Placement and Distribution

Kyle GeorgeLaMarcus Bailey

Suzi Tullis

NikeMission Statement“To Bring Inspiration and innovation to every athlete* in the world.”

Consumer Affairs Mission“To represent the highest service standard within and beyond our industry, building loyal consumer relationships around the world.”

*If you have a body you are an athlete

Nike Free Runhttps://www.youtube.com/watch?v=FYdeVUmWR_8

What Are Nike Free Runs?Nike Free Run are a special type of shoe designed to maximize

running performance and comfort.

• Hexagonal Flex Grooves Allow Natural Foot Movements

• Flyknit Material Provides Comfort and Supportive Fit

• Flywire Provides Great Ventilation And Fit

http://tinyurl.com/mygyobh

Barefoot RunningBenefits:• Strengthens the muscles• endorses a natural running posture

Disadvantages of Regular Running Shoes:• Shoes provide too much support• Shoes reduce proprioception• shoes add mass to the foot

https://www.youtube.com/watch?v=nsDOqJJmTa8

Distribution: Deciding how to get the product into the consumers hands. Distribution = Place Product Price

Place -Where do buyers look for your product or service? –If they look in a store what kind?

–How can you access the right distribution channel?

-Do you need to use a sales force?

–What do your competitors do? How can you

learn from them and differentiate?

Promotion

Target Market –The 4 Ps

Distribution Channels• Marketing or Distribution Channel: A

set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. (P. 341)

• Distribution Channels are the pathways a product takes from the manufacturer to the final consumer.

• Direct distribution occurs when the producer sells goods or services directly to the consumer, with no intermediaries.

• Indirect distribution involves one or more intermediaries.

Producer Producer Producer

Consumer

Wholesaler

Consumer

Retailer

Retailer

Consumer

Supply ChainUpstream

• Set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service.

Downstream(Distribution

Channels)

• Look toward the customer• Wholesalers and retailers• Form a link between the firm and

its customers

(Kolter and Armstrong, p. 340)

California Transparency in Supply Chains Act of 2010This bill would enact the California Transparency in Supply Chains Actof 2010, and would, beginning January 1, 2012, require retail sellers andmanufacturers doing business in the state to disclose their efforts to eradicateslavery and human trafficking from their direct supply chains for tangiblegoods offered for sale, as specified. (California Transparency in Supply Chains Act of 2010)

NIKE is taking action to ensure they are following the California Transparency in Supply Chains Act of 2010 by:

Supply Chain Verification Direct Suppliers’ Certification of Materials Standards for Compliance Training

Supply Chain Management

• Inbound Logistics:Moving products &

materials from suppliers to the company

• Outbound Logistics:Moving products &

materials from the company to the reseller to the customer.

• Reverse Logistics:Reusing, recycling,

refurbishing, or disposing of broken, unwanted or excess product’s returned by the consumer or reseller.

Suppliers Company Resellers Customers

Inbound Logistics

Outbound Logistics

Reverse Logistics

Global SourcingNorth American Market

• 36% of Revenues in 2011

• 35% of Revenues in 2010

• 363 Stores

• 20,000 Retail Accounts

International Markets

• 64% of Revenues in 2011

• 65% of Revenues in 2010

• 393 Stores

• 20,000 Retail Accounts

*This is not an actual picture of Nike’s global distribution

http://tinyurl.com/movq6js

Intermediaries(Channel Level)

•Create greater efficiency in making goods available to target markets

•Reduce work for producer and consumer

•Play an important role in matching supply and demand (p. 342)

Nike DistributionNike Uses Multichannel

Distribution

• Nike has 8 Nike stores and 26 authorized retailers in California

• Nike has approximately 20,000 retail accounts in the U.S.

• Nike sells their products in roughly 200 countries

Nike sells their products through:

• Independent Distributors

• Licenses

• Subsidiaries

Producers & Intermediaries Must Agree On

•Terms & responsibilities of each channel member

•Price policies

•Conditions of sale

•Territory rights

•Specific services to be performed by each party

Producers Must•Establish a list price

•Establish a fair set of discounts for intermediaries

•Define each channel members territory

•Be careful with placement of new resellers

Key Functions of Distribution Channels

Help Complete Transactions

• Information

• Promotion

• Contact

• Matching

• Negotiation

Help Fulfill Completed Transactions

• Physical Distribution

• Financing

• Risk Taking

Channel Design Decision•Analyzing Consumer Needs: What do target consumers want from the channel?

•Setting Channel Objectives: Set objectives in terms of targeted levels of customer service. Decide which segments to serve Decide on the best channel to use for each segment

• Identifying Major Channel Alternatives: Decide the types of intermediaries Decide the number of intermediaries Decide the responsibility of each channel member

•Evaluating Those Alternatives

Channel & DistributionNike is a highly centralized and extremely focused company. the

core functions include:• Brand building and supply chain

management • Dedicated sales force selling Nike

products to retailers or in a limited number of countries, to distributors.

• Nike has relocated production of its footwear and clothing to 600+ contract factories in 40 countries (as of 2011).

• Nike manages a worldwide virtual company while combining internal R&D functions with a low cost of manufacturing strategy

Market Expansion Strategies• Shared distribution channels among

varied product lines lowering cost• Large size provides opportunity for

more leverage against competition• efficient use of production facilities

lowers cost

Nike depends upon highly controlling the athletic footwear

supply chain and getting retailers to commit to orders far in advance.

Marketing Logistics(Physical Distribution)

Planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet customer requirements at a profit. (p. 357)

Nike Free Yourselfhttps://www.youtube.com/watch?v=VKz9RRTpH1A

References•California Transparency in Supply Chains Act of 2012,

S. 657, Governor (2010). Retrieved from http://www.state.gov/documents/organization/164934.pdf

• http://nikeinc.com/•Nike. (n.d.). Nike Free. In Nike. Retrieved March 23,

2014, from http://www.nike.com/us/en_us/c/running/free-run

•Kotler, P., & Armstrong, G. (2014). Principles of Marketing (15th ed., pp. 362-385). Harlow, England: Pearson.