1. Describe Nike views on the reasons for their success (quantitative and qualitative factors).
Nike started as a small distributing company for Japanese shoes. However, the company has grown to a multinational company twentieth century most profitable shoe company. The company is an athletic and top pop culture shoe and apparel company. Nike Inc has lived to its Greek meaning goddess victory. The company attributes its success to both the quantitative and qualitative factors. The success is closely tied to its ability to produce a quality product. Nike is committed to continually manufacture shoes and apparel that of quality standard for the athletes. They continue to engage in innovative activities that improve the boots. The company has three broad stages of developing new shoes that are light and suitable for the intended environment: creation, commercialization and finally availing the product to the intended consumer. Nike Inc is heavily invested in endorsements. The marketing strategy has propelled the success of the organization. The company contracts iconic athletes and celebrity for sponsorship agreements that sell and represent the brand. They are also proactively involved in the entertainment and corporate social activities; this automatically amplifies their charisma in the market.
The primary quantitative cause of the success is consumer trends. The consumers and especially in the United States is focused on body fitness and health. This factor has directly translated to more sales revenue. The rise in the GDP per capita in the Asia and Europe has increased the demand for the athletic apparels into the new global markets. Competition from its peers also pushes them to use high technology that perfectly knit their products that produce irresistible shoes (Kloster, Mette, Schimmelpfenning, & Jorn, 2013). The management has invested in a workforce that keeps on driving. They are spent in an innovative pool of employees that think, improve and create the brand. They produce a variety of authentic products that range of sport wears to sports devices. Therefore the revenue for Nike Inc has increased by 6 % in the last few years and is at 34.4 billion dollars as of today. The digital sales have majorly improved the sales. Statics show that Nike Inc. has more than a thousand retail stores across the world and dominates 23% of the international market share of authentic footwear.
2. Does Nike Inc use low-cost advantage or product differentiation strategy? Provide evidence to support your work.
Nike, Inc continues penetrated broadly into the in American, Asian, Europe, Middle East and African markets. The business growth relies on their competitive advantage amongst its competitors. It combines both the low-cost strength and product differentiation strategies. However, more emphasis is put on cost minimization. The company cost leadership stems from its ability to reduce their cost of production and therefore maximize profitability at low prices of their product. Most of the shoes and accessories are outsourced from manufacturers that are not within the US. The company has a broad network that allows them to work with excellent superiors that can produce a superior product at relatively low prices. The marketing strategy has placed the company at a high competitive margin and pressed the peer to struggle to retain their market presence. The company works tirelessly on maintain sustainable marketing strategies. The company ensures that their profits can sustain their innovative approach.
Product differentiation reflects the creative ability of the company. Nike integrates critical frame designs of shoes and sports accessories and equipment. The creation mix diversity is not very significant to the company. However, the company uses this strategy to protect themselves from financial risk by diversifying their source of revenue and propel their growth strategy.
The table below shows that Nike has continued to enjoy the competitive advantage of market leadership while enjoying highest revenues compared to Puma and Adidas (, n.d.).
3. Resources and capabilities Nike, Inc has that enables it to have a low-cost advantage
The company does not own any manufacturing plant unlike its close competitor, Adidas which allows them to focus on the innovative strategy of the business. They focus on designing, advertising and retailing their products while they outsource production. It by far minimizes the companys costs and therefore allows them to set low prices for their products.
Economies of scale
Nike, Inc saves on costs involved with a large organization. The company makes revenue of more than 29 billion which is twice that of its close rival, Adidas.
Large product scope
The company saves on cost tied to offering a variety of products by a single firm rather than from a multiple. The firm is deep-rooted to inclusiveness for all cultures as well as individuals. Therefore, their wide range of products caters to all people: Men, Women, and kids.
Some of their shoes carry the names of praised professional athletes. For instance, Nike Air Jordan named after Michel Jordan. The company has also used other celebrities to sell their brands such as Serena Williams and Lionel Messi.These ambassadorships create a positive brand image for the company and allow it to enjoy market leadership.
Nike Company has a reputation of guarding the environment. They are known to a production process that controls and eliminates wastes and harmful emissions
Nike, Inc has mastered the art of seducing new customers and maintaining customers. The company has an innovation strategy that separates their products. They have a high image amongst teenagers that allows them to charge a premium price that their peers cannot load.
The Nike franchise has excelled in markets globally and is ranked as the 1St footwear company worldwide. The company has grown by growing its sales revenue in the new demands of the Middle East and Africa.
4. Suggestions on how Nike, Inc. could improve their business strategy and strategic position?
There are a couple of things that Nike could do to improve its business positioning. Nikes tagline is Just do it which is an inspiration for its clients to be confident. However, it could improve on its positioning statement to sell the essence of the organization to its customers. The companys mission has grown to accommodate both the athletes and other people especially in the pop culture, and it should employ a tagline that communicates the desire of Nike effectively (In Miskelly, 2013).
The company should additionally engage in social programs more vigorously in the third world countries in sports and education. There have been times that critics have claimed that Nike is unwilling to promote talent and engage in social responsibility activities in their new markets. They should do this to defend their honor. It will promote their sales and enable them to become thoroughly established in the unique demands of Africa.
Additionally, more often than not the company has used athletes who have portrayed the company negatively. The celebrities are usually under microscope scrutiny, and a bad reputation for an athlete already dents the companys reputation. Nike should improve the screening process of the brand representatives to ensure that they select persons of pure character and talent.
Reebok has dominated in the market of producing the aerobic shoes. Nike has created aerobics shoe; however, they are quite heavy. Therefore, the company should strive to provide a superior shoe that will help beat Rebook which is now fully established.
Retrieved from https://www.statista.com/register/
In Miskelly, M. (2013). Encyclopedia of major marketing strategies: Volume 3.
Kloster, Mette, Schimmelpfennig, & Jorn. (2010). Anything is possible: Just do it -a comparison of the evolutionary process of Chinese and Western newcomers.
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