Marketing Audit
Your entire Paper is due this week. You should combine all information gathered over the past 3 weeks
into one organized, cohesive report. You should also include a brief executive summary and set each
week’s content in the context of the relevant literature. End the paper by responding to the following:
� Identify at least three short-term steps that the company can take to improve its overall marketing
effectiveness. Provide details of specific activities in which the company should engage.
� Identify at least three long-term steps that the company can take to improve its overall marketing
effectiveness. Provide details of specific activities in which the company should engage.
� In addition, include a discussion of the importance of the marketing audit that references scholarly
literature and explain how the audit can help a company identify key issues.
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MARKETING AUDIT
Remember to include all references (in correct APA format), both scholarly and first-person interview, that
you have used in your research.
Abstract
This paper provides a macro-environment audit of a selected company, which is Nike,
Inc. The external influences that affect Nike including the demographic, economic,
environmental, political, as well as cultural factors are described in an in-depth and
comprehensive manner in this paper. These factors cannot be controlled by firm and at times
they present threats. Nonetheless, changes within the external environment of a firm also create
new opportunities (Kotler & Keller, 2012). The person whom I intend to interview is Davide
Grasso, the Vice President, and Global Marketing manager at Nike.
Executive Summary
Nike, Inc is one of the multinational enterprises in the United States of America that designs and
also manufactures sports apparels, foot wares, equipments among other accessories. Its major
production subsidiary is Converse Inc, a company that specializes in designing and distribution
of casual apparels, foot ware, and other personal sports outfits. Hurley International Company,
specialiases in designing, marketing and distribution of sports ware and equipment for the youth.
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Nike has adopted a wide range of marketing and communication strategies that have enabled it to
achieve a lot of success in its marketing activities and revenue volumes. Despite its successes,
Nike has also suffered setbacks in its journey to success. Nike had to contend with several
accusations of child labour abuse and wage exploitation in parts of Asia. Several strikes have
also hit some licensed contractors working for Nike in China.
These activities have affected the marketing effectiveness of Nike’s products in several countries
especially those countries that uphold fair treatment of employees and respect for the rights of
employees to a safe working environment.
- Demographic Factors
Nike makes its products not only for women and men, but also for children of all ages.
The target market for Nike’s products comprises females and males who are between the age of
18 years and 35. This age-group continues to increase every year, which presents a major
opportunity for Nike’s products. People of all ages today are more health conscious than they
used to be in previous years. As such, increasingly more people are actually choosing to join
fitness clubs. Consequently, there is an accompanying growth for demands of fitness products
particularly exercise equipment, shoes and apparel (Nike, 2014). Nike can position itself to
exploit the opportunity brought about by this increase in demand as younger and older people are
looking for sports equipment, apparels and shoes. Moreover, the female’s athletic market is also
on the increase as the number of collegiate athletes have risen considerably from just a few
thousands 5 decades ago to nearly 1 million at present (Nike, 2014). - Economic Factors
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In response to the recent economic developments and trends characterized by a slowing
economy which has caused consumer purchases to reduce, Nike has been greatly affected.
Material prices and labor costs increased. The economic recession, which was the company’s
biggest threat, resulted in weak sales for Nike (Nike, 2014). The actions that Nike is taking in
response to the recent economic recession include increasing sales in China which experiences
robust economic growth. In essence, sales in the Chinese market and in other parts of the globe
were used by Nike to make up for weak sales in Europe, Australia, Japan and North America.
Not only did Nike use the Chinese market to fight recession, but it also cut a total of 1,750 jobs.
Nike also cut its marketing during the recession (Rogoway, 2009).
- Environmental Factors
To make its products, Nike is presently reliant on the availability of natural resources
including energy, water and raw materials. The cost of competition for these resources would
rise as these resources become more and more scarce (Nike, 2014). Greenpeace reported that
Nike had relationships with 2 Chinese textile processing factories that were producing dangerous
chemicals and polluting 2 of China’s major rivers with chemicals that were hazardous (Hunt,
2011). With regard to the steps taken by Nike on the subject of pollution and conservation, Nike
is committed to delivering innovative new products in ways that are more sustainable. To
properly manage scarce resources, Nike develops and uses more sustainable and more recycled
materials, as well as leaner manufacturing processes (Nike, 2014). - Technological Factors
Product innovation is essentially a continuing process and is of major importance to
staying ahead of the competition (Oliva, 2006). In this industry, corporations invest considerably
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in Research and Development so as to sustain the new demands of today’s contemporary athlete.
Nike has employed a lot of specialists who include athletes, industrial designers, engineers, as
well as biomechanics to collaborate in the design process (Nike, 2014). Product technology
generally has to evolve as fitness also evolves so as to gain an advantage. It is of note that Nike
introduced into the market Nike Shox, a product that greatly revolutionized the cushioning foam
utilized in shoes. In addition, Nike also worked together with Apple in launching new footwear
and apparel that would easily carry the iPod of the consumer (Nike, 2014).
- Political Factors
There are several changes in regulations and laws that may affect marketing strategy and
tactics used by Nike. Several states such as Ohio have established Environmental Pollution
Agencies (EPA) pollution control laws that are designed to prevent environmental pollution and
generally to protect the environment (Esworthy, 2013). Such federal and state laws on pollution
greatly affect Nike’s marketing tactics and strategy. The United States Government has also put
in place price controls on prices which could be charged for services and good within the
marketplace. Such price controls are mainly aimed at maintaining the affordability of products,
and to slow inflation. Moreover, the Consumer Product Safety Act gives the Consumer Product
Safety Commission the mandate to formulate safety standards and pursue recalls for goods
which present significant or unreasonable risks of death or injury to consumers (Esworthy,
2013). The laws on Equal Employment Opportunity (EEO) forbid specific kinds of work
discrimination in some workplaces. In the United States, the Federal Trade Commission
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regulates and oversees marketing and advertising law. These laws could possibly impact many of
Nike’s areas of business, for instance how the company labels its products, how it carries out
telemarketing and email campaigns, and how Nike advertises to children (The U.S. Small
Business Administration, 2014). Laws on advertising protect consumers by demanding that
advertisers should be truthful regarding their products and be able to validate their claims.
- Cultural Factors
Nike’s brand is one of the most recognizable worldwide. The public’ attitude towards
Nike’s products is that they are expensive, particularly the sneakers, and are of high quality.
They are also durable products. However, a new reasonably priced series of Nike products for
consumers in Asia made Asian consumers to think of Nike’s products as affordable. Changes in
customer lifestyles such as doing more exercise to keep fit might affect Nike since there might be
an increase in demand for the company’s sports shoes, apparel and equipment. - Markets
The major market segments of Nike Inc are mostly located in North America, Western Europe,
Japan, China and other emerging markets. The markets have been expanding globally as well as
the volume of sales. In 2013, the operations grew by 11% as a result of the popularity of the Nike
brand and all the segments except China registered improved sales in the year 2013. In the same
year the total sales turnover were $20.117 billion while the assets and liabilities for the same
period were $17.584 and 6.428 billion respectively. The total market capitalization for Nike Inc.
amounted to $64.75 billion in 2013. The inventory turnover for the same period was 4.3
compared to the previous year which was 4.3. The total revenue for Nike Inc for the year ended
2013 amounted to $27.8 billion
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- Customers
North American is the leading market segment in terms of sales volume which is followed by the
emerging markets and China. The other markets are Western Europe, Japan and Central and
Eastern Europe. Most of the segments make majority of their sales through wholesale outlets.
Nike Inc products are highly rated both by its direct competitors like puma, Reebok or Adiddas
and its customers. The Nike’s + sports band is a type of shoe that is universally rated as one of
the best basketball shoes globally. It records or provides the distance covered when running and
also the time taken. Nike brand is also common with the youth culture especially the urban
fashions. - Competitors
Nike Inc is the leading company in footwear industry and it controls about 47% of the entire
footwear industry while Reebok and Adidas control 16% and 6% respectively. Reebok is the
second largest manufacturer of footwear in the US after Nike Inc. Adidas market capitalization
for the year 2013 was 15.55 billion while its quarterly growth rate is 2% compared to Nike’s
11% for the same period. The total revenue for Adidas for the year ended 2013 amounted to
18.59 billion as compared to Nike’s $27.8 billion for the same period. Nike’s operating margin
was 0.13 compared to 0.07 for Adidas for the same period while the earnings per share were 2.93
and 2.2 for Nike and Adidas respectively. The gross operating margin was 0.45 for Nike
compared to 0.49 for Adidas. (Nike, 2014)
Adidas is enjoying one of the fastest growths in brand expansion. Their positive attributes have
been shielded from any form of bad publicity by the two largest brands that are Nike and
Reebok. (Van de Ven, 2008) They adjusted and expanded their manufacturing operation
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strategies to specialized outsourced services in the early 60’s from Germany to cheaper
economies in Asia. But their greatest weakness is that they still do not have an operation code of
conduct for outsourced agencies like Nike and Reebok. (Nike Annual Report, 2013) Adidas is
currently considered to the worst employer in footwear industry and it’s largely due to its
subcontracted or outsourced work in outsourced factories in Asia. (Van Dusen, 1992)
- Distribution and Dealers
The largest earners for Nike Inc are the wholesale distributors which control majority of its sales
volume. The inventory turnover or efficiency ratios for the year 2013 was 4.3 compared to the
previous year which was 4.3 while the total revenue for the year ended 2013 amounted to $27.8
billion. Nike has outsourced most of its manufacturing business to China and other parts of Asia.
Nike Inc also operates thousands of retail outlets in North America and also in other selected
countries globally. The future ordering service or program facilitates the retailers to receive
advance orders from customers and deliver them when they are due. In 2013, 87% of all the US
sales were made under this program. (Kotler & Keller, 2012)
Nike also sells its products through their own Direct to Customer sales operations by utilizing the
services of mix independent distributors, sales representatives globally and other licensees. Nike
also operates the NIKETOWNS and other outlets for their employee-only stores. (O D’Esopo, &
Almquist, 2007) - Suppliers
The suppliers of Nike are mostly located in Asia and other parts of the world. All the footwear
for Nike is manufactured outside the US. China and Vietnam manufacture 36% each of Nike’s
footwear production while Indonesia and Thailand manufacture 22% and 6% respectively of the
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total production. (Nike Annual Report, 2013) Other factories that manufacture for their primary
markets are located in Argentina, Brazil, Mexico and India. The major suppliers of Nike’s raw
materials which are generally canvas, leather, nylon and polyurethane that is used to manufacture
the Air-sole components are from China and Thailand. Since the year 1972, Sojitz International
Corporation of America and Nissho Iwai Corporation from Japan has handled the bulk of Nike’s
raw materials in the form of importing and exporting the requirements of the major production
facilities across the world. They also finance the some of the operations and also handle the
transporting logistics for the subcontractors.
- Facilitators and Marketing Firms
Nike operates its marketing strategy by sponsoring celebrity athletes, college teams and other
international professional teams to market its branded apparels and footwear. Nike has an agency
known as the Wieden + Kennedy popularly known as the W+K and its responsible for creating
its advertisements on most broadcasting stations and features mostly on the New York marathon
and other international events. (Lee & Broderick, 2007) Nike has won several accolades in the
international scenes due to its effective advertisement including the Emmy advertisement awards
and also in the Cannes awards events. Nike pursues an aggressive marketing policy that favors
its quality products. (Hauser, 2007) The core competencies of most footwear industries is to
provide quality footwear and they concentrate largely on the research and development of their
products while they leave the production and manufacturing operations to outsourced
contractors. The main companies form the policies that guide the technological expertise,
marketing and distribution networks. These companies gain in the form of reduced capital needs
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and risks, lower wages and management requirements when they outsource their manufacturing
operations.
In conclusion, Nike has adopted several communication strategies to market its products and also
to track vital information from the internet and also from other broadcasting stations.
(Schibrowsky, Peltier & Nill, 2007) Internet marketing and other email technologies are utilized
by Nike to reach potential clients throughout the world. The revenues for Nike Inc have
continued to rise despite economic challenges that exist globally.
- Marketing Function Audit
13.1. Products
Nike’s product line objective is based on performance oriented strategy that seeks to
manufacture foot ware’s and sports apparels that can endure the rigorous training and
competition pressures to achieve top most performance for their clients. For clients who purchase
the products for casual use, Nike Inc aims at providing the best apparels and foot wares that is
based on extensive research on personal performance and comfort.
Nike Inc product and brand overall strategy is mostly based on sports performance where a
major of its revenues are derived from. But the overall casual market for its products is far larger
than the sports market. More product branding and strategy should be focused on the casual
market to achieve higher sales on the emerging market.
13.2. Price
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Nike’s pricing objective are based on the competitive market that also aims at providing the best
sporting and casual foot ware and apparel in the market. Nike products are priced slightly higher
above its competitors due to its products higher quality and endurance aspects of its products. Its
pricing policy is based on value for the price offered but occasional its marketing strategists
conducts assessments on the overall market reaction to its prices in various parts of the world
using different sampling procedures especially in the US which provides almost 45% of its total
revenues.
13.3. Distribution
Nike’s Converse Inc specializes in designing and distribution of casual apparels, foot ware, and
other personal sports outfits for the general public and sportsmen while Hurley International
Company, specialiases in designing, marketing and distribution of sports ware and equipment for
the youth, colleges and other sports events for teenagers. Besides the wholesale customers, Nike
also sells directly to customers through the Direct Consumer Operations. Nike has a global
presence in most of the countries worldwide and its marketing strategy is very effective and
adequate. (Beverland, Napoli & Yakimova, 2007) Its product is available to most of its
consumers globally besides the normal orders that can be placed under the Direct Consumer
operations. (Hauser, 2007)
- Integrated Marketing
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Nike has won the Emmy Award for best commercial on two occasions in the years 2000 and
- (Nike Annual Report, 2003) Its advertising objective is to create a trademark that is
associated with excellence performance in the track and field for athletes and other sportsmen
and women and also for casual use.
The advertising media for Nike is well chosen and effective. The decision to use sports
celebrities to market and promote its products and also to demonstrate the performance of their
technology and design is proving to be the best decision. Nike Inc signed in the NBA player
Mike Jordan, in the year 1984, and its revenues increased dramatically hence the introduction of
the Jordan brand name in one of its foot ware products. (Beverland, Napoli & Yakimova, 2007)
Nike adopted the internet and email marketing management technologies since its inception in
the early 2000 and it’s currently using the broadcast and narrowcast satellite communication
technologies to drive its multimedia marketing campaigns. (Schibrowsky, Peltier & Nill, 2007;
Szmigin, Canning & Reppel, 2005) - Strategy Audit
15.1. Business mission
Nike business mission is clearly stated in market oriented terms and represented wholly by its
trademark in all its designs. (Nike Annual Report, 2013) In the year 2010, the value of its brand
alone was estimated to be worth more than $10.7 billion. Nike’s brand name is very feasible and
it actually leads its sales. Its trademark represents all its mission strategies and accomplishments.
15.2. Marketing Objectives and Goals
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Nike’s marketing objectives and its goals are well stated, adequately enough to plan its
marketing and performance operations to facilitate global expansion and achieve highest returns.
Nike’s athletic foot wares for example, are aimed at providing specific athletic use and they have
been designed with the same purpose in mind. (Prahalad & Ramaswamy, 2004)
The company’s objective is appropriate given its competitive nature and huge resources and
opportunities available. These can be confirmed from its huge revenues that are derived from its
sales revenues and the popularity of its products. In the year 2012, Nike posted more than $24.1
billion dollars in its total revenues.
- Strategy
The management of Nike Inc has a clear strategy of achieving its marketing objectives. The US
forms its target segment with an estimated 45% of its entire revenues coming from the US alone;
its major strategies are tailored for the American market. Product positioning refers to the
development and marketing of the company’s products brand as the true and real images of the
company’s major product. (Kotler & Keller, 2012) To form an impressive strategy, Nike has
chosen a communication strategy that is unique and competitive to the nature of its products. The
use of sports celebrities as its promotion strategy has created an effective marketing strategy.
(Nike, 2014) Most of its customers view the Nike brand as an epitome of success something
which influences its pricing policy. (O D’Esopo & Almquist, 2007). It’s a process known as
brand equity and it occurs where the company’s loyal customers are even more willing to pay
much more to obtain their choice of product mostly because of its positioning in the market. - Short-term Marketing effective Improvement Strategies
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To perfect the effectiveness of Nike’s marketing strategy, the short term measures that the
company can take is to polish its tainted image on allegations of child labor in Cambodia and
Pakistan and which were first registered in the 1990’s. The allegations were once again
confirmed by the BBC in the year 2001 who gave an account of six girls who worked more than
sixteen hours a week continuous for weeks on end and without adequate compensation. Also in
April 2014, a strike in China almost grounded the operations of Yue Yuen Industrial Holdings in
Dongguan that was occasioned by poor pay and inhospitable working conditions. The company
is a Subcontractor of Nike Inc. Nike has to prove to the world that it’s an equal opportunity
employer and its policies are not discriminatory on the basis of race, gender or nationality. Issues
of exploitation can gravely taint its image and can have very negative repercussions on its brand
image globally. The company must have a way of reigning in its errant Subcontractors who
exploit the workers notwithstanding the political factors that may be at play in such countries.
One of the marketing strategies that Nike has adopted is the promotion of its product by using
successful sportsmen as way of promoting its products worldwide. Most of these sports
celebrities don various apparels that are branded with Nike’s trademarks and which associate
success to with Nike’s products. However, there are instances where the motive of Nike’s major
objective of portraying success has been marred by the celebrities negative immoral and
unethical behaviors’ like in the case of Tiger woods’ unbecoming conducts outside the field.
Nike Inc needs to do more on researching their sports celebrities before contracting them so as to
improve the effectiveness of its marketing policies and communication strategies.
Nike also needs to improve on its efficiencies in the production process and conduct more
research on affordable raw materials that can be costed affordably. Its pricing policy is way
above most of its potential customers. Nike’s products are more expensive than its rivals
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Adiddas and Reebok. For its marketing strategies to be more effective the prices of its products
must also resonate well with its potential clients.
- Long-term Marketing effective Improvement Strategies
The long term measures may include more research on improvement of the sportsmen needs and
the latest demands on consumer tastes and preferences. For Nike to maintain a sustainable,
competitive and effective marketing strategy efficient methods of evaluation and feedback
analysis must be established and the objectives clearly defined.
The log-term measures should include an effective promotional strategy that will entail long-
term research on all potential sports celebrities and those that aspire to promote the products of
Nike Inc. These measures will ensure that the risk of recruiting incompetent, hot tempered or
immoral promoters would be minimized. Cases like the suspension of Oscar Pictorius due to
negative publicity would have been avoided much earlier before the revelation or publicity of
Nike’s sponsorship details in February 2013.
Cases of inadequate and ineffective advertisement should also be addressed by adopting clear
communication strategies. Competent and experienced promotional designers should be hired to
design and develop effective marketing materials that are required for long-term marketing
strategies. In some cases Nike had to withdraw some advertisement from the market after some
of their marketing phrases were offensive to the public like the Nike 6.0 advertisement.
(Brettman, 2011) - Discussion of the Importance of the Marketing Audit
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The marketing audit has revealed the marketing activities of Nike Inc, its business environment
and also assessed its present and past performance. It has also provided the basis for analyzing its
marketing strategies. As the dynamic nature of the marketing and business environment is
always changing, the marketing audit report can be used as a point of reference or as a tool of
reflecting the constant changes in the business environment internally or externally. External
environment reveal the changing patterns of the industry’s competitors compared to the
company’s development and growth. The external environment audit also reveals the effects of
government policies like taxation and trade policies on the company. The internal audit reveals
the effectiveness of the company’s marketing strategies and also the marketing information
research.
- Conclusion
To conclude, the main aim of Nike’s marketing strategy should not only be business expansion
only but also it should include corporate social responsibility both to its immediate environment
and also for future generations. A short-term victory against its rivals or competitors would be
great for the company and its management but the major aim of the company should be to
maintain a sustainable and a competitive advantage over the rest of the firms in the industry.
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References
Brettman, A. (2011). “Nike courts controversy, publicity with drug-themed skater shirts” . The
Oregonian. Retrieved 2011-06-24.
Beverland, M., Napoli, J. & Yakimova, R. (2007) Branding the business marketing offer:
Exploring brand attributes in business markets. Journal of Business & Industrial
Marketing, 22(6), 394–399.
