Creating a brand identity that is globally recognized by its logo without being a typical fashion brand is no joke. Nike started off by targeting only athletes but soon became a household name for sneakerheads. And how did they “Just Do It”? Let’s look at the Nike SWOT analysis to understand that.
Nike SWOT Analysis
Back in 1964, when Bill Bowerman founded the company, his plan was just to make more comfortable shoes for American runners.
Over time, the Nike company shifted its focus from selling shoes to selling a lifestyle.
Which is what almost all successful brands do. However, the way they do that depends on their strengths, weaknesses, opportunities, and threats. So, let’s look at the SWOT analysis to understand exactly those internal and external factors for Nike.
Strengths
We’ll be discussing the current scenario in this analysis. These pieces of information showcase the Nike strengths that are helping the Nike brand consolidate its market share in the footwear industry. So, here are some advantages Nike Inc., has over its competitors.
Global Brand Recognition
To compete with already established brands like Adidas and Puma, Nike was ready to play the big game. And to ensure their global brand recognition, Nike masterfully incorporated the brand philosophies of simplicity, design, and style in all their sports apparels and footwear products. From the iconic “Swoosh” logo to the “Just do it” tagline, Nike’s business model has heavily depended on its brand perception.
Till May 31st, 2023, Nike had 1,032 global retail stores. And according to the news, they had 700 more in the pipeline to improve their competitive advantage. All of them are in 45 countries outside the US.
There are 370 of those stores in the United States alone. So, in addition to distributing to stores and individual sellers, they invested in standalone shops and exclusive brand outlets to increase brand visibility.
Innovative Products
Nike never shied away from experimenting with its products. This is why it was able to create some of the iconic innovations in the history of shoes. To name a few, there is the Air Max (1987), the ReactX Technology, and the Nike Forward.
Besides, Nike always tries to be up-to-date. For example, right now, AI is the talk of the town.
So what does Nike do? It starts using AI across its operations to enhance customer experience through key features like personalized recommendations, life-like virtual assistance, and others. And it’s not something new—they’ve done that in the past, too.
In 2015, Nike acquired a patent for an augmented reality design system. This system was later used to design sneakers with holographic technology. But let’s also discuss some of their innovative products that bolster their brand image.
Just a year later, they introduced self-lacing shoes inspired by the movie Back To The
Future. With the rising focus on physical health, Nike didn’t need to do all this, especially when they were already famous. However, Nike’s strategic management knew that constant product innovation was the key to long-term success.
So, they took another step and announced their Triple Double strategy in 2017.
According to this strategy, they would double their innovations, market speed, and direct connection with their loyal customers. This case study also shows why product innovation is one of the significant strengths of the Nike brand.
Strong Marketing Strategies
How do you think Nike was able to sell us a lifestyle and not just shoes? It was all skilful marketing strategy combined with masterful storytelling. Nike has always been extremely strategic about its marketing and is famous for its celebrity endorsements.
The brand hit its biggest jackpot when it signed Michael Jordan in 1984. Back then, Jordan wasn’t even that famous, but they saw his future potential and placed the bet on him. Needless to say, they were right, and by the end of 1985, Jordan netted Nike more than $100 million.
Since then, the brand has signed countless famous athletes like LeBron James, Roger Federer, Maria Sharapova, Kevin Durant, Derek Jeter, and so on.
However, Nike’s marketing is not all about celebrity endorsement. They are very aware of their targeted audience. So they often celebrate different sports cultures, share stories behind the products, and promote all good things like diversity, equality, and inclusion.
They highlight every aspect of themselves that is currently trending, like using sustainable materials, making their marketing campaigns a big success.
Diverse Product Line
Although starting with just runners, over time, Nike has added many more categories in athletic footwear. For example, basketball, the Jordans, soccer (football), men’s and women’s training shoes, action sports, and golf shoes.
But that’s not it. As mentioned before, Nike is no longer just a sports shoe brand; it also sells sports equipment, accessories, and sporting goods like bags, socks, sports balls, eyewear, timepieces, digital devices, bats, gloves and protective wear.
Nike Inc has different brands under its name to market and sell each of these, like Nike Golf, Nike Pro, Nike+, Nike Blazers, Air Force 1, Nike Dunk, Air Max, Nike CR7, Nike Skateboarding, etc.
Global Supply Chain
Nike gets its supply from all over the world as its supply chain strategy is based on outsourcing, diversification, automation and CSR. It outsources 100% of its footwear and sports apparel to independent suppliers. And it is genius because it saves a lot of money.
China is the leading manufacturer of Nike, followed by Taiwan, Indonesia, India, Vietnam, the Philippines, South Korea, and many other Asian countries. For South American locations, Nike outsources from Australia, Canada, Italy, Mexico, Turkey, and the US.
Nike also follows a forecast-driven and make-to-stock supply chain model. Due to this, retailers can place weekly orders based on their on-hand inventory in distribution centers.
Weaknesses
Next, in this Nike SWOT analysis, we have the brand’s weaknesses. Now, some of these can be reversed, while some can’t be. So, let’s see what they are.
Controversies and Legal Challenges
To be honest, Nike does not have one of the cleanest reputations. In the past, it got into many controversies and some very serious ones, like child labor, forced labor, low wages, and poor working conditions. They have also been accused of using sweatshops since the 1970s to produce their sneakers and activewear.
In 2018, the ex-workers of Nike produced 5000 pages of records surveying the female employees who testified to the sexist and gender discriminatory practices that took place in the company.
The Nike brand has tried its best at damage control by aggressively pushing its “inspiring” marketing campaign. But then again, in 2023, rumors again started spreading about whether the brand is ethical or not with their refusal to pay $2.2 million in unpaid wages to their garment workers.
Soon, however, people started questioning Nike’s claims of " responsible sourcing,” “empowering communities,” and “protecting the planet.” their conclusion was that the brand was simply trying to greenwash its image.
Seeing how woke the next generation is and how popular the “Boycott culture” is becoming, this can be one of Nike's biggest weaknesses, which is difficult to undo.
Dependence on the Footwear Market
According to Statista, in 2023, 68% of Nike’s revenue solely came from its footwear. This means that, even after so many years, the brand is largely dependent on the footwear market.
The product diversification is there, but it’s not doing much. And with the rise of e-commerce and new sneaker brands popping up each day at an affordable price, their market can experience a crunch.
If we look at Nike’s competitor, Puma, 50% of its sales are from shoes, and the rest are from sports apparel and accessories. Which is still a healthier balance. The same can be said for Adidas, with approx 55% of sales from footwear.
With a focus on only one segment, there is always a risk of limited growth. Especially if the segment has reached its peak, which is the cake for Nike footwear. Plus, in the future, if Nike ever tries to change the brand precipitation from athletic footwear to something else, this dependency will be a huge roadblock.
Outsourcing Production
As we mentioned before, Nike outsources 100% of its footwear and sports apparel production. It has been their biggest strategy to cut costs, however, in no time, it can become one of their biggest weaknesses.
The biggest issues with outsourcing production are the lack of control and domain knowledge. The brand has no clue how the suppliers cut costs and produce the goods.
This again raises questions on the brand’s claims of being “ethically sourced,” “
Besides, with outsourcing, there always remains a risk of supply chain disruption. What if the suppliers face a natural disaster, political instability, or, even worse, go bankrupt?
There are so many things that can go wrong.
So unless they start producing at least half of their goods, this outsourcing plan will remain a headache and, of course, one of the biggest Nike weaknesses.
Opportunities
In SWOT analysis, opportunities are like hidden cards that a business hasn’t used yet, but they can be extremely beneficial if they do. However, the problem is that businesses do need to put effort into identifying these scopes. So, let’s look at some opportunities that Nike can take advantage of.
Expansion into Emerging Markets
Up until now, Nike was mostly focused on the United States market and North America. However, in high-growth regions like Southeast Asia, Africa, and Eastern Europe, disposable income has significantly increased in the past few years. Two very high-value markets would be India and Brazil.
The number of so-called “middle class” are showing growing interest in sports and fitness, which can be a great opportunity for Nike.
To target this audience, Nike could develop product lines that cater to their specific climate needs and sports trends. Plus, to tackle its product diversification issue, Nike can also try focusing more on its sports apparel and accessories segment in these new markets.
Growth of E-commerce
E-commerce has provided a level of convenience that no other channel could. This is why now there’s a segment of shoppers who explicitly shop online. Now that they are not on Amazon anymore, Nike should invest more in its online storefront and promote it.
They should also start promoting their app called SNKRS, which not many people are aware of.
Nike has already been praised by customers for its good customer service in online stores, but there’s still room for improvement. Many have pointed out that the website does look very plain and lacks character. While it can be their design strategy to keep it minimal, the audience is not liking it much. Especially when the brand is known for its extravagant celebrity campaigns.
Sustainability Initiatives
From the weakness section in Nike’s SWOT analysis, we found out how many controversies this brand has gotten into. While Nike tried to make up for it, something or another kept coming out.
Now, the only way for Nike to kill all the noise is by continuing to do what they promised, which is being more environmentally responsible. It is one of the most effective methods since people are becoming more environmentally conscious and supporting sustainable brands.
Nike recently launched a collection called Nike Forward, which allegedly has a 75% lesser carbon footprint. Many labeled it as Nike's second-best innovation after their Dri-fit. It became quite a popular material that also helped Nike push their sports apparel segment forward a bit.
Nike Forward gave the brand a competitive edge and is thought to change the apparel industry. So, it’s clear that if they can come up with a couple of more innovative ideas that are sustainable and versatile, the brand can fix a lot of its weaknesses.
Technological Advancements
Even though Nike is known for adapting new technologies and product innovations, there’s still a major aspect that they lack. That is developing an anti-counterfeit technology and method.
Counterfeit products, or what we call replicas, are a big challenge for brands like this. Imagine spending five-plus years researching and developing a shoe design and a manufacturer duplicating it within five weeks! And now they are selling that subpar-quality knockoff at one-third of the original price.
Those who are new to the brand may even believe those replicas are originals and get disappointed by the quality. This was also the main reason Nike pulled off from Amazon.
So, under this section in our Nike SWOT analysis, anti-counterfeit technology can be a good addition to solve such problems for good.
Threats
The last section of the Nike SWOT analysis is the threats the business carries. The threats are external factors that might cause trouble or negatively impact the business model in the future. So, let’s see what those factors are for Nike.
Intense Competition
Even though Nike is one of the OGs of the sports footwear segment, it’s never a good idea to underestimate the competition. There’s Adidas, Skechers, Vans, Moonstar, Converse, and New Balance that capture a significant part of that same sports footwear market.
Alongside these big names, there are hundreds of new brands emerging every day with strong storytelling and USPs. Unlike before, gen Z and the next generations are not very brand loyal. Since the rise of fastfashion they only care about getting their money’s worth.
Plus, nowadays, information is so accessible that the newer generation has enough data to scrutinize a brand. Thus, selling them fake aspirations won’t do the trick.
Along with that, now every medium to big size brand is following the marketing strategy of Nike, that is celebrity endorsement. Therefore, Nike has to come up with something new and exciting to win over that competitive advantage.
Counterfeit Products
As mentioned before, counterfeits are a huge issue for big brands. They disrupt the customer’s trust and create a negative brand image. The global counterfeit market is so huge that almost $2 trillion worth of counterfeits are sold to consumers annually.
People who can’t afford real products end up buying these low-quality counterfeits that look similar. In the case of Nike, some of the most popular counterfeits include the Air Jordans and other limited-editions.
Usually, these sneakers sell for hundreds of thousands due to their exclusivity. But imagine you are paying $100,000 for a pair of shoes and someone else getting the exact same for a fraction of the price. You will feel betrayed and blame the brand for not being careful enough, right?
That is how hundreds of genuine sneakerheads feel who spend their hard-earned money to build their original collection. And for a brand like Nike that is fueled by the idea of exclusivity, this is a huge threat. Unfortunately, online shopping played a major role in supporting this illegal market.
Market Sensitivity
For any brand that operates globally, there always remains a threat regarding market sensitivity. Especially with Nike's business model, where it outsources 100% of its production, any minor instability can cause a lot of problems.
Along with that, as an international brand, Nike also has to balance things like trade agreements, embargoes, trade tensions, and protectionism. China is one of the biggest manufacturers of Nike, but due to the post-COVID US-China tension, things may not be the same anymore.
Apart from all these unavoidable international matters, Nike also has some personal scandals to manage. Recently, Nike was accused of using Australian Kangaroo skin to manufacture leather football shoes.
Those who don’t know, some Australian Kangaroos are rare and endangered species and such allegations can severely damage the brand’s already fragile reputation.
Changing Consumer Preferences
A common yet significant threat factor in most brands’ SWOT analysis is the changing customer preference. There’s nothing a brand can do to stop it from happening. So, the only way is to make changes as per customer needs.
While it is great for a brand to have a signature product but relying too much on it can be dangerous. Something similar is with Nike. Nike is known for the Air Forces, AIr Jordans and Pegasus. But what happens when the new generation is no longer fascinated by it? Will the brand stay equally relevant?
Plus if someone wants to buy a vintage pair of Jordan, there are enough resellers in the market. There’s no need for them to pay full price for a new pair. So, this is something Nike should think about and start working on a new line that will resonate with the next generation.
Conclusion
That is a wrap for the Nike SWOT analysis. We hope now you all know what the brand has done right over the years and what changes it should make.
But, we must not forget that there is no secret formula for success. It is a continuous process. And SWOT analysis can be a good tool to keep things in check.
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