A MARKETING PLAN PROPOSAL TO IMPROVE NIKE MARKETING STRATEGIES TO BUILD BRAND LOYALTY TO BOOST SALES
Prepared for
John J. Donahoe II
The President & CEO Nike
Prepared by
(Name of student)
Date
Executive summary
The primary purpose of this plan is to come up with a good marketing plan that will ensure customers develop loyalty to products sold by Nike with the main focus in improving customer loyalty to Nike shoes. Nike is a shoe manufacturing company with its headquarters in the US. Nike has dominated the shoe industry, especially sportswear, as it is the largest sportswear manufacturer in the word (Miroshina, & Romanov, 2018). However, Nike has suffered stiff competition from other competitors like Adidas and Puma. This has resulted in Nike to lose some of its customers globally. With main clients being sports teams, Nike risk to suffer a big blow if customers continue to become disloyal to its products and drop in sales. The main reason customers are becoming disloyal to Nike products is because of; high pricing of Nike shoes, counterfeits products that are of low quality, and dependency on US markets (Tsimonis, & Dimitriadis, 2014)). This proposal aims to provide strategies that Nike can adapt to build brand loyalty to boost sales. One of the plans is to moderate product prices. Nike prices are very high. A pair of Nike shoes cost around $60 to $200.nike need to curb their prices to compete in the market as clients prefer shoes from other manufactures like Adidas as they serve the same purpose as Nike shoes, and they are cheap. Secondly, Nike should dismantle Counterfeits shoes with Nike labels as they are made of low-quality material. These counterfeit shoes make customers reduce or even lose loyalty to Nike shoes as they think Nike has started manufacturing poor quality shoes. And lastly, Nike should expand their markets to many other countries where opportunities arise. Nike should stop depending too much on the US market as there are other countries with great opportunities, and this can lead to an increase in product sales if they invest in those countries.
After researching various financial statements on the company, it was found that the company is not meeting the targets on the revenue from its sales. This was because of the reduction of customers, and also a few new customers are joining Nike brands than it was in the previous years. This has resulted in not meeting targets in the company.
The company is recommended to moderate it’s brand pricing and avail product discounts to attract more customers. The company should also trace and scrap all the counterfeits manufacturers who provide low-quality Nike products to improve brand loyalty to customers. The company should expand its market to many other countries where opportunities lie.
Project scope
Fortune 500 was used to analyze the financial trend of the company and how the company was ranked in various years. The ranking analyzed was for the last five years. To get clear information on the competition, and I had to analyze market trends on multiple companies with the main focus on Nike competitors like Adidas. Financial overviews of Nike Company for the last five years were of great help to the success of this proposal. The research was less costly as most of the information was acquires over the internet.
Problem Statement
After reviewing the financial reports and statements of Nike and other various companies, I realized that Nike company sales were not hitting the target. This was because the business was not ensuring stiff measures on marketing to outsmart their competitors to ensure customers becomes loyal to their brand. I proposed that the company needs to moderate its brand pricing, scrap counterfeits brands in the market, and expand its market and stop depending a lot on the US market.
Company profile
Nike is an American multinational manufacturing company. The main products manufactured by Nike are footwear, apparel, equipment, accessories, and services. The main market focus of Nike is sports clubs like golf, football, baseball, basketball, etc. Nike uses high profile athletes to market its products. Nike’s brands include Nike, Umbro, Nike Golf, Converse, etc. Nike is both B-2 – C and B-2-B, but its operations are 70% in B-2-C.
Financial Analysis
Revenue
Nike’s revenue grows steadily. In Fortune 500, Nike is highly ranked as from 2013; it has never gone below 200. The company revenue has been consistent. From 2013 to 2017, the revenue statistics indicated that the revenue increased every year. The revenue states were as follows in billion dollars: 2013 $ 25,313, 2014 $ 27,799, 2015 $30,601, 2016 $32,376, 2017 $ 34,350 (Nike, 2017). These statistics were evident that the business revenue was flowing well.
Income
According to the financial reports of Nike in the last five years, I noted that though the revenue was increasing, the income was decreasing. This was an indication that the business was not stable.
Profit
The profit of the company is lowering year by year. For example, 2018 Nike revenue was totaling $36,379 billion, a change of 6.0%, but nevertheless, the profit for the same year was $1,933 billion a change of -54.4 % ( Nike. 2019, May 15). This was evident that Nike was not meeting its target though it was increasing expenditure.
Cost of Marketing
In 2018, Nike spent about $3.5 billion, specifically on marketing, this is a lot of money to spend on marketing, and the worst bit is that the profit was still negative.
Stock price
From Nike’s historical annual price data, it is evident that Nike stock always goes up every year. Though it doesn’t skyrocket as per the company’s expectations. This may be as a result of customers who become disloyal to Nike brands and even withdraw from being Nike customers.
Current Marketing Situation
In comparison to Adidas Company, Nike is being outshined by Adidas. Although Adidas is always ranked below Nike in fortune 500, in terms of profit, Adidas is making a great move. For example, in 2018, Adidas revenue was $25,920 billion, a change of 5.1%, and this resulted in a profit of $2,008.6 billion, a change of 6.4% from the previous year (Adidas. 2019, July 21). This indicated the pressure Adidas is putting on Nike. When I went through the chats of customers’ concerns on the brand quality on the Nike website, I found that many clients complained about the problem they have on differentiate Original shoes and Counterfeits (Mardini, 2019).
Recommendations
After researching and analyzing the information carefully, I found some of the marketing strategy Nike need to put in place to ensure it boosts its sales to get back to its profit-making. The company needs to moderate brand pricing; Nike clients complained through their website on the higher prices of Nike products compared to products from their competitors like Adidas and Puma, and while they all solve the same purpose. If Nike moderates it’s pricing by maybe lowering or introducing a discount on its products, it will be able to gain a market advantage over its competitors. Counterfeit products have caused a lot of harm to Nike Company. Nike customers are losing loyalty to Nike brands due to the fake brands produced by counterfeit manufacturers. I recommend the company ensure all counterfeits products are eliminated from the marked to rebuild their customers’ loyalty, which boosts product sales resulting in high profits leading to the high stock price as the shares will shoot up mysteriously. If customers are loyal to their products, they will be able to attract other new customers. Nike uses a lot of money in marketing, but their marketing strategy is not the best. Nike uses a lot of many to pay high profile athletes to market their products, but this is not enough Nike should use some of this money to expand the market to other countries where opportunities areas this will read to making new customers, therefore, increasing sales. If Nike follows these recommendations, it will attract many customers and make huge sales hence high profits.
Conclusion
Nike is a significant and famous shoe manufacturing company know globally. Nike is a company that should be making huge profits. Nike loses many customers and also fails to attract new customers due to the high cost related to its products. Nike also has given room for counterfeits products with Nike label in the market resulting in fake Nike brands in the market that have tarnished the good name of Nike product quality. Nike is also depending a lot on the US market and uses a lot of money to market its goods, and it has not utilized all the markets available globally. For Nike to return to its profit-making routine, it needs to moderate its pricing, remove all fake products in the market, and expand its markets to all available countries in the world.
References
Adidas. (2019, July 21). Fortune. https://fortune.com/global500/2019/adidas/
Mardini, R. (2019). IMPACT OF COUNTERFEIT BRANDS ON CONSUMERS ACCEPTANCE ON THE ORIGINAL BRANDS (Doctoral dissertation, ISTANBUL AYDIN UNIVERSITY INSTITUTE OF SOCIAL SCIENCES).
Miroshina, S. E., & Romanov, E. (2018). Business Valuation of Nike, Incorporated. Review of Business and Economics Studies, 6(1), 78-82.
Nike, I. (2017). Nike, Inc. reports fiscal 2017 fourth quarter and full-year results. Retrieved 2017-06-29, from https://news. Nike. com/news/Nike-inc-reports-fiscal-2017-fourth-quarter-and-full-year-results.
Nike. (2019, May 15). Fortune. https://fortune.com/fortune500/nike/
Tsimonis, G., & Dimitriadis, S. (2014). Brand strategies in social media. Marketing Intelligence & Planning.