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Lessons From Nike’s Global Success

Nike is a multi-billion dollar company dealing in the design, marketing and distribution of sports apparel. Nike was humbly established in 1972 and has grown to be a dominating athletic brand in the sports industry. From shoes to eyewear, Nike has established itself as an innovative and diverse sportswear company. With over 700 stores globally and a twenty billion dollar increase in revenue, all in twenty years, Nike continues to dominate the international sportswear market. Nike’s success can be attributed to its extensive marketing strategies that will be discussed in this paper.

“Sustainability and business growth are complementary,” (Keller, 2016). Sustainability as a marketing strategy aims at achieving production and sales with minimal impact on the environment, in terms of pollution. Nike tries to achieve maximum sustainability by reducing its total carbon dioxide emissions and prioritizing sustainability on consumer brands.

Nike always tries to outdo the competition and innovation is a way to do it. The sportswear market has a lot of big companies such as Puma and Adidas. These brands are quite famous but, “The differentiation strategy of Nike is quite competitive…”. This differentiation and innovation have led to Nike having products in all manner of sports, effectively pushing the company past the competition.

Ensuring the production of quality products, aimed at the consumer's satisfaction is a great marketing strategy. Nike values its consumers, and its products are geared towards helping the athletes. In the Rio Olympics 2016, seventy-nine medals were won by athletes who wore the Nike sneaker brand. This was almost five times more than the brand in second place.

Nike embraces technology. Taking social media as an example, as of April 2016, Nike had the most massive following on all major platforms combined. Through social media and its website, Nike has access to the e-commerce platform, which increases its reach to countries that lack Nike stores. In fact, Nike had launched their website seven years ahead of Adidas. Still, on technology, Nike is miles ahead with the HyperAdapt 1.0 that ties the shoelaces automatically. 

Nike has been seen to react to other competitive sportswear brands by buying them. Several examples are, Canstar, which was acquired in 1994 for four hundred million dollars. Nike also acquired Converse in 2003 for three hundred and five million dollars. This is a sound marketing strategy since by buying a rival company, Nike has essentially eliminated part of the competition.

Nike's advertising is a crucial factor in marketing. Nike offers endorsement deals to celebrities and athletes who have a vast social media influence. The celebrities and athletes, in turn, wear the Nike apparels and market Nike's products. Nike also has a lot of commercials involving celebrities and athletes. By spending over three billion dollars in advertising per year, Nike’s international marketing strategy reaches all corners of the world.

International marketing can be tricky due to socio-cultural differences across different borders. Some countries may be against Nike’s methods, but Nike has to find a way to reach out. The use of campaigns, celebrity endorsements, advertisements, and sustainable manufacturing are international marketing strategies most people can agree on. The use of Social media allows Nike to capitalize on e-commerce. Nike fully utilizes these marketing strategies, making it the largest sportswear company in the market.

https://www.ukessays.com/essays/marketing/international-market-strategy-of-nike-            marketing-essay.php?vref=1

https://profitworks.ca/blog/marketing-strategy/545-nike-    strategy-how-  nike-became-successful-and-the-leader-in-the-sports-product-market.html\

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Why Starbucks​ retreated from Australi​a

When Starbucks was setting up shops in Australia, it had a long list of massive expectations. Any random person can tell why Starbucks’ massive aspiration endured a turn in tables. When ordering for coffee, Australians expect a delicious creamy latte or long black coffee, not a significantly flavored swill. 

While Starbucks café resides in almost every part of the world, the numbers are quite small in its home country, Australia. The reason is that the company endured a closure of over 70 percent stores within the underperforming regions, remaining with only 23 stores in entire Australia. The company began its official operation in 2000 and created up to 90 locations as of 2008. Its fast growth was directly un-proportional to its popularity growth- an element which serves as a sole determinant of business survival in the market.

Even though the fact is that Aussies palate produces a more refined coffee compared to the genre that States offer, a series of strictly business kerfuffles existed on the part of Starbucks. According to the Bookers article of “Why Starbucks failed in Australia,” a Gartner research analyst asserted that Starbucks launched its brand too rapidly before granting Australian consumers, the opportunity to build an appetite or the brand in Starbucks. 

The company also expanded to regional areas, which were majorly outer suburbs within the major cities, making the brand to be too available. The YouTube video on “Why Starbucks failed…” asserted that Starbucks possessed 87 stores in Australia, which did not last for long. The first years of Starbucks swam in a pool of massive loans that totaled up to $54 Million. In 2008, the firm faced challenging times in the economic age of 2008. This led to the closure of 600 U.S stores within the same year. 

The fact that Starbucks did not satisfy the Australian taste was also a major setback for the growth of the café company. Starbuck was a sweeter coffee option compared to the native coffee taste which had won the preference margin of Australians in a long time. Within the first seven years of thriving in the Australian land, Starbucks had accumulated a loss of $105million.  Moreover, the company charged more compared to local coffee in Australia. 

The already thriving culture of coffee in Australia also served as a challenge to the brand in America. According to Turner (2018), the café industry of Australia was projected to expand its revenue base to over $6 billion in revenue as of 2018. The phenomenon does not come as a surprise, as Australia has a strong support of café consumption in the mills since the 1900s. When the Greek and Italian immigrants came to the continent, Australian’s were immediately introduced to the flat white- an essential ingredient of Aussie favorite which was termed the espresso.

Despite accruing such a massive challenge, Starbuck has never given up anytime soon. The company has begun to reopen its locations, though moderately. The company’s stores are still available in most capital cities, as they appear to be successful in their endeavors. Starbuck still boasts of possessing 39 locations in Gold Coast, Brisbane, Sydney, and Brisbane areas, which caters for the interest of tourists who visit the regions. However, their giant dream of possessing at least one store within the streets of U.S beverage appears to be long gone.

https://www.gizmodo.com.au/2018/07/why-starbucks-in-australia-was-a-massive-failure/

 https://www.cnbc.com/2018/07/20/starbucks-australia-coffee-failure.html

 https://www.youtube.com/watch?v=_FGUkxn5kZQ

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WHAT MAKES UNIQLO UNIQUE

In the world of fast fashion, there are very few brand names that are widely recognized globally. Zara and H&M are considered the giants of the global fashion industry. Both companies in the past decade have put all their forces into getting their names out there, not just on a local level but a wide spread international level which in a way that created market entry barriers.   Many clothing companies are trying to enter the market, and they may succeed on a local level. However, when it comes to branching out across boarders most of them fail to do so. There are a lot of factors that play into that, but the most important factor is them failing in distinguishing their name from other fast fashion companies. The core business of fast fashion retailers is designing and producing trendy clothes that come with a lower price tag that appeals to a wide demographic of costumes. The research and development cost for this type of business is extremely expensive, especially if the R&D had to be done on different regions of the world which vary in taste and preference.    Uniqlo is considered one of the newest players in the industry. It is a Japanese company that was opened in 1984. Today, the company owns more than 1,900 stores across 18 markets. It is the largest clothing chain in Asia and the third largest globally, so what made Uniqlo stand out? Uniqlo takes slow and smart approaches when expanding into new markets while considering the unique needs of each market. This method may be the most successful way to enter into new markets, especially in an industry that highly depends on individuals’ tastes and needs. The company tries to find gaps in each market and then tries to fill those gaps. It also caters to each market’s taste and preference.

Innovation: Most fast fashion houses focus on women’s clothing. They would spend more than 80% of the R&D on their female customers. Uniqlo realized the lack of focus on men’s fashion and decided to devote more time, money and energy into catering its male customers. This issue is not prominent in Asia as it is in Europe and the United States. There is a huge gap when it comes to men's fashion. Companies rarely invest in researching what male consumers preferences are. When Uniqlo first started doing that, they realized that a significant segment of men hate how classic t-shirt fits. They also prefer a more fitted clothes. 
Adaptation   Localization is a crucial part of going global, especially in the fashion industry. Although, we consider the world one big town, and we see ourselves not so different from each other. There still is a difference between different regions of the world and the consumer’s need in each region. For instance, when they decided to open in East Asia, they introduced a new line, Hijab line, which caters to their female Muslim consumers. They also used a very famous Indonesian model, Hana Tajima, for their Hijab collection. After proving to be a huge success in East Asia, they started carrying the line in all their other stores around the world. I

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The Tiger Effect: What It Can Do For A Brand

As a vehicle to differentiation and aspirational status, retail brands often pay a premium on sponsorships and endorsements of international athletes. Few do it on the scale of American Sportswear company, Nike. Nike has track record of renowned collection of global endorsers, including; Serena Williams, Derek Jeter, Michael Jordan, LeBron James, Cristiano Ronaldo and Neymar Jr. and Tiger Woods.

https://youtu.be/Kx9fadoL9oU

On Sunday April 14th, Tiger Woods completed a stunning victory at the 2019 Masters taking place at Augusta National Golf Club. This was Tigers’ fifth victory at Augusta and the 20th year of the partnership of Tiger and Nike. Although Tiger took home the “Green Jacket” Nike was able to reap much of the benefits from his Sunday victory. Tiger was wearing his iconic red Sunday shirt and black swoosh cap, which have become a symbolic outfit for the brand and Tiger himself. The victory sent a ripple through the markets- Nike’s stock price rose 2 percent after the Master’s tournament's victory and added $2 billion to Nike's market value, furthermore, the entire golf industry experienced a boost in sales. The phrase coined as “The Tiger Effect” touches on the power and influence one man can have on a brand and entire industry.

The Tiger Effect is something important for retail brands and consumers alike. A brand is essentially a compelling story. Certain technologies and materials can create a superior product but what majority of consumers buy in to is the messaging behind the brand or product.  Nothing stands truer than in retail industry. If compelling enough, retailers can leverage their brand image and it can be proliferated on an international level. Differentiation and value is so much based on the perception and value the brand holds within the eyes of the consumer. The path of dependence is often unique and subjective to historical conditions. Retailers can drastically influence market share and brand perception through the marketing and brand strategies acted on. For Nike, using many figures to tell a larger narrative has proven to give the company a sustainable competitive advantage.

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Emerging markets & the global e-commerce landscape

Emerging markets have been a topic of discussion for quite some time now. E-commerce has enabled the idea of a global market for sellers and buyers a like. As retail in developed markets becomes saturated, furthermore, more favorable government regulations, these new frontiers prove to be lucrative opportunities for e-commerce growth.

According to a report by Business Insider, the current market leader is China as it is the world's largest e-commerce market, nearly half of the population is actively making online purchases, leaving little room for growth. India, Southeast Asia, and Latin America are experiencing significant growth. E-commerce penetration rates in these areas hover between 2-6%, presenting a huge opportunity for future growth as online sales gain traction. Moreover, the graph below highlights markets that are expected to grow at compound annual growth rates (CAGRs) of 31%, 32%, and 16% through 2021.

Things to Consider

Emerging markets offer immense growth and opportunity for firms, however, there are many obstacles firm must consider before making the leap abroad. One major concern is government regulations. US based retailers must understand the regulatory climate they are looking to venture into. Often times, firms will be forced to work with local companies or partner with the governing body as a joint venture. Although not a bad route and often times beneficial when entering foreign markets, it remains important to keep in mind in how strategies and operations will need to adapt. Second is logistics and supply chain management. When doing business in developing regions it can be challenging to implement operational practices done in the US as infrastructure is underdeveloped. Delivery and efficiently will likely be slower and costlier when building out supply chain in these markets Lastly, is retailers must successfully adapt brand, product offerings, and operation to meet cultural norms and practices. Retailers' home markets will differ drastically than emerging markets. The landscape, what consumers want, and what is acceptable will shape a global e-commerce for firms.

Key Points:

  1. Developing nations are trending towards less restrictions on foreign investments. 
  2. Eastern markets consist of large populations, growing middle classes, increased spending power, affinity for western brands, and access to internet create massive opportunities for domestic firms to expand internationally.
  3. Logistically, doing business in developing regions can be challenging. In most of these emerging markets, infrastructure is underdeveloped and the population remain less educated.
  4. Retailers must successfully adapt brand and operation to meet cultural norms and practices, while not damaging current competitive advantages derived from domestic markets.
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Omni-channel retailing

To begin, let us define Omni-channel retailing. Omni-channel retailing is: a fully-integrated approach to commerce that provides shoppers a unified experience across online and offline channels. In short, Omni-channel retailing is having multiple ‘touch-points’ with consumers. Retailers seek to reach consumers on a multitude of platforms as there added benefits for retailers to have an expanded relationship with consumers. This relationship extends from brick-and-mortar, mobile-applications, ecommerce sites, onsite storefronts, interactive catalogs, social media, and every communication platform available.

The application of Omni-channel retailing has some proven success. McKinsey Research and Harvard Business Review conducted a study of 46,000 customers who analyzed each decision made during a 14-month period of consumers shopping life-cycle. They found that 7% were online only, 20% were store-only shoppers, 73% used multiple channels. Furthermore, they stated “Customers who used 4+ channels spent 9% more in the store, on average, when compared to those who used just one channel.”

Case Study: Nike

A current example of Omni-channel retailing is Nike. In a recent keynote session, Adam Sussman, Nike’s chief digital officer, discussed the brand’s digital transformation and how Nike is customizing their approach to meet the needs and further the connection with individual customers. With the goal of creating “more two-way” interactions and providing “consumers in a way that’s both distinct to Nike and unique to each person.” Nike is collecting an immense amount of data through the Nike Plus App membership as well online shopping behavior. By leveraging its insight from various platforms, Sussman states that active users spend four times more on average than regular Nike shoppers. Consumers are more likely to purchase more products while Nike is able to deliver consumers a more personalized retail experience. Furthermore, Nike is creating enhancing brand loyalty by creating a community experience within one of the many touch-points they have with consumers. Nike has successfully synced these touch points so consumers can go from a retail store to an App and receive a personalized shopping experience.

Final Thoughts

Omni-channel retailing is an exciting opportunity for brands and retailers to gain a strong consumer base and control brand communication. Research shows real added value for brands as they can reach consumers on multiple platforms or “touch points” such as brick and mortar, marketplaces, web, mobile and social media. Additionally, Omni-channel retailing offers added benefits to consumers. With the collection of data, retailers are able to deliver a convenient, personalized shopping experience at any given time.

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Online Retailers Shift To Brick-and-Mortar

Retail today is rapidly changing and evolving. Technology has transformed consumers’ preferences and behaviors, as well the tactics retailers use to effectively capture consumers. Communication of brand is key for retailers today in the pursuit of creating a loyal customer base. Many of the leading consumer brands today had their start online. This strategy has allowed them to disrupt the traditional, capital intensive brick-and-mortar retail models. By operating under a direct-to-consumer model, brands are able to retain control of brand communication and distribution, while yielding higher profit margins.

Over the recent years, technology and e-commerce have hurt the physical retail store channel. However, one major trend we see is the expansion of many retailers who had their start as direct-to-consumer, online only businesses migrate in to the physical store realm. A significant example was Amazon’s 2017 acquisition of Whole Foods, which provided Amazon with a significant bricks-and-mortar presence in the US. Other popular retail brands have followed that trends such as; Warby Parker, Allbirds, Bonobos, and Casper Inc. All of the brands mentioned began solely as online businesses with great success, are heavily investing in to the physical space. The value in expanding in to the physical space is retailers can offer customers an “experience” they wouldn’t be able to provide otherwise. Retailers are able to create more “touch points” with the consumer and integrate them in to their network, making a more seamless experience for buyers and stronger brand loyalty.

How consumers interact with goods will continue to evolve. Technology will continue to influence how we see and desire the consumption of goods. That being said, the fact that many of the leading online retailers are pursing what is considered a dying channel in retail shows there is still value in it. There is something to be said about being able to touch and feel tangible goods. In a more hyper connected world, the longing for human experience has become novelty. As quoted by Neil Blumenthal, the founder of Warby Parker, “I don’t think retail is dead. Mediocre retail experiences are dead.”

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Why Tesco failed in the U.S.

If you have ever been to the United Kingdom, you must be familiar with the staple retailer store, Tesco. It is the biggest retailer in the UK and has a strong presence in international markets. It has more than 6,500 stores worldwide including Ireland, Hungary and Thailand. However, one country where Tesco has managed to fall off the radar is the United States.

Tesco entered the U.S. market in November 2007 with almost a $500 Million investment. They opened the first retail store in Los Angeles, California. Soon after that, they started opening more branches across the state of California and eventually expanded into Arizona and Nevada. They went under the name “Fresh & Easy,” which was supposed to give the US consumers an idea of what to expect from the new retailer, fresh food at a reasonable price.

Before trying to dip its toes into the U.S. market, the company spent two years conducting on-ground research. They also spent up to $1 Billion researching the U.S. market. They even adjusted the recipes for the ready to eat meals to fit within the American lifestyle and taste preference. However, Tesco failed in applying the results of their research which resulted in them being disconnected from their target market.

Their choice of location is one of the biggest mistakes they have done. From the company’s experience in the U.K., their small grocery stores which were located near train stations and underground subway hubs were the most profitable. However, in California and Nevada, people rarely use trains or subways. Thus, they lost a huge chunk of their business.

In addition, their strategy is to open stores that are smaller in size than a regular supermarket and place it within walking distance to any residential area or business area. However, most people who live in the West Coast do not walk that often. They usually drive to get their groceries and food which reduces the need for mini markets.

It seems that it would have been better for Tesco to open in metropolitan areas and large cities rather than branching into California, Nevada, and Arizona. Their model and strategy could intertwine better with the lifestyle of a New Yorker or someone who’s from Chicago or Washington D.C as. They are very similar to the U.K. especially London. Therefore, Tesco could have begun their U.S. expansion starting from the East Coast. Nevertheless, Tesco could’ve been successful if it were to learn from its mistakes. They were not doing well in the first branches they opened, yet they kept on expanding and opening other locations without modifying their strategy or analyzing why the first stores were not successful.