Analysis of Potential Market for New Product-Samples for Students

Question: Analysis the Potential Market for New Product. Answer: Introduction Nike Inc. is ranked among the leading manufacturers and suppliers of footwear and sports apparel across the globe. Nike Inc. designs and manufactures sports products and apparels consisting of five main brands such as Hurley International LLC, Brand Jordan, Converse Inc., Nike Brand and Nike Golf designs (CNN, 2015). Nike Inc. produces and sells its products to consumers of different categories, for example, football, men and womens training, running, action sports, basketball and Nike Sportswear. Nikes success is attributed to its excellent global marketing strategies, for example, the use of professional teams and athletes to promote and advertise products to its target consumers in various markets across the globe. This company has dominated the US footwear and apparel markets with athletics products, and therefore, it needs to expand its market share and improve its sales into other international markets. This paper is going to carry out research and analysis of a new potential m arket in Australia, by focusing on the marketing environment, market segmentation and the consumer behaviour. It is going to conclude by explaining the most viable market research strategy for Nike Inc. The environment Changes in trends, consumer taste, and preferences Nike Inc. operates in a fast paced and an incessantly changing fashion industry. The consumer taste and preferences change very fast due to the arrival of new fashion products from competing firms. Consumers tastes are also changing to more personalized products, and therefore, more consumers are demanding for footwear products that are designed according to their personal needs including size, shape, and color. Preferences are also changing so fast, for example, women are increasingly becoming fitness-conscious and are demanding sportswear products that are work out friendly (Kotler Keller, 2012). Fashion trends are also another major change that takes place in this industry. Fashion trends are changing so fast; and therefore Nike Inc. is required to keep abreast with the changes. For instance, the sportswear across the globe is focusing on personalities, and this has made Nike Inc. focus on sports personalities and other celebrities. In this regard, Nike Inc. is forced to change according to fitness trends by positioning itself as a trendsetter in the sportswear and apparel industry. Technology is another major change that takes place in the sportswear global market. For example, the tremendous advancements in the level of technology have led to the emergence of smart shoes that are currently used by athletes today. SWOT analysis Every business operates in a business environment where there are both internal and external factors affecting its operation and performance (Liesch, Welch, Buckley, 2011). These include external factors are those that the business has no control over and internal factors that the business can control. Nike Inc. just like any other business operates in a similar environment. In this regard, the Nike Inc. need to carry out its SWOT analysis to estimate its operational activities in the new market. Strengths Among the important strengths of Nike Inc. is the presence of a talented and specialized team of workers who will be a significant players in the successful venture into the entire Australian footwear and apparel industry (Epstein, Buhovac, Yuthas, 2010). Nike Inc. skilled research department that engages in in-depth research to discover new and modern methods of production of goods that can satisfy the various needs of clients. Through this, the Nike Inc. will be able to do more research in the Australian market, a step that will help the company realize and meet the actual needs of the consumers. The Australian footwear and apparel industry is not been exploited fully; therefore, venturing into the Australian market with different types of footwear items that will give Nike Inc. a competitive edge in the selected geographical location. Despite the presence of a very competitive environment in Australia, Nike Inc. still has a competitive edge over its competitors because it supplies high-quality products to its customers. Besides, its products are designed to provide high-quality comfort among users. This makes Nike products to be considered unique in the market even in the presence of substitute good; therefore, the establishment of the dedicated stores will be a successful venture (George Snowdown, 2007). Weaknesses Nike Inc. possesses a smaller market share in the Australian market as compared to other footwear manufacturing firms like Aldo Group Inc. Nike Inc. does not have a stable ground in the market or a long-term relationship between them and the target market in Australia, and this will negatively affect the companys performance in the country. The buyers of Nike products are consumers and suppliers such as Sports Direct, JD Sport, and other celebrities who consider Nike products as fashion brands. The buyers of Nike products have a strong bargaining power, and therefore, Nike Inc. has to formulate and implement appropriate pricing strategies for their products. Therefore, based on Porters five forces model Nike Inc. will have to reduce its prices to levels that appeal to its current customers. This will helps it to retain its consumers and attract new ones as it expands its market share in Australia. Nike relies on several suppliers to promote the sales of its products. Some of the major suppliers of Nike Inc. include Footlocker, JD Sports and Sports Direct, who possess major supply chains in major cities across the globe (Nike Inc., 2014). According to Porters five forces model of assessing the market environment, these suppliers have very high bargaining power because they have links and access to several markets. They also target making profits and gaining popularity in the markets, and therefore, they deal with many other companies such as Adidas, Puma, and Converse. In this regard, they possess high bargaining power, and therefore, Nike Inc. has to take this into consideration by making wholesale sales to them at fair prices. Opportunities Footwear and sportswear products are becoming more and more popular among male and female sports lovers across the globe. The purchase of footwear and sportswear items has increased among both the young and older population who are aiming at maintaining good health and physical fitness. Nike Inc. can exploit this opportunity for a successful venture in the Australian market. The presence of online solution centres, where business enterprises engage in the selling of products is growing rapidly in Australia. Nike Inc. can exploit this opportunity to carry on online advertisements and the selling of their products to clients in the country. Through the implementation of an effective and a well-planned consumers segmentation, Nike Inc. has a high chance of maximizing its sales volume and improving its profit margins in the Australian footwear industry. Nike faces very minimal threat to market entry in the Australian market. According to Porters five forces model, there is a high threat of new market entrants when it is easy for other firms to enter into the industry (Gaji?, 2012). In the sportswear industry, the threat of market entry is very minimal because the entry of new competitors is very difficult. This is because it requires huge financial resources to establish and sustain a sportswear manufacturing firm. A new entry is even more difficult in markets that are close to their maturity such as the Australian footwear and apparel industry, where there is stiff competition from well-established firms such as Aldo Group Inc. Nike Inc. and Adidas. Threats Nike Inc. will face serous battle from multi-national competitors such as cosmetic companies like Procter Gamble, which are in control of the market Australian market and across the world. This will result in poor performance of Nike Inc. because this scenario will create a perfect market competition in this new market because there will be many firms offering the same products and yet they have a small market share (Pugsley, 2012). By venturing in Australia, Nike Inc. is going to encounter a serious price wars from sportswear and footwear firms that are already existing in the country. This include multinational manufacturers like Adidas and Puma (Jaradat, Salam, Mansour, 2013). There are also other foreign firms that bring substitute products to Australia, and this creates a very competitive market environment in the Australian footwear and apparel industry. Despite this, other manufacturers can imitate its designs and produce substitute products and offer them at lower prices. This will result in price wars among the competitors, for example, the price wars between Nike and Adidas, and this may have a negative impact on the performance of the newly established Nike dedicated stores in Australian cities. Nike is considered the leading manufacturer and supplier of footwear and apparel in many countries, however, in Australia, it faces stiff competition from other manufacturers who produce similar products. Its position as a leader in the footwear industry is under threat from Adidas, which is its closest rival. As already alluded under the section of the threat of substitutes, the rivalry between Adidas and Nike has been going on for many years. Business organizations that aim at achieving both short-term and long-term success should not overlook its rivals, and therefore, they watch each others steps and strategies to identify the weaknesses to exploit to gain a competitive edge in the industry. Market Segmentation To meet the demands of a larger population, Nike Inc. has segmented its markets into various categories, and as a result, this company engages in the designing and the production of various categories of footwear and apparel (Kotler Keller, 2012). As already alluded in the section above, Nike Inc. designs and manufactures sports products and apparels consisting of five main brands such as Hurley International LLC, Brand Jordan, Converse Inc., Nike Brand and Nike Golf designs (Nike Inc., 2014). Nike Inc. produces and sells its products to consumers of different categories, for example, football, men and womens training, running, action sports, basketball and Nike sportswear (Nike Inc., 2014). In line with these aspects, Nike Inc. has segmented its customers into the following demographic, geographic, behaviouristic, and psychographic variables as discussed below. Demographic Demographics which refers to the categorization of consumers based on characteristics such as life-cycle gender, age, occupation, gender, and generation is a major variable that Nike uses to segment its market (Kotler Keller, 2012). With regards to gender, Nike targets both male and female athlete and non-athlete consumers (Otnes Zayer, 2012). The company engages in the production of footwear and apparels that target men and women separately, for example, shoes, tracks, t-shirts and jackets for men and women in different designs. Concerning occupation, Nike targets athletes and fitness trainers. This company engages in the products of footwear and apparels that are used in sporting related activities, for example, football, basketball, training and other action sports. Australia is the home of many athletes, and it has basketball, football, and volleyball teams that use Nike products. Nike designs and manufactures soccer boots that are used by top soccer players across the globe. N ike targets consumers who are aged between 15 and 40 years by developing sports and fitness products. Geographic Nike has segmented its markets according to geographical locations such as cities, regions, and countries according to the demand of their various products. For instance, in the US, this company focuses on the athletes who play baseball and American Football. Equally, in Europe, the company focuses on athletes who play soccer and rugby because this region is dominated by soccer players (Steen Liesch, 2007). Finally, in the Asian region, Nike distributes products that meet the needs of cricket players due to the association of cricket with Asian countries. As a result, due to the increase in demand for Nike products in given geographic regions, Nike distribute its products at higher prices. This practice is in line with the theory of demand and supply which states that increased demand for products results in increased prices of commodities (Kotler Keller, 2012). Behaviouristic Consumer behaviour is another major variable of segmentation that is used by Nike Inc. this company focuses on the attributes of their products and how their products make consumers feel (Westerman, 2006). To achieve this, the company addresses the expectations of their consumers, for example, athletes expect to feel like athletes when they put on Nike products, and Nike customizes the products to meet these expectations. This practice can be explained using the individual trait theory, which states that an individuals personality influences purchasing decision (Udo-Imeh, Awara, Essien, 2015). This has enabled Nike to win the trust and loyalty of customers towards their products. This has also helped Nike Inc. to get benefits from the extra market share composed of their loyal customers. The company has maintained its loyal customers by providing them with high-quality footwear and apparel products. Psychographic This is another major variable that Nike Inc. uses to segment its market. It refers to the grouping of consumers based on their personalities and lifestyles (Blackwell, Miniard, Engel, 2007). In this regard Nike target consumers who play, watch or talk sporting activities because this is what shape their lifestyles and personalities. This company develops a lifestyle, and it creates an attitude and a feeling that surpasses their products through events like sports improvement clinics, which give their targets a sense of belonging to the Nike family. Consumer behaviour Understanding the consumer behaviour is a complex task for business enterprises. This is because their purchasing decision is influenced by different factors such as personal, psychological and social factors (Otnes Zayer, 2012). Despite this, Nike Inc. aims at providing footwear and apparel products consumers belonging to different categories. Based on the segments above, the most promising category of consumers is the behaviouristic segment. To influence consumer decision-making to purchase Nike Inc. products, this company is going to utilize the element of the personality of consumers. According to Udo-Imeh, Awara, and Essien (2015), the personality trait has significant influence on the consumer decision-making process and patterns of consumption. Experts of consumer behavior have discovered general and consumption specific traits, which can be used to formulate marketing strategies to successful influence the decision-making and purchase behaviour of consumers. In a research study that was carried out by Gharibpoor and Amiri (2012), it was established that consumers purchase decisions are influenced by individual and social traits. Nike consumers who belong to the behaviouristic segment make decisions based on the personal, psychological, and social influences. According to the five-factor theory, a consumers purchase decision is influenced by the personality of innovativeness, which makes consumers to prefer new things (Krishnan, 2011). In this regard, Nike will have to access the selected segments response to new sportswear and apparel products and make new changes in its marketing mix to positively influence their purchasing and consumption patterns (Schiffman Kanuk, 2010). For example, Nike will have to take advantage of current technological capabilities to produce smart sportswear products for their consumers (Tsao Chang, 2010,). The purchasing decision of consumers are determined by social influence. Some of the consumers purchase decisions among the consumers of Nike products are influenced by friends and family members. Opinion leaders and role models, for example, Michael Jordan and Le Bron James who use Nike products are major influences in the purchasing decision among many consumers of Nike products (Blythe, 2008). Therefore, Nike is required to identify how consumers in the selected segment respond to social influence while making purchase decisions and employ appropriate strategies to address them effectively. Nike will have to identify the cognitive personality traits that correspond to the selected market segment. In a research study that was carried out by Solomon (2011), it was established that verbalisers and visualisers are the two leading cognitive traits that have huge influences on the purchasing decision of consumers. In this regard, Nike will have to design its marketing and communication strategies to appeal to the verbal and visual traits of their consumers to positively influence them to purchase the companys products. Marketing Research The most viable market research method that will provide an in-depth understanding of the Australian market is survey. Survey refers to a market research method where an entrepreneur formulates questions that are aimed at deriving specific information regarding the involved market (Sarstedt Mooi, 2014). Since Nike Inc. do not have a lot of time for market research, the survey is the most viable market research method because it is a quick method of getting information regarding the market. Secondly, this method is viable because it provides in-depth firsthand information regarding the market to the researcher as compared to secondary research (Longbottom Lawson, 2017). Despite this, a survey is not cost effective; however, Nike Inc. has sufficient financial resources to finance it. The vital information that I would seek for during the research includes consumer taste and preferences, fashion trends, the availability of the major competitors and their market share, the purchasing power of consumers and suppliers, pricing strategies, and the most appropriate geographic location for operation (Jan Diggines, 2009). To acquire this information I would carry out a qualitative market research through survey method. In this regard, I would develop open and close ended questions and use telephone surveys, online surveys, paper surveys, and mail surveys to participants (Amandeep, 2015). I would use these methods because they are quick and provide credible information for use in the making of future decisions. Conclusion In conclusion, Nike Inc. dominates the global sportswear and apparel industry. This company operates in a fast changing fashion industry. The fast paced changes in technological knowledge lead to the fast changes in fashion trends. Similar, the arrival of substitute products from similar companies leads to the fast changes in the taste and preferences of consumers. According to SWOT analysis, the major strengths of Nike include a skilled team of employees that offer high-quality products. However, it also has weaknesses and faces major threats from competitors in the market. The segmentation of Nike Inc.s market can be described based on four major variables, namely, the geographic variable, psychographic variable, behaviouristic, and demographic variable. The consumers of Nike products is influenced by their personality, and this can be explained by the personality trait theory. Finally, for effective decision making in the future, Nike should use a survey method to carry out market research. This method is viable because it is quick and provides accurate and reliable feedback to the researcher. Bibliography list Amandeep, T. L. 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