Nike's Plan for China
Nike is already a global power house, however the potential to increase sales in China was the topic of the most recent annual investor meeting. One may question Nike’s preoccupation with China. After all, Nike China is dominant. They are currently the number one brand with the number one market share while competitors Reebok and Adidas are in 4th and 5th places respectively. They have tripled revenue in the last two years. With 2000 points of sale, 400 stores in the top three cities (Beijing, Shanghai, Guangzhou) and 50 cities with 3 or more stores, Nike is primed to begin pushing into the second tier cities. Let’s examine “why China? “ Socially, China presents a portrait of change. The attitudes and preferences of today's generation of "twenty-something" consumers diverges markedly from those of their parents' generation. In fact, in the economically churning coastal cities, this gap is as wide as ever and growing, leading to comparisons between China today and the 1960s in Europe and the United States. Nike sees a large and growing market for its products in China. China has:
• 20% of the world’s population.
• 50 million middle class households.
• 430 million youth under the age of 20 (5X the number of youth in the US).
• 50 million middle class households –- which will grow to 150 million in next 10 years.
• 65% of its youth involved in sports.
• A consumer market that embraces brands -- particularly Western brands.
• 300 million people expected to move from rural areas to the cities in the next 10 years.
With this information in mind, Nike has created a strategic marketing plan to strengthen their position in the China market. The Global supply chain is in place, now they just need a strategy. But, before Nike can execute their well laid plans, they must first do a little damage control.
In 2004, Nike advertisements featuring basketball star LeBron James slaying a Chinese dragon and a kung fu master were banned in China and met with a flurry of criticism. The TV commercial offended government regulators because it showed an American sports icon defeating the dragon, a symbol of Chinese culture, and the martial arts master, a symbol of national pride. Nike clearly disrespected the Chinese culture, and was forced to pull the ads and apologize. Nike spokeswoman Shelley Peng said th...
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...arket. However, Nike's estimates suggest it will maintain its lead in China after the merger. Nike said it has 30 percent of the Chinese athletic market, trailed by Adidas's 19 percent. The inclusion of Reebok will catapult Adidas's share to 27 percent.
How is Nike’s strategy working? A survey asked Chinese which brands were the coolest. The results came in: Nike 52%; Adidas 38%; Reebok 15%; Li-Ning 13%; and New Balance 10%.
Bibliography
Nike China (NKE) growing fast (4Q05 conf call) The China Stock Blog
Brands in Transition: Making it Work in China 2005/04/12 by Christopher Millward, Beijing This Month
Nike China (NKE) growing fast (4Q05 conf call) The China Stock Blog
2005 Business Report & Independent Online, www.busrep.co.za/index.php?fArticleId=2337753
2005 Business Report & Independent Online, www.busrep.co.za/index.php?fArticleId=2337753
Nike China (NKE) growing fast (4Q05 conf call) The China Stock Blog
CSRwire, http://www.csrwire.com/article.cgi/2411.html
Beijing This Month, featured in Business Beijing, July 2005
China Daily Online. Adidas, Reebok vie against Nike for China market(Bloomberg) 2005-08-09 10:31
JUNE 29, 2005 -- Nike Investor Day Recap
But what makes people buy the name brand Nike? They have great advertisement. I love to watch Nike commercials; they appeal to me as an athlete. The commercials show the inner fight in people, breaking records, becoming a stronger person, being the best you, and being the best athlete; you can be overcoming anything. I find their advertisement to be very inspiring and motivational. The Nike slogan ‘Just Do It’ plastered on so many products inspire others to get out and ‘Just Do It,' no hesitation. Nike tries to appeal to you to buy their products by placing their apparel on professional athletic. Everyone knows Lebron James he has many young athletes that look up to him and want to be just like him. What do they see Lebron James wearing? Nike apparel, for the kids that want to be just like him, they want what he has. So they want the Nike look. For me personally, I see Nike products and logos at just about all sporting events, which is a great strategy for the business.
Nike has always been a company that's been questioned ethically. People have heard about the stories of the sweatshops in Southeast Asia exploiting adolescent employees for unreasonably small amounts of money. This had blemished Nike’s reputation several years ago, but since then, it has strived to become a truly respectable company. Located on Nike's website you can find Phil Knight's credo about ethics. It is as follows:
This case study revolves around Starbucks ability to launch an aggressive expansion in China, a coffee frontier steeped in nearly 5,000 years of tea, Starbucks location-scouting skills and marketing savvy will be put to the test. This case study involves three questions: 1) Should Starbucks continue its expansion in China? 2) Will the Chinese be persuaded to drink coffee instead of tea after 5000 years of no consumption of coffee? 3) Will Starbucks current marketing plan work in China without advertising?
Nike’s goal is to remain unique and different from others in terms of the items offered on the market. Arguably, Nike belongs to a monopolistically competitive market as there only a few organizations with the ability to regulate the amount charged for their product which means they cannot make their prices high as this is likely to make customers move on to other available choices (Nike, Inc., 2012). However, Nike can find a balance between the prices to charge for their products and remaining competitive with other companies in the industry. Nike has formed a distinction between the appearance and performance of their footwear and that of their competitors. Although products are differentiated from other companies, they still influence each other because they are items of the same
For Burberry, it recently closed 17 and opened 18 stores in Dubai, London, Moscow, New York, Seoul and Tokyo. Its various channel of distributions like retail, wholesale and licensing can help to expand those opportunities to the company. However, it seems that Burberry rely too much in Chinese market both in region or as tourists with approximately 30% of its sales in Chinese market (Financial times 2016). As mentioned in PESTEL, if the Chinese market experience the decline or political issue, it will significantly influence the sales and performance. Moreover, the company is also trying to attract the young generation for future
Shirley Ye, Sheng, and Yan Ma. "China Vs. The United States: Market Connections And Trade Relations." International Journal Of China Marketing 2.1 (2011): 45-57. Business Source Complete. Web. 13 Dec. 2013.
Show that aggressive public relations campaigns may still be ineffective when the actions of contractors receive widespread attention an...
The objective of this paper is to perform market research for Starbucks’ President, Charles Shultz to ascertain the possibility of establishing new coffee houses in China. The preliminary research and design for presentation to Mr. Schultz includes: 1) Two to three alternative target customer segments; 2) the types of secondary research used; 3) the problem statement; 4) research questions used to guide the study; 5) major competitors for this market; and 6) the cultural, economic, and political factors that need to be considered in China.
Internationalization Phase, during this phase Chinese companies focused on ‘building brand, localization of products and services for new markets, and differentiation of products to support higher margins’ they did what was ‘good enough’ for the market (Teagarden & Cai, 2009:78). An important issue during this phase was to research and develop the products, and to keep the key talent of the company, such as managers and engineers.
Just as it says in the text, Nike is predestined to be the front-runner in the industry. After all, the company is named after the Greek goddess of victory!
In my point of view, the most unethical Nike’s decision is not to take the responsibility to ensure at least minimum and humane standards that it should offer to its work force. For example, in Vietnam, Nike paid its workers less than the cost of three meals of rice and vegetables and tofu. It treated workers no better than in sweatshops with only two drinks of water and one bathroom break in an eight hour shift. Also Nike let its contractors in developing countries to use child labor under sub-standard conditions. On the other hand, the least unethical Nike’s decision is to have a TV commercial featured a Manchester United player explaining how spitting at a fan and insulting a coach won him a Nike contract.
Liu, W. (2008). When in rome: the key to KFC’s success story in China. Retrieved from http://www.businessforum-china.com/management_article_detail.html?articleid=355&nowpage=1
This project concentrates on the Nike Sports shoe; Nike is one of most significant shoe manufacturing company worldwide. Sportswear manufactured by Nike is known for quality and is most liked brand of athletes. (Daniel, 2011)
This paper will give a brief introduction about the history of Nike Sweatshops which will shed the light on their public image and their manufacturing process. It will further move to the suggested alternatives, what facts impact them, their stakeholder and their impact on the economic as well as social basis. In the end, it will discuss if the given choices are legal and ethical or not.
The first innovative strategy of KFC China is localizing the menu. Trying to sell the same products or services is a typical approach to most foreign expansion for franchise businesses (Bell, 2011). However, one-size fits all approach is not what KFC chooses to implement for their company. According to Shelman, the writer of the case study regarding KFC’s Explosive Growth in China, key success for KFC China is to change the menu to suit Chinese tastes and style of eating. “One of the lessons I take away from this case is that to do China, you have to do China”, says Shelman. KFC localizes their offerings and adapts their existing products to appeal to the Chinese customers’ needs. The menu features Chinese local food like egg and vegetables soup. Examples of innovative products are the Dragon Twister (chicken roll of old Beijing) and the glass jelly milk tea (Zhou...