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Executive summary
Nike Hong Kong is a private limited company that operates as a subsidiary of Nike Incorporation. The firm is located in Kwun Tong, KLN Hong Kong and specializes in different business activities.
Some of the firm’s core business activities include importing, wholesaling and retailing various sports apparels, footwear and accessories. Since its inception, the firm has managed to develop sufficient competitive advantage to enable it survive in an environment that is very dynamic.
Some of the factors that have contributed to the firm’s competitiveness include adherence to quality and innovativeness in its production process. Moreover, the firm has integrated product differentiation as its business level strategy.
One of the ways through which the firm achieves this is by producing high quality products. This has enabled the firm to effectively position its products in the market.
The marketing plan entails a comprehensive evaluation of the firm’s external and internal business environment. The plan details the prevailing market trends, intensity of competition, strengths, weaknesses, opportunities and threats.
The objective of the plan is to suggest how Nike Hong Kong can maximize its sales revenue by improving its marketing strategies. Additionally, the control and evaluation mechanisms that the firm will adopt in assessing its performance have been discussed.
Situation analysis
Baron (2005) asserts that ‘organizations do not exist in a vacuum but rather exist, co-exist and compete in an environment characterized by a high level of complexity’ (p. 1).
Consequently, marketers must develop a comprehensive understanding of their current and potential business environments in which they operate (Lamb, Hair & McDaniel 2008).
Brooks, Weatherston and Wilkinson (2004) further asserts that understanding the current and future business environment is fundamental in business strategy formulation, strategic planning and decision making processes.
External and internal business analysis enables firms’ management teams to determine their organizations’ direction and how to accomplish the set mission.
Market trends
Nike Hong Kong is likely to benefit from changes occurring in the sporting goods industry. One of these changes has arisen from growth in internet technology that has made consumers to be more knowledgeable in their consumption patterns.
According to Hong Kong Trade Development Council (2013), most customers in Hong Kong have become more knowledgeable about health and beauty. This has in turn led to the growth in popularity of various indoor and outdoor sporting activities such as Yoga, aqua fitness and rock climbing in an effort to keep fit.
This trend has led to growth in demand for various sports accessories, apparels and footwear. In Hong Kong, the trend is mainly evident amongst the youth who are increasingly taking sport classes.
Additionally, more women are participating in sports. In an effort to maximise its profitability, Nike Hong Kong will focus on increasing its clientele base by developing products that meet diverse customer needs.
The market for sporting goods such as footwear, sports equipments, apparels and other accessories has increased significantly over the past decade (Stevens, Loudon & Wrenn 2006).
The growth is as a result of increment in the rate at which firms within the industry are venturing the international market through exportation. In 2012, the United States and the European Union were the largest importers of sportswear products from Hong Kong.
The two countries accounted for 29% and 27% of the total volume of sports products exported (Hong Kong Trade Development Council 2013).
Another trend that is evident in Hong Kong is that consumers are increasingly crossing-over from casual-wear designs to athletic designs. This presents a unique business opportunity for Nike Hong Kong to increase its sales revenue.
The Hong Kong sportswear and footwear industry is undergoing rampant expansion as a result of growth in the rate at which consumers are embracing leisure and health benefits associated with physical activities (Hong Kong Trade Development Council 2013).
Sports fans are also demanding fashionable footwear and sports apparels. The Hong Kong Trade Development Council (2013) asserts that modern technology, new applications and organic fabrics are increasingly being integrated in the production of sports products.
To align itself with market changes, Nike Hong Kong will be required to invest in modern designing technology.
Competition analysis
The intensity of competition in Hong Kong sportswear and footwear industry is very high. The fierce competition has emanated from the large number of domestic and international sportswear and footwear companies that ventured the industry.
Some of the firms that have established their base in Hong Kong include Umbro, Puma, Li & Fung, Li Ning, Addidas, Quiksilver, Reebok, Fila and Timberland. The large number of industry players is an indicator of the lucrative nature of the industry.
However, the firms have to develop effective business, corporate and operational level strategies in order to successfully exploit the industry’s profitability potential.
Most of these firms have invested heavily in research and development (Campbell & Craig 2005). As a result, they are able to produce high quality sports apparels and footwear products thus creating a high level of brand loyalty amongst customers.
Investment in research and development enables the industry players to launch new product lines hence gaining more market share.
According to Jobber and Fahy (2009), it is important for firms in the in the industry to invest in research and development. This will increase brand loyalty hence minimizing the probability of customers switching to competing products.
In an effort to develop a high level of competitiveness in their production processes, most firms in the industry have shifted their production bases to China.
Currently, the Hong Kong sports apparel and footwear industry is experiencing a competitive challenge emanating from firms that specialize in the production of luxury brands (Kaser & Oelkers 2007).
These firms are increasingly venturing into the production of various sports products such as sneakers and other accessories (Hong Kong Trade Development Council 2013). Consequently, the likelihood of Nike Hong Kong experience an increment in the intensity of competition is high.
SWOT Analysis model
SWOT analysis is one of the models that firms’ management teams can use to evaluate their organizations’ internal and external business environment. The chart below illustrates Nike Hong Kong strengths, weaknesses, opportunities and threats.
Strengths
- Product diversification– The firm’s management team is cognisant of the fact that product diversification is a catalyst for developing competitive advantage (Porter 1998). Consequently, Nike Hong Kong has integrated product diversification as one of its marketing strategies. Customers can access diverse product categories from the store. This has played a significant role in Nike’s effort to nurture long-term growth.
- Effective pricing strategy– In their quest to maximize profit, firms’ management teams must take into account the element of pricing. This arises from the fact that consumers are price sensitive in their purchasing processes (Worthington & Britton 2006). In the course of its operation, Nike Hong Kong ensures that its products are effectively priced. The firm attains this by setting the price of its products at a relatively low price point. This enables its customers to save approximately 30% to 50% of the prevailing retail price (Hong Kong Trade Development Council 2013).
- Strong brand recognition– Developing strong brand recognition is one of the most effective ways through which firms can increase their sales revenue (Trehan &Trehan 2008). This arises from the fact that consumers develop a high level of product awareness that enables them prioritize the firm’s products in their decision making process. In the course of its operation, Nike Hong Kong has developed strong brand recognition amongst its customers by offering high quality products. Consequently, consumers associate the firm’s brand with value for money.
- High quality products– In line with its lean manufacturing philosophy, the firm’s management team ensures that the products produced are of high quality.
Weaknesses
- High production cost – One of the major challenges that Nike Hong Kong is experiencing is the high cost of production. The firm outsources the necessary raw materials from the international market. The 2008/2009 economic recession adversely affected the cost of production in most sportswear and footwear producing companies. Despite countries experiencing substantial economic recovery over the past few years, full recovery is yet to be attained.
Opportunities
- Increase in demand for sportswear and leisurewear products- There has been an emergence of a new market trend in Hong Kong whereby consumers are shifting to sportswear products. According to Hong Kong Trade Development Council (2013), sportswear products have become a popular category especially amongst the youth. This trend has emanated from the fact that the youth are increasingly associating sportswear products with comfort, versatility and a relaxed lifestyle. Euromonitor International (2013) asserts that consumers are wearing sports apparels at home and during their leisure time. This presents a considerable market opportunity for Nike Hong Kong to exploit. One of the ways through which the firm can achieve this is by investing in its marketing activities.
- Integration of fashion brand and sportswear– Hong Kong Trade Development Council (2013) asserts that ‘Hong Kong has been a centre of fashion industry’ (p. 1). Despite the large number of fashion houses in Hong Kong, Nike should consider developing a new product concept. One of the ways through which the firm can achieve this is by integrating fashion and sportswear apparels.
- Product line extension– To improve the probability of attaining its profit maximisation objective, Nike Hong Kong will invest in product line extension. The firm should invest in research and development in order to be effective in product line extension.
Threats
- Intense competition– Nike Hong Kong faces intense competition from other companies that deal with sportswear products. Some of these companies include Fila, Li Ning and Addidas. Additionally, the firm also faces intense competition from fashion designing companies that have ventured into production of sporting sneakers and accessories (Hong Kong Trade Development Council 2013).
- Changes in economic environment– The 2008 global economic recession had adverse effects on consumers’ purchasing power. The recession led significant transformation in consumers’ purchasing behaviour. Most consumers concentrated on purchasing necessities rather than luxuries. In 2011, the level of consumer confidence in Hong Kong increased to 103 (Euromonitor International 2013). Despite numerous efforts by governments to restore their countries’ economy, the global economic environment remains volatile. This presents a threat to the firm in its quest to market its products.
- Counterfeit products– Counterfeit fashion and sportswear products are very prevalent in Asia and Europe. One of the greatest challenges that Nike faces in Hong Kong is the existence of counterfeit products. It is estimated that there is 1 counterfeit Nike product for every 2 genuine products.
Marketing objectives
In the process of marketing its sports apparel and footwear products in Hong Kong, the firm intends to achieve a number of objectives as outlined below.
- To increase the firm’s market share to 35% by 2015.
- To increase the level of customer satisfaction by investing in continuous product development.
- By marketing its products in Hong Kong, the firm intends to grow its sales revenue by 60% within 1 year.
Segmentation, targeting and positioning
To achieve the above objectives, Nike Hong Kong will be required to ensure that it develops a comprehensive understanding of its customers’ needs and wants. In order to achieve this, the firm will incorporate the concepts of segmentation, targeting and positioning.
In the process of segmenting its market, the firm will adopt demographic and psychographic market segmentation variables. Age and gender are the core demographic variables that the firm will integrate in its production process.
By taking into account age as one of the marketing variables, Nike Hong Kong will be able to meet its customers’ needs.
On the other hand, psychographic market segmentation will enable Nike Hong Kong to meet the customer’s needs with regard to personality, value perception, lifestyle, and self-image. This will improve the probability of the firm developing a high level of customer satisfaction.
To improve its sales revenue and level of profitability, Nike Hong Kong will focus on marketing its products to youthful and elderly customers. The decision to target these customer groups arises from the social transformation that is currently being experienced in Hong Kong.
The market analysis conducted reveals that consumers are increasingly embracing different sports in an effort to stay healthy. By marketing its products to these customer groups, Nike Hong Kong will increase the probability of maximizing its sales revenue and hence its profitability.
In the course of its operation, Nike Hong Kong will be committed in developing and maintaining positive product image amongst its customers. The firm will achieve this by ensuring that customers attain a high level of versatility, comfort and a relaxed lifestyle.
Marketing strategies
To successfully market its products in Hong Kong, Nike will adopt the 4P marketing concept. The firm will focus on four main marketing variables which include product, pricing, promotion and place. The marketing strategies will enable the firm to attain its marketing objectives.
Product strategy
Nike Hong Kong will ensure that its products are of high quality. This will be attained by investing in modern product designing technology.
In order to meet diverse customer products needs and expectations, Nike Hong Kong will ensure that a substantial amount of money is allocated for research and development in its marketing budget. Market research will enable the firm to develop products that result in a level of customer satisfaction.
The firm will also ensure that its store is stocked with a wide range of sports apparels and footwear products. This will contribute towards development of store loyalty amongst the target customers.
Pricing strategy
The firm will be marketing its products in an environment characterised by fierce competition. Consequently, Nike Hong Kong will ensure that it incorporates effective pricing strategy. The firm’s marketing department will conduct a comprehensive competitive market analysis in order to determine their pricing strategy.
This will enable the firm to adopt a pricing strategy that effectively counters the prevailing price war. To appeal to customers’ emotions in the process of making their purchase decision, the firm will incorporate psychological pricing strategy.
Promotion strategy
To achieve the aforementioned marketing objectives, the firm will ensure that sufficient market awareness is created. This will be attained by integrating a comprehensive promotion strategy. Some of the marketing communication methods that will be used include advertising, public relations, and sales promotion.
The firm will employ both traditional and emerging marketing communication mediums. The traditional mediums that will be used include radio, television, outdoor mediums such as billboards and posters (Koekemoer & Bird 2004).
In its outdoor advertising process, the firm will enter into contracts with outdoor advertising companies that have their billboards strategically located. On the other hand, the firm will also post its adverts on various print mediums such as sports magazines and newspapers (Kurtz, MacKenzie & Snow 2009).
Nike Hong Kong will also exploit emerging marketing communication mediums such as the internet. The firm will post the various products it offers on its website. The firm will also use various social networking tools such as Facebook, Wikis, Blogs and YouTube to create market awareness.
Using social media will enable the firm to transform its marketing communication into a more interactive process. Additionally, using diverse mediums will enable the firm to create sufficient level market awareness regarding its products in Hong Kong.
Consequently, the probability of the firm maximising its profitability will be improved (O’Guinn, Allen & Semenik 2008).
To nurture a high level of customer loyalty, the firm will enter into contracts with leading sports celebrities in Hong Kong. Additionally, the firm will sponsor various sporting events in order to interact with sports enthusiasts.
Endorsement by such personalities and sponsoring such events will contribute towards a large number of customers associating with the firm’s products. In an effort to develop store loyalty amongst customers, the firm will incorporate sales promotion by offering cash and quantity discounts.
Distribution strategy
Product distribution is one of the fundamental components in firms marketing processes (Lussier & Kimball 2009). Distribution enables customers to easily access products from the market (Pickton& Broderick 2005). The firm’s management team will ensure that its products are easily accessible in Hong Kong.
This will be attained by adopting both direct and indirect distribution methods. The firm will establish retail outlets in different parts of Hong Kong. To increase the ease with which its customers access its products, the firm will enter into distribution contracts with major supermarkets and hypermarkets in Hong Kong.
The contract will ensure that these stores carry the firm’s products, hence increasing their accessibility (Milne 2008).
Evaluation and control
According to Stapleton and Thomas (2007), it is important for firms’ management teams to ensure that their marketing activities are effectively controlled and evaluated. Evaluation and control increases the likelihood of a firm attaining the set marketing objectives by minimizing possible deviations.
To determine the success of its marketing plan, the firm will engage in a comprehensive evaluation and control process. Various parameters will be utilized in determining the success of the marketing plan.
Firstly, the firm will analyze its sales revenue in order to determine the percentage change. The margin of change obtained from the analysis will enable the firm to determine the effectiveness of its marketing strategies.
Nike Hong Kong will also conduct a market survey in order to determine customers’ perception towards the firm’s products. This will play a significant role in assessing customers’ perception towards its products (Morrison 2006).
Furthermore, the market survey will aid in the determination of the level of customer satisfaction. The firm will also evaluate the percentage change of its market share in Hong Kong.
Considering the competitive nature of the industry, the firm will assess the effectiveness of the marketing plan by evaluating its performance in comparison with competing firms.
Reflexive account
The process of undertaking this project has been of great significance to me as a marketer. This arises from the fact that it has contributed to a greater appreciation on the importance of conducting a comprehensive market research prior to developing a marketing plan.
Market research enables a marketer to gain a comprehensive understanding of the prevailing market trends. Knowledge on customers’ product needs increases the likelihood of developing products that meet the target customers’ needs and expectations.
Therefore, the project has led to recognition of the fact that the society within which an organization operates is a fundamental component in its marketing processes. This arises from the fact that its customers come from the society.
Secondly, the project has also contributed to the development of a greater appreciation on the importance of evaluating the competitive environment in organization’s effort to develop competitiveness. By conducting a comprehensive competitor analysis, a marketer can be able to formulate effective marketing strategies.
This emanates from the fact that he or she is able to identify gaps that have been left by competitors in the course of their operation. By exploiting such gaps, marketers enable their organisations to gain a higher competitive edge.
Despite the fact that market research contributes to the development of a comprehensive understanding of prevailing market trends and the competitive environment, the entire process is complex.
Consequently, it is fundamental for organisations to develop a strong market research team in order to achieve the desired objective.
In addition to evaluating a firm’s external environment, the project has contributed to develop to a better understanding of the importance of developing a comprehensive understanding of an organization’s internal environment.
By conducting an internal organisational analysis, the marketer is able to understand a firm’s strengths and weaknesses.
On the other hand, external analysis enables the marketer the identify market opportunities and threats. Thus, greater insight on areas that the marketer should focus on in the course of formulating the marketing strategies to be adopted is developed.
As a marketer, I have also gained insight on the importance of creating sufficient market awareness in firm’s marketing processes. As a result, this has adequately prepared me in the course of undertaking marketing activities in the future.
Firstly, I will be able to incorporate diverse marketing communication methods and mediums in an effort to develop a high level of market awareness.
In addition to traditional marketing communication mediums, I will ensure that the process is interactive by incorporating emerging marketing communication mediums such as social networking tools. The importance of ensuring that customers easily access the product from the market has also been highlighted.
In summary, the project has been of great significance to me as a marketer in a number of ways. Firstly, I have gained insight on the most important marketing elements that firms should take into account in their marketing processes.
Some of the main aspects that I have appreciated relate to ensuring effective market segmentation, targeting and positioning.
Moreover, marketers should develop marketing strategies that are aligned with their target customers’ needs. It is also important for marketers to continuously review the formulated marketing strategies in order to determine their effectiveness.
Reference List
Baron, D 2005, Business and its environment, Prentice Hall, New York.
Brooks, I, Weatherston, J & Wilkinson, G 2004, The international business Environment, FT Prentice Hall, London.
Campbell, D & Craig, T 2005, Organisations and the business environment, Butterworth-Heinemann, New York.
Euromonitor International: Apparel in Hong Kong, China 2013. Web.
Hong Kong Trade Development Council: the sporting goods industry 2013. Web.
Jobber, D & Fahy, J 2009, Foundations of marketing. McGraw-Hill International (UK) Ltd, London.
Kaser, K & Oelkers, D 2007, Sports and entertainment marketing, Cengage Learning, New York.
Koekemoer, L & Bird, S 2004, Marketing communications, Juta and Company Limited, New York.
Kurtz, D, MacKenzie, H & Snow, K 2009, Contemporary marketing, Cengage Learning, New York.
Lamb, C, Hair, J & McDaniel, C 2008, Marketing, Cengage Learning, New York.
Lussier, R & Kimball, D 2009, Applied sport management skills, Human Kinetics, New York.
Milne, G 2008, Implementing your marketing plan. Web.
O’Guinn, T, Allen, C & Semenik, R 2008, Advertising and integrated brand promotion, Cengage Learning, New Jersey.
Morrison, J 2006, international business environment: global and local marketplaces in a changing world: the international business environment, Palgrave Macmillan, London.
Pickton, D & Broderick, A 2005, Integrated marketing communications, FT Prentice Hall, New York.
Porter, M 1998, Competitive advantage: creating and sustaining superior performance: with a new introduction, Simon and Schuster, New York.
Stapleton, J & Thomas, M 2007, How to prepare a marketing plan: a guide to reaching the consumer market, Gower Publishing Ltd, New York.
Stevens, R, Loudon, D & Wrenn, B 2006, Marketing planning guide, Routledge. New York.
Trehan, M & Trehan, R 2008, Advertising and sales management, EK Publication, London.
Worthington, I & Britton, C 2006, The business environment, Prentice Hall, New York.
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