The Major Competitors for Nike - Case Study Example

?For Nike as a whole the company has managed to forge a level of consumer acceptance and brand equity that's enviable to most of their competitors. The company faces stiff competition in the international market with the merger of Adidas and Reebok. By learning from past mistakes the company has overhauled itself to better compete and adapt to changes in the marketplace and operational risks. Nike must continue to work on maintaining the highest operational, health, and safety standards while providing a fair living wage for all. The challenge for Nike is in serving as a benchmark for operational and manufacturing excellence while maintaining their level of international growth from previous years. Maintaining a level of high innovation, operational efficiency, and driving the creative and wild spirit of the brand culture will continue to be the differentiating factor between Nike and their closest competitors in the marketplace. The major competitors for Nike are: Adidas/Reebok- Both are very established brands domestically and especially internationally with a loyal customer base. For Adidas their key demographics are especially the 35 and older crowd. Their grass roots presence and their history of amateur sports sponsorship especially in soccer has allowed the company to maintain its position as the number two performance apparel and footwear company of Europe. Reebok with their strong market presence, strong endorsement, and fashion focus has captured a significant portion of the market share. 1) Nike has grown from its humble beginnings back in 1962 when Phil Knight started Blue Ribbon Sports the precursor to Nike to become the world’s largest athletic footwear and apparel company. Nike as a brand became known for its edginess, innovation and cutting edge technology. The brand's focus on performance and true innovation has built a high level of consumer acceptance and brand equity from serious athletes and amateurs and as a direct consequence the general public alike. Through savvy marketing campaigns, key sponsorships of professional athletes, sport leagues, teams, and its tradition for continuous technological and operational improvements the company has maintained its leadership position in the industry both domestically and internationally. By shifting its focus towards the consumer and not just the product Nike succeeded in capturing and maintaining the largest market share in the industry. 2) Despite incredible success in the domestic market by the 1980's Nike passed Adidas as the number one domestic athletic shoe company. Nike faced a lot of difficulty getting a foothold in the European market with formidable competitors like Adidas and Puma controlling over 75% of the athletic shoe and apparel market. By adapting its marketing campaign to suit its target audience and through savvy marketing and grassroots efforts Nike has developed its brand equity to become the market leader in the world. By becoming the world's largest athletic shoe and apparel company in the world Nike has had to face a lot of criticism for their unfair labor practices in their Asian manufacturing facilities. 3) Sponsorship deals with athletes like Michael Jordan and Tiger Woods were crucial to development of Nike's brand image as a whole. One of the key elements that helped Nike develop its brand equity domestically and internationally was through a marketing strategy where individual markets saw ads that featured local heroes and athletes and through direct financial support of local sport leagues and teams in the markets they served. Becoming an official sponsor for world renowned international sport events such as the Olympics places the brand in a unique position to increase the brand's goodwill, consumer confidence, and increases loyalty to the brand as a whole. 4) By becoming the number one athletic footwear and apparel company Nike is open to a diversity of operational factors and exposure that need to be constantly monitored. Nike's corporate image was negatively affected when allegations of unsafe work conditions, excessive work hours, low wages and child labor surfaced as a result of an Earnest and Young audit of a factory in Vietnam published by a labor watchdog agency. As a direct result of the allegations, Nike implemented comprehensive changes in its global corporate labor policies. Nike responded to the allegations by stating that all safety and labor violations had been corrected and that although wages were low in the Vietnam factory it was well above their national average. By 1998 a complete overhaul of their global manufacturing standards was completed which included the use of water based solvents and glues, safety equipment and minimum age requirements, OSHA indoor air quality standards, and monitoring of labor practices by independent agencies. 5) By 1998 Nike started expanding its brand portfolio with the acquisition of Cole Hann, a luxury handbag, shoe and accessory maker. In 1995 Nike bought Bauer, the world's leading manufacturer of hockey skates and equipment. In 2002 Hurley a skateboard and surfing apparel and footwear company was added to Nike's expanding brand portfolio and in 2003 Converse was acquired. The goal of Nike's acquisitions efforts and expansion into the performance apparel and other brand extensions like Nike Golf was to expand avenues for revenue growth, to provide brand diversity, and as a whole to divide their business operations by customer segment. Overall all the acquisitions except the Cole Hann acquisition were in line with Nike's corporate philosophy and brand image. The Cole Hann brand was not necessarily a good fit for the company's culture as a whole. 6) Even for a performance oriented brand like Nike becoming a leader in creating new consumer trends and creatively blending fashion and performance is paramount to creating a widespread consumer base that's loyal to your brand and believes in your products and what they stand for. With the accelerated growth of the middle class in China and their mandatory one child policy more families are able to afford an upscale brand such as Nike for their child. Maintaining their performance oriented brand image while adapting the product to regional tastes and preferences will serve to further drive market share growth for Nike in the Chinese market and beyond. For Nike safeguarding brand equity while pursuing and aggressive expansion strategy is paramount to its expansion in the Asian markets particularly in China where the biggest growth opportunities are available for the Nike brand. Although they enjoyed a market share in China of 10% by 2004 opportunities for increasing its market share were excellent with Nike's financial prowess, global marketing expertise, and branding experience. 7). Although Adidas and Reebok have joined forces, domestically and internationally Nike still maintains the top market share position with 36% and 23% respectively. To maintain its lead and build momentum to expand in growing markets such as China and Asia. Nike needs to concentrate on maintaining current with changes in local consumer trends and preferences, while maintaining their focus on providing innovation and meaningful technological improvements to their product line. Read More