Nike Entry Strategies in a New Market
Nike is a globally known and a leading supplier of sports shoes and apparel. It controls about a half of all athletics shoes in the world market. Founded in 1962, the company’s marketing strategies rent upon its brand image which is favored and has evolved to a multinational sports image over time (Carbasho & Greenwood Press, 2010). Nike supply high quality products to more than 100 countries with its target areas in America, Asia and European markets. Through innovation and attractive designs, the company has managed to attain a notable legendary position in the world.
Nike has a significant range of a target market differentiated by the different groups of people who need its products. The company aims to meet the requirements people of all ages in various categories. This strategy has enabled the company to access the maximum number of customers and make enough profits (McDonald, Tu%u0308selmann & Wheeler, 2002).
The marketing strategies
Nikes immediate target consumers are the sportsmen particularly the athletes. The target strategies include sponsorship deals to celebrity athletes and institutional athlete teams. The sponsorship strategy is particularly successful due to its ability to a large number of their target customers. The teams can as well buy track items in bulk and supply to members.
The mission of Nike Company is to exceed all leading athletic companies and make it popular in the world. The company’s goal of maintaining a leading position has to be met by supplying quality products with innovative designs. This attracts the highest number of customers from all aspects. The Nike’s top management guarantees all their customers of the availability of all kinds of products in their leading stores and markets. Nike also focuses on providing high quality products at lower prices in order to maintain their high market share in the market.
The distribution strategies embraced by the company can either a good marketing edge or make them lag behind other potential market leaders. An efficient product distribution strategy is a guarantee for more sales and profits. Delivering the right product to the right customer at the right time improves utility and also increases customer satisfaction and loyalty. Therefore, if the company requires entering a new market, these factors have to consider arriving at the best decision (Nike, 2001). Some of the possible strategies of new market entry include the following.
In this model, Nike allows entrepreneurs to use the company’s trademarks and strategies in exchange of a franchising fee, and loyalties based on revenues. Nike in this case also provides the franchisees with support facilities such as advertising and training as part of the franchisee agreement. This mode of distribution strategy is faster and cheaper than adding Nike managed stores in the US. This is because it costs the parent company less than when new stores are run by third parties. On the other hand, this mode of market entry may be less profitable as the parent company enjoys only a percentage of the earned profits.
Joint venture with local companies
This is a contractual agreement that would join Nike Corporation with other local distribution companies serving the geographic regions of the new markets. The purpose for this particular venture is the distribution of products to the local market. In a joint venture agreement, all parties agree to share both profits and losses in a given proportion. This strategy is one of the most acceptable to gain entrance into a foreign market. Foreign companies venture jointly with domestic companies who have the proper knowledge of the market. The foreign company generally business knowledge and practices into the venture, while the domestic company has the requisite legal documentation and a good market perception.
This is a company whose stock is fully owned by another company (parent company). This can happen though acquisition or an outright purchase of the rights of another company. In this case, if Nike has an ambition of penetrating this foreign market effectively, acquisition of an already existing company may be of great importance. However, in case the acquired company had weak market share or had poor perception in the eyes of the customers, the resultant company may not be guaranteed a success (Root, 1994).
Therefore, the best marketing and distribution strategy that would fit the Nike situation may be settled after a clear analysis of its strengths and weaknesses. On the foregoing, franchising appears the best option as a startup strategy for this new market (Hartman & Werhane, 2009).