Nike Five Forces

Five Forces Model

(Highly Negative. Range from 1-5)

Rivalry (3)

1. How many companies in industry?

As Nike is an international company that has their product selling worldwide, they have countless of competitors, including many domestic local firm. However, not all of these companies have the power to compete with Nike, only a few international companies are NikeÐŽ¦s major competitors, for instance, Adidas and Reebok.

2. How do they compete each other in term of 4P marketing strategy

Product: As an athletic shoes producer, they try to provide better quality and more comfortable shoes that fit to the sport player through research and development. By claiming their shoes meet the physics need of different sports, which help the sport player to maximize their ability by protecting them and reduce the sport harm.

Price: They have pricing strategy for different group of consumer. The price of their shoes varies depending on the type of the shoes, the feature of the shoes, and even design and edition matter. The shoes can be price at a standard price where most customers can afford. Yet some special feature shoes are specially design and created for premium customer who can afford to pay a higher price. For this reason they can capture different group and level of customer.

Place: They opened discount factory outlet stores in rural areas and retail stores in urban shopping center. By selling different kind of product in different places help them to meet the different need of the customers. On the other hand, they also sell their product online, where customer can purchase their product at anywhere and anytime. All this make them be able to maximize their gain.

Promotion: Promotion doesnÐŽ¦t only mean discount in prices, as they cooperate with Super Sport Star to let these famous player to present their product for them, sometime they held up event to give the customers the chance to meet with these super sport player by providing a chance to draw for the ticket after the customer purchasing amount meet the requirement. This will help the company to boost their sales, which at the same time can further promote their brand as an advertisement.

Customer (2)

Even though many believe customer is the greatest and customer should have the absolute power, in this case, Nike has absolute power over customer, where customer has low bargaining power. This can be proved by study many cases where Nike make their customer angry and claim that they will refuse to buy Nike product. An example will be mention here. Two years ago Nike claim that they have successfully invite Michael Jordan, the king of Basketball to Taiwan. Nike said they will arrange a meeting for their customers to see Michael Jordan at a close distance by held an event for the fans. But the condition is ticked is required for the entrance of the event, and this ticket will be draw by Nike, and only customer who buy Nike product till certain amount have the right to participate in this draw. This announcement simply make all Taiwanese crazy and start buying a lot of Nike product just to exchange for a chance to won the ticket at the draw. Yet greater expectation comes with greater disappointment. When Michael Jordan comes to Taiwan and attend this event, he only stays for few minutes then leave, leaving many lucky fans who get the ticket by the draw shock and angry. The customer starts to question Nike about this extremely short events and these angry customer gather together to sign up for boycotting Nike.

However, after Nike come out to apologize, and give a promise of ÐŽ§claim for these 700 lucky customers have the right to be first invited when Nike arrange NBA star to Taiwan next time; customer who purchase the Jordan product for this event can return the product and get refund unconditionally; promise to take care and maintain 30 basketball court in the societyЎЁ, nothing seem to happen anymore.

Even though the first two weeks after the events NikeÐŽ¦s sales seem to be greatly affected, after Nike settle everything, NikeÐŽ¦s product still is the best seller, the relationship between Nike and customer seem unchanged. People still wear Nike to play basketball and do the running. At the mean time, Nike obtains the way of its aggressive advertisement and pricing strategy.

Example like this can be see in many places around the world, not only in Taiwan. For instance the unfair labor condition issues in NikeÐŽ¦s factory at Indonesia also anger many customers; in addition, if you try to type the keyword ÐŽ§boycott NikeЎЁ and ÐŽ§anti-NikeЎЁ in the search engine, you will be able to come up with at least two thousand results. Yet Nike is always able to solve these kinds of problems to minimize the lost at the least cost. In the case of ÐŽ§JordanЎЁ at Nike Taiwan, apologize almost donÐŽ¦t cost anything for Nike, and to take care and maintain basketball court also can encourage more sport player, which is somehow related to their sale of basketball shoes. Most importantly, they can use these for tax deduction.

Apparently, customer have the right to decide whether to buy the product or not, and this right should affect a firmÐŽ¦s destiny. When Nike angers their customer, the customer can choose to boycott Nike and go to other brand instead of Nike for substitution. However, the unfair bargaining power between Nike and customer base upon this substitution. If we merely talk about the shoesÐŽ¦ function, substitution sure does exist. Nike sport shoesÐŽ¦ function can surely be replaced by similar brand like Reebok