NEW YORK (May 5, 2010) – Today NIKE, Inc. (NYSE: NKE) unveiled its strategy and key initiatives to achieve sustainable, long-term growth across its global portfolio of brands and businesses. In this generic strategy, the company minimizes production costs to maximize profitability or reduce selling prices. Organizational Culture Characteristics: An Analysis, Nike Inc. SWOT Analysis & Recommendations, Nike Inc. Operations Management: 10 Decisions, Productivity, Nike Inc.’s Marketing Mix (4Ps/Product, Place, Promotion, Price) - An Analysis, Nike Inc. PESTEL/PESTLE Analysis & Recommendations, Nike’s Promotional Mix (Marketing Communications Mix), Puma’s Generic Strategy, Intensive Growth Strategies & Competitive Advantage, Puma’s Organizational Culture & Its Characteristics (An Analysis), Puma’s Mission Statement and Vision Statement (An Analysis), Burger King’s Generic & Intensive Growth Strategies, PepsiCo’s Generic and Intensive Growth Strategies, Toyota’s Generic Strategy & Intensive Growth Strategies, Puma’s Organizational Structure & Its Characteristics (An Analysis), Ford Motor Company: Generic & Intensive Growth Strategies, Harley-Davidson’s Generic & Intensive Growth Strategies, About Nike – The official corporate website for Nike, Inc. and its affiliate brands, Generic Strategy (Porter's Model) & Intensive Growth Strategies. But there is a negative side to it these days. Being the experienced brand with strong foothold, the company uses differentiation as a tool to reduce the pressure by other brands. The generic strategy trap. To follow successfully the differentiation strategy Nike decided to focus on investing in their R&D department: they focus on individual benefits such as newest technology of producing clothes that let the skin breathe, footwear specific structure allowing to avoid or reduce injury and get the maximum comfort, new electronic devices helping people to stay healthy and active. We offer high quality goods at an acceptable price. To keep its position and competitive advantage, Nike must ensure that its generic strategy and intensive growth strategies are always suited to current business conditions. This strategy facilitates the company’s growth by targeting new markets or market segments. Here are the Top Nike Competitors. For example, Nike enters new markets in Africa and the Middle East to increase its shoe sales revenues. The product differentiation attributes that Nike pays great attention to are the uncanny product features and the timing of introducing their products to market. For that reason, Nike applies aggressive marketing strategies in parallel with the marketing mix the company develops in order to make further known its target 6 SEGMENTATION, TARGETING AND POSITIONING STRATEGY OF NIKE & BYING DECISION ANALYSIS consumers company’s products, enchasing its uniqueness and exclusivity (About Nike, 2018). Strategies of Nike. However, market penetration is just a secondary intensive growth strategy because the company already has significant presence in the global market. It’s you versus the world. Nike mainly concentrates on the sportswear for the sports person and also concentrates on the style of the product how it looks! Nike’s product line is not wide: they offer athletic shoes, workout clothes and a very limited number of additional products. Take a look at these 3 aspects of Nike’s branding strategy that put them at the top of their industry and apply their strategy to your own brand. Based on that strategy, Nike produces its products for athletics in three ways. Nike incorporates a business level strategy that most resembles a differentiation strategy. Standing behind a feeble facade, you sell what you made yourself—squeezed lemon juice with a little sugar. A financial objective based on the differentiation generic strategy is to maximize Nike’s profit margins, such as on new sports shoes. Porter’s (1980) generic strategies as determinants of strategic group membership and organizational performance. Nike quality and durability is a critical part of their strategy to be able to command high prices for their products. Factors such as quality, performance, reliability, competitive pricing, connect with the consumer plays the critical role for the companies operating in this business. NIKE’sstrategy is consistent with its business level strategy of product differentiation and expansion.In this scenario NIKE will embrace the key success factor of it distinctive marketing capabilities,innovation and distribution capability.Thus expansion in the emerging new markets and new segments of consumers will providegrowth opportunities for NIKE.The scenarios explained above are … $35.80 for a 2-page paper . As a result, its products have … This intensive strategy involves the introduction of new products to grow sales revenues. Implementation of brand differentiation strategy is allowed by Nike’s brand name which is a tangible but important factor to ensure future success and maintain its current leadership and market share. Business segments in which Nike operates has a large number of local & national players. A suitable strategic financial objective based on this intensive growth strategy is to increase Nike’s market share through cutting-edge technologies integrated in the design of sports shoes, apparel and equipment. Nike, Inc. uses Michael Porters strategies for competitive advantage such as cost leadership, focus, and differentiation (Johnson & Scholes, 2008). SWOT analysis – Here is the SWOT analysis of Nike. Results of Nike's new Customer Experience distribution strategy in place for over a year in a study by Euromonitor. In the late 1990s, Nike reduced costs and the selling prices of its athletic shoes and other products. Therefore, the product development strategy of Nike supports its generic competitive strategy of differentiation. Required fields are marked *, Copyright © 2020 Marketing91 All Rights Reserved, Marketing Strategy of Nike – Nike Marketing Strategy. Nike has achieved compounded annual growth rate (CAGR) of 11% for the period of 5 years i.e. Let's stay in touch :), Your email address will not be published. For example, the company integrates cutting-edge designs for its shoes. Nike Inc.’s Mission Statement & Vision Statement (An Analysis), Nike Inc. I am a serial entrepreneur & I created Marketing91 because i wanted my readers to stay ahead in this hectic business world. So I see this less as a bold move and more a strategic necessity. Before this, the sentence “It was a 90-minute infomercial and it was awesome” could never have been written. Nike’s differentiation generic strategy provides unique products. Nike’s primary intensive growth strategy is product development. Nike Advertising Strategy How Nike does it Like the majority of large corporations, Nike has learned the benefits of an expansive social media presence. It also gives endless chances for customer segmentation and product differentiation, the pillars of any marketing strategy. Mission- “To bring inspiration and innovation to every athlete in the world”. Nike’s excellence marketing strategies are their energy to achieve their market goals. Therefore Nike tries to portray a brand image of quality and performance. Strong product portfolio:  Nike have strong product portfolio as being present in various interrelated business segments is helping the company in retaining its customers and provide a bundled products to them. Outsourcing of the manufacturing helps the company in keeping its operational cost low and at the same time focus its competencies on sales and marketing activities to drive the sales. Nike’s differentiation generic strategy provides unique products. We realize that the team-mentality that captured the spirit of athletics in the late 1980's and early 1990's has been replaced by a sense of individualism. Nike targets customers from different age groups and middle / upper-middle or upper-income social groups. Focused differentiation: Nike also pursues focused differentiation strategy where it focuses on serving the sports segment by providing the best sports products than other players in the segment. Being present in footwear, sports equipment, clothing and many others Nike uses differentiated targeting strategy.Produc… We realize that the team-mentality that captured the spirit of athletics in the late 1980's and early 1990's has been replaced by a sense of individualism. An intensive strategy shows how a company grows. Firstly, it manufactures for three different segments of people: men, women and children. For GDPR compliance, we do not use personally identifiable information to serve ads in the EU and the EEA. Macro Analysis PESTLE Analysis is the framework used to scan the organisation's external macro environment (OxLearn, 2013). The following are the generic competitive strategies implemented in Nike’s combination strategy: Nike’s cost leadership generic strategy sustains competitive advantage based on costs. Founded in 1964, Nike Inc. has grown to become one of the biggest players in the global athletic shoes, apparel and equipment market. The differentiation strategy of Nike is quite competitive so Nike should ensure any international marketing strategy it applies should enhance its superior brand name. A value proposition is something a company provide its target customers that help in giving them a better result of choosing the company. It is a brand made for the youth and its logo and slogan reflect the same young energy. It invests in research and development, to learn about customers’ taste and fashion trends. Market Development. Also, Nike is in the industry which is by and large affected by the product life cycle which means that sometimes it’s very difficult for the company to respond to the fad timely. Starting from its Swoosh logo to the famous ‘Just Do it Slogan’, these are important factors differentiating it from its competitors. Aside from foot wear, the company boasts of products such as clothing, equipment, and even accessories. Differentiation strategy … Lego It may seem now like a foregone conclusion that The Lego Movie would be a huge hit, but anyone who’s seen a great book, comic or toy turns into a terrible movie knows better. Nike’s marketing strategy has remained a subject of study. Diversification. In the late 1990s, Nike reduced costs and the selling prices of its athletic shoes and other products. The main objective of this intensive growth plan is to expand the market share of Shoe Company by integrating the latest technologies in the design and quality of its sports shoes (Gregory, 2017). Thus, this intensive strategy supports Nike’s differentiation generic competitive strategy via product innovation. This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Haven’t found the relevant content? Copyright by Panmore Institute - All rights reserved. It invests in research and development, to learn about customers’ taste and fashion trends. A differentiation strategy doesn't necessarily guarantee that consumers will find the value that separates your product from other, standard options. The strategy is achieved by producing consumer goods and services that customers perceive to be of high quality or have added unique features. Through product innovation, technology development, and high quality products, they are able to differentiate themselves from competitors and build their brand image. Configurations of governance structure, generic strategy, and firm size. Nike’s strategy is focused upon the young generation. 2.1.2.1 How Nike uses differentiation strategy? We are perceived as “fancy” to most manufacturers in the industry. Nike’s marketing strategy has remained a subject of study. Nike has subsidiaries such as Converse, Hurley and Jordan for driving growth with the help of the different brands. Disclosure: I own shares of NKE For years, US sports gear maker Nike, Inc. (NYSE:NKE) has delivered superior sales and earnings performance, handsomely rewarding … Its strategy is based on innovation, as NIKE tries continuously to balance its products between sport and fashion. “ Also, Nike’s differentiation generic strategy provides unique products. Let’s look at their audience. Through differentiation generic strategy, Nike positions its product offerings in a way to stand out and be different from the available alternatives. Basically their position and differentiation is quite simple: Nike offers high quality sporting goods which their audience is willing to pay a higher premium for. Constant Innovation. Leadership and Differentiation Strategies Laura Allard November 21, 2010 William Hogan Management Cases Upper Iowa University Abstract This paper discusses Low-Cost Leadership and Differentiation business strategies.The paper explains what each strategy is and how they can be applied, utilized and maximized as strategies for a company. Nike uses product differentiation, product design, marketing, production efficiency, high quality and supreme air sole technology as the main key competency. … The major threat to Nike is the imitation that goes hand in hand in various markets which are affecting its revenues and businesses. Also to introduce new models to into the market. For example, the company integrates cutting-edge designs for its shoes. Nike have strong product portfolio as being present in various interrelated business segments is helping the company in retaining its customers and provide a bundled, Nike distributes its products worldwide through different, Nike is the well-known brand globally and its association with the various sports, athletic footwear and sports equipment industry are highly competitive due to the presence of a large number of local and, Business segments in which Nike operates has a large number of local & national players. This has been achieved through advertising, brand name recognition, product innovation, and striving to be at the competitive edge despite having a stiff competition. However, over the period of time, it extended its product line to apparels and accessories like clothing, socks, digital devices, eyewear, and equipment for sports. Merchant, H. (2014). In this strategy, the company grows by increasing sales revenues in existing markets. Establish Your Mission. A strategic financial objective under this intensive growth strategy is to increase Nike’s profitability by entering new markets in Africa and the Middle East. The corresponding intensive strategies grow Nike’s global sports shoes, apparel and equipment business. The basic strategy of Nike is to provide the customers with good quality products. Marketing mix – Here is the Marketing mix of Nike. People are looking for stylish and durable products. Intensive growth strategies: A closer examination. It is these qualities that attract consumers to them. (1997). PESTLE standing for Political, Economic, Social, Technological, Legal and Environmental. Nike distributes its products worldwide through different channels such as resellers, supermarkets, e-commerce sites, retailers, licensees and company-owned outlets. The main point in NIKE’s strategy is innovation, as innovation has been at the heart of NIKE’s philosophy since its founding. Organizational Structure Characteristics (Analysis), Nike Inc. Five Forces Analysis (Porter’s Model), Nike Inc. In product development, these products remain attractive despite changing consumer preferences. Nike spends more than most companies in the industry on R&D in order to differentiate its athletic shoes from its competitors in terms of performance. Nike spends more than most companies in the industry on R&D in order to differentiate its athletic shoes from its competitors in terms of performance. This type of strategy includes two or more of the generic strategies from Porter’s model. This can be a summation of their competitive advantage: their brand name and the high quality product. Many consumers have realized the uniqueness of their products and recognize th… The lemonade stand owner represents the epitome of the scrappy entrepreneur. You can follow me on Facebook. Nike cements its business-level strategy with corporate strategy (diversification) to serve its customers better and increase its market share, thus higher revenue. Dess, G. G., & Davis, P. S. (1984). A. The apparel, athletic footwear and sports equipment industry are highly competitive due to the presence of a large number of local and international players. The combined cost leadership and differentiation generic strategies boost Nike’s performance in the global industry” (Gregory). Targeting is the important aspect of the marketing strategy, especially when a company is in different businesses. On the other hand, Nike’s intensive growth strategy reflects the company’s focus on innovation to develop the business. At the same time, Nike pays a noticeable concern towards a broad differentiation strategy. Nike incorporates a business level strategy that most resembles a differentiation strategy. Before this, the sentence “It was a 90-minute infomercial and it … Nike Inc. practice the form follows value. The major threat to Nike is the imitation that goes hand in hand in various, Marketing Strategy of Zara – Zara Marketing Strategy, Marketing strategy of Apple iPhone – Apple iPhone Marketing strategy, Marketing Strategy of Lenovo – Lenovo Marketing Strategy, Marketing Strategy of Burger King – Burger King Marketing Strategy, Marketing Strategy of ICICI Bank – ICICI Bank Marketing Strategy, Marketing Strategy of McDonald’s – McDonald’s Marketing Strategy, Marketing Strategy of Cafe Coffee Day – Cafe Coffee Day Marketing Strategy, Marketing Strategy of HUL – HUL Marketing Strategy, Marketing Strategy of Volkswagen – Volkswagen Marketing Strategy, Marketing Strategy of Puma – Puma Marketing Strategy, Marketing Strategy of SHELL - SHELL Marketing Strategy. Nike had regained control of the market in both the footwear and ... Current Strategies i. For example, the company integrates cutting-edge designs for its shoes. In order for Nike to sustain its global competitive position as the world’s leading designer, marketer and distributor of athletic footwear, apparel and accessories, it adopted a differentiation competitive strategy (Ghauri and Cateora, 2014). In contrast, Nike, Inc. uses the Leader R&D strategy as detailed below. Being present in footwear, sports equipment, clothing and many others Nike uses differentiated targeting strategy. Nike’s Intensive Strategies (Intensive Growth Strategies) Overall cost leadership is not something that Nike looks to utilize. Additionally, differentiation strategies are most powerful when buyer needs and preferences are too diverse to be satisfied by one product. For creating such value it uses the following resources – Nike Inc. uses a combination strategy for its competitive advantage. Also, Nike’s differentiation generic strategy provides unique products. See our Privacy Policy page to find out more about cookies or to switch them off. It uses separate campaign or strategy to cap the market potential of the different segments. However, the saturation of Nike stores and retailers around the world means that this intensive strategy has only a supporting role in the company’s growth. Related: How to Differentiate Amongst Brand, Logo, and Identity. Nike, Inc. has achieved its superior performance, mostly through competitive positioning and value creation. When a firm uses an intensive growth plan to penetrate the … Types and benefits, Value Added Tax – Definition, Meaning, Examples, Advantages and Disadvantages of VAT. As a result, its products have become the favorite of the serious athlete. A strategic financial objective based on this intensive growth strategy is to improve Nike’s financial risk by entering other industries. Additionally, differentiation strategies are most powerful when buyer needs and preferences are too diverse to be satisfied by one product. Business Strategy We use customer loyalty to distinguish ourselves from our competition. Varadarajan, P., & Dillon, W. R. (1982). Competitive Advantage Through Information-Intensive Strategies. Nike's product differentiation strategy is different from its competitors. “ Also, Nike’s differentiation generic strategy provides unique products. Product and usage-based positioning are used by Nike to create the image in mind of the consumers. Nike now perceives sustainability as a path to leadership, competitive differentiation and most importantly, to evidence a positive framework and actions on social and environmental issues. Differentiation strategy Nike relies more on the differentiation strategy and presumably it is the strategy where they excel. Nike implemented this intensive strategy in its early years, such as when it introduced apparel and sports equipment to its product mix. By referring to legendary track-and field coach Bill Bowerman’s quotation, NIKE states that the vision of their company is “To bring inspiration and innovation to every athlete in the world.” Keywords: Nike, strategy, product differentiation, innovative and outsourcing. Nike competes with the company like Lululemon, Puma, Adidas, V.F Corp., athletic UNIQLO and many others. Customers of Nike ranges from individual customers to companies. Glazer, R. (1999). Nike Inc.’s generic strategy for competitive advantage emphasizes product mix diversity. The generic competitive strategy of differentiation helps the company enter new markets, based on product attractiveness. A generic strategy, according to Michael Porter, defines how a business achieves and maintains its competitiveness. The combined cost leadership and differentiation generic strategies boost Nike’s performance in the global industry” (Gregory). In contrast, Nike, Inc. uses the Leader R&D strategy as detailed below. Market Penetration. Nike uses psychographic segmentation variables to make its offerings more attractive to the target customers. Nike Inc.’s generic strategy (based on Michael Porter’s model) is appropriate for its diverse product lines, ensuring competitive advantage. ... We use strong diversification in what we sale to the differentiation of our consumers. New evidence in the generic strategy and business performance debate: A research note. The athletic wear brand announced yesterday a plan to focus its organizational resources going forward on 40 key retail partners and its own consumer direct efforts while pulling back from “undifferentiated” channels of distribution. The Nike brand and its offering are Stars in the BCG matrix while Converse, Hurley and Jordan are the question mark in the BCG matrix due to their presence in the limited countries. One of Nike’s supporting intensive growth strategies is market development. This strategy involves developing new businesses to achieve growth. For example, Nike’s mission statement highlights innovation applied through new designs for shoes and related products. Our consumer knows what they want and are willing to pay whatever they need to get it. In the Nike world it’s all about brand and brand doesn’t benefit from a lack of differentiation or association with weak partners. Definition: Differentiation strategy, as the name suggests, is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market.It entails development of a product or service, that is unique for the customers, in terms of product design, features, brand image, quality, or customer service. Nike Marketing Strategy #2: The ‘Hit the Road Jack’ Hack that Helped Phil Knight Generate Over $1B in 15 Years. 2.The marketing strategy of Nike. This generic competitive strategy helped the company regain its competitiveness, especially against Adidas. NIKE emphasizes on the key strategy elements of branding advertising, design of products, exclusive customer service, high quality products and new product development (Grant, 2010). Nike believes the “pyramid influence” that the preferences of a small percentage of top athletes influence the product and brand choice. Strategy and Competitors. The Nike strategy is the writing on the wall for retailers large and small that have not figured out how to be collaborative and productive partners for the brands they carry. It is why innovation is a core focus for Nike and its rivals like Adidas and Under Armour. Differentiation strategy … Lego It may seem now like a foregone conclusion that The Lego Movie would be a huge hit, but anyone who’s seen a great book, comic or toy turns into a terrible movie knows better. NIKE’s mission statement is very straightforward. The brand in the formof an intangible resource is very important for current and future success of NIKE, asit allows NIKE to implement a product differentiation strategy to maintain its currentmarket share. The strategy of Nike is to controlling the marginal customer accounts, reduction of input costs and tight control of labour costs, lower distribution costs. Alongside product development, the company applies the market development intensive growth strategy by investing in new technologies to penetrate new market segments, such as segments composed of bodybuilders. Nike's product differentiation strategy is different from its competitors. For example, if your product is more expensive than the competitor selling the standard product, and the consumer doesn't see the added value in your product, they'll likely choose the cheaper option. The competitive strategy that Nike introduced at the end of the 1990's concentrates on honing the focus of our marketing strategies and product offerings through product differentiation. Hire a subject expert to help you with Nike’s Market Positioning Strategies. This new strategy is the rationale behind Nike’s acquisition of smaller company brands in order to cater to the lower price sensitive segments of the market. Nike’s strong focus on innovation is tied to its business strategy. Versatility as the strength of Nike goes beyond its basic function of impact protection such that Nike can shape and tuned to cater the demands of athletes in a detailed manner. 2011-15 and revenue of $ 30,601 million. The company uses its social media accounts to connect directly with their customers and they … Nike had regained control of the market in both the footwear and ... Current Strategies i. Market Penetration. Nike, with its differentiation strategy, the company is continuing to separate its self from the competitors by using its superior technology and innovation. The others use “Product Differentiation” as a strategy to obtain a premium price by making unique products. Founded in 1967 Nike has emerged as the most preferred footwear company for the athletes. Nike plans to put its eggs in fewer baskets going forward. Simply put, product differentiation is a business strategy in which a firms attempt to gain a competitive advantage by increasing the willingness of customers to pay for the products or services they have to offer. Differentiation strategy by Nike is used to gain market share advantage in the broad foot ware market. By focusing on their product line, they are able to produce high quality products that meet customer expectations. Through product innovation, technology development, and high quality products, they are able to differentiate themselves from competitors and build their brand image. Nike is the well-known brand globally and its association with the various sports events such as Cricket world cup, FIFA cup, Olympics and many others has helped the company in creating high TOMA (top of mind awareness) and brand pull. Nike uses psychographic segmentation variables to make its offerings more attractive to the target customers. New technologies enhance the products and set them apart from the competition. Yes, that’s what your brand does, but your mission is the foundation of that brand. Nike has special marketing tactics and has been dominating the whole sports market already for decades. Nike has focused on the effective strategies in order to get the advantages in the market, as there is the emphasis on differentiation strategy and the company is continually strives so that there could be innovation, as the company innovate the Nike+iPod sports in the year 2008. Disadvantage of the cost leadership strategy is lower customer loyality, the reputation of the company may also result in the producing low quality of the product and rebrand itself with a good reputation with leadership. New Balance appears to have a better differentiation strategy than Nike because they succeed in a niche market where they are … Miller, D. (1992). The combined cost leadership and differentiation generic strategies boost Nike’s performance in the global industry. Nike’s primary strategy that is the reason for its unique value proposition is its innovativeness. Initially, the Nike brand was on athletic shoes only. Hire verified expert. Their latest boots, of course, are made of the most perfect materials. Nike’s strategy is focused upon the young generation. I love writing about the latest in marketing & advertising. Starting from its Swoosh logo to the famous ‘Just Do it Slogan’, these are important factors differentiating it from its competitors. Segmentation, targeting, positioning in the Marketing strategy of Nike –, Competitive advantage in the Marketing strategy of Nike –, BCG Matrix in the Marketing strategy of Nike –, Distribution strategy in the Marketing strategy of Nike –, Brand equity in the Marketing strategy of Nike –, Competitive analysis in the Marketing strategy of Nike –, Market analysis in the Marketing strategy of Nike –, Customer analysis in the Marketing strategy of Nike –, What is coaching? Nike’s differentiation strategy is to establish the company as the standard in athletic wear. The cost leadership generic competitive strategy empowers Nike to penetrate markets based on product affordability. There are 697 Nike brand factory stores, 106 inline stores and 99 converse stores and 29 Hurley stores globally. Low Cost and Differentiation Strategies. When it introduced apparel and athletic shoes perfect materials a small percentage of top influence! 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