By Emma Jansen
The athletic industry is a very competitive and
mature market. The leaders of this industry are very well established; leaders
like Nike have made the industry what it is today, but long-time competitors
like K-Swiss have struggled to keep their brands alive. This cutthroat
environment has hindered the entry of new competitors and has benefited those
that remain.
Founded in 1971, Nike Inc. has sure come a long
way dominating the athletic market consisting of over 15 major brands. Its
brand reputation is the reason for its success and progress. Not only is it growing at a
strong pace in the U.S., but its popularity has spread to multiple foreign
countries as well, thus increasing its reputation even more.
It has sponsored many
high-profile athletes, sports teams, and events all over the world such as the
Olympics, and has become one of the most recognized global symbols. Because it
has this access to international opportunities, it gives room for greater revenue
expansion, thus increasing its total revenue.
To get a better sense of just how far Nike has
come over the years, below is a chart that emphasizes its total revenue over
the past decade and you can see its steady increase reaching close to 25,000 [million or 25 billion] this year.
According to Forbes Magazine, Nike’s apparel sales grew 12.3% during 2010 to
2012, which was higher than the growth rate seen for Adidas, Puma or even
Asics. It is expected that Nike’s market share in the global sports apparel
market will grow from 4.9% in 2012 to 6.5% in 2019. This further supports how nothing
and no one can hold Nike back from success.
The
question is how has Nike really been so successful? According to an analysis of
the Nike Inc., economies of scale contributes to this because in order to be
above the top competitors, companies must be able to compete at all levels such
as reasonable pricing, efficient production, and high product quality. Though
Nike’s prices are not cheap and their sale items compare to other brands’
regular price items, it is the quality of the products, the style of the
products, and the name on the products that reel the customers in. Because the
demand for its products is so high, Nike has reason to up their prices and
supply. Besides, if people are willing to pay a higher price for their
products, then there isn’t any need to lower them because the more money they
can bring in the better it is for the future success of their corporation; they
then have the ability to put more money into developing new and innovative
products that will capture the audiences’ attention time and time again.
Advertising
has increased demand for Nike products as well. By incorporating popular
athletes and role models, they are able to grab a lot of attention. That’s the
thing, Nike does not discriminate, but they rather expose their availability of
products and services to all citizens, thus not putting a limit on their consumers.
Nike
continues to satisfy clients and customers wants and needs as well as go above
and beyond other brands so that they can be at the top of the market. Nike has exceeded the break-even point and has succeeded in
reaching their profit maximum. Despite a slight decline from prior years, Nike
continues to have the greatest market share in the U.S. branded athletic market.
While Nike’s market share is still in the lead, it is expected to increase with
new products.
YouTube Links
Works Cited
"How
Nike Will Dominate Emerging Markets." How Nike Will Dominate Emerging
Markets. N.p., n.d. Web. 27 Oct. 2013. <http://www.fool.com/investing/general/2013/09/16/why-nike-is-an-emerging-market-champion-in-the-mak.aspx>.
"Social
Media Sport Brands: Nike versus Adidas." quintly. N.p., n.d. Web. 27 Oct.
2013. <http://www.quintly.com/blog/2013/08/social-media-sport-brands-nike-adidas/>.
Speculations,
Great. "Why Nike Will Outpace The Sports Apparel Market's Growth."
Forbes. Forbes Magazine, 13 May 2013. Web. 27 Oct. 2013. <http://www.forbes.com/sites/greatspeculations/2013/05/13/why-nikes-growth-will-outpace-the-sports-apparel-markets/>.
"Strategic Analysis of Nike, Inc."
Strategic Analysis of Nike, Inc. N.p., n.d. Web. 27 Oct. 2013. <http://condor.depaul.edu/aalmaney/StrategicAnalysisofNike.htm>.
You're right, Nike is the most popular athletic brand in the world. The reason that it has became so popular is the people who wear and support the brand. People like Tiger Woods, LeBron James, and Michael Jordan are why the brand is so popular still to this day. Not only kids and also adults look up to the athletes who advertise Nike making it that much more popular.
ReplyDeleteYou're right, Nike is the most popular athletic brand in the world. The reason that it has became so popular is the people who wear and support the brand. People like Tiger Woods, LeBron James, and Michael Jordan are why the brand is so popular still to this day. Not only kids and also adults look up to the athletes who advertise Nike making it that much more popular.
ReplyDeleteI almost think it's unfair that Nike has taken over the shoe market. Don't get me wrong, I love Nike as much as anyone else does, but I feel like they over advertise their products just so their company can skyrocket even more. I think that all shoe companies should equally advertise their products to make the competition more just and fair.
ReplyDeleteNike has been able to afford such advertising and celebrity endorsements by employing children to work for pennies a day in third world countries. they aren't necessarily better shoes they just have such a large brand name that people associate their name with success. every athlete wants to be his/her best so through advertising they are tricked into believing that nike means they will do better.
ReplyDeleteI agree with Olivia in that they are doing so well because they have famous athletes that children look up to wearing and advertising their products. Children grow up seeing these athletes wearing Nike's so as they grow up they are going to keep buying Nike's. Just because they are such a well known brand that doesn't necessarily mean that they have better shoes or products than another brand.
ReplyDeleteI like that you talked about this topic, it's a good, relatable thing! I agree with everyone else here. Nike has gained it's popularity and probably won't lose it for awhile. Their use of professional sports role models as their spokespeople has brought a huge crowd to their products. I think you related this to econ really well in many ways! Good job(:
ReplyDeleteIt's truly amazing how one company can dominate a market. While other brands, like Adidas, Puma, etc, help support the athletic wear business, it isn't surprising that there is a high demand for the one that all the famous athletes are wearing. What young basketball player wouldn't want the shoes that LeBron James wears? Does that not subconsciously provide a feeling that you too, are a professional athlete? The key here is marketing, and once a company establishes a major group of consumers they can do whatever to their prices and the demand will still be high.
ReplyDeleteAs almost all the comments claim, Nike is only the shoe company leader because the athletes that represent Nike. Take away LeBron James, Kevin Durant, Kobe Bryant, Carmelo Anthony, and Tiger Woods Nike isn't really all that special compared to other shoe companies like Adidas, Under Armour, and Reebok. Good job with all the economic statistics involved in the essay.
ReplyDeleteBy drawing people in from a young age by sponsoring the high profile athletes and utilizing them in their ads from a young age Nike is able to start people at a young age as lifelong consumers. This is only possible because they make a quality product. However, wearing Nike products become a statement as people would much rather be seen with the swoosh embroidered on their sweatshirt than some off-brand.
ReplyDeleteFor a monopolistic competitive market, such as the shoe market it is interesting to observe how well one company is able to create a monopoly. While Nike does not have a pure monopoly their revenue is virtually unmatchable by any competitors, and certainly even some competitors combined. I think that it really exemplifies the gross state of American consumerism and our need for the newest, most popular, brand name item such as Nike shoes. While what they are doing is definitely considered a great command of the economy, when viewed from a purely economic standpoint, the control they have over us is somewhat terrifying. We as American people allow ourselves to be, well, consumed by American consumerism falling prey to their advertisements and non-price competition techniques.
ReplyDeleteI agree with Ben completely. People mainly buy the name brand products and because all of these famous athletes wear them other want to as well. I also agree with the statement where people would want to wear a sweatshirt with the Nike swoosh instead of some off brand logo.
ReplyDeleteThis post clearly shows that first reputation in business is basically everything. If a different company, other than Nike, were to provide the same type of clothing with the same quality, but with a different logo/brand, consumers would prefer Nike. Just like Apple, its reputation has won the crowd, because of its quality. That’s why new businesses must be critical when bringing out new ideas, unless all the money and effort put in will go nowhere and no growth will be made.
ReplyDeleteNike is on top mainly because of all their advertising market. Kids see there commercials or sponsored athletes and immediately want it. Nowadays if you don't have some type of Nike apparel you have fallen out of the cool trend, which everyone wants to be in. This is why more and more people will continue to buy Nike.
ReplyDeleteI agree that Nike is on top because of their advertising market. From my own experience, I have bought Nike apparel because I have seen it advertised somewhere. Also, since athletes are wearing Nike, more people will want to buy it. I agree with Dakota when he says that this is a "trend". Most people want things when other people have them.
ReplyDeleteNike is a well known shoe brand whether it be because of their propaganda such as commercials that are forever implanted in our brain or simply because costumers trust the company and keep coming back. Even though Nike's shoes are rising in price costumers keep coming back because of the trust in the shoes that they've formed. Yeah they are perfectly capable of buying another shoe brand that might be just as good but Nike does a great job at bringing costumers back.
ReplyDelete