Brand Management Of Nike

Nike is one of the leading brands in the sportswear and sports shoes industry. However, the company is considering possibilities for expanding its markets and entering new markets with new products. At this point, it is possible to refer to Pulsation, the new sports drink from Nike, the product totally new for the company. At first glance, the decision of the company to launch a new product is absolutely unexpected, but, on the deeper reflection, the decision of the company turns out to be reasonable, taking into consideration that the company creates the new sub-brand that can open the way for Nike to the new, huge and attractive market which opens wide opportunities for the successful marketing development of the company in the new segment of the market. The sports drink is the reasonable choice for Nike because the product is developed within the sports framework, where Nike traditionally operates but the introduction of the sports drink is apparently the new direction in the development of the company. In such a way, Nike apparently attempts to diversify its product line and introduce new products to enter the new industry that means that the company focuses on the diversification to enhance its competitive position in the global market looking for new option to accelerate its business development, but the introduction of the new product will need the promotion of the new brand to make it attractive to customers and successful in marketing terms.

1)Current brand inventory

A) The brand elements

Today, Nike is a renowned brand and the company is well-known worldwide. Basically, customers can recognize the brand easily, through its logy, promotional slogans, and the overall image of products created by Nike. At this point, it is worth mentioning the fact that the brand of the company is particularly popular, where Nike operates for a long time. For instance, historically, Nike was traditionally strong in the US, the EU and other developed countries, where Nike was traditionally strongly represented and its brand is recognized as one of the leading brands in the sportswear and sports shoes industry.

The process of globalization opened the way for Nike to expand its business further and today the company is really a global company that operates worldwide (Vishwanath & Mark, 1999). At this point, the popularity and recognition of the brand contributed consistently to the progress of the company and its penetration into new markets. The brand’s perception is traditionally positive and many customers prefer Nike as a reliable and high quality brand.

B) The product line and categories for the brand

Traditionally, Nike focused on the sportswear and sports shoes production mainly. This is why the brand was traditionally associated with sportswear and sports shoes industries and related products. The company expanded its business internationally and became one of the leaders in the sportswear and sports shoes industry.

On the other hand, in recent years, the company has started to diversify its product line offering new products. For instance, the company introduced innovations in sportswear and sports shoes manufactured by the company (Quelch & Hading, 1999). But Nike did not only introduce innovations in the new products but also attempted to create new products and enter new industries. However, Nike is still the most successful in the sportswear and sports shoes industry, while its new product line has not brought the company such a success as sportswear and sports shoes so far.

C) The distribution strategy

As the company holds a strong position in the sportswear and sports shoes industry, Nike has to maintain the effective distribution strategy. In this regard, the company uses the intensive distribution strategy to sell its products worldwide. The company cooperates with retailers, who are ready to sell products of the company (Volti, 2005). In addition, the company uses the network of its own stores and cooperates closely with diverse sport franchises. The latter is particularly noteworthy because it implies the long-run cooperation between Nike and sport franchises. Nike often offers sponsorship services, while sport franchises open their fan stores to sell Nike branded products to their fans. In such a way, the company distributes its products internationally using diverse network of distribution.

D) The current promotional strategy

As promotion plays an important part in the successful business development of companies, Nike pays a lot of attention to the development of its promotional strategy. In this regard, it is worth mentioning the fact that the company focuses on the celebrity endorsement as the core of its promotional strategy. Nike promotes its brand rather than specific products to make its brand even more recognizable than it is at the moment. The celebrity endorsement has proved to be a very efficient promotional strategy and company still uses this strategy to maintain its brand popular and recognizable.

E) The current pricing strategy

The pricing strategy of Nike is oriented on the development and maintenance of effective and competitive prices. In this regard, the company attempts to reduce the price of its products shifting the production from developed countries to developing ones. As a result, the company has managed to decrease the costs of production, while the reduction of the costs of production allowed the company to set more competitive price decreasing the price and attracting more customers to its products. At the same time, Nike can and does sell its products at the higher price compared to the average price in the market due to its brand. The company invests into the promotion and maintenance of its brand that need costs but, at the same time, customers have to pay the higher price for the brand of the company, although its products may be similar to products of other, less renowned companies and popular brands in terms of quality or their features.

2)New category, competition and market analysis

A) The market segment

The introduction of the new product by Nike was determined by growing concerns of the company about the enhancement of its competitive position and improvement of the financial performance through expansion of its market share and entering new markets. In this regard, the decision of the company to introduce Pulsation, the sports drink introduced by the company aims at the breakthrough of the company in the new market, the market of sports drink (Olins, 2003). In fact, the decision of the company to launch Pulsation was driven by concerns of the company with the possibility of entering the segment of sports drinks which are drinks destined for professional sportspersons as well as individuals, who are practicing sports on the regular basis.

The positioning of the drink in the sports drink segment of the market is important for Nike because the company operates in the sport-related industries. Therefore, the drink production should also have the sports background. In this regard the company attempted to take a stronger position in the sports drink market with its Pulsation.

B) The major competition for this segment

Pulsation is the sports drink that faces the competition from the part of other companies which produce similar sports drinks. At this point, it is worth mentioning Gatorade, a sports drink that holds one of the leading positions in the global sports drink market. Nike traditionally attempts to take the leading position in the market (Roll, 2006). This is why the company will challenge the position of Gatorade as one of the leaders in the global market. However, Nike is likely to face considerable difficulties with taking the lead because its Pulsation is the new product, while Gatorade has already gained the popularity among customers and Nike has to promote its product and enhance its position in the global market.

C) Proter’s five forces mode

At the same time, in order to assess marketing prospects of Pulsation, it is important to focus on key forces that affect the marketing performance and competitive position of the new sports drink produced by Nike (Viardot, 2011). In this regard, the bargaining power of suppliers is high at the moment because today companies producing sports drinks can count on a large number of suppliers because of the high demand in the market. As the demand is high, suppliers offer their products to large manufacturers, such as Nike. In such a situation, Nike can use the full potential of its brand to introduce the new product successfully and to take the leading position in the market. Suppliers are naturally oriented on reliable brands and Nike is the attractive brand for them. This is why Nike can count on stable and multiple suppliers, which can provide ingredients essential for the production of Pulsation.

The bargaining power of customers is also high. At this point, it is worth mentioning the fact that the growth of the customer interest to sports plays the key part in the enhancement of the position of Nike’s sub-brand, Pulsation. As customers are interested in sports, they are likely to buy sports drink produced by the company (Traverso, 2000). Nike can use its position as one of the leading companies in sportswear and sports shoes industry to reach the target customer group faster. Nike is recognizable brand among sportspersons. Therefore, they are likely to buy the new sports drink from the company because they are confident in the brand and are ready to buy sports drink from the company.

The threat of new entrants is high because the market of sports drink is not saturated so far and naturally many companies are interested in the development of its business in the field of sports drink industry. Sports drinks are attractive for new entrants because companies count on high profits because the sports drink industry is growing. In such a way, the growth of the industry makes the business profitable and attractive for new entrants. On the other hand, such behemoths as Nike can raise barriers to entry substantially preventing minor companies. In such a way, the company can raise barriers to entry, if it enters the sports drink industry and raises the barriers fast.

The threat of substitutes is relatively high because many companies attempt to introduce healthy drinks. However, healthy drinks are not exactly sports drinks, which have different qualities and features. However, customers still can prefer other drinks, for instance, healthy drinks instead of sports drinks offered by Nike. The introduction of the sports drink should be accompanied by the effective strategy that can help to enhance the position of Pulsation in face of potential substitutes which can steadily push out Nike’s sports drink from the market.

The intensity of competitive rivalry is medium at the moment. At any rate, the sports drink market is not fully saturated so far and the industry can keep growing. In such a situation, Nike can use its financial potential and brand image to accelerate its business development in the sports drink industry. Pulsation can be highly competitive due to the popularity of Nike brand. In addition, Nike can use existing distribution channels for its sportswear and sports shoes as well as other products. The competitive rivalry raises the problem of the effective promotion of the product in the market to take the competitive advantage in the market.

3)Brand extension

A) The brand architecture

The brand architecture involves the brand and sub-brand. Nike is the mainstream brand that owns Pulsation. Pulsation, in its turn, is the sub-brand of Nike. The company focuses on the promotion and effective position of its sub-brand to reach the target customer group. At the same time, Nike needs to create the reliable sub-brand since customers should be as confident in Pulsation as they are confident in Nike. In this regard, the company can use the power of the primary brand, i.e. Nike brand. The complex architecture of the brand is determined by the complexity of the organizational structure of the company. In such a way, the company should pay attention to the promotion of the new sub-brand as the powerful brand that can gain the large share of the market. The role of brand can hardly be underestimated in the contemporary business environment. In such a way, the company can reach a considerable success in the market, in case of the enhancement of the brand image and its popularity in the world.

B) The brand strategy for the new product

The pricing strategy of the new product should be oriented on the average price in the industry. As Nike is just entering the sports drink in the market, the company should not set the price above the average price in the market because such price would put Pulsation in a disadvantageous position in the market. Customers will not buy the new product at the high price, even if the product is introduced by Nike, i.e. a renowned and popular brand.

The distribution strategy may involve the use of the distribution channels that Nike has at the moment. As Nike operates worldwide, the company can use the same distribution channels using its international outlets to distribute its sports drink (Riezebos, et al., 2003). At the same time, the development of the distribution strategy for Pulsation will need the focus on large retailers oriented on the sales of sports products, more precisely sports nutrition and drinks. Obviously, sports drinks cannot be sold next to sports shoes. Instead, the company should use either large sports retailers, where the company can sell diverse products, including the sports drink.

The product strategy is also important since it determines the marketing strategy of the new product (Williams, 2004). The sports drink produced by Nike should focus on the development of sports drink that is recommended for professional sports persons. In such a way, the new product strategy should focus on the enhancement of the new brand image of Pulsation. Pulsation should become the new brand that is recognizable by customers that attract them to the sports drink produced by Nike.

Brand elements are crucial for the successful introduction of the new product in the market. In this respect, the logo of Pulsation should mirror the main brand of Nike and bring in some new elements which distinguish the sub-brand from the main brand. The name of the sub-brand, Pulsation, mirrors the dynamic as the distinct feature associated with sports. The packaging of the product should consist of the bright product with the logo of Nike and Pulsation. The character of the new product should convey the idea of dynamic and powerful nature of the new product. Pulsation should bring health and energy to customers, who consume it. The slogan of the new sports drink should emphasize the nature of the drink and its hidden power and may be like follows: “Drink Pulsation, Drink Power”.

The promotion strategy may involve the same strategy used by Nike for other products. The company can use the celebrity endorsement to promote its new sports drink. At the same time, the company should use diverse media available at the moment, including internet and television as the mainstream media. The company may also try using social networks to reach the target customer group. The advertising of Pulsation should be carefully planned and combine the celebrity endorsement with the communication of the clear message that Pulsation is the best sports drink at the moment. The sales promotion should include the close work with large retailers, who may grow interested in Pulsation, if they understand the full potential of the sports drink and its attractiveness to the target customer group. The company can also try using the personal selling to back up its promotion strategy.

Public relations are crucial for the effective promotion of the new product because public relations determine, to a significant extent, the branding of the new product in the global market. Nike should build up positive relationships with the target customer group through sponsorship and organization of socially significant events. In this regard, the event sponsorship may be an efficient tool that Nike can use to promote its sports drink successfully.

4) Conclusion

Thus, taking into account all above mentioned, it is important to place emphasis on the fact that the introduction of the new sports drink, Pulsation, by Nike may raise substantial problems because the company should be able to launch a new product line. Nike has had no experience of producing sports drink so far. Nevertheless, Nike is a popular and recognizable brand. The company has substantial financial resources and extensive experience that can help to reach the target customer group in a relatively short time through aggressive promotion of the new brand. At the same time, the company can raise barriers to entry to prevent new rivals from entry the market and, therefore, Nike can become of the leaders in the sports drink industry.

 

5) References:

Olins, W 2003, On brand, Thames & Hudson, London.

Quelch, JA, and Hading, D 1999, ‘Brands versus private labels: fighting to win,’ in Harvard business review on brand management, eds GS Hardie & LM Lodish, Harvard Business School Press, Boston, MA, pp. 23 – 50.

Riezebos, R, Riezebos, HJ, Kist, B, Kootstra, G 2003, Brand management: a theoretical and practical approach, Pearson Education, Harlow, Essex.

Roll, M 2006, Asian brand strategy: how Asia builds strong brands, Macmillan, New York.

Traverso, D. 2000. Outsmarting Goliath. Princeton: Bloomberg Press.

Viardot, E. 2011. Successful Marketing Strategy for High-Tech Firms. New York: New Publishers.

Vishwanath, V, and Mark, J 1999, ‘Your brand’s best strategy,’ in Harvard business review on brand management, eds GS Hardie & LM Lodish, Harvard Business School Press, Boston, MA, pp. 169 – 188.

Volti, R. 2005. Society and Technological Change. New York: Random House.

Williams, J. 2004. History of Sports. New York: Random House.

 

The terms offer and acceptance. (2016, May 17). Retrieved from

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"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: March 28, 2024]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]
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