Nike Internet Marketing Strategy: P4, P5 & P6

BENEFITS & OPPORTUNITIES

 Introduction

In this blog I am going to describe the benefits and opportunities of Nike using Internet marketing within their marketing mix.

Internet marketing brings a lot of opportunities and benefits to businesses e.g. reach to wider audience, reduce overhead cost of the company and improve availability. Before I start with internet marketing I will like to put you mind in offline marketing.   

Products: Products choices are informed by market research where customers’ needs and wants are assessed. Feedbacks given by customers to the organisation will benefit the Nike because they can modify their existing products or develop new product for their customer’s satisfaction. Internet marketing has divided product into two parts 1) core product and 2) extended product. The core product is the actual “product purchased by the customers to fulfil their needs” and the extended product is “the benefits build around the product”.
Source: Internet Marketing Strategy, Implementation and Practice ISBN 0-273-65883-2.

Personalisation-Personalisation of the product(s) on the Nike’s website can help customer’s personalisation their merchandise to their own satisfaction. The benefit of Nike is that more customers can have their name personalised on a pair of trainers it is easier to do it online as it will take them a minimum of 30 minutes whereas when they have to do it offline it will take time to process and it will be done after working hours.

Price “Price comparison is common online”.  Nike needs to make sure that their online prices matches with their competitor online prices. For example online price comparison websites such as www.kelkoo.com and www.comparethemarket.com  will benefit Nike to compare their prices with their competitors. Internet Marketing Strategy, Implementation and Practice ISBN 0-273-65883-2.
The reason why online pricing is better than offline pricing is that online prices are very clear and transparent for the customer and the business at large because they can take advantage of the pricing that may change regularly or take advantages of special offers that last for a limited period of time and compare the amount competitors are charging. This is called price transparency it can only be done online as customers will be hunting for bargains.

Place-: Nike has move from their traditional “bricks and mortar” to “click and mortar” to create another sales channel. The benefit of Nike moving their business online is that they can “minimise cost of inventory, transport and storage while fulfilling demands from customers”. Source: Internet Marketing Strategy, Implementation and Practice ISBN 0-273-65883-2. Social media and Smart phones have help companies to get where their customers are at any giving time.
Search Engine Optimisation (SEO) The present of Nike website to the W3 is very important through Search Engine Optimisation. Search Engine Optimisation help Nike to be recognise among leading search engines such as Google, Bing and Yahoo. For a company to have an online presence they must be on the top list on the search engines. For example Nike after I typed in “two” letters the name of company appear on top of list. This shows that the company has a strong SEO presence. “Optimizing your website for search engines is a gathering of techniques that simplifies a search engine’s task of searching, for information posted on your website”. – Lee Oden, Online Marketing Blog

Source: http://technorati.com/technology/it/article/10-significant-seo-quotes-helping-you/#ixzz1tuP6eOtw  

Promotion- Promotion is an important aspect in internet marketing. Brining the products to the customers’ attention will help Nike to generate more sales. Online promotion directly markets to the customers as it regularly pop-up sales ads. “The marketing function concerned with persuasively communication to target audience the components of the marketing program in order to facilitate exchange”. Source: Internet Marketing Strategy Implementation and Practise ISBN 0-273-65883-2. The opportunity of Nike promoting their products online is that their customers can have real-time up to date what the latest promotional offers. Customers getting direct e-mail from Nike will pull them to visit the website more.
Advertising: online promotion has help Nike to reach their target audience, and getting more customers and brining awareness of their existing and new products which is benefiting the company. Online advertising has grown over the past years “Online advertising spending in the UK has overtaken television expenditure for the first time, a report has said. Online spending grew 4.6% to £1.752bn in the first half of 2009, while TV spending shrank 16.1% to £1.639bn”.  This shows how online advertising is growing in popularity in the UK and the benefit Nike will have from online advertising is that they can get more customers. Source http://news.bbc.co.uk/1/hi/business/8280557.stm. Online advertising is cheaper and more convenient to reach a wider target audience. Nike website enables their customers to shop and search for information 24/7.  The benefit of online advertising to the customer is that he/she can get the information as far as they have an internet connectivity while offline advertising such as TV, billboards and newspapers ads are not that so popular than they used to be. In a recent article from BBC network it is stated that online advertising has over taken the traditional form of advertising.
Globalisation: the benefit of Nike going online is to reach to a wider audience and expand the company to “trade in a single global marketplace and the blurring of social and cultural differences between countries”. Nike has make sure that they have an “in-depth understanding of the foreign markets environment and assess the advantages of their own products and service” they provided to their customers world-wide.  Source: Internet Marketing Strategy, Implementation and Practice ISBN 0-273-65883-2.

Disintermediation: the opportunity internet marketing has is that they can cut the middle man on Nike is that they can reduce their over-head cost, have better customer relationship management and increase their profitability. Disintermediation is cutting down the middleman by using a direct sales channel from the producer to the customers without any “intermediaries such as distributors or brokers”.  Nike website “promotes and sells direct to their customers”. Internet Marketing Strategy, Implementation and Practice ISBN 0-273-65883-2. “The channel distribution is shorter online as the customer has the opportunity to buy directly from the organisation”. This is the advantage internet marketing has over offline marketing. Offline marketing takes longer time to reach the stores and when it does the products are often more expensive than online. http://www.learnmarketing.net/Benefits%20of%20internet%20marketing%20for%20the%20business.htm

Customer Relationship Marketing (CRM): it is almost impossible for Nike to manage more than “2 million customers at their store every week” to their customers satisfaction. www.forbes.com. With the help of their website it is easier to for organisation to manage the relationships with their customers. They can manage their customers on a one to one basis online successfully. “Individual customer or develop relationship with a particular customer segment”. Internet marketing strategy, implementation and practice ISBN 0-273-65883-2 For example if Nike want to manage their customers on a one-to-one bases they may end up not meeting the requirements of most  of their customers, while with the internet they can manage their customers much more easily by sending emails. “We want to find a way to enhance the experience and services, rather than looking for a way to interrupt people from getting to where they want to go,” said Stefan Olander, global director for brand connections at Nike”. This will retain Nike customers as it shows that Source: http://www.sundoginteractive.com/sunblog/posts/big-advertisers-like-nike-lead-the-way-to-new-marketing-strategies.

24/7 Accessibility: is one of the major reasons for a company to go online. For Nike to go online it will mean that more customers can get to their stores at their own time. “Your store is open, 24 hrs. a day, 7 days a week. Further, your customers are worldwide in reach, and can shop anytime that they want to”. This is the benefit that internet marketing provides to Nike because their customers can shop online at any giving time. As Nike is both online and offline they do not worry about after hours shopping as their customers can shop anytime on their website. With the company’s presence online their customers will not be disappointed as they can always shop at any time of the day without leaving the comfort of their house.
Source: http://ezinearticles.com/?Internet-Marketing
Mass Customisation “provided tailored content to a group of people or individual with comparable interest”. The benefit of mass customisation to the business is that they can get more customers to choose a product that is recommended by other customers. The internet allows customers to customise their products online to their satisfaction. This is only possible online because offline you cannot customise in bulk and it is expensive to do as well. Source Internet Marketing Strategy, Implementation and Practice ISBN 0-273-65883-2

Efficient and Effectiveness

The increasing availability of the web gives business a number of effectiveness and efficiency.

Target market attention internet marketing has helped the business to become one of the best and most powerful organisations. Many businesses today are living the traditional “bricks and mortar” to “clicks and mortar” to capture the growing number of internet marketing services for their business. For example, businesses are dedicated to give their customers a memorable experience online.
Dynamic Pricing Online pricing is done successfully thanks to the advent of technology. Nike website uses dynamic pricing charged prices categorise customers in different groups. “The prices are updated inn real time to the type of customers or current market condition”. Nike website has managed to establish this through their website. The efficiency and effectiveness of dynamic pricing can get Nike capture more consumer surplus this means more profit for the company. Source: Internet Marketing Strategy, Implementation and Practice ISBN 0-273-65883-2
Social Media Social media has helped in a great deal in Nike’s online advertisement. Social Media website such as “Facebook” and “Twitter” are the “two most popular social media networks with over 1 billion visitors between them”.  The used of social media has help Nike to profile their customers through “psychographic profiling” to target “young adults age 24” who spent most of their time online these are “Social Clickers”, “Online Insider” and “Everyday pro”. “Social clickers spent at least 8 per cent their time shopping, while online insider spend upwards to $130 each month and everyday pro uses the internet to fulfil their personal needs such as online banking and retailing”. Social Media has help Nike to get to their customers efficiently and effectively and it is cheap to use and it get to a large number of target audience.
 Source http://www.ebizmba.com/articles/social-networking-websites.

Freedom of Choice has given Nike customers the opportunity to choose from a variety of product. Nike is providing their customers with options to choose different products online. Looking at Nike website they have offed their customers all over the world the freedom of choice from a different range of products and the option to choose their own delivery time.

Track your Purchase online processes can help customers to track their order through the company’s website as they will be paying for their products or services before they receive it. The efficiency and effectiveness of this is that customer’s feel reassured that they can track their order without worrying if their purchase will make it safe to their home. Nike website allows their customers to track their purchase from order, dispatch to transportation before it is delivery to their home address. Once more this reassures the customers and makes them feel that they are obtaining a good service online.

Visual appeal Nike uses images on their website to make it easy and interesting for their target audience to have a clear view of their products in 3D. The use of 3D image makes it easy to spot some of the product at all directions when customers are observing it. Doing this it is clear that Nike wants to meet their customers’ requirements as they have the option to view the product in every angle this will make the customer want to buy the product.

Challenges

Each business face challenges either when they are starting a new company or in Nike case they face a lot of challenges lays ahead,

Competitors there are conflicts worth competitors as most companies are leaving the traditional “brick and mortar” to “clicks and mortar” to become the best. Online presence has given Nike much pressure with its competitors. Adidas Nike leading competitors are constantly at war to get international and domestic market. Nike should “avoid losing their market share to their competitors”
Security Privacy is very important for websites. For Nike to keep their customers they have to value their privacy. These will give the customers coming to the website. It is important that Nike keep detailed information about their customer’s identity safe. Visitors want to be protected from threats posed by hackers, viruses and fraudster. “Online shoppers have the perception that if they are connected to the internet then their personal details and credit card details may not be secure”. This will retain customers as most of them will come back to the company to repeat business. If customers do not feel safe on Nike’s website they will leave for their competitors and this will mean less profitability. Source: Internet Marketing Strategy, Implementation and practice ISBN 0-273-65883-2

Update Nike has to keep their website updated to keep up with their customers demand. As customers wants to keep up with the latest fashion trends Nike should make sure that they keep their customers updated or the might risk of losing them. “The web is perceived as a dynamic medium, and customers are likely to expect new information to be posted to a site straight away”. These expectations from customers are to be considered by Nike because if their website is not updated the website will eventually become outdated and their customers will not stay with the company. Source: Internet Marketing Strategy, Implementation and practice ISBN 0-273-65883-2

Back up to make sure that customers and company data are protected Nike needs to back up the data that is stored on the company’s computers. The challenge for Nike is that creating a back-up system is expensive and can get damage if a major disaster occurs.

 Disintermediation the internet has helped in a huge way in cutting out the middleman by using a direct sales channel from the producer to the customers without any “intermediaries such as distributors or brokers”.  Nike website “Threaten distribution arrangements with exiting partners”. This have an impact on traditional hauler companies because “cutting the middle” will reduce the revenue of these businesses. Source: Internet Marketing Strategy, Implementation and Practice ISBN 0-273-65883-2.

Culture: Cultural different in multinational companies is a challenge to their business model. Nike challenge is to adapt the different culture and tradition to the local people. If the local do not accept the culture of Nike the business will not do well in that country. So when establishing in another country Nike needs to make sure that the local approve of them and carry out a survey to see if the local like the idea of them being in that country.

Language Neither practical accuracy nor perfect change is enough when considering the language you will communicate through your website. Nike makes sure that on their website English is the dominant language but in different countries there are different languages for each of the countries they operate on. This is really a challenge because for Nike to employ staff who understands the language of these countries will be difficult and expensive for the company.

Order fulfilment one of the challenges of internet marketing is order fulfilment. Nike going online has open doors to international target audience increased demand for their products to their customers. Nike customers expect a higher level of reliability, convenience and speed. Delivering the product on time is a challenge because in other to meet their customers expectation Nike needs to make sure that the time they take to deliver products to their is very important because meeting these fulfilment while serving a large number of people at the same time is a challenge.

Supply Chain Market transparency and greater price sensitivity have led to lower customer loyalty. In a B2B market Nike buy and sell products to other businesses. Nike needs to make sure that there are term and conditions regarding their return policy. This is because customers do not have the chance to try the products they want before buying them as that is what they would do offline. This is very important because a customers might want to have their products change because is it not the right size or colour. If this facility is not on the website it might put off potential customers from the company and it would mean that Nike would miss out on profit. Delivery can also be one of the challenges of internet marketing if not managed properly. Nike needs to make sure that the delivery sales to their customers reach them on time. If this is not meet customers might go to competitors because Nike can meet their expectation. Meeting the supply chain expectation is a challenge because customers expect more from Nike regarding delivery and return policy.

Search Engine Optimisation (SEO): Businesses would clearly want to optimise their website for those main keyword phrases that are so competitive, in today’s growing technology. SEO can be a challenge because if these catchphrases are on top of the list when type in it means that the company is not getting enough recognition from customers.  The lower the number of people visit the lower the ranking of the company through search engines. Nike can pay to be a popular website among search engines but this can mean that they can pay a large amount of money and still not get the recognition they are after.

Bibliography

Internet Marketing Strategy, Implementation and Practice ISBN 0-273-65883-2.
http://www.ebizmba.com/articles/social-networking-websites
http://www.sundoginteractive.com/sunblog/posts/big-advertisers-like-nike-lead-the-way-to-new-marketing-strategies.
http://ezinearticles.com/?Internet-Marketing
Class Notes by Lecturer Annie Henry