Competitive Advantage of Companies

Industry Overview

From the mid-'80's to the early '90's, the athletic shoe industry experienced impressive growth. American consumers purchased over 200 million pairs of rubber shoes, resulting to a total of $5 billion worth of revenues for athletic shoe manufacturers. The widely-segmented athletic shoe industry is spearheaded by companies such as Nike, Adidas, and Reebok. The triad of major sports shoe industry has dominated the industry for the last two decades. They own an astonishing 70% of the industry's market share.

However, Nike leads the industry, and has single-handedly overwhelmed both Adidas and Reebok. Nike has been successful in maintaining its position above all other athletic shoe companies. Whereas Adidas and Reebok has been finding a myriad of alternative ways to dethrone Nike for athletic shoe dominance. Recently, Adidas has acquired Reebok for $3.78 billion. This results into a plethora of possibilities and ramifications in the athletic shoe industry. An athletic shoe company owes its success to its competitive advantage. A company's competitive advantage is the very core of its existence as a company.

Nike

Nike's competitive advantage aims to mitigate matters like global competitive similarity and potential new market barriers to penetrate. Nike faces a plethora of competitors from United States to Europe. Emerging markets like Asia is one of Nike's potential target markets. Adidas and other companies have attempted to subdue Nike by manufacturing shoes which carry unique fashion twists. This threatens Nike's market share and its potential target markets. With this in mind, Nike's market share and potential target markets are not secured.

The global market for athletic shoe industries always make room for a myriad of opportunities, which competitors will exploit in order to dominate the athletic shoe industry. Nike copes with such threats by employing its own competitive advantage.

Nike's research and development coupled with its massive advertising is the company's primary competitive advantage. Nike's knack for charismatic marketing and massive advertising bolsters its sales. Nike owes its annual increase in revenues to its advertising. Nike's advertising arsenal is augmented by larger than life celebrity athlete endorsers, which entice consumers in patronizing Nike products; Nike ensures that their endorsers like Lebron James and Tiger Woods is given manic exposure in order for their products to be promoted. Consumers buy Nike not because of the brand alone, but due to the notion that their celebrity athlete idols are wearing Nike.

Another competitive advantage of Nike is its technology. Nike's research and development division ensures that every Nike product is augmented by its innovative technology, which complements the performance of an individual. Even though Nike commands a high price for its products compared to its competitors; its technology is its claim to fame, which is why consumers don't mind a high price for a high quality footwear like Nike. Nike does not compromise its quality standards for a price. Its benchmarking is another competitive advantage of the company (Bogoslaw, 2007).

Adidas

“Brand in the hand” - is Adidas' approach in its marketing strategy in order to bolster its sales. Even though Adidas is the pioneer of the athletic shoe industry, it never stops the progress of the promotion of its products. The proliferation of the Adidas brand is augmented through the use of a massive mobile marketing campaign. A mobile news ticker for the World Cup is the linchpin for Adidas' marketing campaign. Like Nike, Adidas is has also complemented its advertising capabilities by signing up celebrity athlete endorsers.

This is to promote Adidas products through sports played by these professional athletes. Adidas's competitive advantage is its knack for fashion products. Adidas products tend to be a casual wear for most people. Today, Adidas' biggest competitive advantage is being the official outfitter for the NBA. Obviously, the NBA provides Adidas a plethora of opportunities to promote the product.

The NBA's international exposure augments the marketing campaign as well as Adidas products. The NBA has the largest global coverage among American professional sports. Adidas is also on the lookout in overwhelming emerging markets like Asia. Adidas is currently sponsoring the Beijing Olympics. This only shows how adamant Adidas is in promoting its product in order to generate revenues. The competitive advantage of Adidas has been augmented by its acquisition of Reebok. The competitive advantage of Adidas is its knack for casual wear and its dedicated proliferation of its product (Balfour, 2007).

Reebok

After it was bought by Germany's Adidas, Reebok has embraced a casual approach in its marketing strategies. The primary goal of the merger is to dethrone Nike perennial supremacy in the athletic shoe industry (Kiley, 2005). Both companies perceived that synergy between them will result into better chances of overwhelming Nike (Kiley, 2005). Reebok and Adidas shows with its merger that it refuses to be an alternative brand for Nike. Adidas gives Reebok a significant asset in nurturing its brand in a plethora of emerging markets.

Asian countries like China and Korea are known for being fashion-oriented markets (Kiley, 2005). Both companies believed that it will complement each other's marketing strategy. With the acquisition of Reebok, Adidas does not have to exert the much-needed effort to promote their brand in China. Considering that Reebok has already made a deliberate impact with Yao Ming as their flagship endorser (Kiley, 2005). Reebok's competitive advantage lies in its casual footwear and hip-hop influenced apparel.

References

  • Kiley,D. (2005). Reebok and Adidas: A Good Fit.Retrieved. April11, 2008 from http://www.businessweek.com/bwdaily/dnflash/aug2005/nf2005084_8340_PG2.htm
  • Bogoslaw,F.(2007). A Slam Dunk for the NBA in China. Retrieved April11, 2008 from http://www.businessweek.com/investor/content/sep2007/pi20070921_088651.htm
  • Balfour,D. (2007). Nike Gains On Global Reach. Retrieved April11, 2008 from http://www.businessweek.com/globalbiz/content/oct2007/gb20071023_180498_page_2.htm