A study of changes in the Sportswear market in India in the past decade with focus on footwear sector. Analysis and suggestion about the marketing techniques that need to be implemented for the launch of a new product. The study also includes formulating a Pricing strategy and various promotional measures to be opted by Nike. In today’s competitive market, companies always try to introduce different types of products and creative marketing approaches so as to showcase the uniqueness in their products and to survive in the dynamic marketing environments.
Nike, the American multinational company is a leading manufacturer and supplier of sportswear, apparel, accessories and services and holds the top spot in supplying athletic shoes and apparel throughout the world. The company, today is among the most valued brands. (Skoloda, 2010) The product is due to be launched in India, which holds the top spot in terms of being among the fastest growing economies in Asia and is the most preferred markets for multinational companies. Indian economy is growing at 8. 8%, which is among the best in Asia. (Nobrega ; Sinha, 2008) Changes in the Sportswear market over the last decade:
As Isaac Asimov once said “The only constant is Change” so is it. The current markets are ever changing. Philip Kotler ; John Caslione (2009) state that “Turbulence is the new normal”. Companies introducing new products or investing into markets do not just forecast markets to be turbulent but already expect them to be so and formulate strategies likewise. Sportswear is a fast growing market influenced by these drifts and changing lifestyles. Adoption of healthier lifestyles has led to a surge in the usage and consumption of sportswear products, accessories and services.
Indian Footwear industry is forecasted to be growing at Compound Annual Growth Rate of more than 20%. Men’s footwear constitute around 60% of the total market. (Enderwick, 2007) PESTEL analysis of Indian footwear industry. This analysis gives an overview of major factors affecting the overall business process. (Bob Paladino, 2011) Political: India is one of the most stable nations in the world in terms of its political structure. The Indian National Congress (INC) party has been in power in India since 2004. The party’s attitude towards economic development in country has been promising and they have been delivering in the past 8 years.
New trade links have been opened. Provisions have been made for Companies making it easy for them to manufacture and market in India. (Nobrega & Sinha, 2008) Economic: In terms of its Purchasing Power Parity and economic strength, India is fourth largest economy of the world. The Indian footwear market scores over others as it gives benefits like low cost of production, abundant raw material, and has huge base of customers. (Nobrega & Sinha, 2008) Social: The past decade has seen huge surge in people taking active part in health and fitness activities.
This active lifestyle has led to the surge in sales of sportswear products. People have become brand or trend-conscious. With more females now being able to move freely and socialise, India is becoming a preferred market. (Bijapurkar, 2007) Technological: In the past decade, India is becoming the hub of technological developments; be it computer software technology, digital and media technologies or technology related to consumer products. Nike is adapting to these advancements and implementing the relevant technological advances in its products and marketing plans.
Ethical: Not much stress is laid on departments like Health and safety and other worker welfare measures, which means less production expenses for the company. Nike has been manufacturing products in India and politically unlike in western countries, there are no enforcement procedures or pressure on Nike to implement these necessary welfare measures, which reduces the overall expenses of the company. (Bijapurkar, 2007) Legal: Not much legal or formal procedure has to be followed by companies to operate and market their brands in India.
Other factors that have changed and which influence the footwear market in India include: • Innovations in terms of fabric and other garments used in production. • The fashion statement it makes to wear a particular style or type of footwear • Adoption of active and healthy lifestyle Market Segmentation; Approach & Benefits: McDonald & Dunbar (2010) define Market Segmentation as the process of dividing customers into different groups. The motive is to understand the needs of each group and address them properly.
Segmentation is primarily done so as to focus on a particular segment and respond to their needs effectively. In his review of the marketing approach, McDonald (2007) reached to the conclusion that marketing has been reduced to a mere sales support department rather than being at the core of strategy and planning. Kotler & Keller (2009) sharing the same view added that the role of marketing department should be to add to the business planning and setting up strategies and not just promotion. Productive segmentation techniques that we can implement for Nike can be: Demographic: this classification is based on factors like age, gender, family income, education, occupation, social class. Our target market in India are people in the age group 15-35 years. • Psychographic: this refers to the usage of psychology and demographics in order to be able to understand the needs of customers in a much better way. e. g. one segment will have an active and outdoor-oriented lifestyle whereas another segment would be just interested in athletics. • Behavioural: Under this category customers are divided on the basis of their attitude or response towards certain products and trends.
Nike wouldn’t want to focus on just one segmentation process. Kotler & Keller (2009) adds that companies don’t want to focus on just one particular segment in order to reach out more customers. Therefore Nike should go ahead with Selective Specialization, wherein a company selects a number of segments, where to market their products. Brassington & Pettitt (2003) explain that this is always a safer strategy to choose to reach wider range of customers and also the risk factor involved with launching the new products as the product might fail in one of the segments but do well in the other segment.
Market targeting: Since more than one segment is to be taken into consideration by Nike, differentiated marketing seems the best feasible strategy to be implemented wherein the marketing mix is prepared depending on the needs of the particular segment. (Lasserre, 2007) Market positioning: (McDonald & Dunbar, 2010) Infiltrating the particular market segment refers to as positioning. It provides provisions for either introducing a new product in the market or relocating and existing one. Things which need to be considered are: Expectation of the customers. • Current trend and where the market is leaning towards • Features and variants of the product which provide it the core competence • Availability, quality of the product Nike is not the only company providing footwear products, however keeping a focus on the particular segments that we target, a healthy marketing mix and understanding the buying behaviours of the customers will help our new product in occupying a place in the market. Kotler et al (2009) list four specifications to be pursued by a company. They are: Product drivers: unique feature of the product • Service drivers: ease with which they are available or accessible • Image drivers: showcasing or highlighting the product • Cost drivers: factors affecting the pricing of the product Target marketing as defined by McDonald & Dunbar (2010) analyzes which segments yield the most desired results. A particular segment or more than one segments can be chosen and approached in the pre-defined manner. It involves market segmentation, market targeting and market positioning. Pricing strategies Nike needs to consider:
Economists pricing: which evaluates factors like demand and supply, price. Nike has an established brand image and reputation, which usually gives its high end products an advantage over others. Accountants pricing: which deals with the actual costs involved with production and distribution of the product, Mark up and profitability. As we saw in the case study, In case of Nike, we usually see a huge difference in the actual cost of product and its market selling price. Market oriented pricing: Pricing based on analysis and study of a particular egment that has been selected as the target market. Pricing is based on the facts and figures obtained from the study of a specific segment. Competitive pricing: it refers to Keeping up to date with the pricing strategies employed by the competitors and analysing and updating Nike’s pricing techniques. (Kotler et al. , 2009) Tactics like Discount pricing should be very well analysed before being implemented. This refers to slashing down the expected selling price of Nike product. This does help but this strategy could backfire in the long run.
It makes the brand vulnerable to the pricing strategies of the rivals and if every time this scheme of pricing is implemented, profit margins go down and so does the brand image. Nike however should focus on different discount strategies like Seasonal and Quantity discounts. (Kotler et al. , 2009) Models of pricing: Although Nike products are manufactured at a very low cost (as per the case study), their selling price is high keeping in mind the brand value and other costs involved in marketing or promoting the products. High sales resulted because of discounted price is not the motive of Nike.
Instead the focus is to have a higher mark up, so as to cover the investment and cost in the overall process. Skimming is the process suited to Nike, wherein even lesser sales will have a good profit margin associated with them. In skimming, the focus is not on higher sales figures rather it is on profit margins made on individual sales. (McDonald, 2010) Skimming may seem to be unreasonable way of pricing but the reason that selling price is high is usually because of the research and development cost or technological costs involved with the manufacture and marketing of that product.
Premium pricing: in India, the general view of the customers towards a product is that high price refers to higher value and quality. Hence curiosity exists for a product which is not available at a bargain. Price leadership: Since Nike is launching a revolutionary product, Nike has a competitive edge over the rival companies in setting up the price and dominating the market for this particular product. Campaign for Nike: When launching a new product, a lot of factors need to be kept in mind for its effective marketing and promotion. Marketing mix is used interchangeably with “four P’s” of marketing viz. rice, product, promotion, and place. (Kotler et al, 2009) • Product: It is a revolutionary footwear product, which is distinct. • Price: for the particular segment that we have selected, pricing shouldn’t be a limiting factor for sales and since Nike is distinct in terms of introducing this product to the market, they can dominate with pricing. • Place: As discussed in initial part of this report, India as an emerging and fast growing economy will respond well to the • Promotion: Lifecycle of a product depends on how it is promoted.
Nike has in the past signed contracts with well known Indian athletes and sportspersons. They have given the brand a boost When designing a campaign for new product, we need to keep in mind our target market and audience we want to reach to. For example, an advertisement that is less attractive will automatically create a psychological effect in the mind of the buyer and he may see the product likewise. Kotler et al (2009) suggests three steps for designing an effective advertising campaign. They are: 1.
Massage generation and evaluation: In this step, the objectives are set. Since we are launching a new footwear, we can make use of Informative Advertising, through which we can let the customers know about new product. Keeping target market and the marketing mix in mind, a suitable message can be set, evaluated and later communicated. This should have a positive impact on the audience we are trying to reach. Once the message has been set and evaluated, we need to find a creative way and medium to reach to the potential customers.
Nike’s promotional and advertising tools: In Indian subcontinent, people tend to watch and follow Cricket rather than football. Though the interests are diversifying resulting in increasing in market for other sports accessories, Cricket still is the most followed game and Cricketers are looked up to as role models and inspiration by the populace. (Bijapurkar, 2007). Nike is the only Sportswear Company that has been working with the Indian Cricket team since 2006. This already existing partnership should help us in promoting this product.
There has been a surge in the number of social networking website users in India Promotional techniques like being part of Cricketing seasons, exhibitions, distributing discount coupons, organising games or contests, should be thought of while drafting the marketing strategy. Future: Although it is often claimed that advertising on social networking is effective as more and more of our ‘potential customers’ use these sites, ‘Engagement’ is the current marketing trend (Guardian, 2012). Nike has always been at the forefront of introducing innovative products in the Indian market and is likely to do good in future. Growing trend of fashionable footwear products again provides an opportunity for NIKE India to exploit this growing demand. I look forward to the launch of this product in India this Cricketing season.