Distribution Strategies of the Nike Company

Introduction

Distribution is an important factor in marketing since manufacturers and producers achieve their marketing goals by supplying and transporting their products to both small and large-scale businesses. By doing this they generate profits, and at the same time enlarge the number of customers they possess; since they can reach them wherever they are. It can be argued that as a result of the widespread distribution of various products; these products are purchased even in the remotest parts of the world (Kotler 400-510).

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Definition of distribution

Distribution is the process of transferring the ownership of a product through one direction from the manufacturer to the consumer. In this case, there may be intermediaries where the manufacturer does not transfer the product directly to the consumer. Based on this, a distribution channel is the chain of intermediaries where each provides and delivers the product down the chain to the subsequent party; until it reaches the final consumer (Kotler et.al. 356-623).

Effects of distribution on other marketing elements and decision making

In this case, marketing elements include distribution, pricing, products and promotion. Based on this, the price of a product will be high depending on the distribution cost. As a result of this, when distribution channels are extensive, each intermediate agent would like to make a profit resulting in the product’s high price when it reaches the final customer. On the other hand, distribution affects the promotion of a product in that, distribution assists in promoting the product to the customers. In this case, a newly manufactured product reaches the customer through the distribution resulting from its advertisement. Lastly, distribution affects the quality of a product, especially in vertically distinguished firms. Based on this, the product value of a high-quality channel diminishes when it is distributed on a one-sided mode; while the value of a low-quality channel would rise when it is distributed on a multiple side’s bases. It can be seen that distribution affects decision-making in marketing since; the more efficient a product is in the market, the more it is sold resulting in high profits. This will help the manufacturer to expand their distribution strategies in order to gain more profit (Gorchels et.al 50-120),

Nike Company

The Nike Company was established by the University of Oregon in 1964 where it was formally called ‘Blue Ribbon Sports’. Initially, this firm dispersed Onitsuka Tiger shoes at Knight’s automobile in Japan. As a result of its widespread increase in profit, the first trading store was opened at Pico Boulevard in California around 1966. Resulting to the company’s extensive sales, they decided to launch its own design of footwear rather than the Onitsuka Tiger’s. In this case, Carolyn Davidson initiated a new footwear design which was a sign of a sporty shoe known as Swoosh in 1971. Based on this, a soccer shoe called ‘Nike’ became the first shoe of Swoosh design which was released to the market in 1971; during the summer period (Katz 40-106).

It is clearly indicated that Bowerman’s gobbledygook design, formed the basis of the firm’s initial self-designed product. In this case, they built up and advanced the alleged waffle sole which developed to the nowadays iconic ‘Waffle Trainer’ in 1974. As a matter of fact, the Nike Company had approximately half of the market divide of the American sporty shoe market. It is argued that the widespread growth of the Nike Company was contributed to; by ‘word-of-foot’ publicity rather than television advertisements. Based on this, the Nike Company has used television to publicize its products; which has resulted in enlarging its production to embrace many other sports and areas all over the world (Katz 40-106).

Distribution strategies for Nike Company

Channel levels applied by Nike Company

It is of significance to note that the Nike Company has more than 20,000 retailer shops all over the world, which comprise Nike industrial unit stores, Nike stores, and Nike Town stores; as well as internet-based websites which assist in selling and distributing Nike’s sports products. From this information, it can be deduced that the distribution channel levels within the Nike Company include; Manufacturer-wholesaler-retailer-consumer. In this case, the Nike factory stores indicate the manufacturer channel level while the Nike stores and the Nike town stores are for wholesale of the Nike products. Still, on the same point, retail shops and internet-based websites belong to the retail channel level (Kotler 400-510) (Kotler et.al. 436-600).

Types of channels used by the Nike Company to reach its customers

The Nike Company uses different channels in advertising its products. These include the sales force, dealers, telemarketing, internet, agency and distributors. To start with, the Nike Company deals with sports shoes and therefore has used the sales force channel in that; it signs an agreement with a sports team to sponsor it, which in return market it’s the product to and through the players. In doing this, the company has enlarged its market since despite the fact that it targets athletes; others might also buy the products. On the other hand, the Nike Company uses distributors in spreading its products. In this case, level based distribution is used where the most costly quality products are given to certain distributors, leaving the less expensive products to be sold at a reduced price at extra-large retail stores like Wal-Mart (Gorchels et.al 50-120)

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As discussed earlier, the Nike Company has been using television in advertising its products since 1982. Based on this, even though telemarketing channels have not been considered as a key advertising method by the company, some people just admire the shoes worn by their favorite players like Ronaldinho and hence buy them. Further, the company’s products advertisement has been made through agencies. For example, an organization that was based in Portland called ‘Wieden+Kennedy’ has contributed to the Nike Company’s expansion in sales. In this case, slogans have been coined to advertise the company’s product like the “Just Do It” slogan, coined by Dan Wieden. Lastly, the Nike Company advertises and sells its products through the internet where it has specific websites from which, customers visit and enquire about the company’s products (Katz 40-106).

Achievement of integrated channels in the Nike Company

  1. Vertical marketing system: This marketing system importantly engrosses the manufacturers, wholesalers, and retailers as the main components of the distribution process. These members need to work in harmony to cater to the needs of the customers where the manufacturers of the product team up with wholesalers, in the process of product distribution and marketing. As a result of this, the Nike Company has earned itself great credit worldwide.
  2. Horizontal marketing system: This marketing system involves two companies manufacturing a varied product but jointly marketing their products. In this case, Nike should work together with athletic teams so that it can market its products, while on other hand Nike sponsors these athletic clubs. By doing this, the athletic teams would advertise the company’s product which would increase the product’s sales.
  3. Multi-channel marketing system: This marketing system encompasses more than one method in product distribution and marketing. In this case, the information a customer draws from the internet through the Nike Company’s internet-based websites would help him to purchase a product from retail shops selling these products (Kotler 400-510) (Kotler et.al. 436-600).

Statistics of these strategies

As a result of the development of the distribution strategies and marketing systems, the Nike Company presently benefits from approximately 47% of the market divide of all the footwear producing companies. Based on this, the company’s sales have amounted to $ 3.7 billion which indicates that; these strategies have led to expansion in the company’s number of sales and hence making a lot of profit. Additionally, the Nike Company has emerged as the leading supplier of sporty shoes and clothing all over the world. It is well indicated that the Nike company has more than 20,000 retail shops all over the world; which has assisted the company in providing and delivering their products to the customers worldwide. It can be argued from statistics that; Nike’s sales have increased to 52% from the year 2005 amounting to $18.6 billion in 2009 which has resulted from its extensive distribution strategies. In this case, the emerging markets like Russia and China have primarily contributed to the increase in sales of the company’s products (Kotler et.al. 356-623) (Kotler et.al. 436-600)

Conclusion

As a matter of fact, the distribution strategies applied by the Nike Company have contributed largely to the increase in sales of its products all over the world. This is because of the company’s extensive advertising and marketing systems, which allow every customer worldwide to have access to the Company’s footwear and clothing. On the other hand, the company should open up new markets in developing countries where it should open up a retail shop. By doing this, it will have opened up new avenues of marketing its products. In addition, it is advisable for the company to lower the prices of their best quality products, so that a large percentage of customers may afford rather than sell to them only the low-quality products.

Works cited

Gorchels, Linda., Marien, Edward. & West, Chuck. “The Manager’s Guide to Distribution Channels, First Edition. New York: McGraw-Hill. (2004): p. 50-120.

Katz, Donald. “Just Do It: The Nike Spirit in the Corporate World”. Massachusetts: Adams Media Corporation. (1995): p. 40-106.

Kotler, Philip. “Marketing Management”, 11th Edition. New Jersey: Prentice Hall. (2002): p. 400-510.

Kotler, Philip. & Keller, Kevin. “Marketing Management”, 12th Edition. New Jersey: Prentice Hall. (2006): p. 356-623.

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Kotler, Philip., Keller, Kevin. & Burton, Kaliski. “Marketing Management, Australian Edition. New Jersey: Prentice-Hall Publishers. (2008): p. 436-600.

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