect the Nike business. During the business Nike have to ensure that their business is eco-friendly and safety for people, Technological: Over the last few years, technology has changed a lot Nike business.

Nike has used the technology for online shopping, better customer service, effective communication etc and controlling the whole business system. BCG matrix: In 1970’s the Boston consultant group developed a model for different business unit, which is called BCG matrix. The BCG matrixes suggest a way of testing and making sense of a company’s portfolio of product and market interest. The idea of BCG matrix based on the product life cycle theory that can be used to decide business priorities. The BCG matrix makes it easy to analyse the product range and helping to take decisions about products internal strategic analysis.

The main idea behind the BCG matrix is that it is better for the company to get the bigger market share a product or the quicker market growth. (stern and Deimler,2006) Figure: BCG matrix There are four categories in a portfolio of a company in the Boston consultant group matrix. Question mark: Question mark is the first stage of BCG matrix, which is known as problem child. It is primary stage for the business where company have to analyse the market strategy and market position. Star level: It is the second steps of BCG matrix. In the star level, business has highly growing market and rapidly growing sales.

In this level business often use high amount of money for advertising and develop their product to get the high market share. In star level, there are frequent cash flow in the business. Cash cows: It is the dream for every business to reach the cash cows level. In this level business have a high market share in a low growth market where business is profitable and a generator of cash. Because of profits, the business can be milked on an ongoing process. However, Businesses still have to spend money for advertising in cash cows level to increase the market share.

Profits from the business can be used to support other products, which are in their development stage. In the cash cow level business have to follow standard strategy to defend strongly against competitors. (Stern and Deimler,2006) Dogs: In the Dog level, A product that has a low market growth in a less market share. In this stage, business is not profitable. It is very costly and risky to cultivate the product to increase the market share because of low growth market. Therefore if the Dog stage has been identified as part of a portfolio, the business is often stopped or disposed of.

BCG matrix for NIKE footwear: Nike has come up with new product idea- casual footwear for the youth market, which is quite revolutionary in terms of style and comports. The BCG matrix for Nike (casual footwear) are described below Question mark: As Nike is launching new product called casual footwear in the market, according to BGC matrix it can be named as question mark stage for Nike footwear market. In this stage Nike, have to analysis the footwear market positioning and market strategy. They have to consider their competitors in casual footwear market.

As Nike already renowned in the market for other sportswear Brand, so it is comparatively easy for Nike to get the market share. However, they still have to analyse the market carefully and launch the product in the market. (Stern andDeimler,2006) Star : After launching the product in the market, its will become star level. In this level Nike (casual footwear) market share and market growth will increase rapidly. Nike have to advertise their product to increase the market share.

As Nike casual footwear is mainly for youth market they have to sponsor sports personality like Roger Federer, Tiger woods and others ports. Because young generation always follow the successful people. Besides Nike have to develop their product to get more market share and have to increase more promotional activities to reach the customer and to beat their competitor. However, in the star level, there will be lots of cash flow in the Nike casual footwear business. (Quinn, 2002) Cash Cow: According to BCG matrix, this is the best stage for all business. In the Cash Cow level, Nike will become the market leader and they will have high market share and low market growth. They can generate lots of cash flow in this level.

Still they have to advertise their product to keep the high market share. In the cash Cow level, Nike footwear business will be profitable and generate more cash. Dog: Dog is the decline stage of any business. In the dog stage, there will be low market share and low market growth for Nike casual footwear. Nike has to be very careful in this stage. If the dog level is identified properly, Nike have to stop or dispose the casual footwear business. (Quinn,2002) Ansoff’s Growth matrix: Igor Ansoff’s product /matrix is a tool that is assist the businesses to make a decision about their product and growth policy.

The matrix propose that a business effort to grow depend on whether it markets new or existing products in new or existing markets. Existing product /service new Protect/buildWithdrawConsolidateMarket penetration| Product development| Market developmentNew strategiesNew segmentsNew users| Diversification| Figure: Ansoff’s matrix Protect/build: The segment is known as the organic growth sector where many businesses are born and die. There are three strategic options for this segment. Withdrawal : If any business can see no way to attain its business target, hen it may withdraw its product from the market. There are few reason for withdrawal The service or product may are in the decline stage and no possibility of developing quality. The products or service variety may be not up to date and the businesses may find it is spreading its attempt on leading to manage them all. Business may find better opportunity somewhere else and withdrawal could help them to raise funds for new business Consolidation: In this stage, an organisation tries to protect and secure its position in the markets by fulfilling the customers needs or expectation.

The costs of gaining market share is very expensive in a speedily growing market, or where market share is being attained through price cut or where the product or service is not differentiated from competitors offerings. Consolidation is not about enduring static. In a changing market, caused perhaps by new entrants, substitutes or improved performance of competitors- the organisation may need to find way to find ways to counter threats from rivals and make sure the continued loyalty of its customer.

The steps of consolidation are * Developing the quality of products and services Ensuring the customer satisfaction in order to meet their needs more effectively and increase customer loyalty. * Defensive approaches, for example enhancing entry barrier to the market. such as Nike may introduce improved products and services that set customer expectations which new competitors may find hard or expensive to meet the market. (Fiona,1997) Market penetration: Market penetration is where the organisation seeks further growth by providing its existing products or service to the existing market. Market penetration is all about enhancing the market share.

This option is particularly attractive where there is an opportunity to- * Convert non-users customers in the existing market to user * Convert customers who already using the other company’s product or services into using company’s own products or services. Market penetration is comparatively easy for any company if there is growth in the market and other companies failed to meet customer expectation. when non-user convert to users, for instance ,the company who can able to increase output will tend to boost its market share, while companies that can not enhance output will tend to lose some of their market share.

Obviously the main aim of market penetration to increase sales volume but not all the expense of profitability. As Nike is launching new product in the market they can follow the few strategies to get more market share- * Price reduction * Attacking competitors, for examples, by offering a price promotion, increasing promotional activities or extra products or service features. * Enhancing the advertising costs * Sponsoring sports personalities and sports events. * Improving the effectiveness of advertising, sales productivity and the performance of distributor. Fiona,1997)

Market development: This segment is occur when a company introduced an existing product or service into a new market. its also involve to find out new market segments, new uses for its products services or new territories. * An organisation can approach different strategy to market development * New product dimension or packaging * New distribution channel * Different pricing policy to draw attention of different kind of customers. Product or service development: This segment is for developing the new products in an existing market.

It happens where product market is Mature and further little growth can be expected. In order t maintain profitability, an organisation may need to introduce new products or services frequently. In other businesses, like retailing, consumers look for change and development, so product or service development is an important feature of the businesses. However, it is risky to product development, it is hazardous business, and many innovations fail. Innovators have to invest huge money for product development, which has few customers at first.

The plan of first mover advantage is linked with the ability to hold market share before imitator are able to compete. Nike can keep a track of changing behaviour of consumers, demographic changes, changes in customer earnings and financial status. Nike have to design and develop their products according to customer needs. Market testing is very important before launching a product in the new market. Nike can do product sampling before introduce new product in the market. Nike should focus on more innovation, roduct designing and promotion through advert. (Richard and rachman,2001) Diversification: Diversification is explored when an organisation has exploited its existing product range and market exposure and is looking for new products or services in new market. This is risky policy because the business is changing into markets in which it has little or no experience. If a business want to implement a diversification strategy, then it should have obvious idea about what it expects to achieve from the strategy and true assessment of the risks.

Businesses diversify through: (Richard and rachman,2001) Geo-demographic advantages for Nike: Demographic segmentation is the best-known criteria and cover aspects age, sex, family status and size of household’s and geographic segmentation which refers to the fact that purchasing behaviour varies from region to region. The advantages of geo –demographic segmentation is that it is easy , simple and targeting is very easy due to the fact that advertising and promotion activities are limited to the border of the nation chosen.

In the geo-demographic segmentation any company need to concentrate to particular age group or sex group or behaviour of customer. As Nike introducing new casual footwear in the market youth people in the Uk, so geo-demographic segmentation will be the best for Nike. As most young people of Uk are football fan, so Nike can sponsor football club like chealsea, Man U etc, famous football player like Wayne Rooney to introduce their product into market. The disadvantages of geo-demographic segmentation are that by targeting particular age and sex group, company may loose other customer.

As Nike footwear produces their footwear for youth group, they can’t target other age and sex group. Conclusion: Finally, it is cleared there are some important issues are key to a company’s success such as market analysis, differentiation of products, price skimming, product development, diversification etc. Nike have to analyse these this important issues to launch their new product- casual footwear for youth market. However, as Nike has a competitive advantage over its competitor, it is very much possible for Nike to success in Casual footwear business.

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