External and Internal Analysis of Nike
Nike is the largest player in the athletic apparel with $28 billion in annual sales (Mahdi, Abbas, Mazar and George (2015). Nike focuses on and categorizes its customers based on a certain demographics such as age, income trends and many more. Based on the demographic the major customers of Nike are Women, Young Athletes and runners. In addition, the company develops products based on the popular categories of sports. As mentioned by Mahdi et al., (2015), Nike is expanding the range of its women’s apparel, particularly, the sports bras and tights. It is also identified that the Sales of Nike’ training as well as running apparel for women increased by double digits in the last quarter. However, the ADIDAS attracts young athletes to wear its apparel via sponsorship with the local clubs, federation and leagues.
Even though, Nike is world’s largest apparel brand with the highest revenue, it has strong competitors with the highest market Chung, Derdenger and Srinivasan (2013). The major competitors of Nike are Adidas, Reebok, Taylor Made and Rockport. Among all competitors of Nike, Reebok and Adidas are the potential competitors with the worldwide revenue of $3 billion and $ 16 billion (Verdu, G?mez-Gras and Mart?nez-Mateo (2012). It is also observed that competition in athletic apparel is fierce. These competitors are expanding their categories of products as well as nations with widened -. Even though substitutes such as footwear, sports kits of regional brands like Li Ling tend to pose a significant threat against Nike’s performance as the major player in the global shoes market (Chung, Derdenger & Srinivasan 2013). The global demands for athletic footwear, apparel as well as the equipment are projected to grow in the future because the customers cannot substitute these products. On the other side, it has also been observed that Nike has a large degree of brand recognition as well as loyalty; thereby, it will be difficult to for new entrants to match its range.
Nike has developed relationship marketing as well as segmentation to increase consumer satisfaction. It is also identified that Nike, the market leader in the field of the sportswear products is also the market leader of innovation, creativity as well as brand awareness. Although, the company has observed that a tremendous growth in the market, strong competition in the market influenced Nike to buy share other brands belonging to same sector. For example, in 2003, the brand purchased Converse in 2003 (Do, Ko & Woodside, 2015). The product line of the brand focuses on the premium target market. In addition, compared to the marketing of competitors, overall revenue of Nike increased by 4.98% in the first quarter of 2017 (Verdu, G?mez-Gras & Mart?nez-Mateo, 2012). Nike in the international market competes with an increasing number of athletic as well as leisure footwear organizations, athletic and leisure apparel firms.
It is identified that huge production factories of Nike, undoubtedly have been affecting the environment. The operation in these factories releases huge amount of aerial pollution. the company has been dealing with an increasing pressure put by the government.
The growing operation helps the company to expand the operation with almost 338 outlets and 336 outlets in the global environment (Mahdi et al. 2015). The company has successfully been running the operation in more than 52 countries (Verdu et al. 2012). The strong marketing as well as R&D helps the firm to remain active in such competitive environment. In this context, Soener (2015) commented that Nike develops and uses “Make to Stock” customer order that helps to deliver fast service to buyers from the available stock. However, in China, Nike’s operation is affected by the presence of ADIDAS. ADIDAS has contracted with Chinese basketball superstar to manufacture basket shoes and this has affected market share of Nike (Verdu et al. 2012).
Determinants of Strategic Options
Due to the strong global presence, Nike has the opportunity to penetrate in the new market that has increasing rate of growth such as Brazil, China and other European nations. In order to strengthen the brand presence in the foreign nations, it could follow anti-dumping responsibilities on country’s products. In addition, to this the company could develop new production line for the fashionable footwear to attract the new buyers. Moreover, Nike still did not pay a required attention to child wear. However, the demand for child wear is extremely high. The competitors like ADIDAS have developed a child category, which brought in a significant advantage to the company (Walley & Li,2015). Therefore, it is necessary for Nike to focus on the child wear.
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Do, H., Ko, E., & Woodside, A. G. (2015). Tiger Woods, Nike, and I are (not) best friends: how brand's sports sponsorship in social-media impacts brand consumer's congruity and relationship quality. International Journal of Advertising, 34(4), 658-677.
Mahdi, A., Abbas, M., Mazar, T. I., & George, S. (2015). A comparative analysis of strategies and business models of Nike, Inc. and Adidas Group with special reference to competitive advantage in the context of a dynamic and competitive environment. International Journal of Business Management and Economic Research, 6(3), 167-177.
Soener, M. (2015). Why do firms financialize? Meso-level evidence from the US apparel and footwear industry, 1991–2005. Socio-Economic Review, mwv006.
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Walley, K., & Li, C. (2015). The market for luxury brands in China: Insight based on a study of consumer’s perceptions in Beijing. Journal of Brand Management, 22(3), 246-260.