Athletic Shoe and Nike Essay

4452 Words Jan 16th, 2010 18 Pages
NIKE 1 Nike has always remained on the preference list of athletes and athletic footwear was indeed the first category of products launched by the company more than 30 years ago. Today, you can see the craze for its products, not only among athletes, but also among golfers and other sportspeople. Apart from that, Nike shoes and other accessories have also become the favorite fashion products for teenagers. Thus, fashion, elegance and achievements are some of the associated attributes of Nike products.

Early Days of Nike

Phil Knight, the starter of Nike revolution, began merchandising his athletic shoes designs, stores in a trunk inside a car. It is difficult to digest the fact that what is considered as an iconic brand today,
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Also, new technology has facilitated new quick-response programs that link retailers with manufacturers to allow the retailer to have the correct inventory when it is needed called electronic data interchange (EDI). Immediately after a sale is made, electronic point of sale scanners read the information related to the sale such as price, product, size,...

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The Threat of Competition to Nike

The athletic shoe industry is slowly becoming a global oligopoly. There are many barriers to entry preventing new entrants from capturing significant market share. Nike can enjoy economies of scale that create cost advantages over any new rival. Today’s athletic shoes are highly technical. An extremely large capital investment is required for new firms to open athletic shoe factories and conduct research and design to create a popular athletic shoe.

Nike has incorporated forward vertical integration into their corporate level strategy. Nike opened discount factory outlet stores in rural areas and retail stores in urban shopping Mecca’s. Monolithic athletic manufacturing companies utilise economies of scale by spending millions on product endorsements and advertisements by spreading the high cost over their entire yearly sales. The aggressive marketing campaigns turn their products into household names making it arduous for new firms to compete.

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