MARKETING

MANAGEMENT-I
PROJECT REPORT-SNEAKERS

GROUP 7
Sneakers in India
Sneakers in India today have undergone a massive makeover as they are attracting both
attention and investment in the same measure. The millennials have developed a rising
interest towards it. The fitness trend has been the primary reason for its rising popularity,
which is moving it beyond the gym and onto the streets.
Sneakers have become a part of our everyday life. We have had brands like Nike and Reebok
for a while, but it’s only in the last ten years that we have seen the rise of the sneaker
culture. Sneakers have transformed itself from being a can-have to a must-have product
which can be attributed to India’s growing obsession with fitness or its seriousness about
sports.
Nowadays, in India, people invest in different shoes for their varied needs, which changes
according to the occasion. Marathons have popularized running shoes in the country while
endorsements by celebrities have turned sneakers into a cool fashion trend. With it’s Just
Do It attitude, Global giant Nike continues to be the most popular brand.
Besides, brands also create a frenzy with limited editions, set apart by their exclusive design
or celebrity collaboration. Sneakers today have become more than just footwear. From
fashion statement to personality extension and even an obsession, they are out there,
running in style. The factors which influence the decision-making process of consumers
include Shoe design & specifications, price, brand appeal, the popularity of sneakers, need
for specific shoes, and celebrity endorsements.

Nike

Mission: “To bring inspiration and innovation to every athlete in the world”
Vision: “To remain the most authentic, connected, and distinctive brand”

A total of 156 Nike stores in India. Global giant Nike continuous to be the most popular
brand. It is the world’s largest manufacturer of athletic footwear by sales. Nike’s highly
recognized trademark is “Just Do it”.

Why Nike?
Nike is the kit sponsor for the Indian Cricket team since 2005 last extended in 2016 to 2020.
Some big sporting names – Serena Williams, Cristiano Ronaldo, Virat Kohli, Michael Jordan,
Lebron James have been associated with Nike over the years.
Nike maintains strong relationships with the consumer which makes them stay loyal to the
brand. Nike is innovative in nature and invests in technology. Some examples of innovative
products are Nike Huarache, Flyease footwear, Self-lacing Shoes, etc.
Nike invests a major proportion of marketing strategies and designing the product. As part
of the marketing strategy, Nike introduces limited editions in collaboration with celebrities
and also an exclusive construction.

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Insights from Retailers
1. Assessment of customer in first look
Salesman in the retail stores have been trained to assess the customer in the first look.
They judge the customer on the basis of how they are dressed and how they carry
themselves. The salesman then tries to suggest products according to their
understanding of the customer.
2. Differentiation between running and walking shoes
Company such as Skechers is trying to convey the difference between running and
walking shoes to the consumers. They inform the customers about pros and cons of
wearing specialized shoes for different activities.

Walking Shoes Running Shoes

3. Female customers restricted to around 30% of sales and this proportion

falls in the premium segment
4. Focus on footfall in store and track the movement of the customers in the
store
Retail stores are equipped with Footfall Counting Machine. They keep a track of daily
footfall in the store and try to optimize the conversion ratio of sales. Stores reported a
daily footfall of 30-50 people with a conversion ratio within the range of 18-30%. They
are also planning to install a movement tracking machine in the store.

Footfall Counting Machine Motion Tracking Machine

Impact of Environmental Factors on Consumer Behavior

We have tested the impact of various environmental factors on consumer behavior. We
have conducted a survey of 150+ consumers and various retailers to study the impact. We

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have found the following interesting impact of various environmental factors on consumer
behavior.
1. Impact of Reference Groups:
A consumer brand choice is influenced by the choice of consumer’s reference group. We
have seen that people have moved to different brands once they have moved to new
places. This was an attempt to mix in the group by wearing the brand which the group
wears.
2. Growth of Economy:
Several retailers have pointed out that the growth of the economy has a direct co-relation
with the decision making process of the consumer. Of late, retailers have witnessed a
decline in sales due to slowdown of economic growth.
3. Heavy Discounts via Different Channels
Customers have shifted to online channels of distribution to make purchases. These
channels have reportedly offered heavy discounts regularly. It highlights the price elasticity
of demand for the sneakers. But the consumers have been loyal to a set of brands that they
like.

4. Fashion Trends
According to our survey, 32.5% of the respondent’s wear sneakers as a fashion statement.
Changes in the fashion industry impact the consumer buying decision significantly.
Companies have to keep introducing new models of sneakers in their portfolio to remain
relevant.

Macro-Environment Study of Nike

1. Political
 Worker rights, employee laws and minimum wage affect the Nike’s internal
procedures
 GST revision of footwear from 18% to 5% has boosted the industry
 Negative media attention due to poor factory condition and abandoning of
sites, low wages and child labor affect the political support for the company
2. Economic

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  Most of the production facility is located in Asia. The change price of raw
material has direct impact on revenue
 Economic slowdown in the India has directly impacted the revenue
 The sneaker market is highly competitive and hence to decrease cost, wages
are kept minimum
 Nike doesn’t have its own manufacturing facility. It outsources its work hence
creating employment
 Due to economic downturn consumers can be affected and it can reduce
consumer
 Since Nike production facility is outsourcing, it abandons one facility if faced
an issue. This helps to keep price competitive.
3. Social
 The increase in fitness consciousness in the country has boosted the sale of
sneakers that can be advantageous for Nike
 There has been increase in exercise and fitness clubs
 ‘Social Responsibility’ image of the company has increased owing to
sponsoring of social events
 There has not been much targeting for kids and women
4. Technological
 Technology in inventory management right from the retail store helps to
forecast the demand beforehand so that supply chain is not disturbed
 Valuable information technology and its application in the product like Siri
based lace tightening has differentiated Nike
 A laser device to calculate the footfalls is employed in retail stores. This helps
to learn about consumer insights
5. Legal
 Labor laws, factory laws, minimum wage laws have become more
complicated in Asian countries. They were very lenient initially. Nike has
faced many law suits in past for violating human rights. This affects brand
reputation and personality
6. Environmental
 Nike has been blamed to have facilitated factory pollution, river pollution and
trigger other environmental issues
 Nike has used technology ‘Nike Flyknit’ to help decrease factory wastage by
60% but needs to do more in carbon emission, energy and water wastage

Mapping Consumer Decision Making Process

Sneakers are known mostly for the versatility they offer and are less specialized than sports
shoes. Due to this they are typically purchased as casual footwear. This has been further
emboldened by the symbolism it acquired during late 70’s and 80’s pop culture. The
fundamental need has been to stand out from the crowd and to keep up with the times.

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However, dedicated sports sneakers do exist and exert sizeable influence.

After recognition of need, the prospective customer filters out the brands for consideration.
Based on our primary research, the following funneling process occurs before the customer
decides upon the final product.

Total Set Awareness Set Consideration Set Choice Set Decision Set
Nike Nike Nike Nike Nike
Adidas Adidas Adidas Adidas
Metro Puma Puma
Vans Converse
Skechers Reebok
Puma
Reebok
Converse

Nike’s brand logo ‘Just Do It’ and brand ambassadors such as Tiger Woods, Lebron James
and former ambassadors such as Roger Federer and Virat Kohli play a central role in
cementing the idea of a brand in the mind of the customer. This ensures that Nike always
makes it to the awareness set regardless of preference.

Another factor that plays a role in the decision process is the amalgamation of product and
the brand. Often, customers would narrow down the sets based on brands before even
looking at individual products within. This has another implication in terms of positioning,
which is that people won’t consider Nike when they simply need a pair of shoes. Here brand
acts as a deterrent. These factors play together to retain loyal customers who are willing to
pay a premium for the brand while at the same time dissuading switchers.

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However, loyal customers are unlikely to repurchase the same product unless the old one
becomes unusable but have a high frequency of repurchase within the same brand.

Survey Analysis
 The majority customers range between the age of 18 to 30 and thus through our
survey we have tried to recognize patterns in the buying behavior of this age group.
 More than 70% of the targeted audience owns 2 or more pair of sneakers, which
makes it essential to cater to the preferences of this market segment to be able to
capture a considerable share of the market.
 As per consumer preferences, Nike is the most preferred brand and is ranked as their
first preference by almost 40% of the sample.
 Sneakers are worn as a regular wear shoes and the major factors motivating the
consumer behavior are fashion and style, which constitute around 65% of the
sample preference, rather than sports, which is voted for by just around 13% of the
sample.
 Nike, originally being a sports only brand, has been able to recognize this shift and
capture the target market effectively. It has not only successfully catered to the
targeted age segment but has also been able to identify and tap into different
markets based on various demographic factors like gender, culture, geography etc.
Their campaign to uplift women and help them shed the stereotypical gender roles
has been a great success and has helped them popularize the brand not only
amongst women but the entire society which is moving towards gender equality and
wants to be associated with a brand that resonates this trend.
 The major target segment being the youth, it is important to understand that a large
portion of the segment does not have a very high disposable income. Nike has been
able to recognize this pattern effectively by launching a variety of range of shoes by
hyper segmentation of the target to maximize the profits.
 Examples include college going general fashion followers, sports enthusiasts who
compete at inter college events and want to make a career in sports, dance and
musical groups etc.
 The targeted segment is technologically and socially active and hence the major
marketing should be done through channels like internet as identified through the
survey. Also increasing visibility on e-commerce sites is important and can be done
through offering discounts during identified high sale season.
 Since we found that the brand is a major influencer on the amount spent by the
customers, building a positive brand image and focusing marketing strategies to align
the brand vision with the customer needs is important.

Positioning of Nike
Nike has been positioned in the minds of the young people as a new fashion trend by being
more than an athletic brand which offers stylish and cool products. The Just do it slogan of

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Nike adds a motivation factor for its target consumers bringing a sense of achievement and
the ability to do anything in life. It offers a whole line of footwear for almost every sport.
The quality, durability and comfort with breakthrough design and technology associated
with the brand. Nike as a brand demands high premiums and is often more expensive than
its competitors. It has also positioned itself as a symbol of status and a cool accessory in
people’s eyes.

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References

 https://coschedule.com/blog/nike-marketing-strategy/
 https://www.theseus.fi/bitstream/handle/10024/16097/Rubini_Andrea.pdf?
sequence=1&isAllowed=y
 http://www.ukessays.com/essays/marketing/consumer-behaviour-in-relation-to-
premiumproducts-marketing-essay.php
 http://www.encyclopedia.com/topic/NIKE_Inc.aspx
 http://news.nike.com/news/nike-inc-introduces-2015-globalgrowth-strategy
 http://www.ask.com/business-finance/nike-s-target-audiencee1e7f9dc7fe780d2
 http://www.nikeresponsibility.com/report/content/chapter/labor
 http://www.statista.com/topics/961/sporting-goods/
 http://www.ukessays.com/essays/marketing/the-consumer-decision-process-of-
nikemarketing-essay.php

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APPENDIX

Hush
Sr no Questions Da Vinci Puppies Skechers Reebok Nike Adidas
               
6000- 3000- 4299- 3299- 3999- 3599-
1 Price Range 40000 14000 16000 15999 19995 22599
Frequent Price Point 5500-
2 of Sale 12000 5800 5999 4599 6000-8000 7000
Once in Once in Once in Twice in
Frequency of three two two three
3 discounts and sales 0 0 months months months months
Designed
Unique Selling Medicall Sports
4 Proposition Style y Comfort   Technology Appeal
Seasonal Sale
5 Fluctuations 10% 15% 22% 8% 18% 24%
6 Daily Footfall 20-25 35-40 30-35 30-35 40-45 45-50
7 Conversion Ratio 20% 18% 25% 22% 30% 35%
9 Brand Awareness Low High High High High High
10 Product Awareness Low Medium Low Medium High High
11 Marketing Strategy ABT ABT BTL BTL BTL BTL
12 Male/Female Ratio 88/12 76/24 64/36 72/28 68/32 72/28
Locational
13 Advantage YES YES YES YES YES YES
Table 1:Retailer Insights

Figure 1: Market Research