Well, they JUST DID IT and are doing it. Nike is loyal to its affiliates. 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. If you need assistance with writing your essay, our professional essay writing service is here to help! Besides, the brand is deeply connected with athletics and sports and it strives to inspire sports fans across the world. We have developed guidance and tools they can use to improve Human Resources Management (HRM) in their factories. The Competitive Advantage of Nike. 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 maintained a GuruFocus business predictability rank of four stars, suggesting consistent revenue and … Marketing is a major strength of the Nike brand and provides it with a unique competitive advantage in the global sportswear market. Roots to competitive advantage: It is obvious that it wasn’t a red carpet journey for Nike. The above graph shows market share of sport shoes sold on 2009.The main players are Nike and Adidas. 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. Company often seeks to achieve both productivity and differential advantages but few succeed. Nike now has over 750 stores, … Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. 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. Nike needs to manufacture and sale all its products which has gained patent before the right expires. Its promotional videos are more into striking an emotional connection rather than being about product promotions. (See appendix 1) Therefore Nike has gained competitive advantage through innovation, of which Nike Sphere is an example. The ration is 6:1, there is no other price bracket with this many differences. Besides the Jordan brand, other subsidiary brands that Nike owns are Hurley and Converse. This is not an example of the work produced by our Essay Writing Service. In this post, we look at the competitive advantage that Nike has over its competitors. Innovation can be another source of competitive advantage. Disclaimer: This work has been submitted by a university student. 9200 Words 37 Pages. VAT Registration No: 842417633. Apart from a competition from regular rivals, there are many a time new comers equipped with lots of strategies to conquer others. 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. The competitive analysis of Nike vs Adidas in pricing is very interesting. Nike has various competitive advantages outlined below. “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.”. – Supply chain management: Its excellent supply chain management is also a key source of competitive advantage for the brand. Nike offers a “Shop with a Stylist” feature, the perfect way to make the most out of your store visit. Nike Inc. is very good at adapting to the changing markets. When it comes to video marketing, Nike connects with its customers’ emotions uniquely. The company has a great distribution network which … A larger customer base is a significant strength for the Nike brand as it sets it apart from the rest as an exceptional brand. To keep strong brand equity, Nike has focused on its taste and changing preferences. One can observe that over the last few years, Adidas has been slowly eroding the market share from Nike. To compete with powerhouse Nike, Adidas merged with Reebok. Porter’s model helps to understand the sources of Nike’s sustainable competitive advantage over its rivals. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. The brand believes in the spirit of sports and how sports connect people across the world. We have mentioned some of the main factors that put Nike ahead of its competitors. Register to read the introduction… Does the company need to defend itself against new competition? 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. Nike has done some restructuring to help gain competitive advantage. Nike Competitive Advantage just from $13,9 / page. Therefore, customer loyalty is a strong source of competitive advantage. Last year, Nike made about $9.5 billion in revenues, of which 59% came from footwear sales and 29% from apparel. Better yet is that a well-integrated network allows Nike to focus on innovation and deliver high-quality products to the market. How Nike has become the biggest player of the game? The brand has built several sources of competitive advantage which include technology, marketing, supply chain as well as product design and quality. Company Registration No: 4964706. Its prices are a bit high as compared to other competitors but it has made many sales than th… This is the reason NIKE continues to lead in innovation and technology infootwear, apparel, and equipment.The first better ratio is COGS/sales. Similarly, continuous innovations like Air Max range of shoes had widened the gap between Nike and other brands. 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. The firm has product design capability, which is due to its highlyefficient integrated research laboratories. Competitive advantage is what makes an entity's products or services more desirable to customers than that of any other rival. 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. Competitive advantage is something that separates the company from other competitors in the same industry. Nike Inc. is very good at adapting to the changing markets. Over time, Nike has maintained a strong supply chain and manufacturing network that has helped keep the brand popular with agility. Our academic experts are ready and waiting to assist with any writing project you may have. Start with: Competitive advantage simply means what the company is best at. Adidas … 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. Away from the U.S, the Nike brand still dominates the international markets with a total of 790 retail stores spread across the globe. No plagiarism, guaranteed! Nike sensed that scenario and wisely put its eye on EU market. By altering marketing to the customer needs, Nike has been the most successful player in the past and continues to be today. 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 has employed several methods to increase customer loyalty. Reference this. Its Swoosh logo is popular and most notable among the numerous brands in the athletic wear industry. The way Nike smells the opportunities and the way it approaches problems makes it unconquerable. The Nike brand has a wide product range in the market. Two key aspects of this strategy include their large-scale brand recognition and product innovation. Being the greatest sports company of footwear and apparel, it is having largest cost advantages over competition. When markets are reaching saturation, new markets need to be identified to prevent decline in sales. 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. 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. With the brand outsourcing most of its products to external suppliers, this only means that the brand commands a bigger market share. Due to the strong brand competitive advantage, Nike has been able to increase its market share all over the globe. Although the competition is quite tough, Nike is employing new strategies to offer better products to acquire new customers while maintaining the existing ones. 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. Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports. Do you have a 2:1 degree or higher? However, competition in the sportswear industry continues to increase each day and Nike has to step up to stay at the top. Under Armour, founded in 1996, has successfully entered the high-performance apparel industry. In the late 1990s, Nike reduced costs and the selling prices of its athletic shoes and other products. As such, Nike has mainly focused its strategy on innovation to rival its competitors. Nike is doing what is … Competitive advantages can … http://3.bp.blogspot.com/_TjMfUmrr8Gs/SxPoEUasjEI/AAAAAAAAAFI/Az-8n9gq07U/s1600/…………..NIKE_Swoosh.gif. Reebok, offering more choice of shoe, introducing endorsement by sports personalities, sponsoring sporting leagues. These include NIKE Basketball, Training, Sportswear, the Jordan Brand, Running, and Football (Soccer). get custom paper. Many other factors have contributed to Nike’s success. Nike is doing what is required by law and also what is expected of a leader. We have mentioned some of the main factors that put Nike ahead of its competitors. Competitive advantage is something that separates the company from other competitors in the same industry. Nike Competitive Advantage 1089 Words | 5 Pages. In addition other sportswear manufacturers also expand their portfolio. Though Adidas web site is slightly more favourable in user friendly functionalities, it lags behind on Nike’s overall site appearance. It is obvious Nike is a global brand that has widely spread retail stores across the world. How it successfully captured almost half of the market in sport sector and still the giant? In the sportswear industry, Nike commands the largest customer base of all the athletic and sports shoes and apparel products. Nike is one of them. Nike vs Adidas: Market Share . Besides, it outsources most of its production. Branding. They buy it for the experience, value and the emotional benefit that the particular product provides. In this generic strategy, the company minimizes production costs to maximize profitability or reduce selling prices. Nike is unable to use the patents to its advantage. Outsourced Manufacturing Units: Nike receives footwear from more than 140 factories located in 13 countries across the globe. 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. While the U.S remains its core markets, its supply chain and distribution network is spread globally. The company’s global reputation — a key source of competitive advantage — was at stake. They know everything about sports and are often athletes themselves and, of course, know Nike’s products inside and out. The second better ratio is SG&A whichmeans that NIKE has lower selling and administrative cost over Adidas. For instance, it has robust retail, distribution network, and inshore and online promotions. By altering marketing to the customer needs, Nike has been the most successful player in the past and continues to be today. 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. 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. As such, a wide product range of popular products has provided a unique competitive advantage for Nike. Start with: Competitive advantage simply means what the company is best at. Free resources to assist you with your university studies! Nike delivers innovative products, experiences and services to inspire athletes. Superior Marketing Capabilities – Nike has excellent marketing campaigns. 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 … 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. All work is written to order. Company has strong growth potential for 2017. Nike has over 1,180 stores around the world. Marketing Anyone who thinks we have seen the end of competitive advantage needs to … It is a function of the competitive advantage of costefficiency. The buyers of sports footwear and hence their thinking have changed in the past decade. We’re supporting our suppliers in developing predictive, agile, resilient and integrated HRM capabilities. The sneaker giant can simply outspend other sports-apparel retailers, Siegel wrote in … Nike’s Supply Chain System too had played a major role in establishing Nike’s competitive advantage. Consumers don’t just buy a product for its attributes. Customer incentive programs are one of the successful programs within the organisation (Nike, Inc., 2009). It greatly focuses on quality of products for customers. With well-synchronized manufacturing, retail, and distribution network, Nike can cater to demand better. Here we will conduct a detailed analysis of Nike competitors. A recommendation is for Nike Inc. to prioritize investment in product development to ensure competitive advantage. distributors, licensees and subsidiaries innearly 200 countries. Looking for a flexible role? The high brand equity has seen Nike command stronger financial and market growth for the Nike brand. In order to achieve practical guidance, some theoretical tools will be adopted. Today Nike has a strong network of retailers in 200 countries worldwide through distributors, licensees and subsidiaries. The United States provides that largest market for the Nike brand accounting for over 40% of its total sales and accounting for a total of 392 retail stores. The focus of their company is to make legal and humane working conditions. According to the geographic location,Nike has segmented the international market. Competitive advantage in the Marketing strategy of Nike – Outsourced Manufacturing Units: Nike receives footwear from more than 140 factories located in 13 countries across the globe. Nike’s most valuable asset is undoubtedly its brand. 2 Literature Review. As such, Nike has managed to build strong customer trust in the market and with their customers. Show More. Marketing has played a major role in making the Nike brand a global brand. 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. Adidas has six products priced at about 25000 and Nike has only one. In the U.S Nike has seven important distribution centers, five in Memphis, Tennessee, and one in Indianapolis, Indiana, and another in Dayton, Tennessee. Being a global brand, it has a large supply chain, retail, and distribution networks. The company has also focused on apparel and sports equipment and expanded its sales to Europe, Latin America and Asia. 1st Jan 1970 There are many ways that Nike has attracted its customers for value creation. Among the products Nike produces include the following categories; the Jordan Brand, NIKE Basketball, Running, Football (Soccer), Training, and Sportswear. Sustainable competitive advantage is when one company’s value creating products are impossible to imitate by its competitors. Top Nike Competitors. (See appendix 1) Therefore Nike has gained competitive advantage through innovation, of which Nike Sphere is an example. As such, it encourages sports lovers through promotional videos. To attract more customers, nikeid.com allowed them to design and personalise their brand resulting more than 3, 00,000 unique visitors a day. So, Nike’s diverse product range caters to varied customer segments. We could see that multiple activities have played a role in building a competitive advantage. NIKE brand apparel is also manufactured almost entirely outside of the United States, in 34different countries. By following this law, Nike is investing heavily and successfully in marketing its product. The company has heavily invested in design and quality and employed a greater business strategy that focuses on customer service. Further to this, it is having a 10 year deal with NBA, WNBA and MBA development league. Sustainable competitive advantage is when one company’s value creating products are impossible to imitate by its competitors. Although there are now problems arising from these factories, they are switching to making their own goods, labour and political unrest causes delays in manufacturing and shipping of the goods. Nike has strived to create robust brand equity. They remain flexible, and … It offers products in six main categories. The products come in excellent design and quality. Nike offers give away to customers, tickets, sales, sponsorships and … When it comes to product quality, supply chain, or sustainability, the brand has kept a strong focus on accountability, social responsibility, and most importantly, ethics. It is also recognized as the biggest brand in designing, developing, and marketing of sportswear, apparel, and accessories. Today, Nike is a multinational brand that is recognized for its premium quality products that are reasonably priced. Nike spent $3.5 Billion specifically on marketing and demand generation in fiscal year 2020. NIKE is the largest seller of athletic footwear and athletic apparel in the world.The Company creates designs for men, women and children. Competitive Rivalry or Competition with Nike … But how the brand does manage to dominate the international athletic markets that are very competitive? Reebok deals with NFL for designing and marketing all on-field uniforms. NIKE has a good control on production cost. It has 124 footwear factories and 328 apparel factories that supplied products. For instance, it outsources nearly all of its production. Adidas is on its way to launch a new innovative campaign praising the team spirit. Besides using online and offline marketing strategies, Nike also uses media releases, sponsorships, and events to market its products. 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. Within the USA there are 18000 stores that retail Nike products. People are increasingly looking for stylish and durable sports, athletics, and leisure products. A wide product range helps in targeting a larger customer base. The brand has successfully utilized social media and marketing campaigns to target more customers. Professional stylists are ready to give you personalized recommendations tailored to your unique needs. In 2005, Adidas acquired Reebok for $3.8 billion. Where the master giant Nike with its ‘JUST DO IT’ punch line directly target famous sports personalities which at the end rose sell significantly. https://notesmatic.com/2018/12/nike-sources-of-competitive-advantage It is officially sorcerer of couple of university teams and presently assisting them in making their on-field outfits. It has put more investment to support the innovation processes and strengthen the brand. Nike is a customer-oriented brand that knows its customers in all aspects. Nike has invested in research and development. Another advantage is scale, the cost savings associated with a larger corporate size. However, surprise when reviewing its differentiation strategy it . Nike is being extremely pro-active in innovating products that meet Generation Y’s tastes and purchasing methods. From a humble beginning, Nike has managed to build … Thus it has acompetitive advantage of … As such, it has become an excellent marketer. It achieved competitive advantage by adding value in its products. Nike’s world-wide presence has resulted in a wide customer base. You can view samples of our professional work here. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. the United States, the Americas, Asia Pacific and Europe, Middle East and Africa (EMEA). 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. Their reputation then grew, and all athletes wanted to know about this new clothing idea. 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. After takeover both the companies Reebok and Adidas have strong position to compete with Nike in North America. Brand equity is perhaps the main strength of any brand. 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. Adidas; Adidas formerly known as Dassler Brother Shoes is the designer, manufacturer and marketer of shoes, clothing and accessories. Bearing in mind that customer preference changes fast, there is stiff competition among brands. With strong brand equity, Nike has managed to lead its competitors in the sports industry. Roots to competitive advantage: It is obvious that it wasn’t a red carpet journey for Nike. However, customer-oriented brands such as Nike have been able to command customer loyalty. These tactics proved to be a good practice to drag youth attention. Nike has a big advantage over its competition, according to Nomura Instinet analyst Simeon Siegel. It affects the business more or less in a negative manner. In the U.S alone, it has 392 stores and the rest are distributed among countries in the world. 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! A … Nike has patents on some of its products but they are not well organized (Ahmed et al, 2016). This generic competitive strategy helped the company regain its competitiveness, especially … Well, they JUST DID IT and are doing it. Nike has done some restructuring to help gain competitive advantage. Its swoosh logo is easily recognizable among the many brands globally. To gain the strongest competitive advantages is the major concern for Adidas, because it has to compete with giant competitors like Puma, Nike, New balance and others. Its large economy supports it in distribution and marketing over its rivals. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. Coupled with global marketing strategies, Nike can dominate the global athletic footwear and apparel market. This attitude of the company helps in eliminating and meeting any threat and provides a competitive advantage. Threat of new entrance: The brand heavily relies on demand generation expense. From a humble beginning, Nike has managed to build and establish a strong brand name among its target customer. It also utilizes a mix of traditional and modern tools and methods in its marketing strategy. Nike’s cost leadership generic strategy sustains competitive advantage based on costs. Nike has put in place distinctive global marketing strategies and techniques. How Nike has become the biggest player of the game? Nike has close to $29 billion in revenues, almost twice its closest competitor, Adidas AG. Apart from them, it is investing in sustainability and the creation of sustainable products to increase the popularity of … They take every opportunity to change for the best. These are well established channels. Nike’s brands have turn out to be to be very strong as compared to others such as Reebok and Puma. Show More . To overpower competition, Nike’s safest bet is to design innovative products that are tailored according to the needs of athletes. 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. 2.1 Porter’s national competitive advantage Related. Today, product innovation is so important owing to the quick changing preferences of customers. Quick and appropriate decisions at write time, use of brand name, goodwill- therefore increases its CSF (critical success factor) to succeed. The brand is well known for its stylish and great quality products. Registered Data Controller No: Z1821391. 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. It also uses celebrity endorsements and sponsorships to connect with its customers. This is because several aspects including changing customer preferences and competition play a major role in cementing customer loyalty. Marketing is part and parcel of Nike’s business strategy. Management sees the digital business, which grew sales 36% year over year last quarter, emerging as one of Nike's competitive advantages. With this in mind, Nike has invested in research and development to know more about the customer’s taste and fashion trends. Customer experience, customer trust, and customer engagement are among the many factors that when they collaborate they significantly affect brand equity. Competitive rivalry within an industry. The main raw materials used in NIKE footwear are rubber, plastic compounds, and foamcushioning materials, nylon, leather, canvas, and polyurethane films used for cushioningcomponents. The way Nike smells the opportunities and the way it approaches problems makes it unconquerable. *You can also browse our support articles here >. Porter’s model helps to understand the sources of Nike’s sustainable competitive advantage over its rivals. The style, product innovation, and quality have also build Nike’s image in the global arena. Nike successfully fought against this socio-political issue and wisely maintain its brand name. Using production facilities in the Far East has given Nike economies of scale. Nike is an international athletic brand that deals with sportswear such as shoes and apparel equipment. – Marketing capabilities: Nike is known as one of the best marketers in the entire industry. Bargaining power of suppliers: How dependent is the business on its suppliers? Whether a business is dealing with technology, sport, or fashion, innovation provides new leads to tackling challenges. We're here to answer any questions you have about our services. In this alone shows the real power of a winning strategy it is a strong factor in the company’s competitiveness. In the fiscal year 2019 and 2020, Nike spent $3.7 billion and $3.5 billion respectively. Threat of substitute products. 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. Customer preferences and competition play a major role in cementing customer loyalty is a strong source nike competitive advantage competitive,... 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