Nike - a Marketing Case Study

MARKETING ESSAY

Select a product that you have been using for some time. How the company that markets this product creates value for its customers and captures value from them in return?

According to management guru Peter Drucker, “The aim of marketing is to make selling unnecessary.” (Kotler et al., 2013). This statement may raise questions, but my understanding is that successful companies excel by developing their products on the basis of two factors. Market requirements and keeping their customers perspective in mind to meet these requirements. They achieve this by designing and implementing marketing strategies that create value for their customers and build strong customer relationships. In return, they capture value from customers in the form of profits and customer loyalty. Which means, a company need not necessarily try to sell its products but create a system through which customers will want to buy its products.

 This essay aims to explain concepts that companies implement to make their products desirable to a customer and how in return this benefits the company. Being a loyal customer, ever since buying my first Nike sports shoe back in 2006, it does not surprise me that Nike is the global leader in the athletic footwear industry. With a market capitalization of 100.3 Billion dollars (NYSE.com, 2016), Nike is way ahead of its nearest rival Adidas AG that has a market capitalization of 23.6 Billion dollars in comparison. (Bloomberg.com, 2016).

The New York Stock Exchange (NYSE) lists Nike as a company that “designs, develops and markets footwear, apparel, equipment, and accessory products. It is a seller of athletic footwear and athletic apparel. It sells its products through self-owned in-line and factory retail stores and websites.” (NYSE.com, 2016).

Creating value for customers and building customer relationships involves understanding the market place and the customers’ needs, wants and demands. (Kotler et al., 2013). In 1971, Running tracks were transitioning from cinder to artificial-surface tracks. Nike co-founder Bill Bowerman who was a track and field coach at the time had been looking for a way to provide athletes a competitive edge. Bill was trying to create a lighter and faster a sole that would grip equally well on grass surfaces. This led to the creation of the iconic waffle sole that led to the dawn of an athletic empire. (Peterson, 2015). This mentality of the founder demonstrates the company’s understanding of the market place and value creation for customers. It is a strategy that has been implemented till date through extensive investment in design and development of its products. One such example that targeted the millennial customer base was the innovation of a tracking chip called the Nike+Ipod Sports Kit, in collaboration with Apple. This was a wireless system that connected footwear to an Apple device that gave real-time information to the user about distance, calories burned and pace that could even be accessed after the run. (Apple.com, 2006).

In order to sustain and grow a successful business, companies need to design customer driven marketing strategies and construct integrated marketing programs that deliver superior value when compared to competitors. (Kotler et al., 2013).
Analysis of Nike reveals that it has grown to be a global corporation
through its customer driven marketing strategy, which rests on a favorable brand image. Its presence is felt worldwide through its distinctive Swoosh logo and its advertising tag line, “ Just do it”. Another interesting strategy employed by Nike to influence is customer base is its use of sponsorships of distinguished athletes and sports teams in order to grow and sustain brand promotion. (Deng, 2009). As a customer, what influenced me to buy my first Nike shoe was the fact that Football legend - Ronaldinho used them as well. This was during the time of the 2006 World FIFA cup that Nike devised an elaborate advertising campaign. It endorsed a vast majority of the powerhouses of the football world and was called ‘Joga Bonito’. The message of the campaign was to promote fair play (Joga Bonito – means play beautifully in Portuguese) through advertisements. The players showboated their skills in various settings including streets, locker rooms, football grounds and their individual houses. For a customer, Nike created a superior value-proposition of its brand compared to its rivals through segmentation and by supporting fair play apart from the fact that superstars were promoting the use of these shoes that supposedly improved their game.