Marketing Strategies of Starbucks and Nike - Essay Example

Starbucks offers varieties of coffee brewed coffee, espresso coffee, cappuccino, and many others. There are many products of the company that is seasonal or more specific according to the locality where it does the business.

Nike

Nike is a major sports brand in the United States that manufactures different types of sports gear and equipment. The name is the most popular brand in terms of sports shoes and apparel. Nike has created a major loyalty base around the world, especially due to its trend-setting marketing and advertising campaigns, as well as the number of sports stars it occasionally ropes in to endorse its products. The company sells its products through various retailers – both online and offline – along with the exclusive brand stores of Nike. Apart from selling sports-related products, the company sponsors many high-profile athletes and teams in various sports.

At what stage of the product life cycle are they?

Most of the time where Starbucks Coffee formulates its marketing strategy is in the Service phase of the product life cycle. However, their marketing strategy also targets the market during the Realize phase where they produce and deliver the best coffee possible to their customers. When looking into the marketing strategy of Nike they mostly formulate their marketing strategy during the Realize phase in which they manufacture the products and try to capture the market by selling their innovation in the market (Armstrong et al., 2012).

What are the main marketing approaches used by this company?

The main method that Starbucks Coffee applies to its marketing strategy is to advertise its brand through its own products like t-shirts, coffee mugs that its regular customers purchase. On the other hand, the advertising methodology of Nike is exclusively through print media and sometimes through electronic or digital media as well. The early advertising of Nike was mainly focused on the new shoes that it released and the message of the advertisement showed the benefits of various shoes like basketball, tennis, and running shoes.

While formulating the marketing strategy Nike made effective use of television as they believe it to be the most powerful medium of information and commercial. The TV commercials of Nike make a viewer feel the necessity of the product and make them buy. On the other hand, the marketing strategy of Starbucks was in-store marketing. They chose their own coffee mugs and t-shirt as their advertising medium (Coughlan, 2010).

They open small branded flagship stores within the big retail chain stores like Target, Wal-Mart, Best Buy, Mall of America, and many others to capture the crowd comes for shopping there. Through this strategy, the store traffic of Starbucks has risen between 6 to 8% and the interesting fact is that they managed to generate such a number with virtually no marketing. Starbucks generally spends 1% of their revenue in advertising compared to other retailers who spend about 10% of their revenue in advertising.

How do they use their brand to secure and expand their market position?

Nike secured and expanded its market position through emotional advertising as part of its marketing strategy. The company has shown its great ability to appeal to the emotions of its consumers. Their innovative ideas and marketing strategies make their consumers see Nike as the athletic apparel if they want to be victorious. Whereas Starbucks’ one of the methods for expanding and maintaining their brand in the market is through buying out the leases of their competitors. One of the instances that can be cited here is the buyout of Seattle Coffee Company by Starbucks Coffee Inc. when expanding their brand in the UK (Ferrell and Hartline, 2012).

What limitations/barriers does it face in developing its market position?

According to Orin Smith, the CEO of Starbucks Coffee the clustering stores model has increased their revenue but while developing their market position their clustering stores model has poached into each other’s sales. The opening of new stores created losses for the existing stores but because of the size of the company, they could manage the loss and look at the overall sales rather than looking at individual stores.

On the other hand, Nike has successfully expanded in many countries and regions but is still struggling in one of the world’s most important apparel markets – China. The main issue faced by the company is excess inventory. It has threats from the newer companies like Lululemon Athletica and Armour. The challenging market conditions in the Western European region are becoming a barrier to the expansion of the brand (Hawkins and Mothersbaugh, 2009).

What factors will affect its brand over the next 5 to 10 years?

Though both the companies are the leading brands in their respective segments their continuous improvement in customer service and innovative products are the key to their success, which they need to continue to focus on in the coming 5 to 10 years.

 For Starbucks, their focus on customer service is the main key to their success. Whereas for Nike their continuation in inventing newly improved and innovative products make their brand presence stronger in the market along with innovative marketing commercials.