SWOT Business Analysis of Nike

Introduction

A brand consist not only of the logo or the visual identity. It is more than the product, the advertising campaign or the slogan. It is neither only controlled by the company behind it nor only a collection of perceptions that reside in the mind of customers. A brand is a collection of things and it identifies everything that sets into the mind of the customer; it is the idea and feeling a customer has about the company and product. In this paper, an analysis of the brand Nike will be conducted. The brand analysis for Nike will help to understand Nike as a brand and the context surrounding it. While Nike may not always have the direct control over its brand, it needs to identify every interaction the customer has which influences its perceptions. This paper tries to identify how Nike should maintain his strong brand position – which would lead to loyal customers and an increase in customer preference and profit.

The remainder of this paper will proceed as follows. First, a short introduction to Nike. The next section will discuss the public opinion on Nike. Later there will be a competition analysis and with that information a brand perceptual model will be conducted. At last this paper will identify a SWOT analysis and it will conclude with recommendations and implications for Nike.

About Nike

Nike was established in 1962. It all started with a cooperation between Bill Bowerman and Phil Knight, who started to sell shoes under the name “Blue Ribbon Sports”. In 1978 the name of the company was officially changed into the, now widely known, “Nike”, which is a reflection of a Greek goddess who personifies victory. Nike was established to fulfil a mission. This mission is to bring inspiration and innovation to every athlete in the world. In addition, Nike’s focus is to continually seek to innovate, design and develop products to improve athletic performance. Its desire is to design products with true performance innovation and technology benefits which help the athlete perform better. Important is that Nike beliefs that if you have a body, you are an athlete and that implies that Nike is a brand for everyone. With its headquarter in the USA, shops all over the world and more than 40.000 employees, Nike is at the moment one of the leading athletic footwear, apparel and equipment company in the world. Nike is famous for its “woosh” logo, which is recognized by people all over the world. For a lot of consumers, wearing Nike is a statement and it is a brand that can be worn with honour. The success of Nike is reflected in there continuously revenue growth, which was 8% in 2013 (Nike, INC. , 2013).

In addition to its mission, Nike wants the company to achieve profitable and sustainable growth. Therefore, Nike pays a lot of attention to minimize any potentially negative impact on communities or nature. They state that there aim is to challenge, push and explore ways that change the game entirely for materials, design and manufacturing. Nike does not grow just to get bigger. They grow to be better and do better.

Public Opinion

Since Nike is a brand that has an important position in the society, the media is reporting a lot about Nike. According to The Wall Street Journal, Nike’s profits still raise because the demand for shoes and clothes grows even among people who have no intention of wearing them to the gym (Germano & Stynes, 2014). This claim is confirmed by the widely available photos on the internet of fashion bloggers who are wearing Nike. It is a reflection of the fact that there is a current trend where fashion meets sporty. In addition, an interview done by Bloomberg with Mark Parker, the CEO of Nike, shows that Nike needs to move into the direction of a lifestyle brand because of the cultural shift that has put sports and fitness in a position that permeates many aspects of everyday life (Bloomberg TV, 2014). Moreover, Seeking Alpha called Nike the “Goddess of Victory, with an unstoppable growth business” (Seeking alpha , 2014). Since one of Nike’s mission is to maintain sustainable growth, the public opinion keeps a close eye on it. Business Insider reports that Nike was able to solve its sweatshops problem which was considered as an enormous problem of Nike in the beginning of the 21th century. Nike was being shamed in public for its labour practices to the point where it badly tarnished the company´s image and hurt sales. However, according to Business Insider, Nike was able to turn this image around by showing transparency. Moreover, according to Business Insider other companies who outsource could use Nike’s turnover as an example (Nisen, 2013). In today’s world, where the opinion of the digital media and especially bloggers are almost becoming more important than the marketing campaigns of the brand itself, it is important to shed a light on them. A post from Emily Schuman, blogger from cupcakesandcashmere.com with more than 6 million page views a month can be more influential than an advertisement of Nike itself. Luckily for Nike, the general opinion of fashion bloggers on Nike is very positive (Schuman, 2014).

Competitor analysis

Nike is operating in the apparel, footwear and accessories industry which is a highly competitive market, with presence of a large number of players such as Puma, Adidas, New Balance and Asics. The apparel, footwear and accessories industry is exposed to continuous changes in consumer preferences and technology. As a result, if Nike is unable to adapt to changes quickly, it will immediately lose its market share. Comparing the results to its competitors, Nike reported total revenue increase in the third quarter of 2014 by 14.5% year on year (CSImarket, 2014). However, Nike feels the rising competition from emerging players and local players in emerging markets, which focus on niche market segments and are increasingly improving their product quality. The major threat for Nike comes from Adidas because they’re best positioned to compete and have the second largest market share, which was 17% for Nike and 12% for Adidas in 2013 (Kondej, 2013). Adidas is a German brand established in 1949 that designs and manufactures sports shoes, clothing and accessories. The main marketing strategy slogan for Adidas is: “Adidas is all in”, which aims to present a unified image to consumers interested in sports, fashion, street, music and pop culture. Puma is another German multinational company which is a treat to Nike, it was formed in 1924. Its mission is to be the fastest sports brand in the world. Another competitor of Nike is New Balance is an American company found in 1906. Its mission is building a global brand that athletes are proud to wear, associates are proud to create and communities are proud to host. The last competitor that will be analysed in this article is Asics, a Japanese brand found in 1949. Its mission is to become the number one brand for the sports enthusiastic.

Brand Perceptual Map

In order to compare Nike with its competitors it is useful to develop a brand perceptual map. Using a brand perceptual map gives the opportunity to graphically display and explain the perceptions of customers with relation to the product characteristics. For constructing the brand perception map the brands are compared by two opposite aspects pairs, fashionable and non-fashionable and low comfort with high comfort. A fashionable brand is a brand that is conforming to the latest fashion trends or sets the trends by itself. Comfortable is mind and body being at ease or make a person feel secure, happy or relaxed.

In order to identify what the scores for the different brands are for the 2 dimensions, it is important to determine consumers’ perceptions and evaluations of the product or service in relation to its competitors. Normally, marketers determine it by asking consumers a series of questions, but for this paper it is based on my own knowledge. On the fashionable versus non-fashionable scale, Nike scores the highest since it is recognized by a lot of people for providing clothes and shoes that could also be worn outside the gym. On the other hand, Asics is a brand which focus on the practical use. Adidas and New Balance are both brands that are highly fashionable but are valued less fashionable then Nike. Puma, with its mission to be the fastest sports brand in the world, already implies that it does not really focus on the fashionable aspect.

Asics scores highest on the comfortable aspect since it is well known for its high quality and comfortable sporting clothes. On the other hand New Balance is called a sports brand but its shoes are mainly sold for daily usage so it scores low on the comfortable aspect. Nike and Adidas are both recognized for their comfort, while Puma is not really perceived as highly comfortable.

Figure 1. Brand Perceptual Map

SWOT analysis

A SWOT analysis is very useful to identify the external and internal factors that influence Nike.

One of Nike´s strength is its logo, the so called “woosh”. When people see the logo without the brand name, they will immediately be able to identify it as Nike, which shows the power of the brand. Moreover, Nike is staying ahead of the technology curve, with an enormous capacity of innovation and a good R&D department. On the other hand, Nike is showing some weaknesses since it is still mostly reliant on its footwear sales, although its wide range for sportswear. Moreover, Nike is facing enormous high advertisement costs. Nike is investing a lot of money into its marketing strategy and although its strategy works it comes at a high price tag. Nike is having opportunities since it is not only seen as a sporting brand but more and more customers put on Nike products just because their fashion style. Moreover, Nike can easily expand to emerging markets because of their strong brand name. For example Brazil, where the passion for sports is high, is one of the easily target market in the future. The main treat for Nike is, as discussed before, the highly competitive market. If Nike is unable to adapt to consumer preferences quickly, it will immediately lose some of its market share to one of its competitors. Moreover, economic downturns affect consumer goods industries. The more of a population that is suffering financially, the smaller the market for Nike´s goods.

Implications and recommendations

This paper identifies that Nike is a brand with a very good position. It is highly valued by its consumers and other critics and is the leader in its industry. Nike is both scoring high with its product on the comfortable and fashionable scale. Although, Nike has a very good brand positioning there are still some challenges ahead. First of all, Nike needs to make sure to react fast to consumer preferences changes. It needs to make sure that it stays innovating to be able to keep ahead of its competition. Moreover, with the current trend where fashion meets sporty, Nike needs to make sure that its products are both comfortable and fashionable to target both the consumers that want the best sporting wear and the consumers that want Nike products to wear during daily life. Moreover, Nike should acknowledge the power of Bloggers and should think to include this more in its marketing and advertisement strategy. However, after carefully examining the various aspects of the Nike brand and its competitors, I can conclude that the brand is facing a bright future. Still this brand analysis is just a very small step into analysing the forces that are influencing Nike. Especially, to conduct a more useful analysis, deeper market research is needed, where consumers are answering questions.

References

Bloomberg TV. (2014, Oct. 22). Nike CEO Parker: I’m Bullish on Relationship With Apple. Retrieved Nov. 20, 2014, from Bloomberg TV: http://www.bloomberg.com/video/nike-ceo-our-connection-to-athletes-drives-company-HTGswG72R9C6dt24shLU6w.html

CSImarket. (2014). Nike sales versus its competitors . Retrieved Nov. 21, 2014, from CSImarket: http://csimarket.com/stocks/compet_glance.php?code=NKE

Germano, S., & Stynes, T. (2014, Sept. 25). Nike Profits Rise on Higher Footwear, Apparel Sales. Retrieved Nov. 20, 2014, from The Wall Street Journal : http://online.wsj.com/articles/nike-earnings-rise-on-higher-footwear-apparel-sales-1411677987?KEYWORDS=Nike

Kondej, M. (2013). The sportswear revolution: global market. Euromonitor International .

Nike, INC. . (2013). ANNUAL REPORT ON FORM 10-K. Nike .

Nisen, M. (2013, Sep. 09). How Nike Solved Its Sweatshop Problem. Retrieved Nov. 20, 2014, from Business Insider: http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5

Schuman, E. (2014, Feb.). New Kicks. Retrieved Nov. 20, 2014, from Cupcakes and Cashmere: http://cupcakesandcashmere.com/fashion/new-kicks

Seeking alpha . (2014, Nov. 15). Nike: Goddess Of Victory, Unstoppable Growth Business. Retrieved Nov. 20, 2014, from Seeking Alpha : http://seekingalpha.com/article/2685425-nike-goddess-of-victory-unstoppable-growth-business