V 20,000 retail accounts throughout the U. S.

using
independent distributors and also has contracts
with 110 other countries
V Also has agreements with Internet companies
and subsidiaries
V Operates within the sports footwear and apparel
market.
V Originally designing and producing running
shoes, their portfolio has broadened to include a
wide range of sports and leisure wear. This is all
endorsed by top sporting personalities
V They design, develop, and
market high quality active
sports apparel, equipment,
and accessory products
V Nike distributes one new
shoe style every single day
V Nike·s critical factors for
success are maintaining
current standards, closer
working relationships, and
retaining customer loyalty
by guaranteed standard of
product
V Their products are
made for men, women,
and children of all
ages.
V The company
presently sells roughly
300 models of athletic
shoes in 900 styles for
25 different sports.
V Nike's target market
for their shoes is males
and females between
18 and 35 years old.
m They not only see competition from Adidas
and Reebok, but also with Old Navy and
Abercrombie and Fitch
m Continuous marketing research is the key in
assessing the market
V Nike has success as a result of collaborating with
other companies within the sports and fitness
industry
V But at other times, Nike expanded into markets
for which it is not strategically suited
V Nike has realized to initiate more aggressive
programs to review product partnerships that
are outside of its core basis of products
m Consist of 2 companies:
Adidas
Reebok
V Adidas Purpose:
½ The production and distribution of apparel, footwear and
equipment for sports and leisure as well as of products of adjoining
fields, furthermore the commercialization of the registered
trademark Adidas.

V Adidas Mission:
½ To be the leading sports brand in the world.

V The Adidas brand attitude ´Impossible is nothingµ drives all

of their brand communication initiatives and it helps them
strengthen the Adidas brand·s bond with the consumer.
V Reebok·s Mission:
½ Always challenge and lead through creativity.
V At the core of the Reebok brand is the affirmation of the uniqueness
of all people.
V Reebok Strategic Focus:
½ to become a consumer-driven brand that reflects the emphasis on
individuality.

V Athletes Endorsed by Reebok:

½ Sidney Crosby
½ Alexander Ovechkin
½ Allen Iverson
½ Yao Ming
½ Thierry Henry

V Reebok Partnerships:
½ NFL
½ NHL
½ MLB
m Nike and Reebok set the standard
m Nike gained popularity
m Lurking competitors
Adidas Group
Under Armour
m Internet skyrocketed sales in late 90·s
m Upcoming companies took advantage of new
technologies
m Sales have slumped tremendously in past year
m Nike making 4% cut
m Under Armour stated that analyst·s estimates
are far below earlier predictions
m Highly saturated and challenging industry
m Depend in large part on first mover advantage
and scale economies
m Areas to focus: Technologies, pricing, and costs
of production
m Sports Apparel and Footwear industry relies
mainly on innovations and creativity
m Innovative Ideas=Key success factor
m Company could have an advantage
m Without proper funding and resources a firm
could be at a severe disadvantage
m Threat of new entrants based on first-mover
advantage is minimal
m Difficult to compete with large economies of
scale
m Hard to handle all levels, more experienced
firms are able to disperse
m New entrants suffer a severe cost disadvantage
m Significant amount of assets needed
V Power of buyers can be determined by supply
vs. demand and number of buyers
V Price sensitivity effects demand
V Customers more affected by price
V Suppliers are more powerful when the ratio to
buyers is more
V The vast range of products in the Athletic
Apparel industry leads to a dissimilar amount of
bargaining power for the supplier
m O
 

 
 
The existence of close substitute products
increases the propensity of customers to switch
to alternatives in response to price increases
à



 

  









 



 









 

Ô


   

   
 

 




  










 

 





 




m 3) Competitively priced substitutes impose a
maximum value on prices relevant industry
can charge for its products or services

è





m ë



m 


m This is the major determinant of
the competitiveness of the
industry. Sometimes rivals
compete aggressively and
sometimes rivals compete in non-
price dimensions such as
innovation, marketing, etc.
m ï





  

m There is little differentiation between the products sold between
customers.

m Competitors are approximately the same size of each other

m If the competitors all have similar strategies.

m It is costly to leave the industry hence they fight to just stay in

m High fixed or storage costs, which encourages fast turnover of

inventory.
V As the economy slows, consumer purchases are
down. The biggest threat for Nike would be
economic recession.
V Asian economic crisis also affects Nike since its
goods are manufactured in Asia.
½ The labor costs and material prices are going up.
Nike's growth is not just affected by the local economy
but also in the international economy.
½ A weak Euro and an Asian recession could mean weak
sales for Nike.
m People are more health conscious nowadays.
Consequently, more and more people are
joining fitness clubs. There is an accompanying
growth for demands of fitness products
particularly exercise apparels, shoes and
equipment. Nike naturally is at the forefront of
this surge in demand as people are looking for
sports shoes, apparels and equipment.
m The largest among Nike·s objectives, the
women·s athletic market will be a top priority
in the next ten years. The number of women
collegiate athletes have increased from a few
thousand in the 1960·s to almost one million
today.
m Product technology must evolve as fitness
evolves, in order to give competitors an
advantage
m Nike introduced @
, which
revolutionized the cushioning foam used in
shoes
m Nike also collaborated with Apple and is
launching new apparel and footwear that will
easily carry the consumer·s iPod
m Product innovation is an ongoing process and
is vital to stay ahead of competition
m Companies in this industry invest money in
R&D to keep up with the new demands of
today·s athletes
m Nike employs many specialists including
engineers, athletes, biomechanics, and
industrial designers to work together in the
design process
V The top 3 firms in this industry are Nike,
Adidas, and Puma
V The industry is relatively old, so firms must
fight for market share rather than relying
on market growth
V Firms in athletic footwear and apparel also
compete with firms that provide other
substitutes (such as leisure and casual wear)
V Nike has created their own lines of casual shoes
to compete in these markets as well
½ Example: Converse
V During hard economic times, people consume
less retail goods such as clothes and footwear
V Bureau of the Census estimates that retail and
food service sales for January 2009 are 9.7%
below a year ago
V Consequently, the industry has turned to
emerging markets to continue sales growth
½ China
½ Russia
½ Latin America
V Production is outsourced to plants in Asia, Latin
America, and Africa
½ This reduces costs because labor is cheaper
½ Puts sources of production closer to where they will be
sold
V Firms who outsource lose the ability to closely
monitor product quality and working conditions
V Although some people find this unethical, firms
cannot afford to keep production close to home
and still compete on profit margins
V Plants are also located in many different
countries, rather than being concentrated in one
area
V Diversification of production plants reduces the
risk that a firm will greatly be affected by a
problem in any particular country
½ Example: Nike·s largest footwear factory accounts for
only 6% of the total footwear production
½ Nike claims it can recover from any loss in production
within one year·s time
m Technology is always changing, and if Nike
can create apparel and athletic equipment that
the competitors cannot match, then Nike will
grow even higher than its rivals.

m Technology can be based around anything

from softer and more durable running shoes, to
a baseball bat with a new metal to make the
ball go further.
 In this industry there is intense competition,
fashion trends, and price conscious consumers
that have slowed growth in this industry.

 This creates difficult situations for companies to

produce a brand image that appeals to
consumers that want to shop for cheaper
apparel, but also apparel that has quality.
ï
 

à

!
"#$%&


%$'$(
($"'&"'
)

"!'&
*$"(&'
+

"'$ $

$"'&"'

,

"'$ $
-&"'
.

"'$ $
"/0
1

"'!0
'$
2

"&ï'
$-$
3

"&ï'
'$4!!%
à5'$(!
*!!
àà'$
$(/"'
à"/$*
#$4'#$