There are many companies offering similar but not identical products, this is called Monopolistic competition market, and there are also many buyers that perceive differences between these products like service, features, design and quality, so they are willing to pay different prices for them. Therefore, each firm influences each other on the extent of the product prices or has some control over some. For instance, exists different marketing tools that firms use for competition, such as branding and personal selling to differentiate their offerings and advertising. Nike is located at Bearverton, Oregon. The company was founded in 1978by Bill Bowerman and Philip Knight, named Nike and become the number one sports manufactures in the world design by Nolan Breitbarth in the 1970’s.This company sells sports products worldwide. Nike sells a huge range of products, including shoes and apparel for sports activities like volleyball, cycling, golf, athletics, American football, tennis, combat sports, basketball and football. Nike is a company that has attained success in the market thanks to the excellence of its products and the passion for everyone to use its brand products that create the Nike Just Do It feeling for the competition.
The proven strategy of the company is to create a consumer’s perception of brand influences their buying decision in sports industry by athletic expectation that is endorsed by real athletes, technique that has revolutionized the sports marketing. Nike recently teamed up with Apple Inc. to produce the Nike + product which monitors a runner’s performance via radio device in the shoe that communicates with the iPod nano. American brand Nike is number two in terms of name recognition among foreign consumers and is a sponsor of different players, events and sports teams, among others, and is the number one sports brand in the world. The direct competition of Nike has always been the sports brand Adidas. Adidas is a German worldwide firm that also produces different sporting goods, founded in 1949 in Herzogenaurach, Germany. Adidas’ market capitalization is 18.09 billion, well below the capitalization of Nike. Adidas is considered the second sports brand in the world, competing with Nike since this American company was founded. Adidas has never been able to pass or improve the figures of Nike. Adidas recently began to make very similar decisions to Nike; this allows the competition to grow. Adidas decide to use marketing strategies similar to those of Nike in the moment that they decide to invest a large portion of their capital in advertising and celebrity sponsorships, the strategy used by Nike since its inception. Adidas, after ups and downs in the market against Nike, recently decided to acquire the Reebok firm, a sustitute brand of sporting goods, this decision was made in order to topple the market leader Sports, Nike, based on a “partnership”.
Adidas competes strongly with Nike, but Nike still has this kind of monopoly because it makes better things with much less production factors than Adidas. Another example of substitute brand in the sports market is the signature Puma, with a market capitalization of 3.46 Billion dollars. Puma does not compete strongly with brands like Nike or Adidas, their products are also substitutes but it does not has a wide range and variety. Similarly, Reebok products, before the firm was acquired by Adidas, were competing in the sports market with these two giant. Although often substitute products could be better than those of the two big firms, people prefer the big firm’s products for the fact that marketing and advertising is way much better and people get carried away by the image that firms are selling them, beyond quality. Similar examples are for companies like Converse, New Balance and Under Armour, among others. Nike’s market capitalization is 57.58 Billion dollars and the company spends millions of dollars annually in promoting events, celebrities and numerous flashy ads that catch the attention of consumers and promote the culture of sport as a benefit to the world. Nike has managed to remain world leader in sports products since the 90’s and even when there are many other sports brands in the world, Nike is kind of a monopoly in this market thanks to the market strategies used that have allowed this firm to place and especially, remain, well above their competitors, that is why this firm falls into the category of monopolistic competition. Nike has many strengths and weaknesses as a consolidated company in a market that is competitive by nature, as are the sports.
One of its strengths is that it is a world class company that has the facility to sell their products anywhere in the world. Nike has more than 700 production factories around the world. Other two major strengths of the company, as already mentioned, is their slogan and symbol, which have allowed, through their marketing that this brand can become increasingly known. Nike is a well established company that has managed to get out of economic crises and demands, which also represents a threat to the assets of the company. Nike risk much as any brand with celebrities sponsoring by the fact that they may be involved in scandals, but it still retains its credibility as a firm around the world. Moreover, Nike is a company that is dedicated to their customers; it does not neglect any part of the business and react properly to any changes in the consumer behavior by taking steps that allow them to maintain a leading position in the market. This company is a leading innovator, they are always looking to offer the best and satisfy consumer tastes even when the population is different. In conclusion, consumers are always going to prefer products from companies like Nike or Adidas because they have sold them the idea that their products are at the top of the market, and indeed, they are. Nike has an inelastic demand since the variation in the prices of their products does not affect the number of consumers that the brand has, again thanks to their marketing and advertising techniques. The countless ads that Nike publishes around the world are not specifically to view them, Nike have managed to create images that consumers hardly forget, innovative images.
Consumers are always changing by the products they promote the more. Nike dominates and will continue to dominate the global sports market as its products are accessible and because they offer many promotions and discounts to their customers around the world, if Nike dominates this market nowadays is all thanks to its marketing beyond the quality or accessibility of its products.
“This chart demonstrates just how much of the market share for shoes Nike currently owns.”
http://www.socialbakers.com//storage/www/daily-fan-growth-nike-vs.-adidas-originals-from-apr-01-2012-to-apr-30-2012.png This graph shows the ups and downs in demand for different brands of competition in the sports market from
April 02 to April 30 that are not very different from nowadays.
1. Nike Inc. (NKE) -NYSE. [ONLINE] Available at: http://finance.yahoo.com/q?s=NKE. [Last Accessed 5/15/13].
2. Dmitriy Kha. Monopolistic Competition. Available at: http://mail.beaconhill.org/~dkha/data/Micro%20Lectures/Lecture%2011.pdf. [Last Accessed 5/14/13].
3. Paige Adams, Haley Smith, Laura Freeman, Dan Lawson, Hayley Jacobs, Gage Mitchell. NIKE Industry and Company Analysis.
Available at: http://kimboal.ba.ttu.edu/MGT%204380%20Fall%202012/001/NIKE%20Industry%20and%20Company%20Analysis.pptx. [Last Accessed 5/13/13]
4. John B. Taylor, Akila Weerapana, (2009). Principles of Microeconomics. 6th ed. Boston, MA, U.S.A.: Houghton Mifflin.
5. Avinash K. Dixit, Joseph E. Stiglitz. Monopolistic Competition and Optimum Product Diversity. Available at: http://www.jstor.org/stable/1831401. [Last Accessed 5/14/13].
Courtney from Study Moose
Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/3TYhaX