A company's marketing communications mix consists of its advertising, sales promotions, personal selling, public relations, and direct marketing. This can and should be different for different companies and should be something that distinctly identifies one company from another. With all these aspects coming together, the goal is to communicate customer value and build customer relationships to strengthen the company (Armstrong and Kotler).
Advertising:
Nike as a whole, does a great job at advertising in my opinion. The swoosh symbol is found on everyone of their products and is recognized worldwide, especially their running shoes. Every Nike running shoe has the swoosh sign front and center and there is usually no questioning of whether it is a Nike shoe or not. And of course, who does not recognize the famous saying, "Just do it." Not only does Nike do a great job with advertising with just its logo and simple saying, they also utilize famous athletes to wear and use their products. Advertising can be broad and general at times, but if Nike sponsors an athlete in a particular sport, people watching that sport will see the products the athlete is displaying. This can allow Nike to advertise some of their products that are more geared to a certain sport to the consumers that are particularly interested in that sport (http://www.nike.com/nikeos/p/nike/en_US/). I am aware that Nike is not the only brand that utilizes this form of advertising, but they have certainly mastered it with athletes such as golf star, Tiger Woods.
Personal selling:
Nike utilizes a personal selling method in every one of their retail stores. The sales associates in these stores have direct contact and interaction with the buyers of Nike products. Because they are the individuals that directly communicate with the consumers who are interested in Nike products, they must be able to aid in the process of a successful sale. They are knowledgable of the brand and should be trained in asking customers the 'right' questions in order to figure out what they are looking for. To ensure optimal performance from the sales teams, Nike will often send Nike representatives to retail stores that sell their sneakers to give little presentations to keep the sales associates up-to-date on the products and the technology behind them. I know this from a first hand experience because of my job at a sneaker retail store. We recently had a Nike representative give us a mini training session on the Nike running shoes and then we discussed what the customers in our store looked for most of the time and then gave feedback on the Nike running shoes as well as some competitor brands.
Personal selling allows sales associates to create a relationship with the customer, though it may be brief. From the time a customer walks in a store until they leave, it is the sales associate's job to try to establish a relationship with that customer and figure out what he or she is looking to purchase. The sales force acts as a bridge between the customers and the company. The company looks for feedback from the sales associates about their customers, and the customers look to the sales associates to relay relevant and useful information about the product (Armstrong and Kotler).
In my opinion, Nike does a good job at their personal selling because they are the only company I have seen so far that has had represenatives travel to retail store locations to hold training sessions on their products. Also, often times Nike places a small insert in the running shoe boxes that gives some information on the particular product as well.
Sales promotions:
As far as sales promotions for Nike, they utilize marking down their prices and putting them on sale. Regularly, the Nike Shox are priced no lower than $100.00. Another tactic they use is to have their regular prices end in zero and then when they mark them down for a sale, the price will change to something like, $89.99. This is definitely a type of consumer promotion. I would also catagorize this method as a cent-off deal because the consumer is buying a product that has reduced the price right on the actual product such as having a sales tag on the actual sneaker (Armstrong and Kotler). Regular consumers of Nike Shox are aware of how expensive they usually are so when they see one on sale, I think they are more likely to make an impulsive purchase just because of the reduced price, whether they really need the sneaker or not.
Public relations:
PR can be used for many purposes and one of the purposes that Nike has used PR for has been to enhance and maintain a responsible corporate image. Nike has been accused in the past decade of paying low wages and running sweat shops in their Asian factories to produce their products (http://www.usatoday.com/news/opinion/editorials/2002-10-13-oplede_x.htm). They took this accusation very seriously and have made it their duty to ensure that these conditions would not happen. They have a written code of ethics called Inside the Lines and this is what all their employees must read, sign, and abide by to ensure ethics are followed at all times. The also have a Nike Code of Conduct in which the contractors who manufacture their products must abide by to ensure the rights of their employees are respected and that they are given a safe and healthy working environment (http://www.nikebiz.com/responsibility/cr_governance.html). Now the world can see that Nike is monitoring its business outside of the country and trying its best to not be accused of unethical working conditions ever again.
Direct Marketing:
Nike as an entire company has recently launched a new way of direct marketing in the past four years or so. They introduced a print catalog specifically geared to females that would be sent to them directly through their mail. Female athletes expressed interest in this catalog and actually brought it to Nike's attention and Nike took it from there. This catalog focuses on athletic footwear and clothing/apparel for running, yoga, and fitness training. Now women who are loyal to the Nike product can have direct and personal access to the products they want through their very own catalog delivered right to their home (http://multichannelmerchant.com/news/marketing_nike_competing_mail/). For some, this offeres great convenience. It appears that the catalog is going over very well and I would imagine so because with a paper catalog, you can take it with you and shop at you leizure. I think nike will continue to get a good response from this particular example of direct marketing.
Sunday, April 26, 2009
Monday, April 13, 2009
Pricing and Distribution Strategies
Pricing:
The Nike Shox is known to be a higher-end running/athletic sneaker and they are not often priced below $100 for the adults. From experience with buying Nike Shox, they seem to use a little bit of psychological pricing. For one, because the shox are a higher priced sneaker, consumers will think they are of better quality than other sneakers and this is one of the psychological effects this pricing strategy has. If consumers are not that knowledgeable in the sneaker market, they are not going to be able to make comparisons between different sneakers other than based on the price and that is why the price can have such an impact on the buying process. In this case, higher price equates to higher quality and Nike definitely takes advantage and makes use of the psychological pricing strategy (Armstrong and Kotler). Another type of pricing Nike utilizes is segmented pricing. Nike often adjusts their products' prices based on differences in the type of customer they are targeting, the specific product they are trying to market, and the location their products are found. Nike makes Shox for adults and children and the prices are different for each. Although the cost to make an adult sneaker versus a children's sneaker does not vary significantly, the difference in price in which they are sold at can be around thirty dollars. Another example of how Nike utilizes segmented pricing is through the location of their products. Often times, the Nike Shox are priced differently in a Lady Foot Locker versus a regular Foot Locker. I know this from experience because I work in a Lady Foot Locker. Sometimes we have customers approach us saying that they saw the same shoe priced either higher or lower over at the regular Foot Locker. So based on whether the Shox is found in a Lady Foot Locker or a regular Foot Locker, the price can vary. Another strategy I've witnessed from experience is that the Shox have a price ending in zeros, at least in Lady Foot Locker. For example, $115.00. Then, when a particular style goes on sale, you will see the format of the price change to $99.99 as an example. This falls under the psychological strategy of pricing because in consumer's mind, anything ending in ".99" is cheaper than ".00" Overall, Nike uses a price skimming technique for the shox in that it initially sets the price high for these shoes because they are always coming out with something new with different and innovative designs. Eventually, the consumer will see the price decline gradually as the shoe has been on the market for awhile and the next design is getting ready to be released. These strategies seem to be working well for Nike, especially the higher pricing strategy. There is just something about the high price that makes customers feel they are purchasing higher quality and prestige when they buy a Nike Shox.
Distribution:
Nike distributes most of its sneaker products to large chain retailers like Foot Locker. Nike, the shoe company, has to deliver its products to the retailers like Foot Locker. This is major task for Nike because a large majority of their sales is made at these retail locations, so getting product to them is vital to their survival as a company. In order to accomplish this, Nike makes sure it has several distribution centers and computer systems that track inventory, deliveries, and orders in their respected retail stores. From experience, Nike makes use of a POS computer program (point-of-sale) that is integrated into the cash registers and this allows sales to be monitored at the various retail locations. Retailers like Foot Locker and Lady Foot Locker can also order particular products from another retail location for a customer if they are out of their size in a certain product and have it sent directly to their home. Retailers place orders with the shoe companies in order to receive products to sell in the retail stores, usually found in malls (http://premium.hoovers.com.library.cedarcrest.edu:2048/subscribe/ind/fr/profile/basic.xhtml?ID=130). Most often, the type of channel Nike uses is a producer (Nike), then the producer sells to the retailer (Foot Locker), then the retailer sells to the consumer. Nike Shox can also be classified as utilizing selective distribution because they are found in places that match their target markets and positioning. They are found in retail stores that cater to athletic wear, including clothing and shoes. These retail stores are found in shopping malls or freestanding stores where consumers in this market can obtain them when they want to purchase a Nike Shox athletic shoe. It is selective distribution because the Nike Shox are not available everywhere, but they are not exclusive either. They can be found at major retailers catering to the target market of consumers needing athletic footwear but are not exclusive by any means(Armstrong and Kotler). They meet in the middle as far as distribution goes.
The Nike Shox is known to be a higher-end running/athletic sneaker and they are not often priced below $100 for the adults. From experience with buying Nike Shox, they seem to use a little bit of psychological pricing. For one, because the shox are a higher priced sneaker, consumers will think they are of better quality than other sneakers and this is one of the psychological effects this pricing strategy has. If consumers are not that knowledgeable in the sneaker market, they are not going to be able to make comparisons between different sneakers other than based on the price and that is why the price can have such an impact on the buying process. In this case, higher price equates to higher quality and Nike definitely takes advantage and makes use of the psychological pricing strategy (Armstrong and Kotler). Another type of pricing Nike utilizes is segmented pricing. Nike often adjusts their products' prices based on differences in the type of customer they are targeting, the specific product they are trying to market, and the location their products are found. Nike makes Shox for adults and children and the prices are different for each. Although the cost to make an adult sneaker versus a children's sneaker does not vary significantly, the difference in price in which they are sold at can be around thirty dollars. Another example of how Nike utilizes segmented pricing is through the location of their products. Often times, the Nike Shox are priced differently in a Lady Foot Locker versus a regular Foot Locker. I know this from experience because I work in a Lady Foot Locker. Sometimes we have customers approach us saying that they saw the same shoe priced either higher or lower over at the regular Foot Locker. So based on whether the Shox is found in a Lady Foot Locker or a regular Foot Locker, the price can vary. Another strategy I've witnessed from experience is that the Shox have a price ending in zeros, at least in Lady Foot Locker. For example, $115.00. Then, when a particular style goes on sale, you will see the format of the price change to $99.99 as an example. This falls under the psychological strategy of pricing because in consumer's mind, anything ending in ".99" is cheaper than ".00" Overall, Nike uses a price skimming technique for the shox in that it initially sets the price high for these shoes because they are always coming out with something new with different and innovative designs. Eventually, the consumer will see the price decline gradually as the shoe has been on the market for awhile and the next design is getting ready to be released. These strategies seem to be working well for Nike, especially the higher pricing strategy. There is just something about the high price that makes customers feel they are purchasing higher quality and prestige when they buy a Nike Shox.
Distribution:
Nike distributes most of its sneaker products to large chain retailers like Foot Locker. Nike, the shoe company, has to deliver its products to the retailers like Foot Locker. This is major task for Nike because a large majority of their sales is made at these retail locations, so getting product to them is vital to their survival as a company. In order to accomplish this, Nike makes sure it has several distribution centers and computer systems that track inventory, deliveries, and orders in their respected retail stores. From experience, Nike makes use of a POS computer program (point-of-sale) that is integrated into the cash registers and this allows sales to be monitored at the various retail locations. Retailers like Foot Locker and Lady Foot Locker can also order particular products from another retail location for a customer if they are out of their size in a certain product and have it sent directly to their home. Retailers place orders with the shoe companies in order to receive products to sell in the retail stores, usually found in malls (http://premium.hoovers.com.library.cedarcrest.edu:2048/subscribe/ind/fr/profile/basic.xhtml?ID=130). Most often, the type of channel Nike uses is a producer (Nike), then the producer sells to the retailer (Foot Locker), then the retailer sells to the consumer. Nike Shox can also be classified as utilizing selective distribution because they are found in places that match their target markets and positioning. They are found in retail stores that cater to athletic wear, including clothing and shoes. These retail stores are found in shopping malls or freestanding stores where consumers in this market can obtain them when they want to purchase a Nike Shox athletic shoe. It is selective distribution because the Nike Shox are not available everywhere, but they are not exclusive either. They can be found at major retailers catering to the target market of consumers needing athletic footwear but are not exclusive by any means(Armstrong and Kotler). They meet in the middle as far as distribution goes.
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