INTERNATIONAL UNIVERSITY COLLEGE Sofia MARKETING PLAN Market entry/grow opportunity for Nike in Bulgaria INDIVIDUAL ASSIGNMENT Coursework in MARKETING Student registration No: 20019402 Program: MBA Lecturer:Dr. V. Blagoev Executive Summary Our approach to developing a market-entry strategy follows a structured process, based on in-depth understanding of all aspects that feed into a commercial launch. A comprehensive analysis, using market data and market research, allows us to assess all areas affecting Nike’s strategic direction: Current market situation: detailed consumer and business market segmentation and analysis of market drivers will be undertaken to identify the most valuable target segments and underlying reasons for market entry/opportunity. Specific target areas are evaluated to provide key inputs: product, pricing, retail structures, sales and distribution planning – A review of competition: extensive competitive profiling in areas such as positioning, brand, target segments, value proposition, market offer, pricing, customer care, sales & distribution, enable assessment of competitors’ strengths and weaknesses Threats and opportunity analysis: analysis of relevant threats and opportunities that the product might face. An internal SWOT highlight areas of valid advantages and disadvantages, providing input to market entry positioning and value proposition – Objectives and issues: description of limitations or possibilities within the current plan that affect objectives to attain or issues that might affect market and segment growth – Identification of marketing strategy: outline of how Nike is to create customer value and the specific of target markets.
It is also referred to specific strategies of the marketing mix (4Ps) and how they relate to threats and opportunities. – Action programs: how marketing strategies will be turned into actions – Budgets: shows expected revenue, expected marketing cost and ROI Conclusions from the market analysis together with internal SWOT and identified strategic risk areas form the basis for describing the market entry/opportunity. Contents 1. Executive Summary 2. Current marketing situation 3. Threats and opportunities analysis 4. Objectives and issues 5. Marketing strategy 6. Conclusion REFERENCE
I. Current Market Situation 1 Market description Bulgaria isn’t renowned for specialist sports stores. The news for sports goods businesses is generally positive, given Bulgaria’s negative expectations for rapid economic development being one of the poorest members of the EU. Meanwhile, some analysts expect sports clothing and shoes to climb in demand. “The global economic crisis has not yet significantly affected the sport goods market because when people cannot afford to buy apartments they prefer buying goods such as trainers,” said Kr Tsonov, (Director of Sport Depot).
Tsonov said annual turnover of branded sport goods in Bulgaria last year was approximately Euros63 million, relatively small for a population of 7. 5 million people. The figure doesn’t include significant equipment imports from China and Thailand. Germany’s Adidas has some 40% of the market share, with revenues of about Euros 39 million annually. The US Nike and German Puma brands each earn Euros 19 and 13 million over the same period. The Bulgarian sport goods market is still developing. Branded sport clothes and shoes are generally favored sales compared to specialized sport equipment, including that for extreme sports.
But the current small volume of sales is the main reason why large international sports chains have yet to enter the market. Currently, specialized sport goods are offered by a large number of retailers, but most dealers have just one store. In Sofia, there are about 20 such stores and countrywide there are around 70. But mass distribution has yet to gain a stronghold. When it does, as large brands seek to leverage growth in untapped territory with franchising deals, the Bulgarian sports market will streak away.
The main consumers of Nike products can be divided into the following major segments: proffessional athletes (approximately 65 000); • active amateurs (between 20-55 years of age, 368 728), • students (fashion or trend fostered, approx. 896 734); • young active people (between 15-19 years of age, who practice sport for good body shape or just for health, approx. 220 937) and • people from upscale market (usually earn above the average for the country, who would like to feel comfortable and look good when training, approx. 00 000). (Ministry of physical education and sport, 2011, National Statistical Institute 2011) Professional athletes seek better performance and to reach the best of their potential. Product characteristics include light weight, high innovation and cushion technology. For instance Carl Lewi’s custom-designed pair of golden-colored Nike racing spikes made with Zytel, sources state that each shoe weighed about 94 grams. Active amateurs and people from upscale market are concerned with low risk of injuries and better performance.
Product can be viewed with light weight and cushioning technology. Air Max a renowned running shoe by Nike, specially designed to provide the ultimate in impact protection — reducing shock and distributing pressure, best characterizes the product. (www. footlocker. com/searchresults/keyword:nike+air+max/) Students and young active people have similar traits – comfort and trend. Design and cushioning technology is what the product is aimed for. Good example is the online Nike shop, where you can custom your gear – shoes. http://nikeid. nike. com/nikeid/index. jsp#home
In general, Nike’s products are considered to be upscale and versus the competitors the pricing is relative higher. Given that the product prices are realistic Nike is offering to its customers, it is doubtful whether all customers think alike. This may represent a weakness, having in mind the lower output of the economy in Bulgaria. To overcome any future problems, especially in high price line, Nike is open for emerging technologies and heavily invests in innovation towards the development of new products, specifically the Nike Alpha Project, a revolutionary new line of athletic shoes.
Nike was negligent in the past towards the mid-to lower-price-point products, which offers another gap for improvement. To better develop competitive position at all price points more resources and time should be dedicated. There is a great potential in the lower price point and these are needs that can meet the specific characteristics of the Bulgarian market. A. J. Almaney, Ph. D. (2000) 1 Product review According to Nike, the following shoe styles will be available online in January 2012 refering to the launch date.
Regular follow up or update can be found @NikeStore on Twitter. These styles may also be available at authorized Nike retailers or authorized Jordan retailers. |JORDAN | |DATE |STYLE NAME |COLOR |PRICE |STYLE # | |01/07/12 |Air Jordan 8. 0 |Black/Dark Concord-Anthracite-Orion Blue |$150 |467807-009 | |01/11/12 |CP3.
V |Black/White-Stealth |$120 |487428-003 | |01/19/12 |Fly Wade II |White/Varsity Red-Black |$145 |479976-101 | | | | | | | |BASKETBALL | |DATE |STYLE NAME |COLOR |PRICE |STYLE # | |01/06/12 |Zoom Kobe VII |White/Black-Concord-Neutral Grey |$180 |488244-100 | | | | | | | |AIR FORCE 1’s & NIKE SPORTSWEAR | |DATE |STYLE NAME |COLOR |PRICE |STYLE # | |01/14/12 |Air Force 1 |Black/Black |$90 |488298-007 | |01/14/12 |Air Force 1 |Cargo Khaki/Cargo Khaki |$90 |488298-300 | |01/15/12 |Air Max ’95 |Obsidian/Obsidian-White-Action Red |$150 |609048-400 | |01/21/12 |Air Force 1 |White/Obsidian |$90 |488298-105 | http://help-us. nike. com/app/answers/detail/a_id/20727 2 Marketing Mix adapted by Nike for Bulgarian Market
Nike has been developing its Marketing Mix based on product, price, place and promotion. Thus, seeking the right marketing mix to best contribute to its goal of maximum profitability. Product: Nike understands the importance to satisfy every aspect of the consumer market in Bulgaria. To penetrate the competition and gain market share Nike should have an extensive range of products. Key point is to provide features, designs, various brands, packaging and benefits like extra warranties and after sale service. There is need to cater different market segments and every segment has specific requirements as well as individuals. Customized solutions of the product can be offered and shaped as per the requirements of the customer.
Warranties of one year can be offered for the products and in case of defects or problems occur after purchase a replacement can be offered. This can be referred as after sale service and will help in keeping loyal customers. The competitor Addidas is offering only 6 month warranties for the Bulgarian market. There is an increasing interest in the consumer for high end brands and collaboration with other companies could trigger more sales and recognition. E. g. selling i-pods with their jogging shoes range. Price: Internationally Nike is positioned at high-end consumer market with high disposable income looking for better service and top of the line product. Basically the strategy is to provide high cost with maximum profitability, hence high profit margins.
That can be justified by higher cost for innovations and advertisement collaboration with top sport athletes. A possible solution specifically for Bulgaria to overcome the high cost is to introduce special promotions during the festive season or low sales periods or by selling out old models. Place: Nike has developed wide range of distribution channels worldwide. Appropriate for the local market are retail channels: retails stores, brand stores and exclusive show rooms. Online shopping is another means of distributing its various products and its less costly compared to the rest methods. Distributers are commonly engaged to support its retail outlets.
Factory outlets can have a major role in the down market, where discounted products can be disposed. Promotion: Nike has one of the most comprehensive promotion and advertising. To build awareness, brand image and loyalty Nike can use for the local market advertising, sales promotions, advertisement campaigns, public relations, publicity and sales promotions. Nike often relates to top athletes from various sports – football, tennis, golf and etc. Nike also endorses various teams and clubs, such as Levski Football team. It can use shows for product placement or it can sponsor various events – Sofia marathon, Football Cup, Golf tournaments, like Black Sea Rama or even new stadium as it did with “Alliance Arena”
Nike also can use local celebrities in their advertisements to increase brand loyalty by utilizing the brand image of such celebrities. http://www. slideshare. net/hemanthcrpatna/a-report-on-consumer-behaviour-in-nike 3 A review of competition The rivalry among competitors is quite high for the industry. Nike, Adidas and Puma have grown at a remarkable rate, each offering more choices, more innovations and new trends. Marketing has performed very aggressively by sponsoring different teams and social responsibilities. Main competitors of Nike are Adidas with income for 2008 39 890 bnl and Puma with income for the same period 13 883 bnl. Nike currently is standing in second place with just over 19 248 bnl. Trade register 2007) Market positions and strategies for product quality, pricing, distribution and promotion Adidas Adidas manufactures running shoes, football boots, most famous for the Predator range, basketball Pro Model shoes. In addition Adidas makes sport apparel for tennis, rugby, football, lacrosse and separate line for gymnastics. Adidas has followed the steps of Puma and has entered the lifestyle market by offering deodorants, aftershaves, perfumes and watches. Adidas is a well known brand. Main customers are similar to Nike are athletes and sport enthusiasts. The brand appeals to both men and women and even children. Age group is between 15-35 years.
Strength of Adidas include: competitive pricing, effective marketing strategy (sponsorship), market leadership (rivals Nike and Puma for local market), strong online presence (internet site facebook page and linkedin), strong distribution chain (outlets and malls – Sofia, Serdica, Tsarigradsko shousse, City, main distributer – Elmec Bulgaria), partner with leading teams – Ludogorec and Litex Weaknesses of Adidas: high cost structure, over pricing, warranty of products (only 6 months vs. Nike 1 year), no prominent local sport star advertising for brand http://bg-bg. facebook. com/pages/Adidas-Bulgaria/179106108842362 http://bg. linkedin. com/pub/dir/Atanas/Temelkov Puma Currently Puma runs in third on the local market versus Adidas and Nike. It has a different approach towards the market. Long term mission is to be the most desirable sports lifestyle brand.
Thus, offering different segmentation ranging from sports (soccer, running, golf, sailing, motorsport), sport fashion (alliance with: the black label, Alexander McQueen, Yasuhiro Mhara, Rudolf Dassler) and sport lifestyle (watches, fragrances, eye-ware). Strength of Puma: fashionable brand, credible reputation, diversification, sponsoring FT Slavia, Chernomorets and Lokomotiv Sofia. Weaknesses of Puma: innovation follower, lack of market share http://www. slideshare. net/rwbcapel/pumafinal II. INDUSTRY ANALYSIS Microeconomic situation is steadily favorable. Nike continues to increase the number of representative stores in key places in the major cities.
Puma and Addidas, the major competitors are fighting intensively for the piece of the pie. Entering of substitute goods on the current market is a treat for the increase of sales. Factors, which determine the demand for the Nike products are their price, revenue of the consumer, substitute goods, taste of the consumer and advertising. Increasing of raw materials might decrease sales for the products. Same goes if there is presence of substitute goods or similar products. Sports Equipment retail sales in Bulgaria increased at a compound annual growth rate of 8. 7% between 2003 and 2008. Ball sports equipment sales led the sports equipment market with a share of 38. 3% in 2008.
Other specialists were the leading retail format for ball sports equipment in 2008 Datamonitor (2010). Opportunities • Athletic shoes and apparel have become a must for all consumers worldwide. This is due to both the increasing numbers of people exercising and the trend towards casual apparel. • Competition is fierce at all levels in within the industry, especially among the leaders. This creates a sense of security for the companies that have been able to create a niche. • Cost cutting due to restructuring of operations will give many companies the chance to price products more competitively. • One area in the industry that is ever changing is research and development.
The strong departments will surely capitalize on the trends of tomorrow if their efforts are successful. • E-tailing, or customer-designed internet stores, is threatening the traditional distribution channels, thus excluding intermediates and allowing for increasing profitability. Threats • The industry has reached a level of maturity. While style and technology in athletic apparel and footwear has reached a leveling-off point, the important aspect now is for companies to differentiate their lines. • Inflation is reaching higher levels over the Bulgarian economy, which may decrease in consumer spending. • Consumers are becoming savvier and may lean towards discounted items or look for substitutes. In terms of market saturation, many of the key manufacturers in this industry have been around for many years. Consumers may be scanning the market for new and different footwear and apparel products. III. Marketing Objectives and Issues Providing best quality and balanced priced shoes range and apparel to the customer with a special focus on the big cities like Sofia, Varna, Bourgas. Another objective is to make available the product to as many marketable stations as possible. In addition to focus on all types of customers including old aged, young men and women and children as well. • Have strong representation at local and international major sporting events.
Advertising at Local Football Cup in addition Champions and Europe League, Tennis tournament Zagorka Master, Volleyball Champions League and local Playoffs, local Golf tournaments – Black Sea Rama, . • Maintain Brand associations with major sport stars – Grigor Dimitrov, Tzvetana Pironkova and Dimitar Berbatov • Effective use of Corporate Event Sponsorships. ie. , Nike Tour Golf • Develop a website solely dedicated to the Nike brand. Nike has multiple websites all integrated by Nike. com • Use Nike brand loyalty to increase sales. • Create a product image that differentiates from the competition. Swoosh become way of life. • Increase product awareness through using an ntegrated marketing approach – 30 second TV spots, Full page magazine advertising, Varying sized billboards Competition is stiff and already has good background on the local market. Key issues that might affect the attainment of the marketing objectives is for competitors to foresee and adapt to current environment prior to Nike and approach key sport stars and use corporate event sponsorships for their brand awareness. Competitors will definitely follow Nike in its conquest for taking market share and probably use similar methods for generating more customers. Depend in large part on first mover and economy of scale. IV. Marketing Strategy
Nike hopes to create customer value and relationships by identifying three key to success strategies that they believe will be instrumental in reaching sustainable profitability. The first is the necessity to meet the customer’s needs by offering the most comprehensive selection and knowledgeable staff. The second key to success strategy is the need to monitor the competitive environment in an effort to ensure differentiation. And the third need is to create venues and environments for open dialogue and multitude of perspectives. This can be accomplished through proper product, pricing and promotion decisions. Product strategy: several lines of athletic shoes and apparel, diverse product mix consisting of athletic shoes apparel and equipment. Pricing strategy: product skimming strategy and product line pricing.
Promotion strategy: advertising (repeat messages at low cost), direct marketing (through e-shop) and public relations (sponsorship of FT Levski). http://www. bplans. com/sports_clothing_retail_shop_business_plan/executive_summary_fc. php#ixzz1ioAOO2X2 V. Conclusion In this industry there is an intense competition, fashion trends and price sensitive consumers that have slowed the growth of this industry. Financially speaking the companies must be aware the economy is slowing and it should keep its revenues high and costs low. Internet is a huge perspective for Nike in Bulgaria, as the service is gaining more popularity than ever and it must keep user friendly apps to generate more customers than the competition. The well know formula to do this is to keep site simple and user friendly.
By offering great deal and various promotions through online channels there is a potential to bring more customers and consequently more revenue and improve relationship with its clients. On the other hand involving in different events, sponsorship and tournaments could shine the brand picture and gain positive trend toward the competition. Brand awareness will be retaliated and will give competitive advantage, thus gaining more market share in the long run. REFERENCE 1. (www. footlocker. com/searchresults/keyword:nike+air+max/) 2. 2010 Form 10-K, Nike, Inc.. // United States Securities and Exchange Commission. 3. http://bg. linkedin. com/pub/dir/Atanas/Temelkov 4. http://bg-bg. facebook. com/pages/Adidas-Bulgaria/179106108842362 5. ttp://condor. depaul. edu/aalmaney/StrategicAnalysisofNike. htm 6. http://help-us. nike. com/app/answers/detail/a_id/20727 7. http://nikeid. nike. com/nikeid/index. jsp#home 8. http://www. hktdc. com/info/mi/a/imn/en/1X06BN12/1/International-Market-News/Bulgarian-Sports-Market-Limbers-Up. htm 9. http://www. marktforschung. de/studien-shop/marktdaten/sports-equipment-sales-via-key-retail-formats-in-bulgaria-to-2013-33721/? xtypocommerce%5Bcat%5D= 10. http://www. nikebiz. com/crreport/content/strategy/2-1-5-on-the-horizon. php? cat=cr-strategy 11. http://www. slideshare. net/hemanthcrpatna/a-report-on-consumer-behaviour-in-nike 12. http://www. slideshare. et/rwbcapel/pumafinal 13. Kotler, P. , Wong, P. , Sounders, J. & Armstrong, G. (2005). Principles of Marketing (4th European ed. ). 14. Latest materials improve sportswear performance”. ICIS Chemical Business. http://www. icis. com/Articles/2008/08/04/9144388/latest-materials-improve-sportswear-performance. html. Retrieved 2008-10-14. 15. Ministry of Physical Education And Sport (2011). National plan for development of physical education and sport 2011-2020. Retrieved on November 24,2011, from http://mpes. government. bg/Documents/Documents/Strategii/Strategia_2011-2020. pdf 16. National Statistical Institute (2011), Population census in the
Republic of Bulgaria, Retrieved on November 26, 2011, from National Statistical Institute website: http://www. nsi. bg/census2011/pageen2. php? p2=179 17. Nike 2010 Annual Report : 18. Nikebiz : Company Overview : History : 1960s, 19. Peters, Jeremy W. (August 19, 2009). “The Birth of ‘Just Do It’ and Other Magic Words”. The New York Times. http://www. nytimes. com/2009/08/20/business/media/20adco. html? _r=3&ref=business. Retrieved 2009-09-30. 20. Principles of Marketing, Kotler and Armstrong, 14th edition (2011) 21. Registry agency (2007), Commercial register, Retrieved on December 23, 2011, from https://public. brra. bg/CheckUps/Verifications/VerificationPersonOrg. ra 22. www. nike. com
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