Nike's business level strategy - Research Paper Example

1. What is the business’ strategy toward market segmentation? If it segments its market, on what basis does it do so?  Nikes core competency is its ability to manufacture footwear that is of high quality but it also manufactures other sports related products to cater to other segment of the market. It also has other subsidiaries such as Cole Haan, Converse, Hurley International, and UmbroIncto reach other different consumer groups and segments.Nike’s core competency and target market are athletes because their products are sports wear.

Their core product are shoes but expands to other market to reach other segments of the the market. Nike also targets highly active people who would be interested to purchase sporting apparels. The age group of this segment are between 15 to 35 years old and Nike develops its brand towards this segment by investing heavily in its advertising campaign. It does so by forging agreements with iconic athletes such as Manny Pacquiao, Kobe Bryant etch who also serves as its spokesperson lending to the success of its first experiement with Michael Jordan with its Nike Air.

Nike also supports popular teams due to to their reach and influence to their target market.To avoid dilution of its brand, Nike instead used its subsidiary in reaching other segments. For example, instead of venturing into premium dress and casual wear that would dilute the Nike brand, it instead used the brand Cole Haan to tap into that segment market. The same case applies to snoboarding, skating and surfing which Nike has a brand has not established itself. Instead, it used its subsidiary Hurley International to tap into that market.

Umbro specializes in soccer equiptments, apparel and footwear which is surprisingly a Nike subsidiear. This subsidiaries which Nike uses allow it to have an additional 13% revenue in 2009 by tapping into this market segment. In sum, Nike was able to capitalize its brand by investing heavily in advertising and forging partnership with athletes and teams who has a tremendous influence in the age group (15-35) of their segment market.2. What functional units seem the main driving forces in your company?

 Nike became the leading brand in sports apparel due to the interplay of various functional units in its organization. It is obvious that it popular brand which is responsible for its marketing appeal to its target market is due to heavy investment in advertising which is a function of its marketing department.There are also other functional units that help drove Nike to be a highly innovative and competitive sports apparel company. Its sophisticated IT infrastructure and supply chain are able to effectively reach and deliver product to its target markets better than its competitors.

Its IT department allowed Nike to have a custom made shoes on its website which added an appeal to brand and enhancing customer loyalty in its market segment. Albeit heavily criticized for its sweatshops, Nike’s outsourcing makes the company competitive due to the fact that it allows the company to have a lower manufacturing cost that ultimately translates to a higher profit.