Distribution Channels and Digital Marketing

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Table of Contents

Introduction
Fashion Brand
Current Positioning
Competitors
Current Customer Profile
Use of Technology
Marketing Campaign Plan
Conclusion
References

Introduction

The luxury segment of the fashion industry is one of the most profitable industries. Many companies are involved in the development of luxury items. The marketing strategies employed in each of the companies in the industry determine their success and competitiveness. Digital marketing is among the factors that affect the competitiveness and success of a company in the fashion industry. Most of the firms have embraced this form of marketing. Only few of them are conservative.

The past few decades have been dominated by the developments in the information technology sector, as the world is currently in the information age. Globalisation has also expanded the markets for luxury brands. Companies can now market their luxury items anywhere on the planet. The internet remains the greatest asset for digital marketing strategies. All luxury brands have an online marketing platform for their products.

Many luxury brands are internationally known to use the internet to complement the traditional practices in marketing. Nike is a sports shoe and apparel maker that is not in the luxury fashion industry. This report proposes the repositioning of the company to be a luxury company through the production of luxury shoes. It also incorporates a marketing campaign that is aimed at launching the company into the luxury market.

Fashion Brand

The selected fashion brand is NIKE, Inc., which is a company that focuses on the manufacture of quality sports shoes and sports apparel. The company was founded in 1962 as a Japanese shoe importer. At the time of formation, the two founders operated under the name Blue Ribbon Sports (Levin & Behrens 2003).

The company experienced a constant growth after its establishment. It specialised in the sale and manufacture of sports shoes. Currently, NIKE has a global market share of over 30%, ahead of its main competitors in the industry. This figure is also the biggest market share globally for any company in the footwear industry.

NIKE has over 22,000 retail outlets in the United States alone, with thousands of others being located in other global markets. The market for NIKE products extends to over 165 countries in the world (Larson 2011). The main products that the company makes include athletic footwear, equipment, and other apparel.

It is the global market leader in each of these categories (Carbasho 2010). The company is also constantly experiencing growth in revenue that is occasioned by the better performance of the sports industry. In 2008, the revenue for the different segments that the company specialises in were 52% for footwear, 6% for equipment, 28% for apparel, and 14% for other products (Carbasho 2010).

The company uses NIKE as the main brand name. However, there are other brand names under the company, including NIKE Pro, NIKE Golf, NIKE Skateboarding, NIKE+, and Air Jordan (Carbasho 2010). The trademark for the company is the internationally recognised “Just do it”, which is common in many sporting events.

The trademark constitutes one of the largest marketing strategies that NIKE employs. Despite enjoying success in the sportswear and apparel industry, the company has not ventured into the luxury fashion industry. This report, proposes the start of NIKE’s production of luxury sporting items.

Current Positioning

NIKE is currently the market leader in the sportswear category. It has a global market share of over 35% (Carbasho 2010). The sports shoe manufacture is the main activity in the organisation.

The other activities include the manufacture and marketing of sports accessories. The company also leads in revenue in this industry, with the largest sales being in the United States where there are many stores and retail outlets for its products. NIKE has established a sportswear line where international sporting teams can shop for their uniforms and other accessories.

Few attempts have been evident with regard to the company’s plan to venture into the luxury fashion industry through the manufacture of sports labels that are meant as casual wear. However, the company has retained the sports section as the main driver of its operations.

The establishment of online stores is a major boost for the company. The brand runs a website that is dedicated to the sale of its items. NIKE has also collaborated with other retail outlet stores such as Wal-Mart to distribute the sports apparel and sports shoes (Larson 2011). Many sporting Teams and personalities are sponsored by NIKE, and these continue to market the company.

Competitors

NIKE operates in a competitive market. Many companies are involved in the manufacture of sportswear and sports apparel. However, it has managed to stay on top of competition, thus beating some of its closest rivals. NIKE controls about 31% of the global market while the closest competitor, Adidas, controls only 16% of the market. (Larson 2011). Some of the other competitors in the athletic footwear industry include Reebok, Puma, New Balance, ASICS, Converse, K-Swiss, and Sketchers among others (Larson 2011).

In the athletic apparel industry, NIKE controls a significant market portion while Adidas follows closely. Other players in the athletic apparel are Rebook, Quick Silver, VF Knightwear, Columbia, and Puma (Larson 2011). If NIKE ventures into the luxury sportswear industry, it will face competition from the existing companies such as Louis Vuitton.

Current Customer Profile

The current customer profile for NIKE is in keeping with the products that it produces. The main customers are the sporting companies and sports enthusiasts (Carbasho 2010). The company provides support to teams such as Chelsea Football Club. The players get to use the products in their games (Carbasho 2010). The latest marketing strategies that NIKE has employed are targeted at the young population of sports enthusiasts who constitute the largest group of its customers.

The demographics of the customers for the company indicate that most of them are men. The company has managed to market its products to the male customers, with few female individuals being involved in the buying of NIKE’s products. This move may be because of the close association that exists between the male sex and sports. Sporting personalities also form a special group of NIKE’s customers who are also major marketers for the brand (Carbasho 2010). The absence of luxury items means that NIKE has few customers in the luxury category.

Use of Technology

NIKE has made considerable use of technology in the production process, marketing, and sale of the items that it produces. The company has an established presence in the many digital platforms. It operates a website where customers can purchase items and choose from the large number of items on sale.

The website that NIKE operates allows customers to design customised sports shoes while getting the opportunity to participate in the production process. The supply chain for NIKE applies automation as a major concept. This strategy may reveal the success that it enjoys over other popular brands.

The other use of technology in the company is in the design of the items that are on sale. The many manufacturing industries for NIKE in different parts of the world employ automated production processes, which have aided the company to reduce the production costs. Marketing in the company is also advanced based on its utilisation of the many social sites and print media. According to Washington and Miller (2013), this should be practiced by any fashion brand.

The company has an established presence on the internet, operating social site accounts on Facebook, Twitter, and other leading social site networks. The introduction of a luxury brand by NIKE will easily use the technologies in place at the organisation to position it in the luxury market.

NIKE allows customers to develop their own customised shoes

Figure: NIKE allows customers to develop their own customised shoes

Source: (Tannou & Westerman 2012)

Nike Incorporates marketing on all platforms

Figure: Nike Incorporates marketing on all platforms

Source (Tannou & Westerman 2012)

Marketing Campaign Plan

The marketing campaign that is proposed in this section is for a new luxury brand for NIKE that is meant to attract the large markets in its sports shoe section. The company should develop a luxury shoe brand that is targeted to the large market that is in the form of prominent sports personalities. The 7Ps of marketing that consist of the seven elements in the marketing mix are important in the valuation of the performance of the new luxury products that are proposed for NIKE.

Product

Nike should design a luxury brand of shoe that is meant to the sporting personalities for use off the field. The brand should be as competitive as other brands in the market. It should combine quality with fashion, thus ensuring that customers get a fair deal in the purchase.

The branding of this new product should be done like other products that the company has managed to brand in the production line. Packaging is an important part of the product. The company should package the new shoe brand in a manner that is appealing to many sporting personalities (Choi, Jungwoo & Jongsu 2013).

Price

Price is the most important determinant of the class of a luxury item. In addition to the costs that go into the production of the new product, NIKE should ensure that the price suits the target customers. The luxury items in this category are often highly priced. Many prominent and wealthy individuals prefer buying them because they confer a special status (Chevalier, & Mazzalovo 2012).

NIKE should also implement a form of pricing that suits the new group of customers by fixing the prices as a level that is competitive in the market. The luxury shoes should be expensive to correspond to the prevailing market conditions, class of customers, production costs, and the competition.

Promotion

Promotion is an important determinant of the success enjoyed by a company participating in the luxury fashion industry. NIKE has an established advertising policy, with the presence in the different media and internet sites (Chevalier, & Mazzalovo 2012). The proposed luxury shoes that the company should introduce should be marketed through the different platforms. They should be branded as a trademark for the sports personalities who seek class.

Traditional marketing strategies should be combined with contemporary strategies. Print media and posters, television advertising, billboards, and e-marketing are some of the possible marketing platforms. The company should also employ public relations, merchandising, and personal selling in the marketing of the new items.

Place

The places that marketing should occur determine the success of the marketing strategy of an organisation (Chevalier, & Mazzalovo 2012). NIKE has many stores that are dedicated to the sale of items that it manufactures. These items should be utilised in the marketing of the new luxury shoes.

The company also has an online presence, which will offer another place for marketing of the new shoes. The supply chain for the new brands of luxury shoes should be detailed, with the management investing in technology for the management of the additional supply chain features.

People (Staff)

The people involved in the design, marketing, and sale of the luxury items also affect the development of a luxury brand. NIKE should contract qualified and experienced developers for the new luxury shoe design.

Since the company will be interacting with different personalities of different classes in the sale of the luxury sports shoes, the individuals who are entrusted with customer service should also be highly qualified and trained. The human resource policies in the organisation should be reviewed to ensure that the staff members involved in the design and development of the luxury sports shoe is satisfied at the workplace, and hence able to produce quality products.

Processes

The processes involved in the manufacture of the luxury shoes that are proposed for NIKE should be efficiently flowing in a logical manner. The production process from suppliers to the finished product should be effectively managed. The process of marketing needs to be detailed, with the company providing a written summary of the expected marketing process. The customer management procedures employed in the luxury brand development and management should be detailed.

According to Han, Nunes, and Drèze (2010), the company should ensure that the process of handling customers from the point of contact to the last point where it makes the sale of a product need to be effectively managed. Competent and efficient members of staff should also manage the procedures and mechanisms in the development, marketing, and sale of the new luxury shoe items (Calefato 2014).

Physical Evidence

NIKE should invest in the tangible luxury shoe brands that communicate fashion. The layout, décor, and ease of access for the product determine the type of customers that it attracts. NIKE should ensure that this physical evidence of the class is evident in the new luxury shoes. The company should use the social media and social sites on the internet to launch the new luxury shoes, which should be in combination with the traditional media such as the television advertising.

The use of fashion events in the luxury industry is important. NIKE should start its campaign of the luxury items developed by sponsoring a fashion event where these items are launched into the luxury market. Technology should be at the centre of the marketing campaign for the new luxury items. The company should invest its resources in the contemporary technological marketing measures and strategies.

Conclusion

The luxury fashion industry is competitive. Any new entrant has to have the necessary resources to engage in this competition. NIKE fits the profile of a company that can easily engage in the production of luxury items based on its presence in the athletic wear and apparel industry.

This report has featured the company and proposed development of a luxury fashion shoe brand that can attract the many sports personalities and sports enthusiasts. The marketing campaign plan and components are also discussed based on the 7Ps of marketing.

References

Calefato, P 2014, Luxury: Fashion, Lifestyles And Excess, Bloomsbury, London.

Carbasho, T 2010, Nike, Greenwood Santa Barbara, California.

Chevalier, M & Mazzalovo, G 2012, Luxury Brand Management : A World Of Privilege, John Wiley & Sons, Hoboken.

Choi, J, Jungwoo, S & Jongsu, L 2013, ‘Strategic management of new products: Ex-ante simulation and market segmentation’, International Journal of Market Research, vol. 55 no. 2, pp. 289-314.

Han, Y, Nunes, J, & Drèze, X 2010, ‘Signalling Status with Luxury Goods: The Role of Brand Prominence’, Journal Of Marketing, vol. 74 no. 4, pp. 15-30.

Larson, D 2011, ‘Global Brand Management – Nike’s Global Brand’, ISM Journal of International Business, vol. 1 no.3, pp. 1-14.

Levin, A & Behrens, J 2003, ‘From Swoosh to Swoon: Linguistic Analysis of Nike’s Changing Image’, Business Communication Quarterly, vol. 66 no.3, pp. 52-65.

Tannou, M & Westerman, G 2012, Nike: From Separate Digital Initiatives to Firm-Level Transformation, MIT Centre for Digital Business, Capgemini Consulting.

Washington, K & Miller, R 2013, ‘Chapter 37: Most Valuable Apparel & Luxury Brands’, Retail Business Market Research Handbook, vol. 1 no.1, pp. 140-141.

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