MKTG 4400 Final Report

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Swooshing Beyond Borders: Nike's Global Game Plan MKTG 4400 Final Individual Project Kanish Shah MKTG 4400 A James Gordon Dec 12 2023

Executive Summary This individual report will explore Nike's global plans in great detail, covering market positioning, ongoing marketing campaigns, and major obstacles. The objective is to highlight issues and provide recommendations for improving Nike's worldwide marketing strategy. Some existing issues for Nike today are the fierce competition, supply chain challenges and the popularity of counterfeit items. There are various athletic brands such as Adidas and Reebok who are starting to catch up to Nike, by making themselves known globally. Along with this, the manufacturing process for Nike is lengthy and often unreliable putting them at a disadvantage to their competitors. Finally, the popularity and availability of counterfeit Nike products manufactured overseas is bringing down their revenue and decreasing brand trust. To combat this, Nike needs to focus on product innovation and brand differentiation, in an effort to provide a competitive edge to stay ahead of competition. This includes catering products and advertisements to the area they are being sold or shown in, as it can increase consumer interest. Using innovative technologies and materials can also work to their advantage in this area. Along with this, reshoring can help them be more organized and prevent delays in unexpected situations such as pandemics. Finally, reshoring and educating consumers through verified sources can combat the sale of counterfeit goods, and consumers who spend their money there will be reverted to Nike to buy the original products. In conclusion, Nike can strengthen its market leadership by embracing innovation, rethinking its strategy, and building deeper worldwide customer relationships as it navigates these obstacles. The suggested changes provide Nike with a road map for overcoming present challenges and moving in the direction of a more solid and resilient future in the international market. Company Overview Founded in 1964, Nike is now the world's biggest and best-known sportswear company worldwide. Nike began as a small shoe and t-shirt business and has since expanded to become a global giant. It was founded by Bill Bowerman and Phil Knight, and was first introduced as “Blue Ribbon Sports.” Today, Nike has over 1000 retail stores, and employs over 73,000 people in 170 countries (Smith 2022). Nike's business strategy is built on the development of innovative products and technologies that have fundamentally altered the sports apparel industry. The company's success is partly down to its international marketing, which involves working with well-known celebrity athletes and international sports teams. Nike's social responsibility initiatives and ethical business practices have a significant impact on its business success. On Nike’s website, they state “Our purpose is to move the world forward. We take action by building community, protecting our planet and increasing access to sport. Learn more about our progress in our FY21 Impact Report” (Nike 2021). In addition to outlining their actions in the direction of social responsibility, they also make their impact report available for public viewing. Transparency is important because it fosters confidence

between the business and its stakeholders. When it comes to athletic apparel, Nike has cemented its position as the most widely worn brand. Their target market is from the age demographic of 15-40 and in the technological sector, they have also developed a number of fitness apps that assist users in tracking their development and steps. This demonstrates that they are now infiltrating the technological sector in addition to the clothes sector. Moving forward, although Nike is such a huge and reputable brand, they have some weaknesses that still exist today, and could affect them as an organization in the long run. Their marketing mix can be seen through the 4 P’s (Appendix A). Aside from ethical concerns, they have problems in their competitive landscape and with their strategic plans. Key Issue #1 - Intense Competition and Consumer Preferences The first main key issue for Nike would have to do with their competitors, and the fact that they are changing and moving fast in an effort to overtake Nike and stay relevant in the industry. Some big name brands that come into play here would be Adidas, Puma, New Balance, Under Armour and Reebok. Nike holds approximately 38% of the market share while big name competitor Adidas holds approximately 17% (Jain 2023). As competition starts to go up, Nike will find it hard to be the leaders in market share and to maintain their revenues every year. According to Bloomberg, “Increased competition, led by Adidas AG, has knocked the world’s largest sports brand off course and muddied its outlook. Since Parker made the forecast, Nike’s stock is down 17 percent — erasing $22 billion in market value. Sales growth has been uneven, slowing to just 0.1 percent last quarter (Bloomberg 2017). Although Nike is known to be a growth company, this statistic shows that they might be growing but companies are catching up at a quick rate, ultimately slowing Nike down. The buyer power and threat of substitutes is relatively high for Nike as it is easy for consumers to switch between brands depending on preference. These brands also have a huge presence worldwide, as they have multiple stores in not only North America, but even Asia and Europe. Pricing strategies can be affected as a result because margins may have to be reduced in order to eliminate competition. Another factor that could come into play and be affected is brand loyalty and perception. How rapidly young customers change their interests and start hunting for the next big thing has caught Nike by surprise. For example, kids are starting to move on from new Jordan items sooner since they don't have a compelling narrative. This led to an excess of inventory, which negatively impacted profit margins. As a result, the brand loses its coolness since it is more accessible. “Consumers are tightening up on spending, supply chain issues have impacted its inventory, and investors are feeling bearish on the company as a whole with shares of Nike down 8% this year (Jagielski 2023). This problem isn’t directly related to Nike, but a change in consumer preferences has a heavy impact on the structure of the company and results in a shift of strategy. Due to things such as inflation, people have less of a spending capacity and investors are less trustworthy, even in stable brands such as Nike. Key Issue #2 - Supply Chain Management Challenges

Nike has a vast worldwide supply chain that crosses several nations, which makes sourcing, production, and logistics more difficult. According to an article by Rob Neibauer, products from Asian factories were held up due to shipping delays and port congestion, resulting in longer wait times and even overstock due to increased orders trying to eliminate stock outs (Neibauer 2023). Outsourcing products means there are a lot of stages involved in product procurement, and factors such as political trade restrictions and unexpected disruptions can lead to bottlenecks. One of the biggest setbacks was the Covid 19 pandemic, and this put a pause in many services in the supply chain. Since Nike has so many different suppliers and operations around the world, their manufacturing process slowed down significantly and people saw longer wait times and low stock. Complexity grows when several providers are relied upon in disparate places. Production schedules and product availability can be impacted by problems with logistics, plant closures, or disruptions in the supply of raw materials. It is also difficult to guarantee data accuracy and real-time visibility across the supply chain. It takes constant investment and adaptation to integrate technology for improved demand forecasting, inventory management, and supply chain visibility. In a world like today’s, although having various different components of the supply chain can help be more cost effective, it is not the most efficient way to do business as it can result in big delays, and ultimately drive customers away, rather than bring them in. Key Issue #3 - Counterfeiting The term counterfeiting refers to creating replicas of products without the trademarks or design rights, for a fraction of the price. Many goods in today's world are sold as replicas, which are mostly 1:1 copies of the original, but sold much cheaper than the original. According to the OECD iLibrary, “the volume of international trade in counterfeit products was estimated to be $464 billion in 2019 – 2.5% of total international trade (OECD 2019). The footwear industry has the most counterfeit seizures, and Nike was the leader in footwear during this time. Research indicates that the threat of counterfeit items is growing for Nike every year. This may weaken brand equity and have an impact on the brand's overall perception. Additionally, the market's availability of counterfeit Nike goods reduces the company's ability to generate money, which translates into decreased profitability. Furthermore, such enormous losses have an impact on the economy as a whole, due to the lingering effect of more and more counterfeit goods. Out of all the manufacturers in the world, China leads everyone in producing counterfeit goods, as around 63.2 percent of customs seizures from 2011-2013 were from China, and it makes up for around 8% of China’s GDP (Holistik, 2017). Since consumers have the choice to move to other companies , the replica items have somehow damaged the brand's reputation. Despite Nike's long history of excellent brand positioning, given the abundance of fake items on the market, buyers may decide to switch to products supplied by Nike's competitors if the current trend continues. This is a more serious issue than merely lost sales since customers might not be as devoted to a business because fashion trends shift so quickly. Even for professionals, it may be quite challenging to tell the difference between authentic and counterfeit goods since they are so hard to tell apart. The problem here is people around the world are unaware of the counterfeiting going on, and Nike has not done much to educate them through their strong global marketing channels. Strategic Decisions and Action/Backup Plans

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