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The three main product lines of Nike are sports equipment, apparels, and footwear. Nike is well known among customers due to their wide range of sports equipment. The first product of the company was running shoes but now they also sell a wide range of other products such as shorts, jerseys, shoes, base layers and others. Moreover, they also deal in street fashions such as tracksuits, street clothes such as skirts, jeans, tops, and others (Nike Inc., 2016).
The main target markets of Nike in terms of customers are athletes all over the world. Moreover, currently, the company has turned its focus on three types of customers, which include women, young athletes, and runners. It is noticed that Nike is expanding increasingly in the sports products of these customers because they believe that they would increase their sales level successfully. In addition to this, they target consumers between 18 to 40 years of age (Nike Inc., 2016).
It is noticed that Nike is the leading brand in sports product but still it has to face competition from some of the other sports product providers. The three competitors of Nike are new Balance Athletics, Adidas, and PUMA. The strongest competition that they have to face is from Adidas because many of the customers prefer the products of Adidas in comparison to Nike (Nike Inc., 2016).
Nike is operating in the markets all over the world. The main markets of the brand include North America, Greater China, Western Europe, Japan, Central and Eastern Europe, and Emerging markets. The company has targeted all the main markets of these regions, which shows that they have expanded enormously with their physical stores and online presence in different parts of the world (Nike Inc., 2016).
2. Situational Analysis
2.1. Macro Factors
It is noted that PESTLE is a standout amongst the most essential and compelling technique that frequently utilised by associations to evaluate some important macro factors that affect their business activities in a negative way. Each factor of PESTLE is elaborated below:
Political factor is a basic component that association considered at the time of growing their business operations by evaluating the political environment of the target country or market. In addition, it is found that there is a solid rivalry among the sports retailers in everywhere throughout the world that is the reason they are very conscious at the time of formulating their plans. Moreover, it is vital from the prospect of an association to assess the political conditions, tax charges, duties, and regulations of that nation since it would influence their business exercises negatively (Armstrong, et al., 2014).
This is another essential element that association typically considered while going into different parts of the world. They are entirely cognizant to evaluate the monetary steadiness of that nation since it would help them to plan their procedures suitable. With the assistance of appropriate assessment of the monetary strength of country sports, the retail firm can undoubtedly change their money related arrangement keeping in mind the end goal to execute their exercises adequately (Baron, et al., 2014).
It is noticed that the social variable is a standout amongst the most important component that is considered by the sports retail association at the time of extending their operations in various places or spots. In addition, this element gives them a precise overview about the enthusiasm of individuals with respect to the commodity they offer (Czinkota & Ronkainen, 2012).
It is observed that the innovative component likewise impacts the general business operations of an organisation in a positive way. Hence, nowadays the majority of the associations are entirely quick to lean toward those areas where they can use the innovation effectively with a specific end goal to upgrade the quality and reliability of their items to the most extreme level (Li, et al., 2014).
It is critical from the perspective of an association to consider the legal component before going into different parts of the world. Additionally, it is a core obligation of the top authorities of games retailer association to evaluate this variable nearly with a specific end goal to keep away from every single lawful penalties and hindrance (Doole & Lowe, 2008).
The environmental component is likewise a standout amongst the most basic variables that normally considered by the associations at the time of going to different places. Besides, by surveying the environment of that nation initially, would help them to achieve their objectives and targets feasible (Armstrong, et al., 2014).
2.2. Micro Analysis
2.1.2. Porter Competitive Forces
It is found that Porters five forces model aids in accessing where the force lies in a business circumstance which otherwise called the system for industry analysis and business procedure advancement. Moreover, this considered model is really a business methodology tool that assists in analysing the opportunities in an industry structure. Notwithstanding, the Porters five strengths are discussed below:
Rivalry of Competitors
For the primary power of Nike Inc. organisation, the interior contention is high. The significance of internal contention is the measures the level of rivalry between existing firms. The higher the level of competition the more difficult it is for existing firms to generate high benefits (Băcilă, et al., 2012).
Threat of New Entrants
The second force given by Porter is bargaining power of the purchaser, which is moderately high for Nike Inc. Company. The significance of the bargaining force of purchaser will be the capacity of clients to put the organisation under huge pressure, which likewise influences the client`s affect ability to price changes. In addition, the buyer power will raise if the buyers can change to different suppliers with no challenges, and bring on the organisation to give a higher quality service at a decent cost keeping in mind the end goal to hold the clients (Berthon, et al., 2012).
Threat of Substitute Product
The third force would be the risk of new entrants, which is quite low in the sports retail business. The meaning of this power will be clarified as the possibility of any new organisation that may enter the business sector and influences the opposition inside of the sports goods industry. The likelihood of entering a business sector would be lower if the current brands have a high level of client dependability and the current organisation may respond forcefully to any new participant, for example, having a price war (Malhotra, et al., 2009).
Bargaining Power of Customers
For sports retailers and also for Nike Inc., the risk of substitute is low. This power measures the ease with which customers can change to another supplier/organisation that offer the similar product at relatively low cost (Couturier & Sola, 2010).
Bargaining Power of Suppliers
It is noted that the bargaining power of supplier will be view as a low constraint to Nike Inc. Company. For supplier`s power, it is known not how strong the position of a vendor is and how much the supplier has picked up control over expanding the cost of supplies. However, suppliers are all the more capable when they are focussed and well organise, few substitutes accessible to supplies, switching cost, from one to another supplier might be high (Choi & Rifon, 2012).
2.3. Value Chain
It is noted that value chain is the arrangement of connected activities of a firm completed from the underlying phase of sourcing for raw materials to the last phase of delivering the products to clients. Moreover, this incorporates purchase of raw materials, production, and circulation of the organisation`s items and every action adds to buyer value. On the other hand, Porter recommended that organisations increase the value of their commodity and addition upper hand by considering a better approach to direct the activities in the quality chain. Regarding the chain as a framework which can be reconfigured, perhaps by including or eliminating specific exercises in the process, to empower the organisation to perform pivotal activities along the value chain better to anything its rivals. He also proposed that firm exercises are comprehensively separated into two activities that are primary and support activities (Armstrong, et al., 2014). Primary activities are those activities that are directly linked to the enduring production, promotion, delivery and servicing of the organisation product.
2.1.3. Primary Activities
Some of the most important primary activities are discussed below:
Inbound Logistics: These are those activities that are concerned with getting material from suppliers, inventory control of input resources and warehousing (Baron, et al., 2014).
Operations: These are the procedures of conversion of the input resources into final commodity
Outbound Logistics: Outbound logistics are apprehensive with the circulation of the commodities to the buyers (Czinkota & Ronkainen, 2012).
Marketing and Sales: These are the activities that are performed by firm to perform their sales and marketing operations properly
Service: These might be required to preserve or improve product`s value and might entail connection, customer care and repair services (Falbe, 2012).
2.1.4. Support activities
Support activities are those activities that are not directly intricate in production, but might raise the overall efficient and effectiveness of business to some extent
Procurement: Procurement is responsible for buying all materials important for the organisations activities and value forming actions (Falbe, 2012).
Human Resource Management: HRM activities entail staffing, training and recompensing of workers
Technology Development: Technological development includes R&D, innovations, and knowledge improving abilities, which are important in providing a competitive edge to a firm (Choi & Rifon, 2012)
Firm Infrastructure: Firm infrastructure entails forecasting and control structures, such as finance, bookkeeping, and corporate approach (Armstrong, et al., 2014).
3. Summary Situational Analysis
3.1. SWOT Analysis
Sports retail industry is growing rapidly all over the world. It is noticed that Nike has some particular strengths due to which their business is growing. One of the significant strength of Nike is high brand recognition and loyalty. Moreover, they make use of effective marketing strategies to promote their products among customers worldwide. In addition to this, the strong research and development process is also the strength of the industry that has helped Nike to grow (Couturier & Sola, 2010).
Apart from the strengths, there are some weaknesses as well due to which Nike has to suffer. One of the major weaknesses of the company is that it offers high priced products due to which only certain class of customers are targeted. Moreover, the manufacturing of the products is dependent on international markets. In addition to this, the currency exposure is also the significant weakness due to which the business of Nike might be affected in an adverse manner (Malhotra, et al., 2009).
Operating in the sports retail industry gives rise to some of the opportunities for businesses such as Nike. It is noticed that Nike has expansion opportunity in emerging markets. Moreover, the increasing demand for the brand also serves as the growth opportunity for the business. The growth in the women athlete products is also the significant opportunity (Li, et al., 2014).
Competition is the major threat that is present in the sports retail sector, which Nike has to face. Adidas and PUMA are the main competitors of Nike. Moreover, currency fluctuation and economic recession are also the threat for Nike as they are operating internationally (Malhotra, et al., 2009).
4. Market Selection Process
Markets that are shortlisted for Nike for open their stores and online presence includes Irbid in Jordan, Mutare in Zimbabwe, Sakakah in Saudi Arabia, and Abadan in Iran. The market potential for Nike of these cities is evaluating by using 5 options of 12 C’s Framework.
4.1. 12C’s Framework
Sakakah is the city of Saudi Arabia, which is facing development and growth. It is noticed that Saudi Arabia has invested widely in this country to makes its economy stable. For this purpose, many new government buildings, schools, hospitals and others are developed which this market potential for the Nike. Moreover, Irbid is the city of Jordan, which is counted among the special economic zones of the country because it attracts large scale of investment. This means that Nike has growth potential in Irbid market as it is economical, legally, and politically viable. Another shortlisted market for entry of Nike is Abadan in Iran. It is noticed that there is some economic crisis in the region. However, the government is taking some attempts to revive their economy. Mutare is the fourth largest city of Zimbabwe, which has been shortlisted due to its growth potential (Couturier & Sola, 2010).
Foreign currency fluctuation is the important aspect that has to be analysed in the shortlisted countries in order to launch Nike. It is noticed that currency fluctuation takes place in many of the countries due to which businesses are impacted adversely. It is noticed that in terms of currency fluctuation, Mutare and Abadan has to face the problem as they not very strong economy. While, on the other hand, Sakakah and Irbid do not have much currency fluctuation problem because the government is making efforts to develop and grow their economy (Malhotra, et al., 2009).
4.1.3. Control and Coordination
In Sakakah, employment opportunities are wide which means that company would find competent workers for their business. Nike can hire employees in order to provide before, during, and after sales service. Moreover, in Irbid control and coordination would be effective as there are employment opportunities. While on the other hand, in the market of Abadan and Mutare, the control, and coordination aspect is adverse as the economy is weak due to which unemployment is high. This demonstrates that market potential of the Abadan and Mutare is not as strong as it is of Irbid and Sakakah (Băcilă, et al., 2012).
This is another aspect that is evaluated in terms of market potential in order to determine the efficient market for Nike. Countries like Saudi Arabia and Jordan are vast but in terms of sports retail, there are not very brands. Therefore, it is easy for Nike to target different groups in these regions. While on the other hand, Abadan and Mutare are not economically stable country due to which introduction of this expensive brand in the market would not be suitable for the company (Falbe, 2012).
It is noticed that selling in the internal market needs significant financial investment, long-term planning, skills and time of employees. Attracting financial investment in Abadan and Mutare is not easy for businesses because their economic condition is not very stable. While on the other hand, in Sakakah and Irbid, long-term planning, and financial investment can be made by Nike as they have adequate resources and platform (Băcilă, et al., 2012).
4.2. Screening Criteria
Population (18 to 40 years)
The individuals belonging to this age are selected because Nike products are used by the population belong to this age
Assessment of competitiveness is important because it helps in determining the investment , time and efforts needed by Nike to reach target customers
Evaluating economic stability is significant because if a country or city is economically viable then growth opportunities for Nike would increase
Access to the Internet
As Nike is intended to introduce their online store, it is important for them to evaluate the internet accessible for general public
4.3. Justification of Recommended Market
The two international growth markets that are recommended for Nike to enter in 2017/18 are Sakakah in Saudi Arabia and Irbid in Jordan. This is because the economic condition of these two markets is stable in comparison to other shortlisted markets. It is noticed that growth opportunities in Sakakah and Irbid are strong for Nike because customers prefer to purchase quality products. Moreover, other factors that are considered at the time of selecting these two markets are strong investment opportunities, less foreign currency fluctuation, less competitive market, increased the population of 18-50 years, and sufficient access to the internet among target customers (Armstrong, et al., 2014).
5. Entry Modes for Nike
There are numerous entry modes for an organisation at the time of entering into other parts of the world. However, it is imperative from the prospect of Nike Inc. to consider the most appropriate mode of entry while entering into Sakakah and Irbid for the reason that both the places require different exertions to execute their activities substantially. However, in the considered case of Nike Inc.,does it is noted that don`t have their stores in Sakakah and Irbid and it will be helpful for them to introduce their brand in these particular cities in order to get the maximum benefit from the Middle East market (Băcilă, et al., 2012).
5.1. Franchising for “Sakakah and Irbid”
Franchising includes the franchiser offering branding, ideas, proficiency, and in-fact most features that are required to work in an international market, to the franchisee and the administration inclines to be organised by the franchiser. The franchising technique would be profitable for Nike to use while extending their business in these two cities (Sakakah and Irbid). Moreover, the administration of Nike can quickly expand their business development in these specific areas through licensing that would empower them to give a standard package of their sports items, work framework, and management services (Berthon, et al., 2012). In this manner, the administration of Nike would get the knowledge of Saudi Arabia`s and Jordan markets particularly in regards to capital and individual contribution in the administration framework. The incorporated franchising design helps organisations like Nike to expand their work flexibility while managing in another market and keep up the control of the administration over the rights and business of the organisation (Czinkota & Ronkainen, 2012).
It is found that firms like Nike are more centred around franchising procedure as it empowers an association to incorporate the work kind of centralisation and operational decentralisation to keep up their stream of force among their administrators working everywhere throughout the world. Nevertheless, Nike would strong competition rivalry in the business sectors of Sakakah and Irbid accordingly, it would be imperative for the organisation to create proficient advertising system so is to decide their overwhelming position in the retail sports industry (Baron, et al., 2014).
5.2. Exporting for Sakakah
With the help of exporting, it allows Nike Inc. to embrace their existing model and product line at the time of sending goods into an overseas market for distribution for instance (Sakakah). Exporting might be the good option of Nike Inc. while entering into Sakakah just because of its low cost of execution and its low level of threats. In addition, exporting is one of the most imperative and common kinds of entry into international markets for all sorts of business throughout the world (Armstrong, et al., 2014). However, the range of exportation is quite restricted in terms of transportation expenditures, government charges, market rivalry and local duties and demand; it eradicates the requirement for repackaging, advertising, and arrangement development that other methods needed. However, by exporting products into Sakakah allows Nike Inc. to assess how effectively products will sell and what if any variations are required to the current product so that it executes well (Czinkota & Ronkainen, 2012).
5.3. Ownership for Irbid
If Nike Inc. wishes to own and operate their own business in an Irbid market deprived of associates or other outside effect, this might be their best selection. Moreover, this choice will help the top officials of Nike Inc. to manage their business activities in a more accurate manner. However, the possible rewards are unlimited and might lead to additional growth into more marketplaces and the top levels of business achievement (Doole & Lowe, 2008).
6. Marketing Mix
6.1. Marketing Mix of Nike for Sakakah
Nike is a well-known games retail brand known for their top of the line footwear and attire for games and regular use. Moreover, the production sources of the organisation are situated as per the frim requirement that help them to keep up the stock level in order to meet the demand of customers quickly. Due to the continuous increase in their product line it assists them to get the competitive advantage over their competitors (Baron, et al., 2014).
It is noticed that the products of Nike Inc. are intended to focus on the high-class and exclusive class society that can manage the cost of the top of the line products of the organisation. Moreover, the normal footwear cost of Nike is around 150$ to $200 that could be managed by just a small group of people in a society. In spite of the fact that in the chosen market, the purchasing propensities for the nearby individuals coordinate the criteria of Nike, in this manner, it would be fitting for the organisation to dispatch their item with appropriate planning to accomplish an effective development (Armstrong et al., 2014).
Nike always prefers to deal in their official storeroom while performing their business operations. The organisation has their shops all over the world that helps them to keep their appearance among alternate games retail brands everywhere throughout the world. Nike has likewise incorporated online offers of their product over the world that makes them an overwhelming sportswear organisation in the sports retail sector (Choi & Rifon, 2012).
It is observed that the top officials of Nike Inc. are quite keen to consider all possible and effective ways of marketing through which they can easily promote their products and target their market effectively. However, they often use different commercials, celebrity endorsement, and CSR techniques in order to attain the maximum benefit from their promotional activities (Malhotra, et al., 2009).
People are considered as one of the most important part of any organisation for the reason that they are responsible to deal with the customer on a regular basis. For that reason, it is imperative from the prospect of Nike Inc. to hire competent people in Sakakah store because it would help them to attain their set goals and targets viably. However, these people include customer representative, sales people and so on (Berthon, et al., 2012).
6.1.6. Physical Evidence
Physical evidence is another imperative aspect that should be consider by Nike Inc. in order to present their products in a more accurate way that help them to encourage buyers to even visit their store once (Armstrong, et al., 2014).
The process usually copes with the customer service and an organisation capacity to fulfil the requirements of their valuable clients by responding them quickly about their queries and matters. For that reason, Nike Inc. ought to consider this factor in order to improve their overall performance at any cost (Couturier & Sola, 2010).
6.2. Marketing Mix of Nike for Irbid
Nike is the leading brand that deals in apparel and footwear for sports and is highly preferred by customers all over the world. It is noticed that Irbid is also well known in the sports events as their club named Al-Hussein was ranked 4th in the football premier league of Jordan. This means that products of Nike would meet the needs of customers (Couturier & Sola, 2010).
At the time of setting prices, Nike would have to make sure that customer in the Irbid are able to purchase their product. The normal footwear price of Nike is about $200 which means that not all the individuals would able to purchase such high priced product. However, slight decrease in the price would increase market share of Nike in Irbid, as only Adidas is the main dealer in this category. However, people prefer quality products in this region which means that Nike has to make sure that decrease in price does not incorporate comprise on quality (Choi & Rifon, 2012).
The Nike would have to make sure that their physical store is located in the centre of the city so that it is accessible to potential buyers. They must also target leading stores in Irbid so that customers belonging to different areas are targeted effectively (Doole & Lowe, 2008).
There are different promotional activities that can be used by Nike in order to market their products in the markets of Irbid. Social media is one of the most effective means to market both online presence and physical stores as the target population make use of this platform widely to find their preferred quality product (Armstrong, et al., 2014).
Nike has to make sure that they hire competent and qualified employees that are efficient sales representative and marketing experts so that products are promoted successfully in Irbid. Moreover, it is noticed that there are enough people in the target market of Irbid, which means product of Nike would be in demand (Doole & Lowe, 2008).
It is important for Nike to have efficient customer service assistance because it is the main aspect that represents the effectiveness of the brand. Proper feedback must be obtained and complaints must be answered by Nike to promote their brand in the market of Irbid (Berthon, et al., 2012).
6.2.7. Physical Evidence
Physical evidence is important as it demonstrates the manner in which products are perceived in the market. Nike already enjoy significant physical evidence all over the worlds but as it would be their first store in the Irbid they have to make sure that this physical evidence is maintained with their quality products and services (Malhotra, et al., 2009).
6.3.1. Adaptation for Culture
It is important for the long-term success of an organisation that they should consider the cultural element at the time of executing their business operations in different parts of the world for the reason that it would affect their overall goals and objectives in a negative manner. In the case of Nike Inc., they must be well aware of about the beliefs and values of Sakakah and Irbid people that assist them to execute their plan easily (Armstrong, et al., 2014).
It is noted that in Jordan and Saudi Arabia laws are quite strict that is why the role of top officials of Nike Inc. is very important in the process of implementing their plans without any disruption or legal obstacles (Couturier & Sola, 2010).
From the economical perspectives, it is encouraging for Nike Inc. to expand their business operations in Sakakah and Irbid because both the cities are quite stable in terms of economy and most of the living residents are well off that help an organisation to attain their set targets and goals (Li, et al., 2014).
7. Strategic Aspects
7.1. Ansoff’s Matrix
Ansoff’s matrix included four different market growth strategies, which are market penetration, market development, product development, and diversification. Market penetration is the strategy in which the businesses need a growth strategy for their existing product in the existing market. Market development is the strategy in which organisations target new market for their current products (Doole & Lowe, 2008). While, product development is the strategy in which firms introduce new goods in the current market for expansion. Lastly, diversification is the growth strategy in which the organisation introduced new product in the new market. In terms of Nike Incorporation, it is the noticed that they would adopt market development strategy because they aim to enter into new markets for their existing products (Berthon, et al., 2012).
7. Conclusion and Recommendations
It is concluded that international marketing strategies are the basic means of promoting business activities. Nike is the multinational brand but it is focusing on introducing their products and services in the new market. The markets that are recommended to Nike for entry are Sakakah in Saudi Arabia and Irbid in Jordan. The major reason of selecting two markets from the shortlisted market is that their economic stability is viable which means Nike would earn long-term profitability from the two selected markets. They can target customers between ages of 18 to 50 years because sports products are used by the individuals belonging to this population.
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