Factors influencing the competitive advantage of Nike business
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Unit 1 - Exploring Business
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factors influencing the competitive advantage of nike business
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PEARSON (PEARSON)
Business 2016 NQF
Unit 1 - Exploring Business
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2021 BTEC Business Level 3:
Unit 1 - Exploring Business
(DISTINCTION*) Assignment
2
Factors influencing the competitive advantage of Nike
business
Market leadership defines a business which has the largest or
larger share of the market in relation to its competitors. Nike is
one of the largest businesses and is the market leader in the
global sports footwear industry with a high revenue from their
footwear of over $24.2 billion in 2018 (£20.83 billion), compared
to Adidas footwear revenue of $15 billion (£12.91).
Nike invests in marketing and this can be seen in their 2014 fiscal
report. "Nike spent $3.031 billion on what they call “Demand
Creation”. That means Nike has spent about $100 per second on
advertising." 40 Nike is spending almost the same amount on
marketing than Under Armour makes in sales. This article
discusses the importance of marketing that Nike has focused on
in 2016, "Nike spent $3.3 billion on marketing in the last year,
while Under Armour did $3.96 billion in sales in the last year." 1
It is noted that Nike owns 48% of the athletic footwear market in
the United States therefore Nike has a huge market share
allowing Nike to create awareness. Specifically, for basketball
footwear, Nike has 96% of the share. In 2016, Nike's sales
1 https://profitworks.ca/blog/marketing-strategy/545-Nike-strategy-how-Nike-became-successful-and-
the-leader-in-the-sports-product-market.html
, revenue was 32.46 billion (£27.95 billion). Below is a chart that
shows Nike's revenue worldwide from 2005 to 2016 in USD. 2
Furthermore, Nike statistics relate to
market leadership. Nike sales revenue in
1996 was $6.4 billion USD (£5.51billon)
and has grown to $32.46 billion USD
(£27.95 billion) as of 2016. Nike has 31%
of the global athletic footwear market.
There are 700 Nike stores globally.3 There are 45 countries that
have a Nike office.
Nike thrives and excels because of competition existing. Analysts
state, “Brands like Adidas and Under Armour are all doing new
things,” Poser says. “When Nike’s competition is doing a lot, Nike
tends to respond even better. Nike releases a new product.
Creating new threads benefit the business as customers would
want to follow the trend and would purchase their goods which
would increase their revenue and profit.
Nike Stays Ahead of their Competitors. For example, Nike
launched their website in 1999 before their competitors for
example Adidas who launched their website in 2006. They were 7
years ahead of Adidas which gave them the ability to produce
more and increase their awareness. Nike in 2011 had more than
four times the sale than Adidas. 33 Nike was one the first sports
brand companies to utilize social media and use is as an
advantage to promote their goods and services. Nike also tries to
stay ahead of their competitors with their advancements in the
technology in their products (i.e. auto-lacing shoes).
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