Nike\'s Marketing Process: Marketing Is Generally Defined

Nike's Marketing Process:

Marketing is generally defined as a social process through which individuals and groups acquire what they need by developing and exchanging products and services with others. This process involves planning, evaluation, execution, and management of programs that are developed keenly to facilitate free transfer of values with the intended audience to accomplish the objectives of the business. The success of any private or public company is dependent on its core marketing concepts and the various elements of the marketing process. One of the major examples of a public limited company that has demonstrated superb marketing skills is Nike. The firm's marketing skills have emerged from the fact that it has developed the ever-present swoosh into one of widely recognized brand symbols across the globe.

Nike's Marketing Concepts and Marketing Process:

As previously mentioned, Nike's superb marketing skills are evident through the power of its logo and brand (Kotler & Armstrong, 2000). Nike has changed the face of marketing through its strategy of developing superior products around famous athletes as it spends significant amount of money on big-name endorsements, attention-getting advertisements, and flamboyant promotional events. Throughout the years, Nike's marketing concept and process have been centered on its association with some of the popular names in the sporting industry.

However, the company recognizes that effective and successful marketing goes beyond the promotional excitement and promises. This is mainly because good marketing involves consistent delivery of real value to existing and new customers. The initial success of the firm's marketing strategies and initiatives were brought by the technical superiority of its running and basketball shoes (Kotler & Armstrong, 2000). These initiatives have been grounded on serious athletes who are upset with the lack of creativity in athletic equipment. Therefore, the creation of such products has enabled Nike to become a leading company in the industry through product development and innovation. Notably, the product development and innovation measures have enabled Nike to provide its customers with more than simple athletic gear.

In relation to its marketing processes, Nike not only provides athletic gear and equipments but markets a sports culture and a way of life. The company appears to care more about the lives of its customers as it cares for their bodies since it does not promote sales but promotes sports for the benefit of all individuals. The main elements of the company's marketing process are focus on product development and innovation, creating new product lines, building sub-brands, and deemphasizing the Swoosh (Kotler & Armstrong, 2000).

Benefits and Costs of Marketing Orientation for Nike:

Nike is a company that offers a glimpse of the best practices in the future of value co-creation with customers through innovation and marketing processes. The main benefit of the company's marketing orientation is that it has found a new source of value through engaging with connected, informed, and networked customers throughout the world (Ramaswamy, 2008). This has enabled customers and other stakeholders to involve with the company in shaping value outcomes. The engagement with customers has strengthened Nike's capacity to use global network resources and thematic communities to constantly discover and respond to opportunities for new innovation and value creation. Consequently, Nike Inc. has been able to sustain competitive advantage through its marketing orientation by co-creating experiences that are valuable to customers.

The other benefit of marketing orientation for Nike Inc. is that its care for customers has paid off significantly. Since the decade preceding 1997, the revenues of the company have increased at an unexpected annual rate of 21% with the yearly returns to investors averaging 47%. Furthermore, Nike continues to dominate the global athletic footwear market and has 47% market share in the United States athletic footwear industry (Kotler & Armstrong, 2000). Marketing orientation has also enabled Nike to move forcefully into new product lines, sports, categories, and regions across the globe.

Nike Inc. is regarded as a market-oriented company because of its deep understanding of its target customers that informs its product development process in order to create greater value for its customers. The other aspects of the firm's marketing-oriented approach are conducting research on the strategies its competitors use, has an incredible ability to adapt to customers' taste, development of good marketing plans, and the achievement of its marketing objective through profit making.

However, these benefits and characteristics have also involved certain costs of marketing orientation. Since Nike is characterized by increased adoption of technology to become a leading firm in product development and innovation, the firm has huge costs of marketing orientation. Some of the major costs for this firm include heavy investment in product development and marketing research initiatives, using famous sports personalities for advertisements, and high costs in the employment of highly-qualified employees in various departments. The other costs of marketing orientation include distribution costs, several promotional costs, and communication costs.

Macro and Micro Environmental Factors:

Similar to other companies across various industries, Nike Inc. is affected by macro and micro environmental factors that influence marketing decisions. The macro environmental factors are internal aspects that impact the company while the micro environmental factors are external factors that affect the firm. While the micro-environmental factors can be controlled to a certain extent, the macro-environmental factors cannot be controlled despite of their impact on marketing decisions. Therefore, the success of any marketing initiatives requires an understanding of the macro-environmental factors to develop a well-reasoned and practical marketing plan ("A Brief Discussion," 2010).

There are several macro-environmental factors that should be understood in the sports industry including demographic, economic, political, natural, competitive, cultural, and technological forces. The major impact of these macro-environmental factors on marketing decisions is that they determine the type of products that will be developed and the kind of marketing initiatives that will be adopted by the company. These factors are essential in determining effective marketing plans and strategies for the particular target market.

On the contrary, the micro-environmental factors such as product development and innovation measures influence marketing decisions through determining the ability of the company to maintain a sustainable approach in creating quality products. Some of the most common micro-environmental factors include the company itself, marketing intermediaries, competitors, suppliers, and customer markets. The major impact of these factors on marketing decisions is that they make such decisions to be based on consideration of the firm's competitors, the company's size, and its position in the industry and market.

Market Segmentation:

Market segmentation is one of the most important elements in the development of effective marketing strategies and has a significant impact on the success of a company's marketing processes. There are various types of market segmentation such as geographic, consumer, and organizational segmentation depending on the target market and the type of products to be marketed. For Nike Inc. athletic shoes and casual wear are the two types of products that could be segmented for consumer markets and organizational markets.

In segmenting these products, there are two major processes that would be carried out i.e. geographic segmentation and demographic segmentation. Since athletic shoes and casual footwear are two major products sold by the company, they would be suitable for consumer and organization markets. Under the geographic segmentation, these markets will be divided based on diverse geographical parts such as towns and cities. The main objective of geographic segmentation is to ensure that these products are sold in cities and towns that certain sports are not most popular. Athletic shoes and casual footwear will be marketed in consumer and organizational markets where specific sports are not popular in order to attract new customers.

The second process is demographic segmentation that is basically effective in consumer markets in order to promote different product lines for different kind of people. This segmentation process would involve dividing the consumer market based on gender, race, age, income, family size, occupation, and education level. These factors will be essential in determining effective marketing initiatives for particular groups of people and target market.

The target market in segmentation of consumer markets and organization markets are the young generation and people between 30-50 years. The young generation will be targeted because they want to appear fit, healthy, and athletic to others as they prepare to enter the job market. The young generation will also be targeted because they account for a huge portion of the population. Moreover, people between 30-50 years will be targeted because they can show their social status and healthy life through the products (Kotler & Armstrong, 2000).

Buyer Behavior:

There are different types of buying decision behavior that are influenced by various factors and characterized by various stages in the buying decision process. The marketing of Nike's athletic shoes and casual wear is affected by buyer behaviors or buying decisions. In this case, buyer behavior is characterized by psychological factors, social groups, and situational forces. The customer's buying decision and behavior is dependent on his/her motivation, personality, and perception. Some of the other factors include culture, social class, family, sub-culture, reference group, and fashionable product or global brands.

Customers are likely to buy the athletic shoes and casual footwear depending on the motivation they receive from the products, the need to show off to the society, and their perception reputation of the brand or brand image. In addition, customers buying behavior is determined by whether the products are designed depending on their culture and appeal to their respective social classes. Therefore, the main impact of buying behavior on marketing is that marketing strategies and initiatives of the products are developed in consideration of these psychological forces, social groups, and situational factors.

Product Positioning:

Generally, Nike Inc. provides a wide range of product lines across footwear, apparel, and sports equipment products (Bhasin, 2010). However, the company's marketing decisions and initiatives are mainly influenced by its top-selling product lines or categories. One of the product categories whose positioning influences the firm's marketing mix factors is athletic shoes category, which is one of Nike's top-selling product categories. This product category influences Nike's marketing mix factors, particularly through its effect on pricing strategies.

The pricing strategies of athletic shoes are based on vertical integration through which differing channel levels engage in more than one channel level operations that help in controlling costs and product pricing (Bhasin, 2010). The product pricing strategy in turn affects the place where the products are offered. In most case, these products are offered through Nike's subsidiaries and distributors. Furthermore, the pricing strategy influences promotion initiatives that are mainly dependent on identifying accessible locations, using brand ambassadors, building strategic alliances, and advertising in newspapers. Notably, the positioning of the product in the market affects the pricing, place, and promotion of the product to ensure that it increases and maintains its market share.

Extended Marketing Mix Elements:

In addition to using the marketing mix factors in developing its marketing strategy, Nike Inc. uses extended marketing mix elements to achieve its marketing objectives. In this case, the company considers the various demographic factors of its target market or people in order to adapt appropriate product development efforts that will meet the specific needs of the people. The demographic factors and product development initiatives in turn affect the pricing, promotion, and distribution strategies of the firm. Nike ensures that it has developed appropriate pricing of its products and promotion initiatives through which the products will be distributed to the target market. The physical evidence obtained from these initiatives affect the company's marketing processes that are developed based on the identified needs and adjusted depending on changes in the market. Through the extended marketing mix elements, Nike manufactures quality products, use great marketing techniques, and attracts and maintains a loyal customer base that contributes to its huge success in the market (Bhasin, 2010).

Differences in Marketing Activities:

Since Nike Inc. is a global firm that operates in several international markets, the firm uses a differentiated marketing mix approach for different products and different segments of the market. In this case, the company does not design a single marketing mix and uses it for the entire market for a specific product. Through the differentiated marketing mix approach, several marketing mixes are used and focused on various market segments as the marketers use a wide range of segmentation bases (Pride, Hughes & Kapoor, 2009, p.346). Nike uses the differentiated marketing mix strategy to market different kinds of shoes for particular target markets. For instance, the company manufactures different athletic footwear for basketball players and shoes for cross-trainers. In this case, the pricing, place, promotion, and distribution of the different types of shoes are based on the specific target market. For example, Nike uses famous athletes and sports personalities to market the athletic shoes products but do not use the same strategy to market shoes for cross-trainers.