BACHELOR IN BUSINESS ADMINISTRATION

SEMESTER 3

PRINCIPLES OF MARKETING – ASSIGNMENT 2

Prepared for:
Lecturer’s name:

Prepared by:
Student’s Name: – ID No:
 1) Customer-driven marketing strategy

Explain in details what market segmentation and market targeting is

Customer-driven marketing strategy

Customer-driven marketing strategy is advertising to identified target market and reacting to

their needs. These marketing strategies can also enlighten the ways to retain customers and help
build a strong relationship with them.

Companies must draw the customer from competitor business, make them brand loyal and grow
them by delivering greater value. Before anything a company must understand the needs and
wants of its customers, only then it can fulfill by using the marketing strategy.

Market targeting

Target marketing involves breaking a market into segments and then concentrating your
marketing efforts on one or a few key segments consisting of the customers whose needs and
desires most closely match your product or service offerings. It can be the key to attracting new
business, increasing sales, and making your business a success.

Market segmentation

Types of Market segmentation

Geographic Segmentation

Geographic segmentation divides the market on the basis of geography. This type of market
segmentation is important for marketers as people belonging to different regions may have
different requirements. For example, water might be scarce in some regions which inflates the
demand for bottled water but, at the same time, it might be in abundance in other regions where
the demand for the same is very less.

People belonging to different regions may have different reasons to use the same product as well.
Geographic segmentation helps marketer draft personalized marketing campaigns for everyone.

Demographic Segmentation

Demographic segmentation divides the market on the basis of demographic variables like age,
gender, marital status, family size, income, religion, race, occupation, nationality, etc. This is one
of the most common segmentation practice among marketers. Demographic segmentation is seen
almost in every industry like automobiles, beauty products, mobile phones, apparels, etc. and is
set on a premise that the customers’ buying behavior is hugely influenced by their demographics.
 Behavioral Segmentation

The market is also segmented based on audience’s behavior, usage, preference, choices and
decision making. The segments are usually divided based on their knowledge of the product and
usage of the product. It is believed that the knowledge of the product and its use affect the
buying decision of an individual. The audience can be segmented into –

 Those who know about the product,

 Those who don’t know about the product,

 Ex-users,

 Potential users,

 Current Users,

 First time users, etc.

People can be labelled as brand loyal, brand-neutral, or competitor loyal. They can also be
labelled according to their usage. For example, a sports person may prefer an energy drink as
elementary (heavy user) and a not so sporty person may buy it just because he likes the taste
(light/medium user).

Psychographic Segmentation

Psychographic Segmentation divides the audience on the basis of their personality, lifestyle and
attitude. This segmentation process works on a premise that consumer buying behavior can be
influenced by his personality and lifestyle. Personality is the combination of characteristics that
form an individual’s distinctive character and includes habits, traits, attitude, temperament, etc.
Lifestyle is how a person lives his life.

Personality and lifestyle influence the buying decision and habits of a person to a great extent. A
person having a lavish lifestyle may consider having an air conditioner in every room as a need,
whereas a person living in the same city but having a conservative lifestyle may consider it as a
luxury.

2) Market segmentation

Propose one new product and you are required to do market segmenting based on the categories
that you need. And choose which market segment will become your target market
Market segmentation

Market segmentation is a process of dividing the market of potential customers into smaller and more
defined segments on the basis of certain shared characteristics like demographics, interests, needs, or
location.

Nike is unique in the fact that they have a very general targeted demographic segment –them stated
target market is “all athletes”. However, this does not mean Nike does not use market segmenting to
more precisely define various market segments.

Demographic Variables:

Demographic segmentation is a factor used by Nike to target individuals according to their age, life-
cycle stage, gender, occupation, and generation. Although with apparel and sports the market can be
broad, for the most part Nike primarily targets consumers who are between the ages of 15-40. The
company caters to both men and women athletes equally, and is placing an increasing focus on
tweens and teens to build long-term brand loyalty.

Nike addresses this segment by deploying marketing campaigns about young adults striving to be like
their athlete idols. For example, right before the 2014 World Cup Nike developed a video starring
important. Nike sponsored soccer athletes with teenage soccer players. Nike has recently launched a
variety of women’s lines to tap into the fast growing women’s segment. Currently only 20% of
Nike’s revenues are based on sales of products targeted at women, but this is expected to grow
significantly in the coming years.

Proposed product: Nike

My proposed product is the Nike which is a good example of customer demographic and psychographic
segmentation. This product manufacturer sells accessories for athletes. Swot analysis

3) Swot analysis

Explain in details what is swot analysis.

Do swot (strength, weaknesses, opportunities, threats) analysis for the product that you are going
to sell (refer to question no. 2)

Strengths and weaknesses are internal to your company—things that you have some control over
and can change. Examples include who is on your team, your patents and intellectual property,
and your location.
 Opportunities and threats are external—things that are going on outside your company, in the
larger market. You can take advantage of opportunities and protect against threats, but you can’t
change them. Examples include competitors, prices of raw materials, and customer shopping
trends.

 Strengths describe what an organization excels at and what separates it from the
competition: a strong brand, loyal customer base, a strong balance sheet, unique technology,
and so on. For example, a hedge fund may have developed a proprietary trading strategy
that returns market-beating results. It must then decide how to use those results to attract
new investors.
 Weaknesses stop an organization from performing at its optimum level. They are areas
where the business needs to improve to remain competitive: a weak brand, higher-than-
average turnover, high levels of debt, an inadequate supply chain, or lack of capital.
 Opportunities refer to favorable external factors that could give an organization a
competitive advantage. For example, if a country cuts tariffs, a car manufacturer can export
its cars into a new market, increasing sales and market share.
 Threats refer to factors that have the potential to harm an organization. For example, a
drought is a threat to a wheat-producing company, as it may destroy or reduce the crop
yield. Other common threats include things like rising costs for materials, increasing
competition, tight labor supply and so on.

SWOT analysis on Nike

Nike’s Strengths – Internal Strategic Factors

 Strong Brand Awareness – Nike is one of the most recognizable brands in the world as its
name alone is memorable, easy to pronounce, and very unique. Its swoosh symbol is easily
recognized by everyone. Nike has captured approx.31% of the global athletic footwear market.

 Huge Customer base – Nike has millions of customer from around the world who loyally
follow Nike’s trends, participate in Nike events, and even provide customer feedback. Due to
its huge customer base, Nike’s market cap has grown to $115.19 billion as of 2018.

 Aimed for Sustainability – Nike’s CEO Mark Parker has addressed that they will
continue to acknowledge the environmental issues in the communities. The CEO ensures that
Nike will help to contribute in finding a solution against these environmental issues.

 Iconic Relationships – Nike’s long-term partnership with Michael Jordan has proved to
be beneficial in terms of sales for the company. Their collaboration resulted in “Air Jordan 1
Shoes”. Additionally, Nike teamed up with the famous basketball player to help design the
“Air Jordan 1 Shoes”.
 Side Brands – Nike’s ability to maintain and enhance its side brands has enabled it to
enjoy unparalleled success for decades.

 Low Manufacturing Cost – Most of Nike’s footwear is manufactured in foreign countries.

In the year 2018, Vietnam produced 47%, China produced 26%, and Indonesia produced
21% of total Nike’s footwear. Other operations are in Argentina, Brazil, India, Italy, and
Mexico.

 In-house Professionals – Nike has a team of professionals that design its shoes and other
athletic accessories. Nike believes that their business has flourished due to the thorough
research that is conducted for each product.

 Superior Marketing Capabilities – Nike has excellent marketing campaigns. The brand
heavily relies on digital marketing. In the year 2016 and 2017, Nike spent $3.2 and $3.3
billion respectively. The brand has successfully utilized social media and marketing
campaigns to target more customers.

Nike’s Weaknesses – Internal Strategic Factors

 Poor Labor Conditions in Foreign Countries – In the last 20 years, Nike has been
consistently targeted regarding their poor labor conditions. These issues include child labor,
low wages, and horrific working conditions that were deemed “unsafe”.

 Retailers Have a Stronger Hold –Nike’s retail sector makes Nike weak due to its
sensitivity against pricing. About 60-70 % of Nike’s stocks are sold directly to retailers. With
retailers serving as their core customers, Nike does not put up a fight against their pricing
structures whatsoever.

 Pending Debts – Although Nike’s income statements prove to be prosperous, a quick

glance at their balance sheet could paint a different picture. Nike is still facing financial
threats. Currently, they have a total debt of $3.49 billion.

 Dependency on US Market – Even after having established itself globally, Nike still
relies on the U.S Market in terms of sales and revenue. In the year 2018, about 42% of Nike’s
sales came from the U.S, while the rest of 58% came globally. Despite its fame, Nike depends
on the U.S for substantial sales and growth.

 Lawsuits: Four former female Nike employees filed a class-action lawsuit against the

company in August 2018. According to these women, Nike has a toxic company culture for
women. The women filed their case against the sportswear company claiming that the
company violated the Equal Pay Act. The women said the company engaged in systematic
gender pay bias where men were paid more than women for the same amount of work.
 Nike’s Opportunities – External Strategic Factors

 Emerging Markets – Although Nike already has a presence in many foreign countries,
there is still plenty of opportunities for Nike. This is because external markets like India,
China, and Brazil are gradually flourishing.  

 Innovative Products – Although Nike has produced many products, there is still a lot to
innovate. Nike has extended its reach in technology in association with fitness and health.
Products like wearable technology that monitors physical activities, is the first step in building
innovative technology products. Combining technology with athletic wear can prove to be
beneficial as it is an aspect of the fashion industry that still hasn’t been explored much.

 Efficient Integration – The supply and production of Nike’s products depend on

independent manufacturers. The brand can either acquire a few of these or make some of its
own for a more efficient and streamlined supply chain.

Nike’s Threats – External Strategic Factors

 Counterfeit Products – Counterfeit products can significantly affect the revenue and
reputation of Nike. The company deals globally and the risk of counterfeit products has
become higher. A number of merchandisers and retailers offer counterfeit Nike products at
lower prices. The low-priced products are made from low-quality materials but still have the
Nike label. This can tarnish the image of the brand as the customers might feel that Nike has
started producing products that have low quality.

 Increased competitive pressure – Although, Nike is a dominating the athletic industry,

competition, and new emerging brands are still potential threats to the company. With higher
competition ratio, Nike has to spend more money on marketing and advertising. Nike spent
almost 3.5 Billion dollars specifically on marketing in 2018. To overpower
competition, Nike’s safest bet is to design innovative products that are tailored according to
the needs of athletes.

 Marketing Budget Pressure – Companies like Under Armor and Adidas are spending

more on marketing and advertising campaigns, increasing the pressure on Nike.

 Currency Foreign Exchange Risks – Since the brand operates globally, it is affected by
fluctuating foreign exchange rates. Nike reports its financial earnings in U.S dollars. This
affects its revenue as the U.S dollar is exposed to volatility against other financial currencies
 4) Marketing Mix

Propose 4Ps marketing mix strategy to sell the product. The strategy must be based on the
condition in question no. 2 and no. 3

MARKETING MX FOR NIKE

Nike has a wide range of products to offers to its target customers. The Marketing Mix of Nike
consists of products which fall under below three categories

 Footwear

 Apparel

 Equipment and Accessories

Nike has different products for different customer segments and over the years have added to the
width and depth of its products basis the changing needs of its customers.

PRICE:

Superior Quality Demands a Good Price. The company uses Competitive and Skimming pricing
strategy for its customer base and normally targets upper middle class and high-end customers.

Nike is known for its superior quality and world-class shoe designs and successfully manages to
provide value for money to its customers. For the products which are not run of the mill and are
limited edition, Nike uses Skimming pricing strategy.

For the normal products which are in competition with its competitors like Adidas, Puma,
Reebok, Nike prefers to user competitive pricing strategy to cut competition.

PLACE:

Place plays an important role in the Marketing Mix of Nike by using both Offline and Online
channels for the promotion of its products. For Offline channels, Nike uses its own dedicated
Nike outlets and Multi-brand outlets for distributing their products.

The company has set up different outlets and partnered with different multi-brand outlets in
different cities of the country to reach out to the mass audience. For Online channels, Nike uses
e-commerce websites like Myntra.com, Flipkart.com, Amazon.com etc. to promote their
products. Nike is using these channels to sell their new launches in footwear, sportswear etc.
PROMOTION:

Just Do It

Go Beyond your limits |   Achieve Greatness | Don’t Quit | Make Impossible Possible

Five different statements but they all mean the same thing and have the same essence –
That’s what Nike as a brand promotes through all the promotion that it does.

Nike uses a proper mix of Online and Offline channels for promotion and creating awareness.

Nike is known for creating some world class advertisements that are inspiring and high on
energy quotient.

Apart from Television ads, Nike is big on OOH promotion and sponsors different sporting events
like Football, Basketball, Cycling, Golf etc.

Nike also has some famous sports personalities as its brand ambassadors and successfully uses
them as influencers.

On Digital or Online front, Nike experiences some huge fan following on its Instagram,
Facebook and YouTube channels.  Nike successfully leverages these channels for their brand
promotion and for