Nike- an Ecnomic Report

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CHAPTER 1: COMPANY BACKGROUND
Nike is the world's leading designer, marketer and distributor of athletic footwear, apparel, equipment and accessories for a range of sports and fitness activities. Nike is headquartered in Beaverton, Oregon and owns facilities in Tennessee, North Carolina and The Netherlands. The company operates in the Americas, Europe, the Middle East, Africa and Asia Pacific. Nike’s primary product focus is athletic footwear designed for specific-sport and/or leisure use. Nike is the world's largest supplier of athletic footwear, with an estimated share of 50% of the $20 billion market. Sports apparel and equipment are also sold under the Nike banner. Nike is classified under the Footwear manufacturing and marketing industry with a Standard Industrial Classification Code (SIC) 3021- Rubber and Plastics Footwear and its primary North American Industry Classification System (NAICS) code is 316211 - Footwear Manufacturing in the US. CHAPTER 2: MARKET DEFINITION

Products: Nike primarily caters to the vast market for athletic footwear and athletic apparel in the world. It is the largest seller of athletic footwear worldwide by sales. Its operations can be divided into three product lines: footwear, apparel and equipment. Footwear is Nike's largest product category, representing about 52% of the company's revenue followed by apparel product line (28%) as shown in Exhibit 1.1 (Refer Exhibits). In addition to its namesake Nike brand, the company also develops and markets footwear and apparel products under the Cole Haan, Converse, Hurley International, and Umbro Inc. brand names. Geographical segmentation: Nike sells its products in over 180 countries worldwide through its company-owned retail stores and internet sites, as well as through retailers. The company divides its sales into four regions across the globe- the United States, Europe, Middle East and Africa (EMEA), Asia Pacific, and Central and South America. In 2008, these regions accounted for 34.2%, 30.2%, 15.5%, and 6.2% of Nike's revenue, respectively as shown in Exhibit 1.2 (Refer Exhibits). The area of focus in this report is the United States where Nike makes over 34% of its revenue. Market Segments: Nike targets a wide range of customers depending on the type of product offered. Its market segment covers a broad spectrum of customers ranging from teens, age groups 16-20 yrs; to adult age groups 21-40 yrs. Lately Nike also has products for kids aged between 3yr- 7yrs. Although Nike’s main target group was men and mostly athletic professionals, over time it has expanded its product line to accommodate female customers and non-athletes. CHAPTER 3: MARKET STRUCTURE

Competitors: Nike sells products for such a wide variety of sports that it not only competes against many niche companies, like New Balance, Fila, ASICS, Columbia Sportswear, but also against similar large athletic footwear and apparel manufacturers like Adidas AG, Puma, Reebok, Skechers. Competition in the footwear industry is medium and steady. Thus, the market structure for Nike’s footwear is monopolistically competitive with many medium-small scale and large scale companies vying for market share. The major competitors along with the market shares are shown in Exhibit 1.3 (Refer Exhibits). Nike not only has to compete with athletic footwear manufacturers but also with other regional casual/fashion footwear manufacturers like Timberland Company, Wolverine World Wide, Phoenix Footwear, Dick’s Sporting Goods, Finish Line, Big Five, and Hibbetts. Product Similarity: There are companies like Adidas, Reebok, Fila, and Puma who manufacture footwear similar to that of Nike. Although there are certain variations in the design and pattern of Nike footwear, the basic designs are all the same. However, to an extent, the differentiating factor would be Nike’s continual innovations for better product development. For instance, Air Jordan XX3 is the first basket ball shoe designed to embrace...
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