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A Case Study of Nike’s Performance in The Footwear and Apparel Industry

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A Case Study of Nike’s Performance in The Footwear and Apparel Industry

Introduction

Nike is undisputedly the largest contender in its industry having a market capitalization of approximately 136.2 billion dollars as at February 2019. Treading closely is its long-time rival company Adidas which, as at April 2019, boasted of a market capitalization of 49.4 billion dollars. Another competitor of note in the footwear and apparel design and manufacture industry is Under Armour which boasts of market capitalization of 8.54 billion dollars as at December 2019. Despite the fact that Nike has maintained dominant control over the market share in the industry, Adidas and Under Armour have over the past five years developed innovative design and marketing strategies that have enabled them to stay relevant and increase a substantial comparative growth in terms of market share as compares to their major rival thus keeping Nike on toes (Puig , Gonzalez-Loureiro, & Ghauri, 2018).

According to Mahdi, Abbas and Mazar’s Article, there are several strategies that have enable maintain a leading position in the industry. For instance, they assert that one of the Key strategies employed by Nike is focusing on research and development of innovative products in order to continuously improve on the quality of its products (Ali Mahdi, Abbas, & Mazar, 2015).  However, what has given Nike a significant edge in the market as compared to its closest competitor is its investment in product endorsements with famous celebrities therefore maintaining customer loyalty. On the flip-side, Adidas and other rivals in the industry are not as aggressive as Nike in sourcing for such endorsements but focus their efforts in designing and customizing their products to meet specific consumer needs. The risk that Nike faces with this type of approach is compromising on the quality of their products and laying more emphasis on marketing may shift customer preferences in the long-run (Raheem, et al., 2016).A Case Study of Nike’s Performance in The Footwear and Apparel Industry

Adidas is notably the closest contender to Nike in the industry. Adidas has a considerable share in certain segments of the market as compared to Nike due to its specialized approach to product development. For instance, the major areas where Adidas maintains dominance is in the manufacture of football and tennis apparel. This form of specialization requires that Adidas develops quality specialized products giving it an edge over its competitors in the same field. The down-side of this approach is relatively slower growth due to lack of a diversified market as compared to rival firm. Another competitor in the same field is Puma which is relatively lower in rank as compared to Nike and Adidas. Puma’s marketing strategy isn’t as aggressive as Nike’s. For instance, Puma’s move to sign Usain Bolt in the year 2010 seemed to adopt Nike’s strategy of endorsements. However, Puma has not ascribed to aggressive sponsorship like Nike and neither has it established a niche in a particular field of production like Adidas (Ali Mahdi, Abbas, & Mazar, 2015).

  •             In this competitive sports footwear and apparel design, manufacture and sale industry, it is incumbent the firms to adopt hybrid branding and marketing strategies in the same way that Nike has managed to do over the years in order to maintain constant growth and command of market share in the industry. Players like Adidas and Puma ought to divulge more resources towards seeking endorsements of popular sports figures in order to increase consumer preference. Subsequently, the Nike’s strategy of aggressive sponsorship, research and development ensures that they do not compromise on the quality of their products while at the same time maintaining customer loyalty (Kevin, Derdenger, & Srinivasan, 2015). This strategy will enable the company maintain a commanding lead in the industry.  A Case Study of Nike’s Performance in The Footwear and Apparel Industry

 

References

Ali Mahdi, H. A., Abbas, M., & Mazar, T. I. (2015). A Comparative Analysis of Strategies and Business Model of Nike Inc. and Adidas Group With Special Refference to Competitive Advantage in the Context of a Dynamic and Competitive Environment. International Journal of Business Management and Economic Research , 166-177.

Kevin, C., Derdenger, T., & Srinivasan, K. (2015). Economic Value of Celebrity Endorsements: Tiger Woods’ Impact on Sales of Nike Golf Balls. Marketing Science, 271-293.

Puig , F., Gonzalez-Loureiro, M., & Ghauri, P. (2018). Running Faster and Jumping Higher? Survival and Growth in International Manufacturing New Ventures. International Small Business Journal: Researching and Enterpreneurship, 829-850.

Raheem, D., Bhutto, A., Brohi, H., Prithiani, J., Khubchandani, R., Kumar, S., & Abbas, Z. (2016). Strategic Marketing Plan of Nike. KISMONDS International University.