Participating in a Sports event is an overwhelming feeling and getting oneself prepared for such an event is where the word “NIKE” clicks into our brains..!!
NIKE, Inc. (NKE) is the one which first strikes the minds of not only the consumers but also the sports retailers like Foot locker and JD Sports when it comes to Sports and athletic footwear as well as garb as the company being the world’s largest seller for sports commodities. Originally, the company was established as Blue Ribbon Sports in 1964 by present Chairperson, Philip Knight, and Bill Bowerman, a previous trail and coach of the field at the University of Oregon.
Place of NIKE In the Brand Stakes:
Nike has its impact internationally in 190 countries. Before knowing the Distribution of the company it is important to know the other elements of marketing miix- Products, Price and Promotion. Nike brings to the customers innovative and unique products like Nike Air, Lunar, Shox, Free, Flywire, Dri-Fit, Nike+, Nike Fuel, Flyknit. The company uses eveents of sports on a larger platforms like the Soccer World cup, the Rio Olympic Games, And the NFL Super Bowl and endorsement deals are done with renowned athletes like Roger Federer, LeBron, Neymar.
Channel of Distribution: NIKE
Distribution is the 4th important and fundamental element of the marketing mix apart from the Product, Price and Promotion. Distribution is a system of the coordinated activities which includes the transfer of financial commodities between the consumers and manufacturers (Domschke & Schield, 1994). It involves getting the proucts for the customers and fulfilling their requirements by supplying products that they need, directly or through the retailers and thus forming a connecting link between the consumers and produces thus narrowing the gap between them. At present, there are 21 distribution centres of Nike internationally in Australia, Asia, Europe, Latin America, Africa and Canada (Sales Management, 2014). About 900 million units were moved by the supplier chain units of Nike in 2013 with its production network of about 700 factories in 42 different countries. Every product moves from 57 distribution centres across a network of 18,500 accounts and 140,000 retail doors.
( Source: http://www.consumerpsychologist.com)
Nike distributes their products via retail account, through Nike-owned retail comprising of stores in US as well as 160 different countries across the world, and e-commerce sales and also through a mixture of self-owned distributers and authorizations, brand openings, elite showrooms and hypermarkets. This depicts that Nike follows the ‘Selective Distribution system’ where in the products of Nike are distributed in the limited outlets and not on a widespread exposure but are not exclusive either (Iacobucci, 2013).
The distribution channels are classified into 2 categories both of which are followed by Nike (Kotler & Keller, 2008). They are Direct or Zero level channels where the manufacturers sells the products directly to the consumers without any mediator called as DTC sales. For instance Nike sells its products via internet selling (www.nike.com) as well as directly approaching consumers through retail outlets. Nike opened 13 NIKETOWNS in the year 1999 which were not aimed at gaining profits in the business but were a means of showcasing the innovative products of the brand, strengthening the ties with the customers as well as opportunity of strong brand marketing.
The other channel is Indirect channels where the manufacturer (Nike) works while supplying the products to the retailers (Foot Locker, Inc. (FL), JD Sports, and Intersport, GeneralPants Co., the Glue Store, and Hype DC.) which is then sold to consumers. Most of its sneaker products of Nike are distributed to large chain retailers like Foot Locker. This is a challenge for the company because most of the sales are done at this retail stores so getting product for the company is crucial. For this, the company has to make sure that it has Computer systems and many centres for distribution so that inventory, orders and deliveries are correctly and regularly tracked at these retail locations. A POS computer program ( point-of-sale) is incorporated into cash registers which monitors the sales at different retail locations by Nike. And if a customer finds the products out of size, these retailers ( Foot Locker and Lady Foot Locker) can also search for that product from another retailer and send it to customers home.
CONFLICTS AMONG PARTNERS OF DISTRIBUTION CHANNELS:
Conflicts occur in businesses when one partner is inherently more powerful than the other or the other partner is impeding others in the attainment of its goals (Iacobucci, 2013). Such a conflict faced by Nike when the company signed a deal with Fogdog Sports to sell the entire products of Nike online. The deal was not to sell products to any other virtual retailer during the 6 months. This gave rise to operational issues in the company as it entered e-commerce business because it had not to push away its coventional retailers. Thus the e-commerce and development of NIKETOWNS was a killing machine for the retailers which lead to conflicts. But later on, the partners of distribution channels understood the objective behind this was to increase the sales and growth of the company and even they started supporting the decision through e-commerce sales.
To sum up, Distribution and Marketing channels are very important because they are the ones that help us find the products and services that we need..!!
Lastly, I would suggest that Nike should also give individual franchises as it only gives its products through the retailers. The recent researches shows the lower failure rates of businesses with developing franchises. Also, Nike should expand its business through more innovative ways alongwith the increased utilization of E-commerce for its business distribution.
Langley, C. J. (2003): The Management of Business Logistics : A Supply Chain Perspective, South-Western, Thomson Learning, p. 108
STUDENT NAME: AMI PANJWANI
STUDENT ID: 216063531