NIKE INDIA marketing report

TTHE UNIVERSITY OF DANANG
THE VNUK INSTITUTE FOR RESEARCH AND EXECUTIVE EDUCATION

MARKETING
REPORT

LECTURER & SUPERVISOR: MS. MAI QUYNH ANH


International Marketing
Module
Academic Year 2021 - 2022
VNUK Institute for
Research and Executive
Education, the University
of Danang

OUR TEAM
Ngo Hoang Yen
Bui Thien Phuoc
Tran Thi Tra My
Huynh Thi My Co
Luong Minh Thang
Le Nguyen Quynh Nhu



what 's

Tables of Contents

01

Introduction / 05

Company History
Vision and mission statement

02
Domestic Environment / 07

Controllable elements
Uncontrollable elements






Foreign Environment / 22

Uncontrollable elements

03
References / 34

Phil Knight and Bill Bowerman

This report is all about to show a part of the Marketing plan for
Nike’s products; with reference to the scope of the
international marketing task, the report shows how both
controllable and uncontrollable factors affect Nike offering new
products in the market.

NIKE in India


Nike is one of the biggest brands in sportswear in the world. From elementary school students
to professional athletes, no one could deny the attractiveness of Nike between any brands in
the market. Nike was founded by University of Oregon track athlete Phil Knight and his coach
Bill Bowerman in January 1964 as "Blue Ribbon Sports" (Ahmed et al., 2016). According to
Nike Inc, The company initially operated as a distributor for Japanese shoe maker Onitsuka
Tiger, which met Knight's Automobile and officially became Nike, Inc. on May 30, 1971. Since
entering the sports market to provide products to customers, Nike has gradually grown up,
surpassed over competitors as well as stuck in the customer's mind, as a result of its
relentless efforts and continuous development over the years. Therefore, implicitly affirming
the brand position through the quality of the product.

Mission

‘To bring inspiration and innovation to every athlete in the
world’

Nike has been aware and always focused on product development
and innovation strategies. Increasing reliability in quality, bringing

satisfaction to customers from marketing campaigns or customer
care services are meticulously cared for.

Vision

‘The Nike goal is to carry on his legacy of innovative thinking,
whether to develop products that help athletes of every level of
ability to reach their potential, or to create business opportunities
that set Nike apart from the competition and provide value for our
shareholders.’

Nike guides the thinking of management through its mission and vision as a source of
inspiration. In other words, deliver the message in clear, concise, and precise language while
also gaining buy-in and support across the business. Therefore, increasing the efficiency of
employees' work productivity via a clear goal determination right from the start. In other
words, Nike Corporation irrefutably has created wealth for its owners and shareholders, but its
rhetoric of social responsibility—itself‐presentation of the corporation as a now global citizen
—constitutes a more dubious claim (Stabile, 2000). Moreover, the company announced the
purpose of the company with a specific business strategy, they invest in building a brand-new
market and celebrity. Developing products that must be high quality by using innovative
technology and being stable in front of the competition in the market.
6


According to Cateora, Gilly, and Graham (2010), the domestic environment uncontrollables include
home-country elements that can have a direct effect on the success of a foreign venture: political
and legal forces, economic climate, and competition.

7

Firm
Characteristics
Controllable elements
The inner-circle represents the controllable
variables. Those variables that a marketing
manager or a company can easily control to suit
the demand of the business. They include
"Marketing Mix" and research activities.
Controllable factors can be changed over the
long term and often in the short term to adjust to
modifying market conditions, consumer tastes, or
corporate goals (Philip et al. 2010, p.12)
8


9


Product
Anything that can be offered to a market for attention,
acquisition, use, or consumption that might satisfy a
want or need (Kotler, 2015).

Differentiate of product
Nike is the market leader in the sportswear industry,
with sales of sports shoes accounting for most of their
revenue. It provides a variety of items, including
customized shoes for a range of sports. Product
development is Nike's intensive growth strategy

(Smithson, 2019). Changes in its product mix
accompanied the development of Nike Inc.. It involves
the launch of new products to increase its sales. For
example, the company seeks to research and develop
in order to develop new products and improve existing
stuff. Nike emphasizes product innovation through
innovative shoe and apparel designs using technology
to improve product quality and differentiate itself from
competitors. Nike has not only adapted to a changing
market by designing and selling iPod nano-connected
smart products, as well as providing a mix of Apple Inc
and Nike products to measure athlete performance, but
it also allows customers to design and customize
product features according to their needs hence
allowing them to appeal to a wider audience (Gregory,
2017).

10


A pricing strategy is a model for determining
the most appropriate price for a product or
service. It assists a company in pricing that
optimizes profits and shareholder value while
considering consumer and market needs
(Business Jargon). Therefore, price is one of
the key controllable factors that every firm
must consider carefully in their domestic
industry. Because the competition among
current companies is more intensive in this

industry, businesses are constantly looking
for new competitive advantages to set
themselves distinctly. Nike's pricing method,
which is mainly based on the concept of
value-based pricing, has played an essential
role in facilitating Nike to become one of the
largest shoe businesses in the world. Nike is
focused on bringing the best customer value
at the right price. This strategy determines
the maximum price that consumers are willing
to pay for the company's products, such as
sportswear, sports shoes, and equipment. It
ensures maximum retention of the buyer's
surplus.
Channel of distribution
The distribution network is vital since it helps the company cut costs while
also controlling expenditures and the ultimate price they charge for their
products. It relates closely to some factors such as including transportation,
logistics, and supply chain management. However, they will have a lot of
control over prices if a company can find a place where they can build up and
manage their distribution network. Nike uses three channels to sell a wide
range of products to consumers:
Retail stores
Nike Online Store
Niketown retail outlets (company-owned)
Retailers are the most important places where their products are sold. In the
US, Nike has more than 200,000 retailers. Nike exclusive stores are prevalent
in most cities and suburbs throughout the country to meet the requirements of
geographically specific consumers.
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Nike is a brand famous for its strong branding
and marketing strategy. The promotional
strategy in Nike's marketing mix is ​extremely
comprehensive, and aggressive. The Nike
company logo and swoosh image plays an
important role in corporate advertising. The
company relies heavily on advertisements,
especially those involving popular celebrities,
such as professional athletes and sports
teams. For example, Nike also took the
opportunity to promote its brand by sponsoring
marathons, international events such as the
NBA basketball championship.
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TNEMNORIVNE CITSEMOD

UNCONTROLLABLE
ELEMENTS


Political/
Legal Forces
The domestic political or legal forces are uncontrollable

elements that determine what laws and regulations of a home
country impact its marketers on doing business in international
markets (PESTEL Analysis, 2016). In this part, we are going to
analyze a specific element which is how US citizens and
lawmakers demand Nike improve its working conditions in
international markets.
US Lawmakers and Citizens Demand Nike for Basic
Human Rights Treatment, Equal Pay and Standard
Working Condition for its Subsidiaries Overseas

Everything started in 1991 when American labor activist Jeffrey
Ballinger published a report on Nike's factory practices in
Indonesia, exposing the ugly truth of low wages, child labor, and
appalling working conditions akin to a sweatshop – a factory or
workshop where employees work long hours for low pay in
hazardous working conditions. Later it was discovered that Nike
sweatshops were popular in most of Nike’s developing Asian
markets, including India, where labor regulations are frequently
disregarded. Nike was accused of turning a blind eye to this
situation in order to keep the costs as low as possible and
maximize profits (New Idea, 2019).
These discoveries have since then caused a major outrage within the US public. Nike boycotts and antiNike chants have become the backbone of the anti-Nike campaign, which employed hundreds of
thousands of consumers. Sales of the company's sportswear have plummeted as a result of the
unfavorable publicity, which contrasts with the company's sleek looks and 'Just Do It' slogan (The
Guardian, 2001). In addition, the protests also put pressure on US lawmakers to act. Many states had
begun passing new laws that required retailers and manufacturers with global revenues of more than
$100 million, which included Nike, to publicly disclose how they were addressing poor working
conditions in their global manufacturing networks. In 2014, the US House of Representatives proposed
the Federal Business Supply Chain Transparency on Human Trafficking and Slavery Bill. By this law,
Nike was required to file annual reports to disclose what measures, if any, they have taken to identify

and address conditions of forced labor, slavery, human trafficking, and child labor within their supply
chains, whether in the US or abroad (The Fashion Law, 2019). As a result, since the early 2000s, Nike
has actively tried to resolve its sweatshop problem in order to reclaim its brand reputation in both
domestic and international markets.
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A sweatshop in India

Enhancing worker-management engagement, increasing openness and transparency, monitoring
contract factories, setting industry-leading compliance standards, outlawing child labor, and supporting
employee freedom of association are some of the solutions (Sustain Case, 2016). These admissions and
changes have aided in improving public perception of Nike and recovered the brand profits after the
scandal.
However, recently, after nearly two decades, Nike was again accused of exploitation in India and other
foreign markets by “treating the sweatshop issue as a public relations inconvenience rather than as a
serious human rights matter”, which means the company only did the bare minimum to slip through laws
and please protesters, without actual care for its workers. In 2017, the United Students Against
Sweatshops (USAS) held demonstrations in cities such as Boston, Washington D.C. to raise awareness
on the recent discovery of workers in Asian countries suffering wage theft, verbal abuse, and excessive
hours. These events again influenced the US government to consider updating on the human rights
requirements for Nike. This means that this uncontrollable political and legal element still poses a strong
presence today and forces Nike to keep assessing its marketing strategies in foreign markets including
India (Business & Human Rights Resource Center, 2017).
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UNCONTROLLABLE ELEMENTS

COMPETITIVE

STRUCTURE
Nike is the world's largest sports brand and the pride of the Americans. In 1977,
under the advice of advertising agency John Brown, the Nike brand was
officially born and had been kept ever since. By 1980, Nike had a 50% share of
the sports shoe market in the US (the company went public in December that
year) and continued to expand worldwide in the following decade with
impressive business results.
Nike, Inc.'s main competitors are Reebok,
Puma, and Adidas, claiming to be the
most relevant company globally. In this
way, they are presenting a very tough
competition with Nike Corporation. The
company is devoting a lot of financial
resources to its marketing tactics.

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COMPETITIVE STRUCTURE

NIKE - ADIDAS

The conflict between Reebok and Nike is a story everyone knows, and when Adidas decided to buy
Reebok, it was time to declare war officially. The acquisition of Reebok brought Adidas 28% off
Reebok's total annual revenue of about $ 11.5 billion in global sales, enough to compete with Nike the No.1 competitor in the US. Even without the Reebok acquisition, it is still seen that the battle
between Adidas and Nike has never cooled down. The purchase of Reebok is Adidas' official
declaration of war against Nike. Both sides constantly invest in advertising campaigns and milliondollar contracts to "cover" their names.
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NIKE - REEBOK

The year 1979 marked the beginning of Nike's peak when the shoe company controlled half of the
US running shoe market (Geraldine, 1992). Nike's success comes from knowing how to seize the
moment when both big brands, Adidas and Reebok, completely ignore the sports running shoe
market. However, in 1980, Reebok made Nike "strange" when it launched sports products for
women. Meanwhile, Nike only focuses on the men's market segment. It is by hitting new market
segments with the "right people, at the right time" marketing strategies, which are choosing celebs
to represent their brand, that has made Reebok's sales increase rapidly. The fledgling warrior
surpassed the most prominent American player at that time - Nike; Reebok used to hold 26% of the
US sports product market share in the 1980s (Salpini, 2021). Although it is only a short success, it is
also what any rookie wishes. Reebok's "overtake" dealt a fatal blow that made Nike miserable.
However, the Nike team has woken
up and redefined the right direction:
running shoes are not only beautiful,
but they need to be of high quality.
In addition to following the original
product direction, Nike also spent
heavily on marketing campaigns and
then reaped great success. It
returned to the race track
spectacularly, regaining its position
in the shoe industry.

19


In the United States - which accounts for
40% of all global sportswear sales - Nike

equipment is appreciated on a large scale,
whether it is running gear (where it owns
about 60% of the market share) or must-have
basketball sneakers (an impressive 90%) or
high-performance skates (about 20%)
(Powell, 2015).


According to footwear expert Matt Powell of
industry analysis group NPD: "Adidas has
made a lot of right moves and, if patient, can
gain back some of its lost shares..."; "but no
one is a threat to Nike right now". Adidas is
now the third biggest footwear brand in the
States after Under Armour - but none of them
can, it seems, realistically topple Nike at the
top of the sportswear game.



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Economic
climate
Sportswear maker Nike Inc said on December 18 that
full-year 2020 revenue is likely to be better than
previously expected after the company's online sales
rose for a third straight quarter thanks to the focus
consumer's fear of contracting the COVID-19

epidemic demand for sportswear. Accordingly,
Nike's revenue increased about 9% to $11.24 billion
in the quarter ended November 30, higher than
experts' average forecast of $10.56 billion.
Nike's profit also jumped 12% to $1.25 billion, or 78
cents a share, and beat analyst expectations of 62
cents a share. Meanwhile, selling and administrative
expenses in the same period decreased 2% to $3.3
billion. The above spending decline is because,
during the period of the COVID-19 pandemic raging,
Nike did not spend much on marketing its brand and
sports events.
The trend has given Nike and other sportswear
makers a much-needed boost after their revenue hit
the pandemic earlier in the year. During the
lockdown, many people also logged on to Nike's
store and workout apps, driving the company's online
sales significantly higher throughout the year.
Jessica Ramirez, the retail analyst at consulting firm
Jane Hali & Associates, said Nike's investment in ecommerce channels had given the company a
significant competitive advantage over rivals other
than Adidas
“Nike’s website is promptly updated and easy to
browse, its app is intuitive and its focus on gathering
customer data through its various services has really
helped it target the right consumers at a time when
people are more cautious with their spending.”
(Uday, 2020).
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II

Foreign
Environment
According to Cateora, Gilly, and Graham (2010), foreign environment uncontrollables are uncertain
elements in the international market that companies in their home countries have little or no control
over. They include political/legal forces, economic forces, cultural forces, competitive forces,
geography and infrastructure, level of technology, and structure of distribution.
22





Cultural Forces
Cultural forces are elements affecting
firms’ marketing decisions which
result from countries' unique culture
including language, social
construction, beliefs, customs,
values,.. (Riskó & Wiwczaroski, 2014)
In this part, we are going to explore
the uncontrollable cultural element
that is Indians’ attitude towards
counterfeit products.

Counterfeits, also known as knock-offs or fake products, are illegal
representations of a registered trademark goods that are identical or
similar to goods for which the trademark is registered, with the intent

of deceiving the purchaser into believing that he or she is purchasing
the original goods, according to the World Trade Organization (WTO,
2011). In short, counterfeits usually resemble genuine goods while
typically having lower quality in terms of performance and reliability.
Indian’s Attitude toward Counterfeit Products.

Indian consumers are keen on buying fake Nike goods.

The rise of digital platforms that makes it easier to sell and buy
consumer goods, especially further amplified by the effect of the
COVID-19 pandemic, has driven a surge in counterfeit product
commerce in India (Forbes, 2020). This situation poses a great
headache to Nike as its sportswear is one of the most pirated products
in the Indian market, which seriously damages the brand’s reputation
and profitability within the country.
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Why do Indians purchase
knock-offs?
Why do Indians purchase knock-offs? A 2019 study showed that
92% of Indian clothing consumers between the ages of 15 and 30
admitted they have bought at least one counterfeit good. When
asked for the reasons why they preferred them over the real
things, most participants listed lower prices as the most attractive
aspect, followed by availability and diverse ranges of offerings
(Fortune India, 2019). However, further research revealed that
counterfeits' triumph in the country might be majorly caused by the
cultural lack of care toward validity, originality or creativity.
Because before weighing the cost-benefit of buying counterfeit

from factors like prices or availability; consumers first face two
choices: to either support the real creators by buying their
products or hurt them by opting for the illegal imitations. Most
Indian consumers, unfortunately, choose the latter as long as it
satisfies their own cost-benefit perceptions (Quartz, 2017).
To further understand the point above, let us take a look at what
types of counterfeit goods there are and which one Nike products
fall into. Counterfeiting in the fashion business is divided into two
types: deceptive and non-deceptive. Deceptive counterfeiting
happens when a consumer is unaware that he or she is acquiring a
fake or fraudulent goods, whereas non-deceptive counterfeiting
occurs when he or she intentionally purchases a replica of the
original product being fully aware of its illegal origin and lower
quality (Mondaq, 2019). Fake Nike sportswear usually falls into the
non-deceptive category where consumers can quickly identify it
based on the steep difference in price and quality, as well as
shady selling location. An example is a pair of expensive, high-end
trendy Nike shoes offered at a low price by an unverified street
vendor or online store (Inexto, 2019). This means most of the
time, Indian consumers purposely make the decision to purchase
Nike counterfeits, as opposed to buying them by accident like in
the case of deceptive counterfeiting when knock-offs are identical
to the authentic product in price and packaging but quality.

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The “piracy” attitude is not
individual-based but a
widespread issue within
Indian society. Experts

suggest the cause for this
culture is due to the fact that
the concept of Intellectual
Property Rights is not widely
taught early in school nor
mentioned by the media.
When doing classworks that
involves
researching,
students are often unaware
of the importance of
respecting the rights of
original creators and giving
due credit to others when
using
their
creations
(Hindustan Times, 2021). As
a result, the vast majority of
young people are unaware of
the labor-intensive nature of
producing
goods
and
services,
and
are
unconcerned about the harm
caused by purchasing
counterfeits. A majority of

the
elder
population,
including those in lawmaking institutions, share
this attitude. As a result,
progress toward enhanced
protection for brand creators
and increased enforcement
against counterfeit producers
is slow (Managing IP, 2019).


&

Geography
Infrastructure
Geography refers to factors impacted by a country's geographic
location, such as its position on a world map or the risk of natural
disasters, which can have positive or negative impacts for a
company's marketing strategy. The infrastructure component,
on the other hand, relates to the level of existing infrastructure
that supports marketing operations such as communication,
which corporations must assess before entering a foreign market
(Hill, Chae, & Park, 2012). In this section, we'll look at the state
of natural disasters in India, as well as the country's lack of
combating infrastructure.
Risks of Natural Disasters and Lack of Infrastructure to
Combat them.

Natural disasters happen frequently and the country is still not equipped

to mitigate the economic damages.

The 2019 Global Climate Risk Index stated that India is the 14th
most vulnerable country in the world to natural calamities, due to
its geographic location as a seismic risk zone and an
intertropical convergence point. Between 2000 and 2019, India
has suffered 321 major catastrophic events. Some of the most
common disasters are flood, earthquake, cyclone and drought.
In this same period, India has lost almost 80 billion dollars in
economic damages caused by disasters. (Atlas Magazine, 2020).
There are many reasons for India’s big susceptibility to natural
disasters. First of all, the low public spending on disasterresistant infrastructure, such as dams and drainage systems, as
well as river embankment and canal protection, is fatal and
causes the society to collapse quickly from disasters. Secondly,
modern disaster warning systems, particularly in low-lying areas,
are extremely lacking and incapable of accurately forecasting
disasters quickly enough for the population to put on protection
or evacuate. Thirdly, illegal deforestation is a rampant issue that
causes soil erosion in several regions, resulting in floods causing
more damages (Business Line, 2020).
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