In 1984, Nike has overwhelmed Adidas as the number one selling running shoe Company in America. Yet this was not enough for Nike. At this time Nike was known for its attention to the wants and needs of their market, the individual runner. The Nike Brand itself, and while Nike CEO Phil Knight promoted Nike across the country, the quality, comfort, and design of the shoe were selling the product already. From 1985-1987, Nike was demoted to number two in the shoe market standings. Sales plummeted due to the running boom of the late 70’s and 80’s had begun to diminish.
Nike began to notice and entire market that the company had been avoiding- everyday athletic activities. Nike’s shoes were barely patronized by ordinary people, which was only target market was for professional athletes. In 1985, Michael Jordan entered the picture, and bolstered Nike’s sales (Nike, 2008). Fast forward to the early ’90’s, Nike is now the leading designer and marketer of athletic footwear and apparel for a wide-array of sports and fitness activities. It is considered as the Coke of the basketball shoes industry. With Nike, Basketball players become the brand, but rival shoe companies want to be like Nike.
Currently, Nike single-handedly dominates the U. S. footwear market with about 45% of the total market. Nike controls more than 20% of the US athletic shoe market. The company designs and sells shoes for a wide-array of sports, including baseball, basketball, cheerleading, golf, volleyball, hiking, tennis, and football. Nike has collaborative deals with other shoe companies like Cole Haan, which they augment with their shoe innovations like the AirMax technology. Furthermore, it operates Nike Town shoe and sportswear stores, Nike factory outlets, and Nike Women shops. Nike sells its products throughout the U. S.
and in about 160 other countries (Nike, 2008). Company Analysis Even before Nike Inc. was founded, its founder Phil Knight already came up with a company known as Blue Ribbon Sports. Knight together with renowned track coach Bill Bowerman founded Blue Ribbon Sports in order to address the clamor of athletes for efficient performance shoes. First year sales turnout garnered $8,000. And in 1971, BRS launched the concept of Nike, the Greek goddess of victory (Nike, 2008). By the end of 2005, Nike recorded a total of $13. 7 billion in revenues through the course of the fiscal year, and an 11. 8% increase in 2004.
Strong and consistent revenue progress and generation across its markets and a myriad of product lines all contributed to such increase. For the fiscal year of 2005, operating profit for Nike was $1. 9 billion, over 2004 it ballooned to as much as 22. 2%. In the fiscal year of 2004, net profit was $1. 2 billion, a subsequent 28. 1% over 2004. Its product distribution stretches from U. S. , Asia Pacific, The Middle East, and the entirety of Europe. More than 23 people are employed in its main offices in Beaverton, Oregon alone.
By the end of May 31, 2007, Nike has declared a total of revenues amounting to $16.3 billion, and a $1. 3 increase prior to its present earnings (Nike, 2008). Nike’s triad of primary product engines have employed more than 880,000 contract workers for 700 contract factories in 52 countries. Nike apparel, equipment, and footwear were constantly manufactured in these factories (Nike, 2008). Competitive Advantage and Corporate Strategy Worldwide competitive similarity, market barriers to penetrate, and the eclectic cultures of each target market compose the scope of Nike’s competitive advantage. Nike’s competitors stretches from the U. S. all the way from Europe among them are: Adidas, Reebok, Converse, and Puma.
These manufacturers rival Nike in the saturated market of performance athletic shoes. Some of these companies attempted to overwhelm Nike with its line of shoes with unique fashion twists. Nike’s market share and area of expertise are relatively threatened by such competitors, and generates international logic discrepancies. Furthermore, market barriers and segments suggest that there are no secured areas in penetrating Nike’s competitive sphere, as well as other manufacturers. With this in mind, opportunities emerge from regional and global markets, which are accessible and will gradually be exploited by its competitors.
This urges Nike to adapt to the distinct taste of a particular market segment. Such marketing strategy’s aim is to convey the unique taste that certain cultures clamor for in order to reach out to relative market segments as well (Porter et al. , 2002). Nike faced its fiercest competition in Europe. Germany-based Adidas single-handedly overwhelmed the European sports market, saturating it with a plethora of footwear and accessories. Over 75% of Europe’s athletic shoe and apparel market were dominated by Adidas, as well as a portion of it by Puma.
These two companies have developed a firm allegiance of local sports team, which includes: tennis, rugby, track and field, and soccer. Both have sponsored numerous local teams in European cities, and have generated contracts for its stable of European athletes. Adidas has earned prestigious reputation, and was deemed an icon in Europe. With this in mind, Adidas is considered the Coke of athletic footwear in Europe. Another European manufacturer, Reebok, has contested Nike for athletic shoe supremacy.
Yet all attempts were futile, because it has limited distribution tactics that has hampered its sales in the U. S., as well as in Europe (Porter et al. , 2002). Currently, Nike is embracing a marketing strategy that is expected to bolster its following in Europe, and carved its market niche as well. Nike is giving Adidas and other European brands a dose of their own medicine, as Nike has augmented its marketing arsenal by contracting European athletes as well. This is the counter-attack that Nike uses in order to generate revenues, and engulf market shares of European brands. Obviously, Nike is clever in terms of getting endorsers to market their product; this entices consumers to patronize the Nike brand (Porter et al. , 2002).