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Unit 1 Learning Aim b

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Business BTEC is a course which allows all students to work to the best of their ability.
The BTEC approach of continuous assessment allows students to work steadily towards their final grade over two years and be confident of the final outcome, without the added stress of a terminal examination.
This approach to assessment also means that deep learning takes place and students’ retention of knowledge is often significantly higher

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Introduction

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Introduction

Nike, Inc., founded in 1964, is one of the world’s largest suppliers of athletic shoes and apparel. It operates in over 190 countries and offers a wide range of products including footwear, clothing, and sports equipment. Nike has become a household name due to its strong global presence, innovative marketing strategies, and its commitment to innovation in sports performance products.

Why Choose Nike: Nike is a leader in the sportswear market and continuously uses market research to innovate its products and stay ahead of its competitors like Adidas and Under Armour. Nike’s ability to adapt to consumer needs and market trends makes it an excellent choice for examining market research.

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Aim and Objectives

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An aim is the overall long-term goal of a business, while an objective is a specific, measurable step taken to achieve the aim.

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Sustainability: Nike aims to reduce its carbon footprint and produce more eco-friendly products.Innovation: Nike’s objective is to constantly innovate to improve athlete performance through advanced footwear and apparel technologies.
Market Expansion: Expanding into emerging markets such as India and Africa is a critical objective for Nike’s global growth strategy.

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Competitors: Nike competes with Adidas and Under Armour. Nike stays competitive by focusing on innovation (such as Flyknit technology) and celebrity endorsements (e.g., Michael Jordan, Serena Williams).

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Purpose of Market Research

The purpose of market research is to gather, analyse, and interpret data about a specific market, including information about potential customers, competitors, and the overall industry. The insights gained from market research help businesses make informed decisions, mitigate risks, and identify opportunities for growth. Here are the key purposes:

1. Understanding Customer Needs and Preferences

Market research helps businesses understand their target audience’s needs, wants, and behaviours. By identifying customer preferences, companies can tailor products or services to meet demand more effectively.

2. Evaluating Market Opportunities

Research enables businesses to identify potential gaps in the market, emerging trends, or untapped customer segments, allowing for more strategic decision-making when expanding or developing new products.

3. Assessing Competition

Businesses can use market research to understand their competitors’ strengths, weaknesses, strategies, and market positions. This helps companies differentiate themselves and develop a competitive advantage.

4. Supporting Business Planning

Accurate data from market research allows businesses to make data-driven decisions about product launches, marketing campaigns, pricing strategies, and distribution channels, ensuring their plans align with market demand.

5. Mitigating Risks

By gathering relevant information about market conditions and customer preferences, market research helps businesses minimise the risks associated with launching new products or entering new markets.

6. Improving Marketing Strategies

Research provides valuable insights into the most effective ways to reach and engage a target audience. This includes determining the right messaging, advertising channels, and promotional tactics.

7. Tracking Market Trends

Ongoing market research helps businesses stay informed about changes in the industry, technological advancements, and shifts in consumer behaviour, allowing them to adapt and stay competitive.

8. Determining Product or Service Demand

Businesses use market research to assess whether there is sufficient demand for a particular product or service before investing time and resources into development or production.

9. Measuring Customer Satisfaction

Market research can gauge how satisfied current customers are with a company’s offerings, providing insights into areas for improvement and ensuring long-term customer retention.

In summary, market research serves to provide businesses with actionable insights that can drive strategic decisions, helping them meet customer needs, stay competitive, and ultimately achieve business success.

How Nike Understands Customer Needs and Preferences

Nike conducts extensive market research to understand the evolving needs and preferences of its customers. They gather feedback through surveys, focus groups, and social media, helping them design innovative products that resonate with various customer segments (e.g., performance athletes, casual wearers, and fashion-conscious consumers). Their research into preferences for sustainability, comfort, and style helps Nike develop products like eco-friendly shoes and advanced athletic gear.

2. How Nike Evaluate Market Opportunities

Nike uses market research to identify emerging opportunities in various regions and product categories. For example, they recognised a growing demand for athleisure wear and launched a range of stylish and comfortable clothing that blurs the line between sportswear and casual fashion. Nike also identified opportunities in international markets such as China, where they adapted their marketing and products to fit local preferences and trends.

3. How Nike Assesses Competition

Nike keeps a close eye on competitors like Adidas, Under Armour, and Puma through market research. By analysing competitors’ marketing strategies, pricing models, and product launches, Nike can stay ahead by offering superior products or differentiating its brand. For example, Nike leverages its cutting-edge innovation (like the Nike Air technology) and strong brand identity to maintain its competitive edge.

4. How Nike Supports Business Planning

Nike’s market research supports long-term business planning by providing data on consumer trends, emerging sports, and regional market preferences. This helps Nike plan its product pipeline, marketing campaigns, and distribution strategies. For instance, Nike uses research to identify which sports or product categories (such as basketball shoes or running gear) are expected to grow, allowing them to allocate resources effectively.

5. How Mitigate Risks

Market research helps Nike mitigate the risks of launching new products or entering new markets. Before introducing a new line of sports apparel or shoes, Nike tests the market with prototypes, gathers customer feedback, and conducts pilot programs to ensure that the product will meet consumer expectations. By understanding market demands, Nike reduces the risk of product failures.

6. How Nike Improve Marketing Strategies

Nike uses market research to refine its marketing strategies. They collect data on consumer behaviour to design targeted advertising campaigns, such as personalised ads on social media or collaborations with popular influencers. Research into how different demographics engage with digital platforms helps Nike tailor its messaging and reach the right audience effectively.

7. How Nike Tracks Market Trends

Nike continuously monitors market trends through research to stay ahead in a competitive industry. For example, they track trends like the growing interest in sustainability and the shift toward digital fitness solutions. This led Nike to introduce eco-friendly products made from recycled materials and launch digital platforms such as the Nike Training Club app, which offers fitness routines.

8. How Determines Product or Service Demand

Before launching a new product, Nike conducts research to determine the level of consumer demand. For example, they test limited editions or special product releases in specific regions to gauge interest. When introducing innovations like the Flyknit running shoes or self-lacing shoes, Nike assessed demand among runners and tech enthusiasts to ensure the success of the launch.

9. How Nike Measures Customer Satisfaction

Nike uses surveys, online reviews, and social media monitoring to measure customer satisfaction with their products and services. This feedback allows them to make improvements in product design, quality, and customer service. By addressing issues raised by customers (e.g., fit, durability, or comfort), Nike enhances its reputation for delivering high-quality products.

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Summary

Nike’s success is heavily influenced by its use of market research across all aspects of the business, from understanding its customers and competitors to planning its future growth and marketing strategies.

Nike needs to carry out market research to remain competitive and align with consumer preferences. By understanding the market, Nike can adjust its product offerings, improve customer experience, and expand into new segments.

The Market: The global sportswear market was valued at $267.61 billion in 2021 and is expected to grow significantly by 2026. Nike is at the forefront of this market, competing against large brands such as Adidas and Puma.

Target Market: Nike targets a broad customer base, including professional athletes, fitness enthusiasts, and casual wearers. Their marketing campaigns focus on different customer segments, from high-performance athletes to lifestyle consumers.

Competitors’ Activities: Nike keeps a close watch on competitors, like Adidas, which has invested heavily in sustainability through its ‘Parley for the Oceans’ collection. This influences Nike’s own efforts to introduce sustainable products, such as shoes made from recycled materials.

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Activity

Conduct secondary research on Nike’s competitors, such as Adidas or Under Armour. They will compare the marketing strategies of these competitors with Nike’s campaigns and explore how each company uses market research to inform their strategies.

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Market Size

To determine whether the market is a mass or niche. For example Toyotas produce cars for the mass market whilst Ferrari produces for the niche markeT

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Structure

The demographic of your customers, which will help define where to advertise and the language and tone to use. For example, a business selling commodities for elderly people might rely on advertising in leisure magazines or travel brochures such as Saga.

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Trend

Knowing how, when and by what means customers are likely to buy your products, based on previous performance, is useful when planning a campaign. This type of information contributes to market intelligence.

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Segmentation

The broader market is divided into segments based on characteristics such as:

- Demographics: Age, gender, income, education, etc.
- Geographics: Location, region, climate.
- lIFESTYLES: Lifestyles, values, personality traits.
- Behavioural factors: Purchasing habits, brand loyalty, product usage.

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Needs and Problem Analysis

Companies identify the specific needs, problems, or pain points their product or service can solve. This helps in targeting customers who are most likely to benefit from their offering.

Competitor Analysis

Understanding who competitors are targeting can reveal gaps or opportunities in the market. Companies often analyse competitors’ marketing strategies to determine where they can differentiate.

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Apple – Targeting by Lifestyle and Behaviour

Demographics: Apple’s target customers tend to be higher-income individuals and professionals, but they appeal broadly across many age groups.

Lifestyle: Apple focuses on customers who value innovation, design, and premium quality. They target creative professionals, tech enthusiasts, and those who seek intuitive and user-friendly devices.

Behavioural Factors: Apple knows that their customers are highly loyal and design their product launches around anticipation and exclusive features that appeal to early adopter.

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Coca-Cola – Targeting by Geographic and Behavioural Segmentation

Geographics: Coca-Cola segments its market by geography, targeting different regions with tailored marketing strategies. In the UK, they may focus on health-conscious messaging (e.g., promoting Diet Coke or Coca-Cola Zero Sugar), while in other regions, their messaging may focus more on fun and celebration.

Behavioural Factors: Coca-Cola uses behavioural segmentation by considering consumption habits. For instance, they market heavily around big events like the World Cup, where people are likely to gather and consume beverages.

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Nike – Targeting by Demographics and lIFESTYLES

Demographics: Nike targets a wide range of age groups, primarily focusing on athletes, fitness enthusia

Lifestyle: Nike positions itself as a brand for people who are passionate about sports, self-improvement, and an active lifestyle. THE “Just Do It” campaign appeals to those who are motivated and strive for personal excellence.

Segmentation: Nike segments its market by sport (football, running, basketball) and designs products for each specific group. They tailor their messaging and products to match the desires of each segment.

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Methods for Gathering Market Research Data

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Qualitative Research

This involves collecting and analyzing non-numerical data, such as opinions, motivations, and feelings. Nike uses qualitative research to understand the emotional connection customers have with their brand and products. For example, Nike conducts focus groups to gather insights into customer satisfaction with new product lines like the Nike Air VaporMax.

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Quantitative Research

This involves collecting numerical data that can be analyzed statistically. Nike uses this type of research to track sales trends and consumer behaviors. For example, Nike monitors customer purchase data to determine which regions have the highest sales of certain product categories.

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Primary Research

Primary research involves gathering new data directly from sources like customers, either through surveys, interviews, or direct observation.

Questionnaires: Nike frequently sends out post-purchase questionnaires to customers asking for feedback on their experience with specific products. This helps Nike adjust their designs based on consumer feedback.
Interviews/Focus Groups: Nike holds focus groups with athletes to discuss their needs in terms of performance wear. For example, before developing the Nike Zoom Fly, Nike interviewed marathon runners to understand their needs.
Surveys: Nike uses online surveys to gather data about customer preferences for new product lines. After the launch of the Nike Adapt BB shoe (self-lacing sneakers), surveys helped Nike understand customer reception.

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Secondary Research

Secondary research involves collecting data from existing sources such as industry reports, published articles, or internal sales records.

Internal Data: Nike uses sales data from their own stores to analyze which products are selling best in different markets. For example, data might show that basketball shoes perform better in the US while running shoes perform better in Europe.
Market Reports: Nike regularly reviews reports from firms like Nielsen or Euromonitor to understand global sportswear trends and consumer behavior.
Articles and Journals: Nike refers to industry publications like Sportswear International to track competitor innovations and market trends.

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Market Segmentation Activity

Students will analyse Nike’s target segments, such as athletes, fashion enthusiasts, and environmentally conscious consumers. Using secondary data, they will create customer profiles for these key segments and explore how Nike tailors its products to meet the needs of these groups.

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Advantages and Disadvantages of Market Research Methods

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Definitions:

Bias: Prejudice or subjective opinion that can influence the objectivity of research.
Control: The ability to direct and shape the research process.
Cost: The monetary expense involved in conducting research.
Currency of Information: The timeliness and relevance of the data to current events or trends.
Ease of Access: How easily the researcher can obtain the needed data.
Time Taken to Collect: The duration it takes to gather and process the data.
Reliability of Sources: The trustworthiness and accuracy of the data or its origin.

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1. Bias

Primary Research
- Advantage: Researchers can minimise bias by designing questions and data collection methods specifically to reduce subjectivity.
- Disadvantage: Researcher bias can still influence how questions are framed or how data is interpreted.
Secondary Research
- Advantage: As the research is already conducted, the researcher’s bias is less likely to influence the results directly.
- Disadvantage: The secondary source may be biased based on the original researcher’s perspective or the original objectives of the study.

2. Control

Primary Research
- Advantage: The researcher has full control over the data collection process, including methodology, sample size, and target audience.
- Disadvantage: This requires more effort to maintain control, particularly in maintaining objectivity or ensuring accurate data.
Secondary Research
- Advantage: No control is required over data collection, as the data has already been collected.
- Disadvantage: Limited or no control over the quality, relevance, or accuracy of the data, since it was collected for a different purpose.

3. Cost

Primary Research
- Advantage: Can be cost-effective if you have the resources (such as conducting surveys or interviews in-house).
- Disadvantage: Often expensive due to the need for planning, data collection, and analysis.
Secondary Research
- Advantage: Much cheaper than primary research because the data is already available.
- Disadvantage: Accessing some secondary data sources (like research papers or market reports) may require a fee.

4. Currency of Information

Primary Research
- Advantage: Provides up-to-date and relevant data, since it’s collected in real-time for the current research objective.
- Disadvantage: Time constraints in data collection can delay the acquisition of the most current data.
Secondary Research
- Advantage: Some secondary data sources are very recent and offer a wealth of data quickly.
- Disadvantage: The data may be outdated and not reflect current trends or circumstances.

5. Ease of Access

Primary Research
- Advantage: Data can be tailored specifically to the needs of the research, and access can be controlled based on target participants.
- Disadvantage: Can be difficult to access certain participants or data sets, particularly in hard-to-reach populations.
Secondary Research
- Advantage: Secondary data is often readily available through online sources, libraries, or reports.
- Disadvantage: Some data sources may not be freely accessible or may be locked behind paywalls.

6. Time Taken to Collect

Primary Research
- Advantage: Collection can be designed to fit the researcher’s specific timeline.
- Disadvantage: Time-consuming, as it requires planning, data collection, and analysis.
Secondary Research
- Advantage: Quick to obtain, as the data has already been collected and may only require finding and reviewing.
- Disadvantage: Time may still be needed to sift through large amounts of data to find relevant information.

7. Reliability of Sources

Primary Research
- Advantage: Generally more reliable as the researcher has direct knowledge of how the data was collected.
- Disadvantage: Reliability may still vary based on the design and execution of the research.
Secondary Research
- Advantage: Can be reliable if the secondary source is from a credible or reputable provider.
- Disadvantage: The reliability of secondary sources can be questionable if the original research was poorly conducted or is not transparent.

Advantages and Disadvantages for Nike

Bias: If Nike only surveyed professional athletes, the data might be biased because casual runners would have different needs. To avoid this, Nike uses a combination of primary and secondary research.
Control: Nike has more control over primary research methods like questionnaires, allowing them to target specific customer groups, though it is more time-consuming and costly than secondary research.
Cost: Secondary research is often cheaper than conducting surveys or focus groups. For example, Nike can purchase reports from research firms, saving time.

Survey Design Exercise

design a survey for Nike to assess customer satisfaction with a recent product launch, such as Nike Flyknit shoes. The survey will focus on features like comfort, design, and performance, helping students develop primary research skills.

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Effectiveness of Market Research Methods

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Nike’s use of both primary and secondary research is highly effective in guiding its marketing plans.

Primary research methods such as customer questionnaires allow Nike to gather feedback on product performance. For example, Nike emails customers surveys after purchases to gain insights into customer satisfaction.

Secondary research allows Nike to stay competitive by monitoring competitors like Adidas and tracking industry trends, which helps them innovate and remain a leader in the sportswear market.

The most effective method for Nike is its primary research. Interviews with athletes provide direct input, helping Nike tailor products precisely to meet market needs, which supports its innovation goals.

Case Study on Sustainability Initiatives

Students will conduct a case study on Nike’s Move to Zero campaign, focusing on sustainability efforts. They will evaluate the role of market research in shaping Nike’s sustainability initiatives and explore consumer attitudes toward sustainable products.

Learning outcome: Evaluate the role of market research in shaping sustainability efforts.

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