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Nike Mission Statement: To bring inspiration and innovation to EVERY althlete in the world. (If you have a body, you are an althlete.)

Some examples of herb:

-ginger

-mulberry leaves

-mint

-dry chrysanthemum

Chrysanthemum flowers are boiled to make a sweet drink in some parts of Asia. The resulting beverage is known simply as "chrysanthemum tea". Chrysanthemum tea has many medicinal uses, including an aid in recovery from influenza.

The leaves of several species are edible, and in particular C. coronarium (the crown daisy or garland chrysanthemum) is grown commercially in East Asia as a leaf vegetable, known as tung ho (Chinese: 茼蒿; pinyin: tónghāo) or shungiku (Japanese: 春菊[シュンギク]). In China, the greens are often stir-fried simply with garlic and dried chile peppers. The color of the cooked greens is dark, their texture dense and mucilaginous, and their flavour fragrant and complex.

Contents 1 Market Plan -- Nike Sports Drink 1.1 Executive Summary 1.2 Company Description 1.3 Current Marketing Situation 1.3.1 1.Market and Customer 1.3.2 2. Product Performance 1.3.3 3. Competitors 1.3.4 4. Macroenvironment 1.4 Opportunities and Threats 1.4.1 Opportunities 1.4.1.1 Olympic Games 1.4.1.2 Culture 1.4.1.3 Health Concerns 1.4.1.4 Nike's fame and reputation 1.4.1.5 Partnership with Nestle 1.4.2 Threats 1.4.2.1 Current Sports Drink 1.4.2.2 2006 Powerade Launch 1.4.2.3 Tooth problems 1.4.2.4 Unexpected Regulatory Changes 1.5 Objective and Key Issues 1.6 Marketing Strategy 2 Others 3 Image Tagging for Image:IMG_1225.JPG

[edit] Market Plan -- Nike Sports Drink

[edit] Executive Summary

As the population of the contemporary world becomes more health conscience, we will recommend Nike to introduce a new product line in the China market; sports drinks.

Nike has already today a leading role within the sports equipment market and is well familiar with the threats and possibilities involved. With strong efforts in our research centre together with adapting our new product for the Chinese consumer specifically, we believe the sports drink could be a profitable future division of Nike’s.

The product line will consist of several drinks, all with the goal of increasing performance or endurance for the athlete. The different products will be flavoured with different traditional Chinese herbs and tapped in innovative bottles.

Nike has historically been using sports stars for promotion and the same approach will be use in the launch of the sports drinks, we will also have a presence at the Olympic games in Beijing. Together with TV-commercials and advertisements in sports-magazines, we will work towards getting exposed in fitness centres and of course in our own Nike stores.

To avoid creating a new supply-chain and minimize the cost outlay, we will suggest Nike to outsource the entire distribution of the product to a well established food and drink company with a strong China presence; Nestlé. We expect sales from grocery stores to be big and believe that Nestlé would be an ideal partner.

While the Chinese market might seem too immature for a launch, we argue that it is crucial for Nike to increase awareness in the region at this very early stage and impress and familiarize tomorrow’s consumers already today.

[edit] Company Description

this is just a draft, please change as u guys find appropriate / raz

As one of the most profitable sports-companies in the world, Nike – a now 30 year old giant, has not only made the right decisions at the right time, but also kept on evolving and consistently met new customer needs.

Producing everything from sport shoes, watches and underwear to high performance fabrics and eyewear Nike has never stopped diversifying its product portfolio. Being a truly global player, Nike currently employs 23 000 people worldwide and is a truly global player; its international sales 2003 for the first time exceeded sales in the US.

Nike’s mission goal has already from the start, more than 30 years ago, been to bring inspiration and innovation to every athlete in the world. While this is an important part of its success, it’s not nearly as crucial as how Nike defines the term athlete. Bill Bowerman, one of its founders once said; If you have a body, you are an athlete. This bold statement widens Nike’s potential target-group and stresses its will to inspire people to live a healthy lifestyle.

To bring innovation to athletes all over the world, Nike has divided its business into three core divisions; footwear, apparel and equipment. The equipment segment is the most diverse containing varied products like golf clubs, skateboards and snorkels. It is also within this segment that Nike is diversifying most aggressively by buying new subsidies, the latest acquisition being Bauer – a maker of hockey equipment.

Apart from diversifying by mergers and acquisitions, Nike has an extensive research and development programme in its headquarters in Oregon, which has developed many of its most profitable products.

The equipment revenue for 2005 grew by 15%, and is now Nike’s most growing division. As this report will focus and concentrate mainly on China, it might be relevant to mention that Nike is currently opening 1,5 retail stores per day in the mainland of China, a very exciting market.

REFERENCE: http://www.nike.com/nikebiz/investors/annual_report/ar_05/index.jsp

[edit] Current Marketing Situation

[edit] 1.Market and Customer

"...China is becoming a battlefield. Both local and foreign retailers and manufacturers are trying to claim a share," said Glen Murphy, managing director of ACNielsen China. This is the exact condition of China's current beverage market. China's beverage market has a total consumption of 20 million kilo-liters and a total annual sales turnover of over 120 billion RMB yuan (14.6 billion US dollars). The sports drinks market is especially appealing. Let's look at the current situation. Firstly, people are concerning more about their health in daily life. As a result, in the overall beverage market, soda drinks saw its market share fall under 30%. This is mainly because consumers have pursued more and better taste, nutritional values and higher utility value in recent years, resulting in a notable increase in the market shares of beverage like tea, fruit juice and sports drinks. Secondly, in recent years, it gradually becomes a trend to drink sports drinks among young people in mainland China. In a news article of Guangzhou Daily on 29/08/2005, a shopkeeper of a convenient store told the journalist that sports drinks sold best among all the beverage. A high school student said he bought sports drinks only because it was a trend and he wanted to follow. More and more consumers are awared of the sports drinks, a relatively new product in Mainland China. The popularity of this new product is rising all the time. Thirdly, it is accepted by people that a higher price of a sports drink is justified. In the current market, sports drinks usually enjoy a higher price than other soft drinks by 2-3 yuan. The high value of energy and sports drinks has been the main driving force behind the category's expansion. What's more, in 2004-2005 Annual Report Beverage Wholesale & Retail Market of china, it says that China's drink market is more concentrated towards leading brands and there is a high degree of market concentration for all product varieties. As a historical and famous trend leader, enjoying a professional and highly recognized sports brand, Nike will perform exellently in this new market with attrative opportunities.

However, as what Glen Murphy, managing director of ACNielsen China said, thrilling and enticing as it is, China is never an easy market. With intensified competition resulting from China's further opening of the market and entry to the WTO (World Trade Organization), many strong competitors are also entering the market and compelled to develop clear strategies in order to win consumers in the long term. As we can see, there has been a severe competition in sports drinks market already. In the first half of 2004, among the top 20 brands doing advertisements on CCTV, 6 of them are sports drinks. Moreover, the people do have some knowledge and understanding of the sports science, such as the role of both macro (energy sources for examples), and micronutrients (such as iron and calcium), as well as some of the primary sources of these. But even they know part of the knowledge, many sports drinks in the current market are of poor quality. Most of them do not have clear labels and do not meet the international standard. And the actual contents of energy drinks are not always mentioned on the labels and this may place a individual at risk of taking restricted/banned substances unknowingly as well. Our challenge is that we should not only produce a product of high quality, we should think of ways to educate our customers as well. Once they realize the difference between the sports drinks, and understand that we can always meet their need, we can achieve a big success.

                                                                 Produced by Cianna & Cecilia

here is the information i have for my parts 2-4.

[edit] 2. Product Performance

the price of gatorade is btwn .04 and .06/lt (in USD) the price of powerade is btwn .04 and .07/ltr

the powerade on average is a bit more expensive when compared using the same container sizes ie. 12oz is .06 powerade, .04 gatorade. these prices are only for the US i dont know where to find price info for china.

the sales and profits info is in the excel file, ill extract what is neccesary later

customers are satisfied for both products. they meet the requirments of various levels of athletes (through the 3 main product lines which can be generalized as: strenuous long duration training, more sugars and salts. average training. light training, lower salt and sugar levels. mostly for individuals training to lose weight and become in shape or those whose workouts are under 1.5 hours).

[edit] 3. Competitors

gatorade and powerade both have similar strategies. they gain product support by signing teams and leaguges. gatorade has on its roster, NBA, WNBA, NFL, MLS, US Soccer Federation, MLB, PGA, and USA Cycling. Powerade has NHL, NASCAR, RHRA (drag racing). Additionally, powerade has signed lebron james, a NBA player who was rookie of the year last year and has tremendous marketability. they have created, 'flava 23' as his brand of powerade and are using his basketball skills as a marketing platform. gatorade i would say has no major weaknesses except potentiall that they do not have any endorcements abroad ( i could not find any, i will check more on this later). powerade just does not have much of the market (appx 15% vs. gatorade's 80% share) the fact that each of these companies are beverage companies rather than sports focused companies appears to be a major WEAKNESS.

[edit] 4. Macroenvironment

each successive generation in the US is consuming more packaged beverages than the prior generation. much of this change is attributed to increased wealth allowing for such consumption. this wealth affect would be very important in china where gdp is growing 9% annually allowing more people to afford such 'luxuries.'

i have been unable to find economic info for sports drinks.

changes in technology would only serve to drive down the costs of production, the product can not be improved as such it can not become obsolete. the only way for the product to become dated would be shifts in consumer preferences which is why new lines of gatorade and powerade are introduced, to fulfill this new preference.

politics should not matter much as most likely this beverage would be bottled in the host country which would insulate the company from political intervention.

culturally nike pepsi etc. are both american and global companies. i think for these companies brands to be impared it would have to be a result of company specific mistakes rather than US mistakes. these companies employ a sufficient number of employees globally to insulate them from such perception shifts. For example, "Nike family is a fairly vast enterprise. We operate on six continents. Our suppliers, shippers, retailers and service providers employ close to 1 million people." (this is from the company web page: http://www.nike.com/nikebiz/nikebiz.jhtml?page=3)

====SOME OTHER INFO====:

gatorade attributes much of the sales increase to the new sports bottle, which is reffered to as 'a piece of sports equipment'

last qtr for pepsi there was 15% bevg sales growth in the asia pacific region.

half of pepsi's beverage profits come from the US because of the economics of scale present in that market. as we discussed the fixed costs of the plant are the majority of the price associated with these beverages.

the major problem companies encounter when introducting new food products (again this is knowledge of the US, may apply in China but i am not certain) is acquiring shelf space. it is very expensive and difficult to obtain key shelf space (eye level). most consumers make thier purchaces on a whim when grocery shopping consequently product placement is vital. i can go over this in greater detail if you would like, let me know.

sports drinks are sometimes refered to as 'functional beverages'

the value of nike is 22.7 billion USD this clout should help them muscle into this new market

this is some info about pepsi that you guys should look over just to have an idea about the sports drink part of their business.

This morning, PepsiCo (PEP,Hold,$55.06) reported 3Q EPS of $0.78 excluding a one-time charge for repatriation of international earnings, $0.04 above our estimate and $0.05 above consensus of $0.73. The upside primarily reflected core growth ahead of our estimate, with operating income up 11% versus our 9% estimate.

PepsiCo's portfolio strategy continued to show its strength with overall business growth ahead of our estimates due primarily to International and North America beverages. PepsiCo International revenues were up 17% and division operating profit was up 28%. Increased mix of high-margin beverage volume, up 13%, and strong snacks volumes of 7% drove the growth. Strongly expanding economies such as China and Russia combined with PepsiCo's marketplace effectiveness to drive the performance. This more than offset continued sluggishness in the company's biggest international businesses of Sabritas in Mexico (volume down nearly 1%) and Walkers in the UK (volume down nearly 1%). PepsiCo International was 22% of line of business operating income in 2004. PepsiCo Beverages North America (PBNA) grew profits 16% on a 17% revenue increase and 8% volume increase. Relatively high-priced noncarbonated sales drove the performance, with volumes up 24%, and the higher margin carbonated soft drink business being stable with volumes flat year-on-year. Margins did not expand due to increased raw material costs and a previously announced decision to spend on advertising and marketing at increased rates. PepsiCo Beverages North America was approximately 31% of line of business operating income in 2004.

[edit] Opportunities and Threats

[edit] Opportunities

[edit] Olympic Games

Beijing will hold the 2008 Olympic Games, which will create a huge market for this Nike sports drink. Chinese people are well known as the first ones to explore the usage of herbals with long history and mature experiences. Visitors would like to experience something unique and traditional of Beijing once they are there. It would be amazing to have the Swoosh and Herbs together.

One of the three Beijing Olympics spirits is called the "green Olympics". The herbal essences could also be applied to this spirit to attract more customers.

[edit] Culture

There are still a lot of people who believe in the magical effects of the Chinese traditional medicine in mainland China and people are very familiar with certain herbal flavors. Although the product is new, the idea of using herbal essence is not new to most people. Once the new drink is introduced to the market, it will not be difficult for people to accept. There is likely to be a huge potential market for the herbal sports drink.

[edit] Health Concerns

Nowadays Chinese people are more and more concerned about the health-related problems. Chinese herbals have been regarded to be effective in health protection for thousands of years. Thus people in mainland China are very likely to accept this new product. With the awareness of the bad effects caused by carbonated beverage, people might choose the herbal ones which are considered to be good to their health.

[edit] Nike's fame and reputation

Nike is also a popular brand in mainland China, with many loyal customers who would like to try its new products. Since Nike is a foreign brand, people would be interested in trying the sports drink with Chinese traditional herbal essence in it.

[edit] Partnership with Nestle

Nike can enter into a strategic partnership with Nestle. Nestle is the world's 3rd largest beverage company. Nike will be able to use Nestlé’s Chinese distribution chain allowing Nike to avoid the costs associated with creating a new supply chain. Nestle has no product in the sports beverage category as such it should be willing to enter into a partnership. This partnership would allow both companies to profit from the introduction of this sports drink with minimal investments. Nike will contribute its brand awareness and access to its sports endorsers. Nestle will provide its supply chain and connections within the beverage industry so that the product can shelf space in grocery stores. Also Nestlé’s presence within the beverage manufacturing industry will allow Nike to obtain better prices when dealing with distributors. By working together these companies will be able to launch this product while committing minimal initial capital. However, Nestle must be made to sign a noncompete agreement with Nike so that it can not leave the partnership and begin competing with Nike's new product. Such agreements are common in strategic partnerships of this nature.

[edit] Threats

[edit] Current Sports Drink

Before Nike, there have already been sports drinks in the market, known as Balance Drink,Pocari Sweat,Mizone,Scream and etc. They have already had their stable markets and the price is considerably low. If the idea of adding herbal essence is not as competitive and effective as expected, there might be a price war among all those competitors. The market power of those current competitors can be Nike's biggest threat.

[edit] 2006 Powerade Launch

Coca Cola, with the largest beverage sales in the world in 2004, is going to launch Powerade to China in 2006. Powerade is known as the second biggest sports drink in the US, which will be competent competitor for Nike sports drink.

[edit] Tooth problems

Sports Drink by its nature does contain sugar which might generate tooth problems like cavities if the individual doesn't pay attention to the oral hygiene.

[edit] Unexpected Regulatory Changes

Since mainland China is a place where there needs a lot of improvements to the legislation, some unexpected regulatory changes may happen, which could affect the business negatively.

Also it's important to know that sports drinks are seasonal,which means that the revenues might not be high in winters.

[edit] Objective and Key Issues

Objectives

Key Issues

[edit] Marketing Strategy

1. Targeting the selected market segments

We will use a differentiated marketing strategy for our sports drink. Differentiated marketing is a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. When dividing the market, we have applied 4 different segmentation variables: geographic, demographical, psychographic and behavioral.

Geographic

We will focus on the urban population rather than the rural one. People living in the countrified areas are too poor to buy the sports drink as sports drink is often perceived as luxury.

Demographical

This variable is closely related to the pervious one. As our product is having a slightly higher price compared to our competitors, consumers need to have higher income to purchase it and metropolitans (citizens in Beijing, Shanghai, and other big cities) are having the highest income in China.

Psychographic

People with active lifestyle are prone to buy our product because they will spend more time on sport than others. That means they are more likely to buy sports drink.

Behavioral

We will also target our product to loyal Nike customers. They will be the first group to try our new product. They will act as our ambassadors to introduce the product to public.

In the long run, we will offer different favors for different segments. Some suggestions include, dry chrysanthemum^, mulberry leaves, mint and ginger. As this is only in the initial stage, we will only have chrysanthemum favored sports drink.

^Chrysanthemum is often used with garlic and dried chilled peppers. It has an aid in recovery from influenza and can relieve psychological tension (Alibaba, 2005).

2. Competitive advantages and Product positioning

There are 3 steps needed in choosing the positioning strategy: identifying possible competitive advantages, selecting the right competitive advantages and developing an overall product positioning strategy.

2.1 Identifying possible competitive advantages

Nike sports drink is different from other sports drinks in many ways. Firstly, we are the only product which includes Chinese herbs. Our appreciation of Chinese culture is clearly shown. We believe this is very important if we want to enter the China market. Secondly, Nike is a sports company and has committed to bring inspiration and innovation to every athlete in the world. We are the only athletic focused company which produces sports drink. Moreover, Nike is an internationally well-known company and is promised to be corporate responsible for society. This provides a strong brand equity for our new product.

2.2 Choosing the right competitive advantages

Among the 3 competitive advantages discussed above, we believe distinction is the most important. Nike sports drink is the first and only sports drink with herbs. It has the advantages of sports drink and Chinese herbs. It is uniquely China.

2.3 Developing the overall product position

We will have a “more-for-more” positioning strategy for our product. Our product provides customers with higher value, but at the same time, it is relatively more expensive. Having herbs in sports drink is a special experience to the customer. It is original and distinctive. Besides, the sport drink is developed by the experienced Nike research lab, which is famous for its quality researches. On the other hand, our product offers prestige to customers because of Nike’s strong brand equity. Moreover, our staffs in Nike stores are friendly and responsive. These also deliver higher customer value. All these benefits allow us to position our product at a higher price.

2.4 Positioning statement

"To athletes who need to restore energy after exercises, Nike sports drink provides you with the minerals needed to rebalance your body, as well as the refreshing taste and unique effectiveness of herb."

3. Marketing Mix

The marketing mix consists of 4 elements: product, price, place (distribution) and promotion. Each plays an important role in making the product successful.

3.1 New Product

Nike sports drink is a consumer product, which is bought by final consumer for personal consumption.

Product attributes

As discussed before, we will offer a high quality sports drink which includes Chinese herbs. These herbs will offer an additional benefit not found in other sports drinks, like taste and helpfulness of herbs.

Packaging

Last quarter, the sales of Gatorade surged. Pepsi attributed a large part of this rise to a redesigned bottle. We will follow this example and introduce an ergonomically designed bottle. The bottle will prominently include the Nike logo and the design would be fashionable. It is essentially a “sports equipment”. Nike collectors will also find the bottle a new item to collect.

Labeling

Concern about labeling, it will include all the ingredients used to make the sports drink. A picture and short description of the herb used will also be included to let consumers have more knowledge on it. Many of our competitors do not have concrete ingredients lists in their bottles.

3.2 Pricing

We will set our price at 4.5 yuan per 600mL bottle while the average price of our competitors is between 2 and 3. This is consistent with what we have discussed earlier in positioning: “more-for-more”. As Nike is a well-known company selling high quality products, it is understandable to set a higher price for the new sports drink. At this price, our consumers are purchasing not only a sports beverage but also the Nike image.

Companies have to adjust the price frequently to response to the changing market environment. We will have promotional pricing to increase sale. Nike can hold special-event pricing before games and competitions. As people awareness of sport is the highest before these events, this strategy can encourage them to purchase the product as refreshment.

The BEIJING 2008 Olympic Games is a great opportunity for Nike to promote the new sports drink. There will be millions of people arriving Beijing and the number of potential customer will increase drastically. Special-event pricing can be practiced specially for the Olympic Games, e.g. customers can buy 4 bottles of sports drink at a price of $17.

3.3 Place (Distribution)

Partnership with Nestlé

Nestlé, with 140 years of history, is the second biggest food and beverage company in the world. Its products can easily be found in China everywhere. The partnership is a form of vertical marketing system. As it is very expensive and difficult to obtain a key shelf space (eye level) in grocery stores, building a good relationship with the retailers is very important. By partnering with Nestlé, we can gain access to Nestlé’s supply chain and sell our product in most grocery stores, like supermarket. This can greatly reduce our distribution cost.

Nike will sign contracts with Nestlé agreeing to share a certain percent of profits get from the sports drink sale. This kind of profit-sharing agreement provides the incentive for Nestlé to work well because the revenue is based on the sale of the product. Nike can also increase the percentage shared by Nestlé when the sale goes well.

As Nike is new to the beverage industry, it is difficult for it to find suitable and reliable manufacturers to produce the sports drink. Therefore, we suggest Nike can have Nestlé responsible to find the manufacturers. As Nestlé is an experienced player in the field, it can help and give advice to Nike to look for the right manufacturers.

Nike stores

In addition, we will sell our product through Nike stores. Customers can directly go to a Nike store to purchase the sports drink and ask for advice on the type of herb from salesmen. Buying from a Nike store also make the customer feels superior because the sports drink is a product of a “big, internationally famous” company. The sports drink will be placed along with the popular sports equipments in the store. This is the most accessible part with most customers’ attention. Customers buying the sports equipments may buy the sports drink as well.

Other methods

We have also considered selling the drink in fitness centers and gyms because people are more likely to buy sports drink after doing sport. Placing our sports drink in vending machines in a good choice of selling inside sport centers.

3.4 Promotion

Promotion is an important part in the marketing mix strategy. Products need promotion in order to be get known by potential customers. For our Nike sports drink, three promotional tools will be used.

Advertising

Advertising can influence customers’ perception and purchase decision. The media which we will use are TV, printed materials (including sports magazines and newspapers) and Internet. TV and printed materials are two media which receive the most public attention. These two are the major types of media which is used by marketers. The TV commercials will be featuring popular sports stars because they can present a credible image to the public, which is also consistent with Nike’s brand image. For the Internet (e.g. Yahoo! Website), we choose it to promote our new product because there are increasing numbers of web user in China every year. This form of advertising can surely boot our sales.

Sales promotion

We will also adopt the sales promotion method in publicizing our product. This tool can encourage immediate purchase decision. Free samples will be distributed with any purchase in Nike stores. Sampling is the most effective way to introduce a new product. After trying our sports drink, customers will be more familiarized with it and prone to buy it in the future. Besides, contests and games can also be held to promote the product, especially during the Beijing 2008 Olympic Games. Consumers can design their own bottles for the sports drink or collect labels to enter lucky draw, and prizes will be Nike products.

Public relations

Information about our sports drinks will be included in the company’s website and newsletters. Potential customers and investors can look out the details of our product there. We will also have a news story entitled “An innovation! Sports drink with herbs!” published in sports magazines to inform the public of our unique sports drink.

Some good images that can add to our powerpoint:

http://webchantier.free.fr/pubancien/confection/nike.jpg

http://resonline.no.sapo.pt/NY%20-%20o%20poder%20do%20marketing%20-%20Nike.gif

http://www.badsports.net/shoucang/hoopin/11.1/new/Nike%20China(close%20up).jpg

http://www.nike.com/nikebiz/about/img/swooshdesign.jpg (The Swoosh)

http://www.inhs.uiuc.edu/~kenr/prairiephotos/hymen.herb.infl1.jpg (Chinese herb)

http://www.dreddyclinic.com/ayurvedic/herbs/herbs_images/basil-herb.jpg

http://www.atkinson.yorku.ca/~lripley/zchtplc.jpg (PLC)

Reference:

Kotler, P., Armstrong, G., Ang, S. H., Leong, S. M., Tan, C. T., Tse, D. K. Principles of Marketing: An Asian perceptive. Singapore: Prentice Hall.

Nikebiz

--Hiki 00:14, 27 November 2005 (UTC)

[edit] Others

Please pay attention to the Promotion Mix We welcome announced editings on our market plan!

Frank Woods 12:51, 2 November 2005 (UTC)

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