Competitive Advantage Of Nike Marketing Essay

Published Date: 23 Mar 2015

By tailoring marketing to the customer needs Nike has been successful in the past and continues to be today (Johnson, G & Scholes J 2004). How Nike has become the biggest player of the game? How it successfully captured almost half of the market in sport sector and still the giant? Well, they JUST DID IT and are doing it. Nike does not want to do only what is required by law, but also do what is expected of a leader.

It is obvious that it wasn't a red carpet journey for Nike. The way Nike smells the opportunities and the way it approaches problems makes it unconquerable. 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.

Being the single largest sports company of footwear and apparel, it is having largest cost advantages over competition. Its large economy supports it in distribution and marketing over its rivals.

The above graph shows market share of sport shoes sold on 2009.The main game is being played between Nike and Adidas.one can observe that over the last few years, Adidas has been slowly eroding the market share from Nike.

Consumers don't just buy a product for its attributes. They buy it for the experience, value and the emotional benefit that the particular product provides. The product might be as good as, or better than, the competitor's; but as long as the consumer perceives the product to be not superior or not different from others, the product can't become successful. By following this law, Nike is investing heavily and successfully in marketing its product.

To compete with powerhouse Nike, Adidas merged with Reebok. Adidas is on its way to launch a new innovative campaign praising the team spirit. It is officially sorcerer of couple of university teams and presently assisting them in making their on-field outfits. These tactics proved to be a good practice to drag youth attention. Reebok deal with NFL for designing and marketing all on-field uniforms. Further to this, it is having a 10 year deal with NBA, WNBA and MBA development league.

Where the master giant Nike with its 'JUST DO IT' punch line directly target famous sports personalities which at the end rose sell significantly. To attract more customers, nikeid.com allowed them to design and personalise their brand resulting more than 3,00,000 unique visiters per single day.

Nike has the most favourable web site with both high web site appearance and user friendly functionalities. However, Adidas web site is slightly more favourable in user friendly functionalities while lagging on overall in web site appearance in comparison to Nike's web site.

Altman Z-Score:

Nike

6.94

Adidas Group

2.5

Reebok

4.37

This is a good way to evaluate company's credit risk.

Z-SCORE ABOVE 3.0 -The Company is considered 'Safe' based on the financial figures only.

Z-SCORE BETWEEN 2.7 and 2.99 - 'On Alert'. This zone is an area where one should 'Exercise Caution'.

Z-SCORE BETWEEN 1.8 and 2.7 - Good chances of the company going bankrupt within 2 years of operations from the date of financial figures given.

Z-SCORE BELOW 1.80- Probability of Financial embarrassment is very high.

When markets are reaching saturation, new markets need to be identified to prevent decline in sales. Nike sensed that scenario and wisely put its eye on EU market. 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.

Quick and appropriate decisions at write time, use of brand name, goodwill- therefore there is a match is CSF (critical success factor) to succeed. Today Nike has a strong network of retailers in 200 countries worldwide through distributors, licensees and subsidiaries. Within the USA there are 18000 stores that retail Nike products. These are well established channels.

Porter's 5 forces

This model is used to identify the sources of competition, and how to gain advantage over them.

Potential Entrants

Other sportswear manufacturers expanding their portfolio

Cheap copies from the Far East

Buyers

The buyers of sports footwear have changed in the past decade.

There has been and increase in women purchasing the shoes,

Generation Y has a different tastes and purchasing methods.

Substitutes

When required for professional use there is no substitute goods, but as a fashion item there are many other goods that could be purchased.

Suppliers

Using production facilities in the Far East has give Nike economies of scale. Although there are now problems arising from these factories, they are switching to making there own goods, labour and political unrest causes delays in manufacturing and shipping of the goods,

Competitive Rivalry

Reebok, offering more choice of shoe, introducing endorsement by sports personalities, sponsoring sporting leagues

Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports.