Threat of substitute products. Their reputation then grew, and all athletes wanted to know about this new clothing idea. Nike’s brands have turn out to be to be very strong as compared to others such as Reebok and Puma. Nike has done some restructuring to help gain competitive advantage. As such, a wide product range of popular products has provided a unique competitive advantage for Nike. According to the geographic location,Nike has segmented the international market. Marketing Being a global brand, it has a large supply chain, retail, and distribution networks. Professional stylists are ready to give you personalized recommendations tailored to your unique needs. In the U.S Nike has seven important distribution centers, five in Memphis, Tennessee, and one in Indianapolis, Indiana, and another in Dayton, Tennessee. Nike has been able to outshine so many brands in the athletic wear industry because of the competitive advantage that it has over its rivals. The company’s global reputation — a key source of competitive advantage — was at stake. The buyers of sports footwear and hence their thinking have changed in the past decade. Their secret is brand management because despite selling their products at a higher price, consumers are still willing to pay more money for its brands which are believed to be of high quality with different styles. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Besides using online and offline marketing strategies, Nike also uses media releases, sponsorships, and events to market its products. Top Nike Competitors. Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports. A … Apart from a competition from regular rivals, there are many a time new comers equipped with lots of strategies to conquer others. Branding. Last year, Nike made about $9.5 billion in revenues, of which 59% came from footwear sales and 29% from apparel. Besides the Jordan brand, other subsidiary brands that Nike owns are Hurley and Converse. Away from the U.S, the Nike brand still dominates the international markets with a total of 790 retail stores spread across the globe. Outsourced Manufacturing Units: Nike receives footwear from more than 140 factories located in 13 countries across the globe. Nike’s cost leadership generic strategy sustains competitive advantage based on costs. The Competitive Advantage of Nike. From a humble beginning, Nike has managed to build … Nike sustains competitive advantage based on cost strictly due to the company minimizing production cost so they are able to maximize profitability or even able to lower the selling prices. The company has heavily invested in design and quality and employed a greater business strategy that focuses on customer service. Nike is doing what is required by law and also what is expected of a leader. It also utilizes a mix of traditional and modern tools and methods in its marketing strategy. Competitive Advantage. Two key aspects of this strategy include their large-scale brand recognition and product innovation. Customer incentive programs are one of the successful programs within the organisation (Nike, Inc., 2009). As such, Nike has managed to build strong customer trust in the market and with their customers. When markets are reaching saturation, new markets need to be identified to prevent decline in sales. Nike is one of them. The aim of this project is to reveal Nike’s competitive advantages in global market and especially focus on company strategies in Chinese market. Its large economy supports it in distribution and marketing over its rivals. COMPETITIVE ADVANTAGE Companies all seek a competitive advantage, as that will give them the opportunity to sustain profits that exceeds the average in their industry. Nike has employed several methods to increase customer loyalty. Nike offers give away to customers, tickets, sales, sponsorships and … When it comes to video marketing, Nike connects with its customers’ emotions uniquely. Nike Competitive Advantage. Consumers don’t just buy a product for its attributes. Company has strong growth potential for 2017. It greatly focuses on quality of products for customers. By altering marketing to the customer needs, Nike has been the most successful player in the past and continues to be today. These include NIKE Basketball, Training, Sportswear, the Jordan Brand, Running, and Football (Soccer). It also uses celebrity endorsements and sponsorships to connect with its customers. Threat of new entrance: Nike has invested in research and development. With strong brand equity, Nike has managed to lead its competitors in the sports industry. They know everything about sports and are often athletes themselves and, of course, know Nike’s products inside and out. Reebok deals with NFL for designing and marketing all on-field uniforms. The Nike Vaporfly shoe has sparked debate over whether it gives runners an unfair competitive advantage (NIKE) The International Association of Athletics Federations (IAAF) chimed in … Well, they JUST DID IT and are doing it. For instance, it has robust retail, distribution network, and inshore and online promotions. Therefore, customer loyalty is a strong source of competitive advantage. Reebok, offering more choice of shoe, introducing endorsement by sports personalities, sponsoring sporting leagues. Nike made sure to capitalize on location as a competitive advantage, locking up premier retail real estate on Michigan Avenue in Chicago, Union Square in San Francisco, and about every other prime location in the top 50 cities in the world. Adidas … Looking for a flexible role? This attitude of the company helps in eliminating and meeting any threat and provides a competitive advantage. Disclaimer: This work has been submitted by a university student. Competitive Rivalry or Competition with Nike … But how the brand does manage to dominate the international athletic markets that are very competitive? How it successfully captured almost half of the market in sport sector and still the giant? If the business has only one major supplier and no … They remain flexible, and … To gain the strongest competitive advantages is the major concern for Adidas, because it has to compete with giant competitors like Puma, Nike, New balance and others. Apart from having vital and enthusiastic workforce and entrepreneurial attitude, its wide range of quality products, distinct supply chain management, effective & efficient marketing tactics and strong presence in e-retail industry give Nike an extra edge. One can observe that over the last few years, Adidas has been slowly eroding the market share from Nike. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. Though Adidas web site is slightly more favourable in user friendly functionalities, it lags behind on Nike’s overall site appearance. (See appendix 1) Therefore Nike has gained competitive advantage through innovation, of which Nike Sphere is an example. NIKE has a good control on production cost. NIKE Competitive Advantages Nike as a global company known worldwide that makes a large range of products for athletes including shoes and apparel as well as equipment sustained its competitive advantage through effective knowledge management. However, surprise when reviewing its differentiation strategy it . By following this law, Nike is investing heavily and successfully in marketing its product. Here we will conduct a detailed analysis of Nike competitors. With the brand outsourcing most of its products to external suppliers, this only means that the brand commands a bigger market share. So, Nike’s diverse product range caters to varied customer segments. When required for professional use there is no substitute goods, but as a fashion item there are many other goods that could be purchased. The company has a great distribution network which … In this alone shows the real power of a winning strategy it is a strong factor in the company’s competitiveness. Incorporated in 1967, Nike has grown throughout the decades to be the number one brand in the selling of sports-wear and apparel across the world. Although the competition is quite tough, Nike is employing new strategies to offer better products to acquire new customers while maintaining the existing ones. Nike Inc. is very good at adapting to the changing markets. Some of the competitive advantages are explained asfollows:i) High product quality: The R&D of NIKE results in the competitive advantage of innovationand high product quality. NIKE is the largest seller of athletic footwear and athletic apparel in the world.The Company creates designs for men, women and children. Competitive advantage is something that separates the company from other competitors in the same industry. Nike maintained a GuruFocus business predictability rank of four stars, suggesting consistent revenue and … Another advantage is scale, the cost savings associated with a larger corporate size. Using production facilities in the Far East has given Nike economies of scale. NIKE brand apparel is also manufactured almost entirely outside of the United States, in 34different countries. As such, it encourages sports lovers through promotional videos. We have developed guidance and tools they can use to improve Human Resources Management (HRM) in their factories. Well, they JUST DID IT and are doing it. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Bargaining power of suppliers: How dependent is the business on its suppliers? 1st Jan 1970 Show More. This is because several aspects including changing customer preferences and competition play a major role in cementing customer loyalty. The brand is well known for its stylish and great quality products. We’re supporting our suppliers in developing predictive, agile, resilient and integrated HRM capabilities. Equally, it is also paying attention to its pricing, retail, and marketing strategy to deliver the best products to its customers across the world. How Nike has become the biggest player of the game? 2.1 Porter’s national competitive advantage Based on this Five Forces Analysis, it is also recommended that Nike Inc. must implement strategies to attract and retain more customers, so as to minimize the effects of substitution in the sports footwear industry environment. A recommendation is for Nike Inc. to prioritize investment in product development to ensure competitive advantage. Nike is loyal to its affiliates. “To bring inspiration and innovation to every athlete in the World.”, “To represent the highest service standard within and beyond our industry, building loyal consumer relationships around the world.”. It achieved competitive advantage by adding value in its products. Start with: Competitive advantage simply means what the company is best at. These are well established channels. Nike has put in place distinctive global marketing strategies and techniques. Besides, it outsources most of its production. Besides, the brand is deeply connected with athletics and sports and it strives to inspire sports fans across the world. In the 21st century, gaining customer loyalty in any product is very difficult. Free resources to assist you with your university studies! In 2005, Adidas acquired Reebok for $3.8 billion. This is not an example of the work produced by our Essay Writing Service. Nike is an international athletic brand that deals with sportswear such as shoes and apparel equipment. It is officially sorcerer of couple of university teams and presently assisting them in making their on-field outfits. (See appendix 1) Therefore Nike has gained competitive advantage through innovation, of which Nike Sphere is an example. Adidas is on its way to launch a new innovative campaign praising the team spirit. And with a firm grip on the competitive advantage factors, Nike is deemed to continue leading its competitors in the manufacture of athletic wear and apparel. All work is written to order. Competitive advantage is a set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition. Adidas has six products priced at about 25000 and Nike has only one. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Nike has strived to create robust brand equity. If you need assistance with writing your essay, our professional essay writing service is here to help! We could see that multiple activities have played a role in building a competitive advantage. How Nike has become the biggest player of the game? Nike also owns subsidiary brands like Converse, Jordan, and Hurley that also target distinct customer segments and athletic fans. This is the reason NIKE continues to lead in innovation and technology infootwear, apparel, and equipment.The first better ratio is COGS/sales. With this in mind, Nike has invested in research and development to know more about the customer’s taste and fashion trends. The Nike brand has a wide product range in the market. Nike sensed that scenario and wisely put its eye on EU market. Show More . Nike has done some restructuring to help gain competitive advantage. Related. So, the brand has heavily invested in research, innovation, and marketing which has helped to bring the best designs to the market right before its competitors. Outsourcing of the manufacturing helps the company in keeping its operational cost low and at the same time focus its competencies on sales and marketing activities to drive the sales. Our academic experts are ready and waiting to assist with any writing project you may have. In the fiscal year 2019 and 2020, Nike spent $3.7 billion and $3.5 billion respectively. Price and product differentiation, an impact the swoosh logo has created, greater benefit (utility) to customers are a few reason why company is still there. In the sportswear industry, Nike commands the largest customer base of all the athletic and sports shoes and apparel products. Nike is being extremely pro-active in innovating products that meet Generation Y’s tastes and purchasing methods. Quick and appropriate decisions at write time, use of brand name, goodwill- therefore increases its CSF (critical success factor) to succeed. Over time, Nike has maintained a strong supply chain and manufacturing network that has helped keep the brand popular with agility. Bearing in mind that customer preference changes fast, there is stiff competition among brands. The way Nike smells the opportunities and the way it approaches problems makes it unconquerable. Today, Nike is a multinational brand that is recognized for its premium quality products that are reasonably priced. Nike is unable to use the patents to its advantage. The brand has successfully utilized social media and marketing campaigns to target more customers. – Marketing capabilities: Nike is known as one of the best marketers in the entire industry. Study for free with our range of university lectures! To attract more customers, nikeid.com allowed them to design and personalise their brand resulting more than 3, 00,000 unique visitors a day. Many other factors have contributed to Nike’s success. Nike has patents on some of its products but they are not well organized (Ahmed et al, 2016). Management sees the digital business, which grew sales 36% year over year last quarter, emerging as one of Nike's competitive advantages. Brand equity is perhaps the main strength of any brand. They take every opportunity to change for the best. get custom paper. Thus it has acompetitive advantage of … Competitive Advantage: Nike’s competitive advantage over other brands in the athletic footwear and apparel industry is shown through their differentiation strategy, which helps them to incorporate value and uniqueness in all of its products. Its prices are a bit high as compared to other competitors but it has made many sales than th… The second better ratio is SG&A whichmeans that NIKE has lower selling and administrative cost over Adidas. http://3.bp.blogspot.com/_TjMfUmrr8Gs/SxPoEUasjEI/AAAAAAAAAFI/Az-8n9gq07U/s1600/…………..NIKE_Swoosh.gif. Nike has various competitive advantages outlined below. Whether a business is dealing with technology, sport, or fashion, innovation provides new leads to tackling challenges. Even though difficulties in entering the new market because of the single currency and the trade rules, consumer sales outside of the United States exceeded sales in the United States in 2003 with only 43% of the company’s sales coming from the US. Competitive advantages can … – Supply chain management: Its excellent supply chain management is also a key source of competitive advantage for the brand. It affects the business more or less in a negative manner. Coupled with global marketing strategies, Nike can dominate the global athletic footwear and apparel market. Porter’s model helps to understand the sources of Nike’s sustainable competitive advantage over its rivals. Innovation can be another source of competitive advantage. It has 124 footwear factories and 328 apparel factories that supplied products. Registered Data Controller No: Z1821391. No plagiarism, guaranteed! Do you have a 2:1 degree or higher? In order to achieve practical guidance, some theoretical tools will be adopted. A larger customer base is a significant strength for the Nike brand as it sets it apart from the rest as an exceptional brand. Nike has a big advantage over its competition, according to Nomura Instinet analyst Simeon Siegel. Nike has over 1,180 stores around the world. The company has also focused on apparel and sports equipment and expanded its sales to Europe, Latin America and Asia. Company Registration No: 4964706. Nike is a customer-oriented brand that knows its customers in all aspects. People are increasingly looking for stylish and durable sports, athletics, and leisure products. However, customer-oriented brands such as Nike have been able to command customer loyalty. Reference this. This generic competitive strategy helped the company regain its competitiveness, especially … https://notesmatic.com/2018/12/nike-sources-of-competitive-advantage Due to the strong brand competitive advantage, Nike has been able to increase its market share all over the globe. Competitive advantage is something that separates the company from other competitors in the same industry. In this generic strategy, the company minimizes production costs to maximize profitability or reduce selling prices. The brand heavily relies on demand generation expense. Better yet is that a well-integrated network allows Nike to focus on innovation and deliver high-quality products to the market. Nike successfully fought against this socio-political issue and wisely maintain its brand name. the United States, the Americas, Asia Pacific and Europe, Middle East and Africa (EMEA). To overpower competition, Nike’s safest bet is to design innovative products that are tailored according to the needs of athletes. Apart from them, it is investing in sustainability and the creation of sustainable products to increase the popularity of … Nike’s most valuable asset is undoubtedly its brand. Nike spent $3.5 Billion specifically on marketing and demand generation in fiscal year 2020. Its Swoosh logo is popular and most notable among the numerous brands in the athletic wear industry. Nike has close to $29 billion in revenues, almost twice its closest competitor, Adidas AG. The focus of their company is to make legal and humane working conditions. distributors, licensees and subsidiaries innearly 200 countries. As such, Nike has mainly focused its strategy on innovation to rival its competitors. Register to read the introduction… Does the company need to defend itself against new competition? Marketing is a major strength of the Nike brand and provides it with a unique competitive advantage in the global sportswear market. Roots to competitive advantage: It is obvious that it wasn’t a red carpet journey for Nike. We have mentioned some of the main factors that put Nike ahead of its competitors. Nike’s Supply Chain System too had played a major role in establishing Nike’s competitive advantage. In the U.S alone, it has 392 stores and the rest are distributed among countries in the world. Under Armour, founded in 1996, has successfully entered the high-performance apparel industry. It is obvious Nike is a global brand that has widely spread retail stores across the world. The brand sells its products through Nike-owned retail stores, digital platforms, retail accounts, a mix of independent distributors, licensees, and sales representatives in nearly all the countries around the world. Anyone who thinks we have seen the end of competitive advantage needs to … The main raw materials used in NIKE footwear are rubber, plastic compounds, and foamcushioning materials, nylon, leather, canvas, and polyurethane films used for cushioningcomponents. Its swoosh logo is easily recognizable among the many brands globally. Customer experience, customer trust, and customer engagement are among the many factors that when they collaborate they significantly affect brand equity. You can view samples of our professional work here. Nike Inc. is very good at adapting to the changing markets. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! These tactics proved to be a good practice to drag youth attention. Marketing is part and parcel of Nike’s business strategy. 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