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IMT-02: MARKETING IN ACTION
PART – A
Q1. What are the characteristics of a customer-centric organization?
Q2. Write a note on the significance of an effective marketing mix. How can it be achieved?
Q3. The economic environment can affect patterns of demand and supply. What are the major economic indicators? How can a company monitor them over time?
Q4. What is the purpose of customer relationship management? How can implementation of CRM be profitable for companies as well as customers?
Q5. Explain the purpose of segment.
PART – B
Q1. How can successful positioning be ensured? What is meant by repositioning?
Q2. A product goes through definite life stages just like living organisms. Describe the stages in a product’s life cycle with a focus on the strategies at the various stages.
Q3. Write a note on the information required to prepare a sales forecast. Explain the qualitative and quantitative methods of forecasting.
Q4. Experimentation is crucial in the innovation process. Comment.
Q5. What are the activities involved in channel strategy decisions?
PART – C
Q1: How is the effectiveness of advertising evaluated? Explain how advertising results can be improved.
Q2: What is public relations? Explain its relationship with publicity.
Q3. What do sponsors gain from sponsorship?
Q4. New entrants raise the level of competition in an industry. How can this be checked?
Q5: What is the main focus of the core strategy? Describe the elements that comprise the core strategy.
SPONSORSHIP AND THE MARKETING MIX
Ford is a global firm that makes cars and commercial vehicles. It has been the leading car seller in UK for twenty-eight years. It is based in the US but operates all over the world. In Europe, it has thirty-five sites in nine countries. Its famous brands include Ka, Focus, Land Rover and Volvo.
A strategy is a set of plans designed to help a business reach its aims. Part of Ford’s strategy is to use sponsorship. It is an official sponsor of the UEFA Champions League. This helps it reach out to target customers all over Europe. It helps Ford to compete. It also helps it to develop a strong brand image and improve its brand value.
Marketing aims can be reached by effectively using parts of the marketing mix. These are often listed as product, price, promotion and place.
Ford’s products are cars and commercial vehicles. Each different vehicle is targeted at a certain part of the market. Each will appeal to a certain market segment. Ford knows, through its market research, that many of its target customers are also interested in football. It can therefore target the groups accurately. The UEFA sponsorship lets Ford use many communication channels to reach these groups.
Ford has three aims while pricing its products:
•To cover costs
•To make a profit
•To compete with other firms
UEFA sponsorship also allows it to compete without using price. This is called non-price competition. For instance, Ford produces a range of Champions League special edition cars. These are more attractive to its target buyers and can have special features.
This refers to where the cars are sold. The football sponsorship allows Ford to spread the brand message across the globe. The Ford dealership network is the largest in Europe. Dealerships are planned so that everyone has one within reach.
Promotion is often split into ‘above-the-line’ and ‘below-the-line’. The first is paid for directly. The second is publicity through, for instance, sponsorship and public relations (PR). Ford’s main above the- line spending has been on TV. New technology and multiple channels mean that traditional ATL communications are becoming weaker tools. The UEFA sponsorship combines both types and helps Ford to cover all of Europe. The Ford brand is promoted before and after the game, and at half-time. Advertisements are shown at matches. Ford uses the slot either side of TV breaks to show brand messages. These are targetted at the football audience it knows is watching.
Q1: Identify the target market of Ford. Critically evaluate the impact of the marketing mix elements on the target market.
Q2: Highlight the advantages and disadvantages of sponsoring a cricket match, in the Indian context.
NIKE: RUNNING OVER THE COMPETITION
Nobody takes the admonition ‘Just do it’ more seriously than Nike, the Company for whom the slogan was written. Whether it’s entering a new sport, moving into a new geographic market, or developing a new product, Nike approaches its mission with the dedication and single-mindedness of an athlete training for competition. And whatever the task, the goal is always the same: To turn in a peak performance, one that leaves no doubt as to who the best is. That is because at Nike, winning isn’t merely a corporate philosophy-it’s the Company’s business.
‘This brand is all about building products for athletes, high-performance products, very authentic products, innovative products, bringing new technology to athletes so they can perform better-at a higher level in their sport,’ says Bill Zeitz, Global Director of advertising development at Nike.
Liz Dolan, the Company’s Marketing Director, puts it in even more basic terms. ‘We have a really incredibly simple mission, which is, “serve the athlete”. If you’re in product development, that means you have to make sure that the products really work, that they’re really great for whatever sport you are assigned to. If you’re in the communications area, it means that you have to communicate with an authenticity about the sports experience, what athletes know to be true of what it feels like to win a basketball game, or run a marathon, or whatever.’
This near-obsession with authentic athletic performance comes naturally to the Beaverton, Oregon, Company started in the 1960s by Phil Knight, a sports enthusiast and runner who believed the needs of serious athletes were being neglected by Adidas and Puma, the German Companies that dominated the athletic shoe industry. With the help of Bill Bowerman, his former track coach at the University of Oregon, Knight set out to develop a shoe that would make a difference in a runner’s performance.
The rest, as they say, is history. Nike has become a dominant player in sports apparel. With track, basketball, tennis, and other traditional sports in the “win” column, Nike recently has turned its attention to building its franchise in soccer, cricket, rugby, hockey, and in-line skating, among others. After all, Dolan explains, being a global sports brand requires an intensely local focus.
Being a global brand is extremely important to Nike because its home market, the United States, is nearing saturation. According to John Horan of the newsletter Sporting Goods Intelligence, sporting-goods chains have over expanded and profit margins are threatened. When Nike announced that its second quarter earnings in 1997 would not live up to Wall Street’s expectations, its stock dropped 13 percent. With these spurs at home, Nike has to look overseas where it has only 27 percent of sales compared to 43 percent in the US to generate additional revenues.
But going overseas is not a sure win for Nike. ‘Understanding what sports the people in [a] country play, and then being great at those sports… that’s always the challenge. In UK, for instance, we are a really good basketball brand, but they don’t play that there. And we are a really good tennis brand, but they kept telling us, ‘Other than the two weeks during Wimbledon, nobody in really cares about tennis.’ So in UK soccer is what they play. Rugby is what they play. So we had to really concentrate on being great at two sports that were not really something that came from our American tradition at all. That took years of product development and talking to consumers about, ‘What does this sport really mean to you when you play it, and what does it really mean to you when you watch it?’ The brand attributes for Nike in UK are the same-we really want to be the authentic sports brand-but the sports that are the building blocks for that are very different in UK than they would be in the US or in Japan.’
Outside the US, soccer is the main sport, and Nike has pursued the soccer player and fan with a vengeance. In the US, Nike has signed a multiyear contract with major league soccer that calls for it to spend $3.75 million a year to sponsor five of the league’s ten teams. In addition, the contract contains a clause that allows Nike to retain sponsorship of half of the League’s teams as it expands. Overseas, Nike spent $20 million in a sealed bid process to sponsor the Italian national team. During last year’s European championships, it bought up all the billboards around stadiums where matches were held, effectively undermining the event’s official sponsor, Umbro. In the spring of 1997, it sponsored a worldwide soccer tour that featured top teams. It has also spent millions on global advertising campaigns and signed leading national soccer stars such as Eric Cantona (captain of the national champion Manchester United soccer team in UK) to highly lucrative contracts.
But nothing matches Nike’s sponsorship agreement with the Confederacies Brasil de Futebol, Brazil’s soccer federation, which cost the company a breath-taking $200 million. Why Brazil? It won the 1994 World Cup soccer match. The contract is a 10-year deal that includes appearances in Nike-produced exhibition matches and community events. Nike will supply Brazil’s national teams with sports kits. In return, the teams will participate in five annual friendly soccer games that Nike is arranging, and to which Nike retains the television rights. Nike will also have access to training clinics in Brazil and to the infrastructure of the game.
Nike has applied the same technical skill and drive to soccer shoes that it applied to the basketball shoes. For example, when Nike couldn’t find equipment for testing the best stud configurations and traction in cleated soccer shoes, it decided to build its own. The goal is to create the world’s best soccer shoe, but that won’t be easy. First, the competition isn’t yet ready to roll over and play dead. Adidas retains sponsorship of many top teams and players, including the national teams of Germany, Spain, and France. It also sponsors World Cup 1998, with the rights to sell official soccer balls and sports apparel. Further, Adidas has invaded Nike’s home turf, sponsoring three US teams and featuring players from those teams in its US advertising. ‘We don’t think that anybody can get near to us on the product side,’ says Peter Csandai, an Adidas spokesman. Reebok, Nike’s main competitor in the US, has also signed contracts with at least thirty professional soccer clubs throughout the globe.
Further, there’s competition at home from firms such as Vans, a small California company that aims directly at the teenage market by targeting the California adolescent-an Internet-surfing latchkey kid. As the number of teenagers in the US grows from 25 million in 1997 to over 31 million in 2010, this move could prove shrewd. These kids are not into team sports; instead they are attracted by individual sports such as skateboarding, snowboarding, surfing and mountain biking. Within two years of entering the market for snowboard boots in 1995, for example, Vans has become the third largest company in the business. So, it’s in a position to make a move on Nike.
Competition is not Nike’s only problem; some of its actions haven’t left fans cheering either. Signing bad boy Eric Cantona generated a lot of criticism and infuriated the soccer establishment in UK In 1996, Nike flew eight of soccer’s hottest players to Tunisia to film an advertisement in which the athletes competed against the devil. Not surprisingly, this ad drew angry letters from many offended fans. Even the Brazil deal has been heavily criticized. As part of that deal, Nike had to pay Umbro an undisclosed amount to cover the remaining two years of its contract with the Brazilian federation. ‘Nike is going in and almost encouraging teams to break contracts,’ says James R. Gorman, President of Puma, North America. Finally, not all soccer athletes are convinced that Nike is better. Many pro players continue to get their equipment from companies such as Umbro, Puma, and especially Adidas, which have been part of the sport for decades, not just the last few years like Nike.
Still, with over $8 billion in sales in 1997, Nike remains the biggest player in the game. Adidas is a distant second with $3 billion. With its free spending, Nike appears to have changed the economics of the game. Nike intends to be the number one supplier of soccer gear by World Cup 2002, but so far its efforts have produced only $200 million in annual sales. It has a long way to go before it scores a match-winning goal in the global soccer market.
Q1: Identify Nike’s markets and Nike’s positioning in these markets.
Q2: Describe the Company’s global soccer marketing mix.
Q3: What marketing recommendations would you make to help Nike achieve its quest for global soccer dominance? How serious is the threat of a firm like Vans? Is Nike likely to be successful in global soccer?
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