Company often seeks to achieve both productivity and differential advantages but few succeed. According to the geographic location,Nike has segmented the international market. As such, a wide product range of popular products has provided a unique competitive advantage for Nike. In this generic strategy, the company minimizes production costs to maximize profitability or reduce selling prices. It has 124 footwear factories and 328 apparel factories that supplied products. Its prices are a bit high as compared to other competitors but it has made many sales than th… Nike maintained a GuruFocus business predictability rank of four stars, suggesting consistent revenue and … To keep strong brand equity, Nike has focused on its taste and changing preferences. To attract more customers, nikeid.com allowed them to design and personalise their brand resulting more than 3, 00,000 unique visitors a day. Today Nike has a strong network of retailers in 200 countries worldwide through distributors, licensees and subsidiaries. Nike has done some restructuring to help gain competitive advantage. Nike has patents on some of its products but they are not well organized (Ahmed et al, 2016). Top Nike Competitors. This attitude of the company helps in eliminating and meeting any threat and provides a competitive advantage. The Nike brand has a wide product range in the market. Start with: Competitive advantage simply means what the company is best at. Porter’s model helps to understand the sources of Nike’s sustainable competitive advantage over its rivals. “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.”. Reference this. Nike is unable to use the patents to its advantage. Do you have a 2:1 degree or higher? Its swoosh logo is easily recognizable among the many brands globally. It is also recognized as the biggest brand in designing, developing, and marketing of sportswear, apparel, and accessories. Anyone who thinks we have seen the end of competitive advantage needs to … Well, they JUST DID IT and are doing it. Competitive Rivalry or Competition with Nike … Nike is an international athletic brand that deals with sportswear such as shoes and apparel equipment. This generic competitive strategy helped the company regain its competitiveness, especially … It has put more investment to support the innovation processes and strengthen the brand. Nike has close to $29 billion in revenues, almost twice its closest competitor, Adidas AG. Over time, Nike has maintained a strong supply chain and manufacturing network that has helped keep the brand popular with agility. The firm has product design capability, which is due to its highlyefficient integrated research laboratories. 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. It also utilizes a mix of traditional and modern tools and methods in its marketing strategy. We have mentioned some of the main factors that put Nike ahead of its competitors. How Nike has become the biggest player of the game? Registered Data Controller No: Z1821391. The brand believes in the spirit of sports and how sports connect people across the world. Adidas; Adidas formerly known as Dassler Brother Shoes is the designer, manufacturer and marketer of shoes, clothing and accessories. Nike sensed that scenario and wisely put its eye on EU market. The company’s global reputation — a key source of competitive advantage — was at stake. By altering marketing to the customer needs, Nike has been the most successful player in the past and continues to be today. Using production facilities in the Far East has given Nike economies of scale. Related. Bearing in mind that customer preference changes fast, there is stiff competition among brands. In order to achieve practical guidance, some theoretical tools will be adopted. If the business has only one major supplier and no … 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. Show More . Customer incentive programs are one of the successful programs within the organisation (Nike, Inc., 2009). As such, it has become an excellent marketer. Innovation can be another source of competitive advantage. The company has also focused on apparel and sports equipment and expanded its sales to Europe, Latin America and Asia. Threat of substitute products. With this in mind, Nike has invested in research and development to know more about the customer’s taste and fashion trends. Brand equity is perhaps the main strength of any brand. A larger customer base is a significant strength for the Nike brand as it sets it apart from the rest as an exceptional brand. 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. Besides, it outsources most of its production. For instance, it outsources nearly all of its production. 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. To overpower competition, Nike’s safest bet is to design innovative products that are tailored according to the needs of athletes. It greatly focuses on quality of products for customers. The focus of their company is to make legal and humane working conditions. The Competitive Advantage of Nike. Nike is one of them. Disclaimer: This work has been submitted by a university student. the United States, the Americas, Asia Pacific and Europe, Middle East and Africa (EMEA). From a humble beginning, Nike has managed to build … The high brand equity has seen Nike command stronger financial and market growth for the Nike brand. Marketing Competitive advantage is something that separates the company from other competitors in the same industry. We're here to answer any questions you have about our services. distributors, licensees and subsidiaries innearly 200 countries. Further to this, it is having a 10 year deal with NBA, WNBA and MBA development league. Register to read the introduction… Does the company need to defend itself against new competition? To compete with powerhouse Nike, Adidas merged with Reebok. 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. Consumers don’t just buy a product for its attributes. Nike has strived to create robust brand equity. While the U.S remains its core markets, its supply chain and distribution network is spread globally. 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. A … 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. This is because several aspects including changing customer preferences and competition play a major role in cementing customer loyalty. Apart from a competition from regular rivals, there are many a time new comers equipped with lots of strategies to conquer others. Its promotional videos are more into striking an emotional connection rather than being about product promotions. It is officially sorcerer of couple of university teams and presently assisting them in making their on-field outfits. Under Armour, founded in 1996, has successfully entered the high-performance apparel industry. 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. These include NIKE Basketball, Training, Sportswear, the Jordan Brand, Running, and Football (Soccer). We could see that multiple activities have played a role in building a competitive advantage. Nike’s most valuable asset is undoubtedly its brand. With well-synchronized manufacturing, retail, and distribution network, Nike can cater to demand better. The competitive analysis of Nike vs Adidas in pricing is very interesting. 9200 Words 37 Pages. 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. Reebok, offering more choice of shoe, introducing endorsement by sports personalities, sponsoring sporting leagues. These tactics proved to be a good practice to drag youth attention. 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. Show More. As such, Nike has mainly focused its strategy on innovation to rival its competitors. Nike’s world-wide presence has resulted in a wide customer base. In this post, we look at the competitive advantage that Nike has over its competitors. The above graph shows market share of sport shoes sold on 2009.The main players are Nike and Adidas. Nike has invested in research and development. *You can also browse our support articles here >. Roots to competitive advantage: It is obvious that it wasn’t a red carpet journey for Nike. The brand is well known for its stylish and great quality products. Outsourced Manufacturing Units: Nike receives footwear from more than 140 factories located in 13 countries across the globe. Competitive rivalry within an industry. Competitive advantage is what makes an entity's products or services more desirable to customers than that of any other rival. Nike has over 1,180 stores around the world. Better yet is that a well-integrated network allows Nike to focus on innovation and deliver high-quality products to the market. 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! Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports. Another advantage is scale, the cost savings associated with a larger corporate size. Nike offers give away to customers, tickets, sales, sponsorships and … Nike’s brands have turn out to be to be very strong as compared to others such as Reebok and Puma. In this alone shows the real power of a winning strategy it is a strong factor in the company’s competitiveness. Equally, it is also paying attention to its pricing, retail, and marketing strategy to deliver the best products to its customers across the world. Its Swoosh logo is popular and most notable among the numerous brands in the athletic wear industry. As such, it encourages sports lovers through promotional videos. The sneaker giant can simply outspend other sports-apparel retailers, Siegel wrote in … It is a function of the competitive advantage of costefficiency. It also uses celebrity endorsements and sponsorships to connect with its customers. Thus it has acompetitive advantage of … As an outstanding brand that prides in the highest popularity and customer loyalty in the sportswear industry, it is no doubt that customer loyalty is a unique competitive advantage that has kept Nike leading its rivals. Among the products Nike produces include the following categories; the Jordan Brand, NIKE Basketball, Running, Football (Soccer), Training, and Sportswear. In the sportswear industry, Nike commands the largest customer base of all the athletic and sports shoes and apparel products. The brand has successfully utilized social media and marketing campaigns to target more customers. Many other factors have contributed to Nike’s success. NIKE brand apparel is also manufactured almost entirely outside of the United States, in 34different countries. Two key aspects of this strategy include their large-scale brand recognition and product innovation. A wide product range helps in targeting a larger customer base. 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. In the 21st century, gaining customer loyalty in any product is very difficult. Being the greatest sports company of footwear and apparel, it is having largest cost advantages over competition. 2.1 Porter’s national competitive advantage From a humble beginning, Nike has managed to build and establish a strong brand name among its target customer. The three major competitive advantages are differentiation, cost and response. After takeover both the companies Reebok and Adidas have strong position to compete with Nike in North America. No plagiarism, guaranteed! Adidas … (See appendix 1) Therefore Nike has gained competitive advantage through innovation, of which Nike Sphere is an example. Study for free with our range of university lectures! We have mentioned some of the main factors that put Nike ahead of 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. Nike delivers innovative products, experiences and services to inspire athletes. Nike is being extremely pro-active in innovating products that meet Generation Y’s tastes and purchasing methods. 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 successfully fought against this socio-political issue and wisely maintain its brand name. The way Nike smells the opportunities and the way it approaches problems makes it unconquerable. Therefore, customer loyalty is a strong source of competitive advantage. When required for professional use there is no substitute goods, but as a fashion item there are many other goods that could be purchased. Nike does this by heavily focusing and investing in research and development to produce very innovative products, sportswear, and apparel exclusively made from sustainable materials. Though Adidas web site is slightly more favourable in user friendly functionalities, it lags behind on Nike’s overall site appearance. Being a global brand, it has a large supply chain, retail, and distribution networks. How it successfully captured almost half of the market in sport sector and still the giant? Competitive advantage is something that separates the company from other competitors in the same industry. But how the brand does manage to dominate the international athletic markets that are very competitive? By following this law, Nike is investing heavily and successfully in marketing its product. These are well established channels. Nike has put in place distinctive global marketing strategies and techniques. Management sees the digital business, which grew sales 36% year over year last quarter, emerging as one of Nike's competitive advantages. The company has heavily invested in design and quality and employed a greater business strategy that focuses on customer service. Looking for a flexible role? Threat of new entrance: This is not an example of the work produced by our Essay Writing Service. NIKE is the largest seller of athletic footwear and athletic apparel in the world.The Company creates designs for men, women and children. In the U.S Nike has seven important distribution centers, five in Memphis, Tennessee, and one in Indianapolis, Indiana, and another in Dayton, Tennessee. Roots to competitive advantage: It is obvious that it wasn’t a red carpet journey for Nike. Company has strong growth potential for 2017. The style, product innovation, and quality have also build Nike’s image in the global arena. Competitive advantages can … 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 is on its way to launch a new innovative campaign praising the team spirit. 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. Sustainable competitive advantage is when one company’s value creating products are impossible to imitate by its competitors. Nonetheless, excellent management of the supply chain and manufacturing networks has helped Nike produce and deliver superior quality sportswear and apparel while keeping the costs affordable. Marketing has played a major role in making the Nike brand a global brand. It offers products in six main categories. For instance, it has robust retail, distribution network, and inshore and online promotions. As such, Nike focuses on research and innovation to create new designs and styles to improve the popularity of its products in the market. Nike needs to manufacture and sale all its products which has gained patent before the right expires. The second better ratio is SG&A whichmeans that NIKE has lower selling and administrative cost over Adidas. NIKE has a good control on production cost. 1st Jan 1970 Nike vs Adidas: Market Share . Sustainable competitive advantage is when one company’s value creating products are impossible to imitate by its competitors. In the U.S alone, it has 392 stores and the rest are distributed among countries in the world. Nike has a big advantage over its competition, according to Nomura Instinet analyst Simeon Siegel. Adidas has six products priced at about 25000 and Nike has only one. This is the reason NIKE continues to lead in innovation and technology infootwear, apparel, and equipment.The first better ratio is COGS/sales. It affects the business more or less in a negative manner. With the brand outsourcing most of its products to external suppliers, this only means that the brand commands a bigger market share. With strong brand equity, Nike has managed to lead its competitors in the sports industry. How Nike has become the biggest player of the game? 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. Nike Competitive Advantage just from $13,9 / page. Free resources to assist you with your university studies! The buyers of sports footwear and hence their thinking have changed in the past decade. In 2005, Adidas acquired Reebok for $3.8 billion. Besides using online and offline marketing strategies, Nike also uses media releases, sponsorships, and events to market its products. get custom paper. Nike is doing what is … All work is written to order. They remain flexible, and … Nike’s Supply Chain System too had played a major role in establishing Nike’s competitive advantage. 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. How it successfully captured almost half of the market in sport sector and still the giant? Their reputation then grew, and all athletes wanted to know about this new clothing idea. Last year, Nike made about $9.5 billion in revenues, of which 59% came from footwear sales and 29% from apparel. They know everything about sports and are often athletes themselves and, of course, know Nike’s products inside and out. However, competition in the sportswear industry continues to increase each day and Nike has to step up to stay at the top. By altering marketing to the customer needs, Nike has been the most successful player in the past and continues to be today. Today, Nike is a multinational brand that is recognized for its premium quality products that are reasonably priced. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. However, surprise when reviewing its differentiation strategy it . Start with: Competitive advantage simply means what the company is best at. Nike has employed several methods to increase customer loyalty. The ration is 6:1, there is no other price bracket with this many differences. Strong human resources policies and capable, qualified management are essential for all Nike suppliers to be compliant with the law and our Code Leadership Standards. Quick and appropriate decisions at write time, use of brand name, goodwill- therefore increases its CSF (critical success factor) to succeed. In addition other sportswear manufacturers also expand their portfolio. In the fiscal year 2019 and 2020, Nike spent $3.7 billion and $3.5 billion respectively. The brand heavily relies on demand generation expense. The brand has built several sources of competitive advantage which include technology, marketing, supply chain as well as product design and quality. Nike now has over 750 stores, … The main raw materials used in NIKE footwear are rubber, plastic compounds, and foamcushioning materials, nylon, leather, canvas, and polyurethane films used for cushioningcomponents. Whether a business is dealing with technology, sport, or fashion, innovation provides new leads to tackling challenges. Besides the Jordan brand, other subsidiary brands that Nike owns are Hurley and Converse. 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. 2 Literature Review. Away from the U.S, the Nike brand still dominates the international markets with a total of 790 retail stores spread across the globe. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Due to the strong brand competitive advantage, Nike has been able to increase its market share all over the globe. 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. Porter’s model helps to understand the sources of Nike’s sustainable competitive advantage over its rivals. 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 … Marketing is a major strength of the Nike brand and provides it with a unique competitive advantage in the global sportswear market. Nike offers a “Shop with a Stylist” feature, the perfect way to make the most out of your store visit. It achieved competitive advantage by adding value in its products. (See appendix 1) Therefore Nike has gained competitive advantage through innovation, of which Nike Sphere is an example. Nike has done some restructuring to help gain competitive advantage. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. 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. A recommendation is for Nike Inc. to prioritize investment in product development to ensure competitive advantage. 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 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. Our academic experts are ready and waiting to assist with any writing project you may have. Nike spent $3.5 Billion specifically on marketing and demand generation in fiscal year 2020. Nike is doing what is required by law and also what is expected of a leader. Marketing is part and parcel of Nike’s business strategy. Besides, the brand is deeply connected with athletics and sports and it strives to inspire sports fans across the world. Company Registration No: 4964706. We have developed guidance and tools they can use to improve Human Resources Management (HRM) in their factories. 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. VAT Registration No: 842417633. They buy it for the experience, value and the emotional benefit that the particular product provides. They take every opportunity to change for the best. So, Nike’s diverse product range caters to varied customer segments. Nike Competitive Advantage. Nike Inc. is very good at adapting to the changing markets. Differentiation, cost and response demand generation in fiscal year 2019 and 2020, Nike is a global,... 1 ) therefore Nike has employed several methods to increase each day and Nike has become excellent! Entrance: company has a wide product range helps in targeting a larger customer base believes in the and... The companies Reebok and Adidas stylists are ready and waiting to assist with any project... 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