Nike Industry Research Paper Example | Topics and Well Written Essays - 2000 words

Nike Industry - Research Paper Example For example, Adidas and Reebok are the closest competitors of Nike Inc. However, Adidas is one of the main competitors of Nike in that the company owns 5.32% of the industry market share and has been privileged to sponsor major events such the as the 2012 Olympics. While Nike owns 35.21% of the industry but suffers a major ordeal of competitive losses as it does not focus on social media to keep in touch with return customers and potential new ones. Reebok on the other hand, is a subsidiary of the Adidas Company and owns about 2.58% of the market share posing as a potential competitor for Nike in terms of quality products, target market, and promotional schemes (Bureau of Labor Statistics, 2008). Customer Bargaining Power Based on 2009, 2010, and 2011 revenues that peaked at $20.9, Nike’s customers have a high bargaining power with regards to their social backgrounds and average total household income. The target market for Nike Inc. earns an average total household income of $50,000 to $150,000 per year making the target market upper-middle class. The customer base of Nike Inc. is cultured in terms of quality and continued use of the company’s products, therefore, it has very little interest in switching brands. Trends in this market show that 62% of customers buy Nike shoes once per year as their use for the shoes is central to exercise and athletic reasons. The target market includes athletes and non-athletes while 19% of all sales are from athletes while the rest are distributed amongst customers looking for products giving/providing comfort, enjoyment, fitness exercise, and quality collections. Supplier Bargaining Power Given the market share of more than 35% that Nike Inc. has secured within the industry, the bargaining power of suppliers is weak due to the fact that there are few other companies that can sustain their survival better than Nike. For example, competition between suppliers in 2012 resulted to increased revenues for Nike as sup pliers had to win Nike’s confidence by lowering their prices and providing discounts in order to win the tenders. Additionally, Nike’s market share has placed the company as a high contender of the suppliers with best deals . Due to bulk purchases of supplies, the company enjoys extensive cash and purchase discounts (Lazich, and Virgil, 2011). Threat of Substitutes Reflecting back on the competitive forces that shape the sportswear industry, it has been noted that most companies in this industry capture their market share with regards to trends, customer behavior, and culture of the company (Lazich, and Virgil, 2011). Nike Inc. faces a major threat of substitutes from various companies starting with the major competitors Adidas and Rebook. However, Nike shoes and other products fair better on the competitive market due to brand recognition rather than quality and design. With regards to purchasing power of customers, above 62% of return customers buy shoes once a year and have more than $50,000 in total household income (Lazich, and Virgil, 2011). Due to prices that match the quality of products traded by Nike, substitutes bridge the gap between low income earners and product sales. For example, the market share owned by companies labeled as others is 29.68 (Mirando, (2012). Threat of New Entrants The threat of new entrants in the sporting industry is almost zero. Two considerations make up for this claim. Firstly, the sportswear in