Nike- an Ecnomic Report - 3357 Words

CHAPTER 1: COMPANY BACKGROUND Nike is the world s leading designer, marketer and distributor of athletic footwear, apparel, equipment and accessories for a range of sports and fitness activities. Nike is headquartered in Beaverton, Oregon and owns facilities in Tennessee, North Carolina and The Netherlands. The company operates in the Americas, Europe, the Middle East, Africa and Asia Pacific. Nike’s primary product focus is athletic footwear designed for specific-sport and/or leisure use. Nike is the world s largest supplier of athletic footwear, with an estimated share of 50% of the $20 billion market. Sports apparel and equipment are also sold under the Nike banner. Nike is classified under the Footwear manufacturing and marketing†¦show more content†¦Barriers to Entry: The athletic footwear industry is a very competitive and mature market. The leaders of this industry are very well established. Leaders like Nike, Reebok, and Adidas have made the industry what it is today. In order to have an edge over the leaders, companies must be able to compete at all levels such as reasonable pricing, efficient production, and high product quality. These things are difficult to achieve without the resources of an established manufacturer. Another key barrier to entry is the access of traditional distribution channels. Lesser-known brands are viewed by retailers as b eing too risky to replace an established brand name like Nike or Reebok on the shelf. Thus, high startup costs, lack of distribution channels, brand equity and cutthroat environment hinder the entry of new competitors. Non Price Competition: In a monopolistically competitive market like that of footwear industry, there is just a slight difference between the products manufactured by various companies such as Nike, Reebok, Adidas, Puma etc., and hence the companies rely heavily on non price competition. They mainly use advertising to flaunt their products and try to get consumers to buy their product over another. The goal of product differentiation and advertising (non price competition) is to make price less of a factor in consumer purchases and make product differences a greater factor. There is a lot of non price competition