Nike is a well known manufacturer of athletic footwear, clothes and other accessories that an individual would require to go in for sport.
Nike has numerous advantages over its rivals that make it a fierce competitor in the market, these include price benefits due to economies of scale. In addition, the design of modern athletic footwear is highly technical, requiring a significantly huge capital investment for new firms to penetrate into the industry.
Large amounts are needed to establish the factories, conduct research and design of trendy athletic shoes. As such, Nike mainly faces competition from the few established spots brands like Adidas, which has 25% of the market share, and Asics, which controls 15% of the market. Another significant competitor in the industry is Reebok with 10% of the global market. Nike, on the other hand, has 32% of the athletic footwear market in the world (Deng 102).
Competition in the athletic show industry involves high levels of retaliation.
For instance, the entry of new competitors that attempt to take a fraction of the market share is faced by a ruthless market battle from established firms that have the capacity to absorb massive losses in the effort to drive new rivals out of business. The competition between existing firms is based on retaliatory practices of efforts made to expand its market share. While the industry growth is rather stable due to Nike’s dominance in the US, the company should continue fighting for the global market share.
One of the primary characteristics of the athletic products industry is the rapid change of technology in both the retail and the sporting markets. This implies that the profitability of the industry is determined by company’s ability to have the most recent fashion trends in their athletics merchandize. Nike meets this expectation by having some of the most cutting edge products in the market, like the “Nike + iPod” line of products which allow users to connect their iPod devices to sensors implemented in their shoes to record pace, time, and calories burned. Nike also has unrivaled unique and patented cushioning system that enhances user comfort (Deng 104). In the international scene, the success of a company and its market share are dependent on the product characteristics.
This implies that the industries strive to have their brand names known, since this leads to higher sales. This supports the notion that a larger market share improves the firm’s advertising capabilities, which contributes to the name recognition. Besides brand recognition, the price of the item is a significant factor that determines the consumer’s choice. The variation in fixed costs is influenced by manufacturers’ efforts to minimize their production costs. This is achieved by outsourcing the assembly process of athletic shoes in countries where cheap labor is available, and tax laws are favorable. The savings attained by the manufacturer are passed on to the consumer, which affects their purchasing power (Stepheny 1).
The sportswear industry faces minimal threats from substitutes of its products.
The design of athletic shoes is aimed at enhancing comfort and personal safety, when sporting. “The only substitutes for athletic shoes are other kinds of shoes, and going barefoot” (Almaney 7). As such, the firms are only required to meet the main requirements of the customers for sporting shoes, which are comfort and safety. The difference in the market share is determined by marketing strategies. Nike, for instance, has the largest market share since it uses top athletes to wear, promote and sponsor their products, which enhances the recognition of the brand. Some of Nike’s endorsements include Michael Jordan, Kobe Bryant, and Tiger Woods (Almaney 7).
Almaney, A.J. Analysis of Nike, Inc. Chicago, IL: DePaul University, 2000. Print. Deng, Tianbai.
““Just Done It”— Nike’s New Advertising Plan.” International Journal of Business and Management. 4.
3, (2009): 102-105. Print. Stepheny.
SWOT analysis of Nike with other companies. 2009. Web. 22 Feb. 2013