Differentiation Strategy Nike’s cost leadership generic strategy sustains competitive advantage based on costs. Nike had regained control of the market in both the footwear and ... Current Strategies i. For example, Nike increases its stores and retailers in the United States to sell more athletic shoes to American consumers. The findings of the study highlight Nike’s strategies which focus on innovation and emphasis on its research and development department, provision of premium pricing for its customers, broad differentiation strategy, market Segmentation Strategy and Closed-Loop strategy. On the other hand, Nike’s intensive growth strategy reflects the company’s focus on innovation to develop the business. Disclosure: I own shares of NKE For years, US sports gear maker Nike, Inc. (NYSE:NKE) has delivered superior sales and earnings performance, handsomely rewarding … Nike’s excellence marketing strategies are their energy to achieve their market goals. The following are the generic competitive strategies implemented in Nike’s combination strategy: Nike’s cost leadership generic strategy sustains competitive advantage based on costs. An intensive strategy shows how a company grows. The Nike brand and its offering are Stars in the BCG matrix while Converse, Hurley and Jordan are the question mark in the BCG matrix due to their presence in the limited countries. So I see this less as a bold move and more a strategic necessity. The major threat to Nike is the imitation that goes hand in hand in various markets which are affecting its revenues and businesses. Strong product portfolio:  Nike have strong product portfolio as being present in various interrelated business segments is helping the company in retaining its customers and provide a bundled products to them. The major threat to Nike is the imitation that goes hand in hand in various, Marketing Strategy of Zara – Zara Marketing Strategy, Marketing strategy of Apple iPhone – Apple iPhone Marketing strategy, Marketing Strategy of Lenovo – Lenovo Marketing Strategy, Marketing Strategy of Burger King – Burger King Marketing Strategy, Marketing Strategy of ICICI Bank – ICICI Bank Marketing Strategy, Marketing Strategy of McDonald’s – McDonald’s Marketing Strategy, Marketing Strategy of Cafe Coffee Day – Cafe Coffee Day Marketing Strategy, Marketing Strategy of HUL – HUL Marketing Strategy, Marketing Strategy of Volkswagen – Volkswagen Marketing Strategy, Marketing Strategy of Puma – Puma Marketing Strategy, Marketing Strategy of SHELL - SHELL Marketing Strategy. A strategic objective based on the cost leadership generic strategy is to grow the company’s competitive advantage through new technologies to reduce production costs. The product differentiation attributes that Nike pays great attention to are the uncanny product features and the timing of introducing their products to market. As a result, its products have become the favorite of the serious athlete. A differentiation strategy doesn't necessarily guarantee that consumers will find the value that separates your product from other, standard options. In this generic strategy, the company minimizes production costs to maximize profitability or reduce selling prices. 2.The marketing strategy of Nike. Nike spends more than most companies in the industry on R&D in order to differentiate its athletic shoes from its competitors in terms of performance. This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Differentiation strategy by Nike is used to gain market share advantage in the broad foot ware market. Therefore Nike tries to portray a brand image of quality and performance. Nike’s product line is not wide: they offer athletic shoes, workout clothes and a very limited number of additional products. Take a look at these 3 aspects of Nike’s branding strategy that put them at the top of their industry and apply their strategy to your own brand. The strategy is achieved by producing consumer goods and services that customers perceive to be of high quality or have added unique features. PESTLE standing for Political, Economic, Social, Technological, Legal and Environmental. The generic strategy trap. It invests in research and development, to learn about customers’ taste and fashion trends. Our consumer knows what they want and are willing to pay whatever they need to get it. Simply put, product differentiation is a business strategy in which a firms attempt to gain a competitive advantage by increasing the willingness of customers to pay for the products or services they have to offer. It uses separate campaign or strategy to cap the market potential of the different segments. Starting from its Swoosh logo to the famous ‘Just Do it Slogan’, these are important factors differentiating it from its competitors. A strategic objective linked to market penetration is to increase Nike’s market presence by increasing the number of authorized retailers. Nike has achieved compounded annual growth rate (CAGR) of 11% for the period of 5 years i.e. Firstly, it manufactures for three different segments of people: men, women and children. March 6, 2018 By Hitesh Bhasin Tagged With: Strategic Marketing Articles. Nike Advertising Strategy How Nike does it Like the majority of large corporations, Nike has learned the benefits of an expansive social media presence. Nike uses psychographic segmentation variables to make its offerings more attractive to the target customers. It uses separate campaign or strategy to cap the market potential of the different segments.Targeting is the important aspect of the marketing strategy, especially when a company is in different businesses. Nike's product differentiation strategy is different from its competitors. Product Development. Organizational Structure Characteristics (Analysis), Nike Inc. Five Forces Analysis (Porter’s Model), Nike Inc. Market Penetration. For example, Nike’s mission statement highlights innovation applied through new designs for shoes and related products. Nike’s strategy is focused upon the young generation. The demand graph is shaped by variables such as the change in the fashion, technology, taste and preferences of the customers. So Nike contracted with many athletes’ spokesperson, professional teams and college athletic teams to advertise and promote their products to customers. For example, the company integrates cutting-edge designs for its shoes. In contrast, Nike, Inc. uses the Leader R&D strategy as detailed below. We realize that the team-mentality that captured the spirit of athletics in the late 1980's and early 1990's has been replaced by a sense of individualism. Nike now perceives sustainability as a path to leadership, competitive differentiation and most importantly, to evidence a positive framework and actions on social and environmental issues. The reason why Nike, Inc. has gained a competitive advantage over other companies is that it undertakes an evaluation process, which involves evaluation of resources, clarification of goals, defining customers and examining competitors. For example, the company integrates cutting-edge designs for its shoes. Through differentiation generic strategy, Nike positions its product offerings in a way to stand out and be different from the available alternatives. For creating such value it uses the following resources – This type of strategy includes two or more of the generic strategies from Porter’s model. Nike’s primary strategy that is the reason for its unique value proposition is its innovativeness. Cite this page. Through product innovation, technology development, and high quality products, they are able to differentiate themselves from competitors and build their brand image. Nike mainly concentrates on the sportswear for the sports person and also concentrates on the style of the product how it looks! Glazer, R. (1999). Nike’s strong focus on innovation is tied to its business strategy. For example, the company integrates cutting-edge designs for its shoes. Organizational Culture Characteristics: An Analysis, Nike Inc. SWOT Analysis & Recommendations, Nike Inc. Operations Management: 10 Decisions, Productivity, Nike Inc.’s Marketing Mix (4Ps/Product, Place, Promotion, Price) - An Analysis, Nike Inc. PESTEL/PESTLE Analysis & Recommendations, Nike’s Promotional Mix (Marketing Communications Mix), Puma’s Generic Strategy, Intensive Growth Strategies & Competitive Advantage, Puma’s Organizational Culture & Its Characteristics (An Analysis), Puma’s Mission Statement and Vision Statement (An Analysis), Burger King’s Generic & Intensive Growth Strategies, PepsiCo’s Generic and Intensive Growth Strategies, Toyota’s Generic Strategy & Intensive Growth Strategies, Puma’s Organizational Structure & Its Characteristics (An Analysis), Ford Motor Company: Generic & Intensive Growth Strategies, Harley-Davidson’s Generic & Intensive Growth Strategies, About Nike – The official corporate website for Nike, Inc. and its affiliate brands, Generic Strategy (Porter's Model) & Intensive Growth Strategies. For GDPR compliance, we do not use personally identifiable information to serve ads in the EU and the EEA. Product and usage-based positioning are used by Nike to create the image in mind of the consumers. The competitive strategy that Nike introduced at the end of the 1990's concentrates on honing the focus of our marketing strategies and product offerings through product differentiation. Implementation of brand differentiation strategy is allowed by Nike’s brand name which is a tangible but important factor to ensure future success and maintain its current leadership and market share. The company uses its social media accounts to connect directly with their customers and they … Being present in footwear, sports equipment, clothing and many others Nike uses differentiated targeting strategy.Produc… Nike uses differentiation in combination with the cost leadership strategy to achieve growth objectives. It is these qualities that attract consumers to them. Varadarajan, P., & Dillon, W. R. (1982). “ Also, Nike’s differentiation generic strategy provides unique products. Outsourced Manufacturing Units: Nike receives footwear from more than 140 factories located in 13 countries across the globe. Basically their position and differentiation is quite simple: Nike offers high quality sporting goods which their audience is willing to pay a higher premium for. A differentiation strategy works best when the buyer's needs and uses of the item are diverse, and there are not many rivals following a similar type of differentiation approach. This intensive strategy involves the introduction of new products to grow sales revenues. But there is a negative side to it these days. Nike, Inc. has achieved its superior performance, mostly through competitive positioning and value creation. Let’s look at their audience. Low Cost and Differentiation Strategies. NIKE emphasizes on the key strategy elements of branding advertising, design of products, exclusive customer service, high quality products and new product development (Grant, 2010). In the late 1990s, Nike reduced costs and the selling prices of its athletic shoes and other products. Disadvantage of the cost leadership strategy is lower customer loyality, the reputation of the company may also result in the producing low quality of the product and rebrand itself with a good reputation with leadership. Diversification can support Nike’s generic competitive strategy of differentiation through new businesses that supply materials for product innovation in the athletic shoes, apparel and equipment business. Nike’s marketing strategy has remained a subject of study. Strategy and Competitors. This generic competitive strategy helped the company regain its competitiveness, especially against Adidas. Configurations of governance structure, generic strategy, and firm size. Constant Innovation. See our Privacy Policy page to find out more about cookies or to switch them off. It is a brand made for the youth and its logo and slogan reflect the same young energy. Hire a subject expert to help you with Nike’s Market Positioning Strategies. Different coaching styles, What is Corporate Training? Business Strategy We use customer loyalty to distinguish ourselves from our competition. This new strategy is the rationale behind Nike’s acquisition of smaller company brands in order to cater to the lower price sensitive segments of the market. Let's stay in touch :), Your email address will not be published. The competitive strategy that Nike introduced at the end of the 1990's concentrates on honing the focus of our marketing strategies and product offerings through product differentiation. It is why innovation is a core focus for Nike and its rivals like Adidas and Under Armour. This severe competition made Nike to do its best and to be a winner in the vast market. Nike spends more than most companies in the industry on R&D in order to differentiate its athletic shoes from its competitors in terms of performance. Customers of Nike ranges from individual customers to companies. Results of Nike's new Customer Experience distribution strategy in place for over a year in a study by Euromonitor. Business Strategy We use customer loyalty to distinguish ourselves from our competition. Nike incorporates a business level strategy that most resembles a differentiation strategy. Additionally, differentiation strategies are most powerful when buyer needs and preferences are too diverse to be satisfied by one product. As a result, its products have … Before this, the sentence “It was a 90-minute infomercial and it was awesome” could never have been written. The corresponding intensive strategies grow Nike’s global sports shoes, apparel and equipment business. The basic strategy of Nike is to provide the customers with good quality products. Nike is the well-known brand globally and its association with the various sports events such as Cricket world cup, FIFA cup, Olympics and many others has helped the company in creating high TOMA (top of mind awareness) and brand pull. Creating new technologies in material and designs that are continually updated to reflect consumer preferences create a niche that others try to copy but never can sustain Nike's pace. The adoption of differentiation as a secondary generic strategy allows Nike to expand the customer base by emphasizing over the unique product features. NIKE’sstrategy is consistent with its business level strategy of product differentiation and expansion.In this scenario NIKE will embrace the key success factor of it distinctive marketing capabilities,innovation and distribution capability.Thus expansion in the emerging new markets and new segments of consumers will providegrowth opportunities for NIKE.The scenarios explained above are … NEW YORK (May 5, 2010) – Today NIKE, Inc. (NYSE: NKE) unveiled its strategy and key initiatives to achieve sustainable, long-term growth across its global portfolio of brands and businesses. Nike uses psychographic segmentation variables to make its offerings more attractive to the target customers. We are perceived as “fancy” to most manufacturers in the industry. NIKE – Marketing StrategiesReebok and Adidas offer the most intense brand competition. Nike’s differentiation strategy is to establish the company as the standard in athletic wear. The combined cost leadership and differentiation generic strategies boost Nike’s performance in the global industry” (Gregory). Your email address will not be published. A strategic financial objective based on this intensive growth strategy is to improve Nike’s financial risk by entering other industries. At the same time, Nike pays a noticeable concern towards a broad differentiation strategy. A value proposition is something a company provide its target customers that help in giving them a better result of choosing the company. Nike quality and durability is a critical part of their strategy to be able to command high prices for their products. Founded in 1964, Nike Inc. has grown to become one of the biggest players in the global athletic shoes, apparel and equipment market. Nike’s strong focus on innovation is tied to its business strategy. Therefore, the product development strategy of Nike supports its generic competitive strategy of differentiation. The Nike strategy is the writing on the wall for retailers large and small that have not figured out how to be collaborative and productive partners for the brands they carry. ... they actually price lower than Nike in a lot of different areas strategically. A suitable strategic financial objective based on this intensive growth strategy is to increase Nike’s market share through cutting-edge technologies integrated in the design of sports shoes, apparel and equipment. Nike, with its differentiation strategy, the company is continuing to separate its self from the competitors by using its superior technology and innovation. Segmentation, targeting, positioning in the Marketing strategy of Nike –, Competitive advantage in the Marketing strategy of Nike –, BCG Matrix in the Marketing strategy of Nike –, Distribution strategy in the Marketing strategy of Nike –, Brand equity in the Marketing strategy of Nike –, Competitive analysis in the Marketing strategy of Nike –, Market analysis in the Marketing strategy of Nike –, Customer analysis in the Marketing strategy of Nike –, What is coaching? Market Development. Thus, this intensive strategy supports Nike’s differentiation generic competitive strategy via product innovation. This strategy adds an aura to Nike’s products. 2.1.2.1 How Nike uses differentiation strategy? Nike’s marketing strategy has remained a subject of study. Copyright by Panmore Institute - All rights reserved. Founded in 1967 Nike has emerged as the most preferred footwear company for the athletes. (1997). Its strategy is based on innovation, as NIKE tries continuously to balance its products between sport and fashion. However, over the period of time, it extended its product line to apparels and accessories like clothing, socks, digital devices, eyewear, and equipment for sports. Nike, Inc. is a marketer of sports apparel and athletic shoes. This is how they work, the design is super innovative and this does not only refer to the boots. To keep its position and competitive advantage, Nike must ensure that its generic strategy and intensive growth strategies are always suited to current business conditions. Alongside product development, the company applies the market development intensive growth strategy by investing in new technologies to penetrate new market segments, such as segments composed of bodybuilders. Haven’t found the relevant content? Nike cements its business-level strategy with corporate strategy (diversification) to serve its customers better and increase its market share, thus higher revenue. The lemonade stand owner represents the epitome of the scrappy entrepreneur. Parnell, J. Market Penetration. Definition: Differentiation strategy, as the name suggests, is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market.It entails development of a product or service, that is unique for the customers, in terms of product design, features, brand image, quality, or customer service. Nike have strong product portfolio as being present in various interrelated business segments is helping the company in retaining its customers and provide a bundled, Nike distributes its products worldwide through different, Nike is the well-known brand globally and its association with the various sports, athletic footwear and sports equipment industry are highly competitive due to the presence of a large number of local and, Business segments in which Nike operates has a large number of local & national players. Aside from foot wear, the company boasts of products such as clothing, equipment, and even accessories. By focusing on their product line, they are able to produce high quality products that meet customer expectations. Targeting is the important aspect of the marketing strategy, especially when a company is in different businesses. The combined cost leadership and differentiation generic strategies boost Nike’s performance in the global industry. Related: How to Differentiate Amongst Brand, Logo, and Identity. SWOT analysis – Here is the SWOT analysis of Nike. People are looking for stylish and durable products. Nike receives footwear from more than 140 factories located in 13 countries across the globe. New Balance appears to have a better differentiation strategy than Nike because they succeed in a niche market where they are … Dess, G. G., & Davis, P. S. (1984). In the late 1990s, Nike reduced costs and the selling prices of its athletic shoes and other products. The apparel, athletic footwear and sports equipment industry are highly competitive due to the presence of a large number of local and international players. Nike’s secondary intensive growth strategy is market penetration. A financial objective based on the differentiation generic strategy is to maximize Nike’s profit margins, such as on new sports shoes. Diversification is the least significant in Nike’s intensive strategies for growth. 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