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Products: NIKE, Inc. (NKE)

Nike Brand Footwear(Nike Brand Footwear)
Nike Brand Apparel(Nike Brand Apparel)
Nike Brand Equipment(Nike Brand Equipment)
Other Businesses(Other Businesses)
Licensing Businesses(Licensing Businesses)

Nike Brand Footwear

What is being offered?

This refers to the division involved in the design, development, and marketing of footwear worldwide under the Nike brand. This typically includes the footwear designed for athletic purposes, but a large proportion is worn for casual and leisure purposes as well. The top selling footwear categories include:

  • Training
  • Running
  • Basketball
  • Sports-inspired casual shoes
  • Kids shoes

Apart from the above, the company also sells footwear in categories like aquatic activities, baseball, cheer leading, football, lacrosse, outdoor activities, skateboarding, tennis, volleyball, walking, wrestling, and other athletic and recreational uses.

Nike also sells footwear types like slippers and sandals. However, slippers and sandals constitute a very low percentage of overall footwear sales.

Who is buying?

Men, women, and children across the world, especially those who fancy sports inspired footwear.

What do buyers care about?

  1. Style and comfort
  2. Pricing
  3. Inclination to a particular sport
  4. Durability

Competitors

  1. Adidas AG
  2. Puma AG Rudolf Dassler Sport
  3. Under Armour

Nike Footwear Strengths

  1. Strong Brand:

    Nike has a strong brand recognition globally and has been associated with several famous sportsmen. It is currently one of the top sports brands in the world.
  2. Lean Organization:

    Nike doesn't manufacture footwear on its own, and instead outsources the production and focuses on innovation. This gives the company flexibility to get the best price and to move the production in case a better opportunity emerges.
  3. Strong Marketing:

    Nike has always been top-notch in marketing its product. Its promotions are usually tied to world famous sports personalities.
  4. Strong R&D:

    Nike has strong R&D capabilities which are evident from its ever evolving product line and introduction of innovative products to the market.

Nike Footwear Weakness

  1. Vulnerable to price sensitivity of retail sector:

    Since Nike sells most of its products through retailers, its likely to be under margin pressure from retail companies since they tend to pass savings to customers.

Global Sports Footwear Market

This refers to the global market for sports and sports-inspired footwear measured in US dollars.

The Global Sports Footwear Market increased from $63 billion in 2008 to $67 billion in 2010. The increase was primarily driven by strong growth in Asian markets, particularly due to a 5% growth in China.

With the improvement in macroeconomic conditions, the global sports market size increased to $74.7 billion by the end of 2011. The market size was estimated at $79.3 billion in 2015. The figure jumped to $83.8 billion in 2017.

Chart: Global Sports Footwear Market

Nike Footwear Global Market Share

This refers to the dollar market share of Nike footwear in the global market for sports and sports inspired footwear.

Nike footwear global market share has consistently grown over the years and stood at 25.4% at the end of 2017. This can be attributed to strong marketing and innovation by Nike as its product line has been consistently evolving. However, in the recent past Under Armour and Adidas have caused problems for Nike. The company is still significantly in the lead, but UA and Adidas are continuously level the playing field.

Chart: Nike Footwear Global Market Share

Nike Brand Apparel

What is being offered?

Nike sells sports apparel and accessories in several sports categories, sports-inspired lifestyle apparel, and athletic bags under the Nike brand. These products are essentially designed to compliment Nike footwear and are sold through the same marketing and distribution channels.

The apparel essentially includes jackets, caps, pants, t-shirts, sweaters, inner-wear, swimwear, shorts, socks, skirts, tops, and belts.

Who is buying?

Men, women, and children, especially those who fancy sports inspired apparel, are buying across the world.

What do buyers care about?

  1. Style and comfort
  2. Pricing
  3. Leaning to a particular sport

Competitors

  1. Adidas AG
  2. Puma AG Rudolf Dassler Sport
  3. Under Armour
  4. Quicksilver
  5. VF Knitwear

Nike Apparel Strengths

  1. Strong Brand:

    Nike has a strong brand recognition globally and has been associated with several famous sportsmen. It is currently recognized as among the top sports brands in the world.
  2. Lean Organization:

    Nike doesn't manufacture the apparel on its own and instead outsources the production and focuses on innovation. This gives the company flexibility to get the best price and to move the production in case a better opportunity emerges.
  3. Strong Marketing:

    Nike has always been top-notch in marketing its product. Its promotions are usually tied in with world famous sports personalities.
  4. Strong R&D:

    Nike has strong R&D capabilities which are evident from its ever evolving product line and the introduction of innovative products to the market.

Nike Apparel Weakness

  1. Vulnerable to price sensitivity of retail sector:

    Since Nike sells most of its products through retailers, its likely to be under margin pressure from retail companies since they tend to pass savings on to customers.

Global Sports Apparel Market

This refers to the global market for sports and sports-inspired apparel in terms of US dollars.

The Global Sports Apparel Market declined consistently over 2008-09 to reach $122.3 billion by the end of 2009. This decline was attributed to a weaker economy as the apparel market was hit harder compared to footwear. With an improvement in macroeconomic conditions, the figure improved over the next few years to reach $167 billion by 2017.

Chart: Global Sports Apparel Market

Nike Brand Sports Apparel Market Share

This refers to the dollar market share of Nike brand apparel in the global market for sports and sports-inspired apparel.

Nike Brand Sports Apparel Market Share has increased from about 3.7% in 2006 to 6% in 2017.

Chart: Nike Brand Sports Apparel Market Share

Nike Brand Equipment

What is being offered?

Nike sells performance equipment under the Nike brand which includes bags, socks, sport balls, eye wear, timepieces, electronic devices, bats, gloves, protective equipment, and other items. This also includes small amounts of plastic products that Nike sells to other manufacturers through its wholly-owned subsidiary, NIKE IHM Inc.

Who is buying?

Professional and casual players across the world.

What do buyers care about?

  1. Equipment quality
  2. Durability
  3. Brand

Competitors

  1. Adidas AG
  2. Puma AG Rudolf Dassler Sport
  3. Under Armour

Nike Brand Equipment Strengths

  1. Strong Brand:

    Nike has a strong brand recognition globally and has been associated with numerous famous sports figures. It currently is recognized as one of the top sports brands in the world.
  2. Lean Organization:

    Nike doesn't manufacture the apparel on its own, and instead outsources the production and focuses on innovation. This gives the company flexibility to get the best price and to move the production in case a better opportunity emerges.
  3. Strong Marketing:

    Nike has always been top-notch in marketing its product. Its promotions are usually tied in with world famous sports personalities.
  4. Strong R&D:

    Nike has strong R&D capabilities which are evident from its ever evolving product line and continued introduction of innovative products to the market.

Nike Footwear Weakness

  1. Vulnerable to price sensitivity of retail sector:

    Since Nike sells most of its products through retailers, it is likely to be under margin pressure from retail companies since they tend to pass savings on to customers.

Global Sports Equipment Market

This refers to the global market for sports equipment (excluding golf) in terms of US dollars.

The Global Sports Equipment Market declined from $50.1 billion in 2008 to $49.9 billion in 2009 owing to a weaker economy. With the improvement in global macro-economic conditions the figure improved to $68.4 billion by the end of 2012. The figure has improved since and reached $74.9 billion in 2017.

Chart: Global Sports Equipment Market

Nike Brand Equipment Market Share

This refers to Nike's share in the global market for sports equipment (excluding golf), in terms of US dollars.

Nike Brand Equipment Market Share increased from 1.9% in 2006 to 2.4% in 2008 as Nike benefited from its strong brand and marketing. However, the figure declined to 1.9% in 2010 as equipment sales slowed during the recessionary period. Nike Brand Equipment Market Share declined to 1.9% by 2012 but improved to 2.5% in 2014. The figure declined to 2.2% in 2015, and further to 1.9% in 2017.

Chart: Nike Brand Equipment Market Share

Other Businesses

What is being offered?

Converse Inc. is Nike's wholly-owned subsidiary that sells sports footwear and has built its reputation as America's original sports company. The subsidiary was acquired by Nike in 2003, and since, it has successfully re-established its market. The subsidiary has been associated with famous shoe brands like Chuck Taylor, Jack Purcell, One Star, and catering to sports such as basketball and tennis.

Who is buying?

Men, women, and children across the world, especially those who fancy sports inspired footwear.

What do buyers care about?

  1. Style and comfort
  2. Pricing
  3. Inclination to a particular sport
  4. Durability

Competitors

  1. Adidas AG
  2. Puma AG Rudolf Dassler Sport
  3. Under Armour

Nike Footwear Strengths

  1. Strong Brand:

    Nike has a strong brand recognition globally and has been associated with several famous sportsmen. It is currently one of the top sports brands in the world.
  2. Lean Organization:

    Nike doesn't manufacture the footwear on its own, and instead outsources the production and focuses on innovation. This gives the company flexibility to get the best price and to move the production in case a better opportunity emerges.
  3. Strong Marketing:

    Nike has always been top-notch in marketing its product. Its promotions are usually tied in with world famous sports personalities.
  4. Strong R&D:

    Nike has strong R&D capabilities which are evident from its ever evolving product line and introduction of innovative products to the market.

Nike Footwear Weakness

  1. Vulnerable to price sensitivity of retail sector:

    Since Nike sells most of its products through retailers, it is likely to be under margin pressure from retail companies since they tend to pass savings on to customers.

Other Businesses Revenue (excluding corporate)

This figure represents the revenues generated by NIKE Brand segment, which includes the revenues of NIKE Brand licensing businesses that are not reported as part of a geographic operating segment, NIKE Golf and Hurley revenues, and revenues for the Nike owned Converse brand.

The revenue for this division was nearly flat for the period between 2008-2012, only growing from 2.5 billion to 2.7 billion. A sharp growth was seen in 2013, due to a reorganization of the company's operating segments. The results of Nike Golf and Hurley were previously combined and reported as "Other Businesses" by the company. But as a result of this reorganization, the revenues of these segments get added to NIKE Global Brands Revenues.

Since the contribution made by Converse to the revenue of this segment is far larger than that made by the NIKE Global Brands and Corporate Revenues, it is fair to estimate the growth rate of this segment around the growth rate expected for the Converse business. In the 2012-2014 period, the Converse business grew at a rate of 12%, while the overall company revenues grew by 9%.

In 2015, the revenue figure stood at $1.9 billion. This figure has since remained almost flat. In 2017, revenues came in at $1.9 billion.

chart: Other Businesses Revenue (excluding corporate)

Licensing Businesses

What is being offered?

This refers to the division that is involved with licensing NIKE Brand property and know-how to individuals or organisation.

Who is buying?

Franchisees, corporations, sports franchises and sporting events across the world.

What do buyers care about?

  1. Distribution model
  2. Expertise
  3. Brand Name

Competitors

  1. Adidas
  2. Puma
  3. Under Armour

Nike Licensing Strengths

  1. Strong Brand:

    Nike has a strong brand recognition globally and has been associated with several famous sportsmen. It is currently one of the top sports brands in the world.
  2. Lean Organization:

    Nike doesn't manufacture footwear on its own, and instead outsources the production and focuses on innovation. This gives the company flexibility to get the best price and to move the production in case a better opportunity emerges.
  3. Strong Marketing:

    Nike has always been top-notch in marketing its product. Its promotions are usually tied to world famous sports personalities.
  4. Strong R&D:

    Nike has strong R&D capabilities which are evident from its ever evolving product line and introduction of innovative products to the market.

Nike's Licensing Revenue

This driver refers to the total revenue posted by Nike's Licensing division.

Nike's Licensing Revenue has increased from $56 million in 2009 to $80 million in 2017.

Chart: Nike's Licensing Revenue