Nike has several strengths, weaknesses, opportunities, as well as threats
Swot Analysis
Nike has several strengths, weaknesses, opportunities, as well as threats that influence its market operations and performance:
Strengths
For many years, Nike has built a strong brand and reputation in the U.S. market to produce quality apparel fashion products. Therefore, this enhances positive customer loyalty resulting in increased demand for the company’s products. Strong focus on research and development is also a major Nike’s strength. Application of new technology and innovation in the designing and manufacture of apparel products such as footwear and clothes has helped the company to continue producing better products for its customers, hence improving its competitive edge in the market. The company offers a diverse brand portfolio, ranging from sportswear to lifestyle fashion apparel for both women, men, and children. As a result, this helps the company to capture a broader market base. Again, the use of effective marketing strategies is a core strength for the company. For instance, its Swoosh logo its widely recognized globally. It also combines a wide range of marketing mix strategies such as online commercials, ads, and athlete celebrities, among others, to reach all the desired target markets.
Weaknesses
Nike also faces some weaknesses that may disrupt its performance in the market. For instance, the company is highly dependent on the U.S. market; hence that affects its profitability due to the increased competition. Also, Nike products are priced high due to the company’s strong brand. Therefore, the company faces a great risk of increased competition from the rivals whose prices are lower. Also, the company faces labor relation issues relating to poor salaries and working conditions; hence this may affect its reputation and ability to attract highly talented and qualified employees.
Opportunities
Nike has some great opportunities that may enable it to achieve better success when appropriately explored. For instance, improving the product mix by introducing more products for both athletes and non-athletes may help the company to acquire a larger market share. Also, the rapidly growing market due to population increase and increased demand for lifestyle fashion apparel gives the company a great opportunity to explore and achieve better success. Moreover, Nike’s focus on innovation and technology offers it a better chance to prosper in the market by providing innovative products of high-quality material and design.
Threats
Some of Nike’s key threats include competition and imitation or product counterfeiting. For instance, the company faces stiff competition from rival companies such as Adidas, Reebok, Puma, Fila, and Converse, among others. The increased competition may cause a decline in Nike’s sales and profits in different regions of the U.S. Also, many retailers and merchandisers are selling Nike counterfeit products with Nike logo. Most of the counterfeit products are of low quality; hence they may affect or tarnish Nike’s brand and image.
Nike’s 5-Factor Competitive Analysis
Competitive Rivalry
The level of competition determines how Nike will continue to maintain its market share for apparel fashion products in the U.S. and other regions. Nike experiences direct competition from its key rivals, including Adidas, Reebok, Puma, Fila, and Converse. Therefore, competitors exert a strong force against Nike; thus, it should focus on strengthening its competitive edge to achieve continued success in the long-term.
Buyers or Customers Bargaining Power
Due to the existence of many competitors and substitute products in the market, the customers have low switching costs. Therefore, the customers can easily switch to the products offered by other companies. However, Nike focuses on high-quality design and performance, which has enabled it to build strong customer loyalty. As a result, Nike has a highly competitive edge, thus reducing the bargaining power of its customers to moderate or low.
Suppliers Bargaining Power
Nike’s suppliers have low bargaining power. Nike produces apparel fashion products in large quantities due to its existing broad customer base. However, the suppliers are few; hence this reduces their bargaining power. Therefore, suppliers have less impact on Nike’s competitiveness.
Threat of Substitutes
Substitutes from various Nike competitors pose a significant threat to the company’s competitiveness and performance.
The existence of substitute products gives Nike’s customers considerable alternatives to choose from. As a result, the customers can easily switch to the substitutes due to low switching costs. However, substitutes have a moderate force against Nike’s competitiveness due to the company’s strong brand.
Threat of New Entrants
The high cost of building a strong brand and product development makes it difficult for new entrants to compete with Nike successfully. Nike boasts a strong competitive edge due to its brand; hence the threat of new entrants is minimal. Therefore, new entrants exert weak force against Nikes market competitiveness.
Nike’s 4P’s Analysis
Nike is well-known for its aggressiveness in marketing to acquire a large customer base. It focuses on appropriate marketing mix strategy to reach the target market and achieve its desired results. The marketing mix is based on the 4Ps of marketing:
Product
Nike offers a wide range of products, including sportswear and lifestyle products for both women, men, and children. Some of the products include shoes, tops, t-shirts, hoodies, pullovers, jackets, vests, shirts, pants and tights, socks, and surf and swimwear, among others. Also, the company focuses on producing quality products through innovation to ensure customer satisfaction.
Place
Nike uses both offline and online channels to ensure that their products are available to the customers at all times. For instance, the company has many retail outlets in different parts of the U.S. and other regions globally. Therefore, customers can access a wide variety of all the company’s products from the store outlets. Also, customers can access Nike products from its website and other websites such as Amazon and Flipkart.
Price
Pricing is one of the differentiating elements of Nike. Nike usually charges higher prices compared to its competitors. Nike’s ability to charge high prices is based on the company’s premium quality of products. Also, the company’s popularity, customer loyalty, and brand image allow it to charge premium prices.
Promotion
Nike’s marketing mix is exceptionally aggressive and comprehensive. For instance, it carries promotional campaigns through various online platforms such a YouTube, Instagram, and Facebook, among others, to reach millions of its target customers. Also, it uses sport celebrities or stars for marketing its products through promotional campaigns and advertisements. The Nike slogan and its swoosh logo play a significant role in advertising its products since they are widely recognized globally. Moreover, the company uses various discounts, such as bulk and timely discounts, to attracts millions of customers.