Marketing Strategy and Economic Changes Essay
Marketing Strategy and Economic Changes
Marketing Strategy and Economic Changes
Many organizations and business entities have developed and expanded their operations across the world as a result of the great developments which have been experienced in various economies across the world. One of the major issues that have contributed to the growth of organization is their strategies in marketing their products and services so that the consumers are aware of what they are offering. Marketing strategies when implemented properly often bring good returns to a company in terms of increased market share, increased sales as well as increase in the profitability(Larson, 2011).
Failure of a company to have effective marketing strategy can result in failure and collapse of the business since the company is not able to promote its products and influence the purchasing behaviour of the consumers (Parker, 2011). It is important that an organization should formulate a marketing strategy that will enable it realize its objectives and goals in the short and long run. However, there are changes in the economy which may affect the marketing strategies which an organization applies for its products so that it can be able to stay in the market. Economic issues such recession and depression in the economy may force a company or an organization to change the strategies and adopt new ones that will not affect the company negatively. Nike Inc is a multinational organization that deals in sportswear in terms of clothes as well as shoes for all groups of people(Nike: The Future Of Marketing, 2012).
Nike Inc is a worldwide known brand of sportswear designer, manufacturer as well as distributor and seller across the world. The company is known to produce one of the top quality brands of products that are used across different sports in the world. The company has been in the forefront in ensuring that its marketing strategies are effective and capture the market as well as help it stay on top of the competition(Zakrevskaya, &Mastracci, 2013). The marketing strategies which the company has been using include brand promotion and commercials with the endorsement of famous celebrities in the sports field. The company uses successful sports professionals, college teams as well as celebrities who they sponsor using their products(Nike: The Future Of Marketing, 2012).
When the successful sports professional such as Michael Jordan are seen by consumers to use the products of the company, there are high chances that the consumers will be influenced to purchase the products since someone that is successful has recommended them and also makes use of them(Larson, 2011). This marketing strategy of using celebrities and successful sports persons builds the notion in consumers that they too can have the same experience as the sports persons that use the same products and also show their association with the persons of their choice. The company has also made use of marketing segmentation as part of its marketing strategy. Nike Inc has majority of the sportsmen as its consumers (Nike: The Future Of Marketing, 2012).
However, changes in the global economy can have negative impacts and influence the marketing strategies of the company. As mentioned earlier, economic factors such as the occurrence of recession, as well as depression are some of the economic factors which can influence and impact the marketing strategies of the company(DATAMONITOR: NIKE, Inc., 2012). The impacts of the economic changes can be analysed in terms of the effect on the competitive advantage of the company, targeting, market segmentation as well as positioning in addition to branding of products.
Impacts of Economic Changes
Economic recession and depression are the major economic changes that can greatly affect the marketing strategies that Nike Inc applies. During the economic recession and depression, it means that there is less supply of cash and that people do not have enough to sustain their normal purchasingbehaviour(Zakrevskaya, &Mastracci, 2013). The products that Nike Inc offers to the consumers, especially the sportsmen are often of high price. Recession and depression will mean that the company will have to look for new marketing strategies which can still help sustain its profitability. Sponsoring of the sportsmen is the primary marketing strategy which the company has used for many years and has been seen to be effective (OnurTaş, &Cunedioğlu, 2014).
Therefore, during recession and depression, Nike Inc will be forced to forgo some of the sponsorships since it will not be able to sustain the sponsorships which are often free to the athletes in return for the athletes wearing the brands of the company(DATAMONITOR: NIKE, Inc., 2012). The company would want to reduce its costs in sponsoring during the recessions and depression since many people at this time do not have enough funds to spare which they can spend on high-end products such as those of Nike. Companies that produce substitute products which are cheaper will have an added advantage compared to Nike (Groucutt, Forsyth, &Leadley, 2004). Consumers would want to purchase less of the high-end products hence accusing Nike Inc to lose its competitive advantage to the competitors that offer cheaper products.
Segmentation, Targeting and Positioning
Nike Inc is a well-known brand and often uses marketing segmentation as a way of promoting is products. The market segment that the company has engaged in is the sportsmen segment in the market (DATAMONITOR: NIKE, Inc., 2012). The primary target has been athletes and people that engage in sporting activities across the world from different age groups. This means that the company relies heavily on sports to promote and sell its products. Therefore, when there is economic recession and depression, the company may want to adapt a new market segment, that of those that are not involved in sports(OnurTaş, &Cunedioğlu, 2014). However, the marketing segmentation and targeting of the non-sporting groups will mean that the company has to adjust the pricing of its products.
Furthermore, the targeting strategy of the company will be affected negatively since it will need to change from just sponsorship of the sportsmen but also to check on diversity of its products. Under positioning in the market, Nike Inc has been able to position itself strategically across the globe in many countries(Zakrevskaya, &Mastracci, 2013). The company operates in different countries hence has a global presence which is good for the company. The economic recession and depression will not have a major impact on the positioning of the company as it already has a global presence. However, it may have to look at other markets that are developing where the market may not be greatly affected by the changes in the global economy(MacEwan, & Miller, 2011).
The other aspect of marketing strategy that may be affected by the negative economic changes in the global economy is branding. Nike Inc has been observed to have a strong brand that commands a huge market share as compared to other competitors(Lee, & Ha, 2012). The branding of the company’s product will not be affected since the company has a fully established brand that is well known and has a great market share in sports.
Impact on Consumer Behaviour
Changes in the global economy, especially issues such as recession and depression in the economy will have an impact on the consumer behaviour and how they make their purchasing decisions; especially regarding the products of Nike Inc(MacEwan, & Miller, 2011). Consumers depend on their income to purchase products and when the global economy faces issue such as recession and depression, their income is likely to be affected. Therefore, the consumers in this case will shy away from high-end products since they are expensive.
According to the law of demand, when the price of an item is high, there are chances that the demand may decline. Income is a determinant factor hence the purchasing behaviour of the consumers will change with consumers seeking for more urgent needs such as food and clothing and other needs instead of spending their money on sportswear (Zakrevskaya, &Mastracci, 2013). Therefore, Nike will be forced to seek alternative marketing strategy which will still appeal to the consumers such as offering of discounts and providing affordable products. Consumers during recession and depression will often seek for substitute products that can still function the same way as the primary product hence they will opt to purchase other types of clothing that can still perform the functions of Nike products.
The global economy is constantly experiencing growth which continues to create opportunities for many companies in the world, Nike Inc included, to grow and expand on their business. Nike Inc has potential for growth in various areas based on the technological developments which have continued to increase innovation and creativity (MacEwan, & Miller, 2011). Furthermore, the many policies in various countries on business have been changed to open up borders for international trade in various countries across the world which means an increase in the potential market for the products of the company. The growth opportunities that the company has include the growing global market for footwear as well as the growing opportunity in online retail.
Global footwear market
Over the recent years, there has been tremendous growth that has been experienced in the global market on footwear which provides Nike with an excellent opportunity to grow its business (NIKE, Inc. SWOT Analysis, 2014). The company has a strong brand portfolio as well as strong marketing strategies which if properly managed will enhance the business. As mentioned, there has been a lot of reduction in trade barriers in many countries across the world through trade treaties which have opened up new markets especially bin developing countries.
The global market for footwear has grown over the years and in the year 2012; the revenue generated amounted to about $256.6 billion. The European markets as well as the Asian markets have also experienced growth over the years which provide a great opportunity for the growth of the company (Lee, & Ha, 2012). The global footwear market is poised to grow a lot and hence Nike should take up the opportunity since there is a growing demand among consumers for footwear products that are comfortable.
The other growth opportunity that Nike Inc has is online retailing. Over the years, there has been a growing trend among consumers to make purchases online as a result of the technological as well as the development of the internet(NIKE, Inc. SWOT Analysis, 2014). Consumers over the recent past have been seen to prefer online purchasing which they consider to be affordable, efficient as well as convenient. Therefore, Nike Inc, through its website and creation of an online store for its products, can growth in the future (Larson, 2011).
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