The innovation strategy of the Nike Corporation has kept the brand at the top of the industry despite the fact that the sneaker/sportswear industry is a very furiously competitive market. A few companies have a hold on the sneaker industry worldwide. The companies face pressure to keep up with the competitive market and raise profit margins.
One element that makes this industry so competitive is the fact that there are many different firms both domestically and internationally that produce footwear. This is considered the external market (Pearce, 2000, Ch. 4-5). While manufactures are constantly on the hunt for new innovative products, the basic sneaker design is similar in all the major companies. While each company puts their own stamp on the design as far as the market goes the products are basically identical. This causes quite a competiveness to convince the consumer that their product is “special” or a better value. This is described as Nike’s mission (Pearce, 2000,ch.3) One way many companies have sought to keep the margin costs low is by outsourcing to third world countries. This enables companies to keep the market price competitive while still managing profits. Most major sneaker manufactures have turn to outsourcing. While this provides low prices for the consumer it also means contributing large amounts of money to countries other than our own.
One of the draw backs of the sneaker industry is its barriers of entry. While shoe styles change constantly, sneakers in particularly are controlled by a few prominent firms. Nike and Addidas have become major players in the industry with the majority of sales of this product. This industry has all the characteristics of high barrier of entry. Nike, Reebok, and Addias control the advertising market, with multi-million dollar campaigns difficult to match by smaller firms. This is Nike’s strategic analysis (Pearce,2000, Ch. 9). Small companies would find it hard to compete with the low margin costs associated with bulk production. However customer loyalty to particular brands is the greatest obstacle a new sneaker company may face. Society has made major sneaker producers a part of culture. Customers are often loyal to only one brand and will spend the bulk of their money on that one manufacturer. These global advertising campaigns has engrained on society what shoes are fashionable and in demand The control of advertising by major players in the industry may mean consumers may have a lack of perfect information. The average consumers are overwhelmed with information regarding the larger brands, but smaller companies struggling with advertising may not have the same opportunities. Overall the sneaker industry is very competitive, but only within the largest firms in the industry. For Nike it is extremely important to remain aware of innovative strategies and to use strategy models such as those outlined by Pearce.
Works Cited:
Pearce, John A., and Richard B. Robinson.(2000) "3,4,5,9." Strategic management: formulation, implementation, and control. 12th ed. Boston: Irwin/McGraw-Hill,
The Manufacturing Practices of Nike and it’s Competitors (n.d.). Retrieved from
