Nike Footwear Company Intensive Marketing - Essay Example

Nike Footwear Company Introduction Nike is an American International company that deals with the design, development, marketing and selling of footwear. Nike has been in the footwear production business for about 49 years. Through this period, their products have increased in popularity and so has their sales. Currently it is one of the world’s largest producers of athletic shoes. Nike provides employment to almost 50000 people globally, which is the highest compared to the other footwear producing companies. The aim of this discussion is to analyze the Nike footwear Company in relation to the Industry – based considerations (the dynamic of five forces) and Resource-based considerations (VRIO). Industry – based considerations (the dynamic of five forces): Competitive rivalry The use of technology. Pricing. Product promotion. Creativity and innovation. Management of production supply chain. Threat of Entry to the industry Aggressive marketing. High entry capital. Limited access to athletic shoe distribution channels. Brand loyalty. Threat of Retaliation. Power of suppliers Availability of the raw materials. Nature of raw materials. Power of Buyers Bargaining power. Product promotion. Product availability. Product affordability. Summary Nike Footwear Company applies technology in their production thus ensuring the high quality of their products. This give them power in competing with their competitors especially those with limited access to technology. They have also high promoted their product through sponsoring various sports activities. This creates loyalties of their customers especially the celebrated sports personalities who they pay to use their products. A good example of such is Basketball player, Michael Jordan. Basketball fans who adore Jordan always find themselves loyal to Nike. Through creativity and innovation, they have been able to consistently come up with new products. This enables them to satisfy the high demand for new and more user friendly products. Nike has factory outlet stores all over the world. This enhances availability and continuous flow of their products in the market thus helping in developing their customers’ loyalty. They attain loyalty of by the value of their products and the continuous availability of the products in the market. Nike has made entry into the industry hard through intensive marketing. This makes it hard for the new firms because of the grip its brand name has on the consumers. The entry capital into the footwear production industry is also to high thus making it hard for new investors. The new entries can also pose a threat through retaliation. This might occur for example, when a company decides to dope their products. (ROY, 2009). The power of their suppliers is also limited. This is because they have low a large number of willing suppliers. The large number of the willing suppliers is also another factor that leads to the low bargaining power of their clients. Their row materials are manly nylon, rubber, and leather. These are commodities that require the addition of value before being used. for this reason they have the bargaining power over their suppliers because he commodities can not be used without the manufacturing. Nike has bargaining power over their customer. This is because they have few major competitors. This is also because they supply their products through factory outlet that are available globally. This increases the product availability. The use of influential sports personalities in promoting their products also reduces their customer’s bargaining power (CARBASHO, 2010).. Resource-based considerations (VRIO): Resource-based considerations (VRIO) Analysis are a good tool that helps establish whether a resource is of competitive advantage or not. Value Technology International events Legal Conditions Rarity Technology Consumer loyalty Finances Imitability Technology Creativity Organizational aspect of strategic alliance and network Management Formal control systems Innovation Summary Nike has a number of valuable resources. Technology is most valuable as it enhances the production of products that are both competitive and affordable. Application of technology also reduces the risk of their products being counterfeits of their products. Having sponsored very many sports activities globally, they always gain from such events since they encourage the use of their products. Legal conditions that makes it hard for entrance into the industry also reduces the amount of competition to their products. Nike kind of technology used in Nike is rare. The rare technology helps them in producing products that are superior to their competitors’ in terms of quality. This make their products sell more. Nike has been in the footwear production for a long time. Over the years, they have been gaining knowledge of the industry thus a smooth business operation. This has also earned them customer loyalty which ensures large sales. They also have access to a large amount of finances from their sales and shareholders. This enables to pay adequately for creativity and innovation thus improvement of the quality of their products. This also allows them to invest heavily in technology which also improves quality of their products. The application of technology has also helped them in a major way. This has led to the use of technologies such as, Nike zoom, Nike fly wire and Nike air in their production. These technologies have made their products: lightweight, versatile, durable and cushioning. The use of technology has also reduced the risk of imitation of their products by making the whole imitation process very costly. The level of creativity drawn in the design and improvement of their product is of high quality. This makes the end product hardly imitable. Nike Footwear Company has also highly benefited from organizational aspect of strategic alliance and network. It has highly contributed to the growth of all the other forms of resources. Through the diligent management, they have managed to acquire rare resources like money and properties which they have effectively used to ensure a stable and consistent growth of the company. Nike also encourages innovation amongst its staff leading to the invention of new products. In conclusion, we see that the ability of Nike Footwear Company to access and effectively manipulate these resources has greatly impacted it growth. Bibliography CARBASHO, T. (2010). Nike. Santa Barbara, Calif, Greenwood. REILLY, R. F., & SCHWEIHS, R. P. (2004). The handbook of business valuation and intellectual property analysis. New York, McGraw Hill. ROY, D. (2009). Strategic foresight and Porter's five forces: towards a synthesis. Munich, GRIN. Appendix: Table 2: Nike: VRIO Table 1: Five force in Nike Read More