Leadership and Differentiation Strategies Laura Allard November 21, 2010 William Hogan Management Cases Upper Iowa University Abstract This paper discusses Low-Cost Leadership and Differentiation business strategies.The paper explains what each strategy is and how they can be applied, utilized and maximized as strategies for a company. Disadvantage of the cost leadership strategy is lower customer loyality, the reputation of the company may also result in the producing low quality of the product and rebrand itself with a good reputation with leadership. The strategy is achieved by producing consumer goods and services that customers perceive to be of high quality or have added unique features. The generic competitive strategy of differentiation helps the company enter new markets, based on product attractiveness. Founded in 1967 Nike has emerged as the most preferred footwear company for the athletes. Parnell, J. For example, Nike enters new markets in Africa and the Middle East to increase its shoe sales revenues. Nike incorporates a business level strategy that most resembles a differentiation strategy. So Nike contracted with many athletes’ spokesperson, professional teams and college athletic teams to advertise and promote their products to customers. Business Strategy We use customer loyalty to distinguish ourselves from our competition. For GDPR compliance, we do not use personally identifiable information to serve ads in the EU and the EEA. It is these qualities that attract consumers to them. Strong product portfolio:  Nike have strong product portfolio as being present in various interrelated business segments is helping the company in retaining its customers and provide a bundled products to them. ... they actually price lower than Nike in a lot of different areas strategically. It is a brand made for the youth and its logo and slogan reflect the same young energy. Through differentiation generic strategy, Nike positions its product offerings in a way to stand out and be different from the available alternatives. Through product innovation, technology development, and high quality products, they are able to differentiate themselves from competitors and build their brand image. Targeting is the important aspect of the marketing strategy, especially when a company is in different businesses. It uses separate campaign or strategy to cap the market potential of the different segments.Targeting is the important aspect of the marketing strategy, especially when a company is in different businesses. The combined cost leadership and differentiation generic strategies boost Nike’s performance in the global industry” (Gregory). The athletic wear brand announced yesterday a plan to focus its organizational resources going forward on 40 key retail partners and its own consumer direct efforts while pulling back from “undifferentiated” channels of distribution. Nike have strong product portfolio as being present in various interrelated business segments is helping the company in retaining its customers and provide a bundled, Nike distributes its products worldwide through different, Nike is the well-known brand globally and its association with the various sports, athletic footwear and sports equipment industry are highly competitive due to the presence of a large number of local and, Business segments in which Nike operates has a large number of local & national players. Organizational Culture Characteristics: An Analysis, Nike Inc. SWOT Analysis & Recommendations, Nike Inc. Operations Management: 10 Decisions, Productivity, Nike Inc.’s Marketing Mix (4Ps/Product, Place, Promotion, Price) - An Analysis, Nike Inc. PESTEL/PESTLE Analysis & Recommendations, Nike’s Promotional Mix (Marketing Communications Mix), Puma’s Generic Strategy, Intensive Growth Strategies & Competitive Advantage, Puma’s Organizational Culture & Its Characteristics (An Analysis), Puma’s Mission Statement and Vision Statement (An Analysis), Burger King’s Generic & Intensive Growth Strategies, PepsiCo’s Generic and Intensive Growth Strategies, Toyota’s Generic Strategy & Intensive Growth Strategies, Puma’s Organizational Structure & Its Characteristics (An Analysis), Ford Motor Company: Generic & Intensive Growth Strategies, Harley-Davidson’s Generic & Intensive Growth Strategies, About Nike – The official corporate website for Nike, Inc. and its affiliate brands, Generic Strategy (Porter's Model) & Intensive Growth Strategies. Being present in footwear, sports equipment, clothing and many others Nike uses differentiated targeting strategy.Produc… Nike Inc.’s Mission Statement & Vision Statement (An Analysis), Nike Inc. Nike’s marketing strategy has remained a subject of study. A suitable strategic financial objective based on this intensive growth strategy is to increase Nike’s market share through cutting-edge technologies integrated in the design of sports shoes, apparel and equipment. Definition: Differentiation strategy, as the name suggests, is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market.It entails development of a product or service, that is unique for the customers, in terms of product design, features, brand image, quality, or customer service. Merchant, H. (2014). Versatility as the strength of Nike goes beyond its basic function of impact protection such that Nike can shape and tuned to cater the demands of athletes in a detailed manner. It invests in research and development, to learn about customers’ taste and fashion trends. 2.1.2.1 How Nike uses differentiation strategy? Let’s look at their audience. Nike’s product line is not wide: they offer athletic shoes, workout clothes and a very limited number of additional products. We offer high quality goods at an acceptable price. Their latest boots, of course, are made of the most perfect materials. Also, Nike is in the industry which is by and large affected by the product life cycle which means that sometimes it’s very difficult for the company to respond to the fad timely. For that reason, Nike applies aggressive marketing strategies in parallel with the marketing mix the company develops in order to make further known its target 6 SEGMENTATION, TARGETING AND POSITIONING STRATEGY OF NIKE & BYING DECISION ANALYSIS consumers company’s products, enchasing its uniqueness and exclusivity (About Nike, 2018). (1997). Nike quality and durability is a critical part of their strategy to be able to command high prices for their products. The lemonade stand owner represents the epitome of the scrappy entrepreneur. In the late 1990s, Nike reduced costs and the selling prices of its athletic shoes and other products. Aside from foot wear, the company boasts of products such as clothing, equipment, and even accessories. The Nike brand and its offering are Stars in the BCG matrix while Converse, Hurley and Jordan are the question mark in the BCG matrix due to their presence in the limited countries. We realize that the team-mentality that captured the spirit of athletics in the late 1980's and early 1990's has been replaced by a sense of individualism. In the Nike world it’s all about brand and brand doesn’t benefit from a lack of differentiation or association with weak partners. Establish Your Mission. We use cookies for website functionality and to combat advertising fraud. For creating such value it uses the following resources – New Balance appears to have a better differentiation strategy than Nike because they succeed in a niche market where they are … Before this, the sentence “It was a 90-minute infomercial and it was awesome” could never have been written. Nike has subsidiaries such as Converse, Hurley and Jordan for driving growth with the help of the different brands. On the other hand, Nike’s intensive growth strategy reflects the company’s focus on innovation to develop the business. In addition, a financial objective related to this intensive growth strategy is to increase Nike’s sales revenues through more sales to sports enthusiasts in current markets. Nike mainly concentrates on the sportswear for the sports person and also concentrates on the style of the product how it looks! ... We use strong diversification in what we sale to the differentiation of our consumers. Nike’s Intensive Strategies (Intensive Growth Strategies) The others use “Product Differentiation” as a strategy to obtain a premium price by making unique products. Diversification can support Nike’s generic competitive strategy of differentiation through new businesses that supply materials for product innovation in the athletic shoes, apparel and equipment business. For example, the company integrates cutting-edge designs for its shoes. The cost leadership generic competitive strategy empowers Nike to penetrate markets based on product affordability. For example, if your product is more expensive than the competitor selling the standard product, and the consumer doesn't see the added value in your product, they'll likely choose the cheaper option. Starting from its Swoosh logo to the famous ‘Just Do it Slogan’, these are important factors differentiating it from its competitors. Nike Inc.’s generic strategy (based on Michael Porter’s model) is appropriate for its diverse product lines, ensuring competitive advantage. We realize that the team-mentality that captured the spirit of athletics in the late 1980's and early 1990's has been replaced by a sense of individualism. Nike, Inc. uses Michael Porters strategies for competitive advantage such as cost leadership, focus, and differentiation (Johnson & Scholes, 2008). Starting from its Swoosh logo to the famous ‘Just Do it Slogan’, these are important factors differentiating it from its competitors. Market Penetration. Nike uses psychographic segmentation variables to make its offerings more attractive to the target customers. Their brand is associated with providing top-notch … This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Nike has achieved compounded annual growth rate (CAGR) of 11% for the period of 5 years i.e. Nike receives footwear from more than 140 factories located in 13 countries across the globe. This can be a summation of their competitive advantage: their brand name and the high quality product. Essay on Nike’s Market Positioning Strategies Through Nike’s years of existence in the business, it has gained much of the American athletic gear … Constant Innovation. Segmentation, targeting, positioning in the Marketing strategy of Nike –, Competitive advantage in the Marketing strategy of Nike –, BCG Matrix in the Marketing strategy of Nike –, Distribution strategy in the Marketing strategy of Nike –, Brand equity in the Marketing strategy of Nike –, Competitive analysis in the Marketing strategy of Nike –, Market analysis in the Marketing strategy of Nike –, Customer analysis in the Marketing strategy of Nike –, What is coaching? See our Privacy Policy page to find out more about cookies or to switch them off. Outsourcing of the manufacturing helps the company in keeping its operational cost low and at the same time focus its competencies on sales and marketing activities to drive the sales. Let's stay in touch :), Your email address will not be published. We are perceived as “fancy” to most manufacturers in the industry. Customers of Nike ranges from individual customers to companies. 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