http://essays24. only footwear, but also apparel and
http://essays24. com/Business/Strategy-Ikea/16542.
html Nike was established in 1972 by Bill Bowerman and Phil Knight with a mission to bring innovation and inspiration to every athlete in the world. The company started out as an American based footware distributor and evolved globally overtime to include not only footwear, but also apparel and equipment. Nike is one of the most recognized brands in the world and many are extremely familiar with their tag line “Just Do It”. Nike has capitalized on first mover advantage over the years and led the market in innovation.Nike competes in a saturated market with many traditional and potential competitors. To maintain future success Nike needs to focus on new strategies. Nike, who also owns Hurley, Converse, Bauer, and Umbro has several traditional competitors including Reebok, Adidas, UnderArmor, New Balance and Puma.
Any company that produces athletic footwear or athletic apparel is a competitor to Nike. Nike also sells sunglasses and fitness equipment. Nike also faces potential competition with other shoe or apparel manufacturers.Sketchers had traditionally produced more fashionable everyday footware but has been extremely focused in the last few years on athletic footware. Their Shaper brand is now widely popular for consumers who like to walk for exercise and their cross-training and running shoes are gaining popularity.
It takes little effort for a current shoe manufacturer to change designs and molds to make new types of shoes. The same applies to current apparel manufacturers. Athletic apparel accounted for 13% of U.
S. apparel offerings in 2009 and is projected to grow an additional 8. % by 2014, to $15. 3 billion (CISC). Other potential competitors who compete for consumers money and attention are fashion conscience accessory and apparel merchants. Most companies only look at the first type of competition in a market analysis.
To stay ahead of the competition a good company must look at all traditional, potential, and oblique competitors. Typical entry barriers for new companies in the athletic apparel and footwear industry are high due to the large economies of scale needed for manufacturing, distribution, research and development, and other operations.Entering this industry requires high initial capital investments in order to acquire land, build factories, and develop new product. In addition, developing and selling highly innovative products requires large marketing and advertising costs that make the barriers to entry even steeper. Consumers who are looking to purchase premium products will tend to look towards manufacturers with established recognizable brand names.
Strategic Options Nike has been known as the industry leader for years in the footwear business. Nike was the first to introduce the dri-fit technology (Smithson), technologies in running shoes, and many other innovations.Customers carry large bargaining power as they can always threaten to buy rival products.
Switching costs are typically very low and many due switch to a rival’s products if the rival offered trendier or hotter products or if the rival’s reputation for footwear in a specific sport (e. g. soccer) is very high. Large selection among several brand names, in addition to large price variations, allow consumers to choose shoes suited to their preferences in design, comfortability, and price.
In reviewing Nike and its current strategies, they should look at the following options for future success: * Work to rebrand Nike as a fashionable brand Create a premium brand that targets young people, women and any who are into fashionable shoes. * Nike’s traditional consumers are aging and other brands are resonating with younger consumers. Focus marketing efforts on strategic partnerships with popular young entertainers and athletes that kids can relate to. Capitalize on brand and recognition with younger market.
* Market Nike at more upscale retailers such as Nordstrom or Macy’s * Get a strong hold on Emerging Markets like China and India * Market towards youth in these countries Form partnerships with local manufacturers to gain entry into markets. In doing so, work on their reputation towards social and economic responsibility in these factories. * Market Nike more in emerging countries such as China and India * Need to target youth especially in emerging markets where they make up a large percentage of population * Focus marketing efforts at large sporting events on key products * Provide Championship sport teams with Nike and other technologically advanced products. This is great PR for a company. Be first as the outfitter of sports teams to market and test new products All three should be focused on to expand Nike’s brand and focus on growth and sales. In today’s competitive environment, companies should focus on several strategic options to keep them in front of the competition and sustain market share and growth. The first two strategic options can be combined to be extremely effective in combination.
Nike should first continue to expand brand internationally and can do this also while capitalizing on global marketing events. Nike has also shown it can grow by expanding into new markets.When the U.
S. hosted the World Cup in 1994, Nike’s global soccer sales were $45 million. Nike executives convinced Phil Knight that soccer was the company’s future. After that event, soccer sales were nearly $1 billion, or 25% of the global market and Nike’s share of the soccer shoe market in Europe, 35%, exceeded Adidas, at 31%.
Nike has achieved that fast growth in part by using the same outsize marketing tactics that made it big in the U. S. Nike realized that millions of kids around the globe play casual pickup soccer games in the street and developed the shoe especially for them (Holmes).Nike has been successful studying emerging trends in the world and quickly working to meet consumer needs before the competition. The third strategic option of marketing to younger consumers should be explored domestically. Nike was infamous 15 years ago for its marketing campaigns and strategic partnerships with celebrities.
They need to look at this for its new younger audience. Both fashionable and athletic companies are fighting for younger consumer’s disposable income and needs for fashion.Nike needs to be careful not to assume their brand and notoriety will continue to keep them forefront on young consumer’s minds. Nike could achieve this through both marketing efforts, new designs, and looking at an acquisition that would bring in some recognizable brands and possible a new and innovative leadership team.
Three specific criteria were used to evaluate these options. 1. Does your strategy exploit your key resources? 2. Does your strategy fit with current industry conditions? 3. Will your differentiators be sustainable?These questions were used to evaluate the three strategic options. While these questions could be easily answered, it became apparent that Nike needs to continue to capitalize on its reputation and brand globally as well as with younger consumers domestically. International sales for many companies are exceeding domestic growth so the first priority would be to focus on international brand growth and market share.
Bloomsberg Businessweek. The New Nike. SEPTEMBER 20, 2004 By Stanley Holmes http://www. businessweek. com/magazine/content/04_38/b3900001_mz001.
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