Nike Environment Analysis

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Principles and Practices of Marketing

        In Course Assignment- Nike Footwear in US

Name: Tan Lee Yee

Student ID: Q5327325/ QB150055B

Module Code: MAR2019-N/ TMKT2035

Year: 2016

Module Leader: Jill Ross

Module Tutor: Dr. John Eng

Submission Date: 02Dec 2016

Word Count: 2606 words

1.0 Introduction

Nike is the market leader in the footwear market. Implementing tools of PEST Analysis is crucial to measure the external factor which will influence the organization performance in order to fix or strengthen it. Additionally, Nike begins with market segmentation and develops a market offering that is positioned in the target market to target the customer more easily. As Nike has many rivals, it is necessary for Nike to adapt their marketing mix with using marketing strategy sustain competitive advantage by co‐creating experiences of value with customers (Ramaswamy , 2008). 

2.0 Macro Environment Analysis

Pest Analysis is used to analysis external macro environment that offers opportunities or threats to a company (Kolter and Armstrong, 2008). The PEST analysis is all generally considered to be an uncontrollable environment which out of the company control. PEST standing for Political, Economic, Social, and Technological.

2.1 Political Analysis

The growth-orientated policies of the US government help companies foster the business growth (Kolter and Keller, 2009). In this context, US policies offer Nike the opportunity to modernize their product. With the policies of the government which offer low-interest rates, the competitiveness of the tax system and stable currency conditions assist the Nike growth (UKEssays, 2015). Nike gets the opportunities to advance the growth of business when the most market politic is in stable condition. The free trade policies promote better market penetration overseas. In infrastructure development, the government has helped a lot to the developing countries, thereby gaining an opportunity to Nike expand the range of market. As the result of political analysis, Nike Inc has opportunities to expand Nike footwear market in global. 

2.2 Economic Analysis 

Economic recession is the biggest threat for the Nike. Nike. Inc has faced treat which is financial crises of 2008 happened in the US (Havemann, 2009). The US economy downturn affects growth and advancement of Nike due to the consumer purchases are decreasing down. When customer purchasing power low drove demand for Nike footwear decreases as Nike is normal goods. Figure 1.0 shows the consumer purchasing before economy downturn influences the sales of footwear. In the year 2008, customers reduce expenditures in Nike footwear with 3.5% due to the purchasing ability drop. In contrast, the customer increases spending on Nike when the economic turning well. Nike revenue has dropped from 19627 million US dollar in the year 2008 to 18528 million in the year 2009 (Statista, 2016). In additional, the high prices of Nike product might result in consumers switch to the cheaper brand with has closer quality with Nike.

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Apart from US economy downturn, Asia economic downfall also has effects on Nike on account of Asia is one of the manufacturing areas of Nike product. As result, the labor costs and material price are increasing rapidly. However, Nike used its well-established brand equity to take advantage of growing consumer demand in emerging economies where labor cost is low (Nike, 2014).The sweatshop problem about Nike pays less than minimum wage and unfair treatment to labor is a threat to Nike which declines in reputation and sales (DailyMail, 2011). In order to resist the contingent Corporate Social Responsibility critiques, Nike stands out with argue that Nike offers the job opportunity and paid local rates for labor (Beder, 2002). Overall, the economy analysis illustrates economic recession and the decline in reputation is a treat to Nike footwear sales.

2.3 Society Analysis

The shift in basic psychological motivations brought with it the host of changes in lifestyles. (Abu and Kamarulzaman, 2009). Nowadays, worldwide increases in health conscious and it means that people are more yearn for better lifestyles (Ekatepuha, 2014). The desire for healthier lifestyles has led numbers of people would like to do exercise. This has given them more time for outdoor living that can go along with that lifestyle such as playing badminton more frequently. The demanding for badminton product such as sports footwear is required. With an increase in demand for shoes, Nike is the first choice when people seek to sports footwear. Therefore, Nike has to produce and supply more sports shoes in order to fulfill the market demand. However, the sweatshop problem which faced by Nike become more critical and the negative brand image would occur if Nike unable to manage it well (Lutz, 2015). This causes company reputation drop and declining in sales due to more demands more responsible of the company (Murphey and Gause, 1974). With respect to society analysis, Nike has the opportunity to robust the sales but also faces the threat of the decline in reputation.