New Balance
Situation Analysis
New Balance International was founded during the early 1990s specializing in orthopedic footware to improve the fit of their shoes. Today the company continues its founding values in a highly specialized niche business of providing athletic footware in a wide range of widths and sizes which distinguishes the product from its competitors. With the philosophy of “one size did not fit all,” New Balance expanded operation from the US and currently markets its product in 160 countries in six continents. New Balance Inc. first appeared in South Africa In 1976 when a Durban based company obtained a license to distribute the brand. Under this distribution plan the company held a very small percentage of
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Switching cost are low for the athletic shoe industry because shoes are a relative inexpensive personal good that is frequently replaced.
Bargaining Power of Suppliers: Suppliers have little bargaining power, and little impact on profit potential because most large athletic shoe manufactures have relocated their factories in countries where labor is inexpensive. Moreover, athletic shoes are manufactured from raw materials such as rubber, leather and nylon. The manufacturing process actually adds to their value.
Threat of Substitute Products: Atheletic shoes are designed for comfort, fit and personal safety during periods of iintense or increased movement. The existence of close substitute products increases the propensity of consumers to switch to alternatives in reponse to price increases. The availability of substitutes in the athletic shoe industry, invites customers to make price, quality and performance comparisons. If the athletic shoe is used for a specific sports, there maybe relatively few substitutes. If the shoe is used because of comfortability, they are interchangeable with minimal switching cost. This holds true for athletic shoes worn for fashion. Overall the threat of substitute products is moderate and depends on the motivation for purchasing the product. The impact to profit potential is moderate to high.
Bargaining Power of Buyers: Buyers tend to have a high switching cost in regards to opportunity cost. If an athletic
Sports shoes still remains the focus of New Balance and the company has experienced remarkable growth over last 40 years. It especially had
The trade policies in NorthAmerica are quite liberal when compared to the other areas of operation such as LatinAmerica and Europe.
sale of Nike’s high-margin products to high-end customers. Regardless of the low cost of the World Shoes, they
New Balance was founded by William J. Riley in 1906 in the city of Boston. Riley started by making arch supports for customers who had to spend all day on their feet. Over time the building of arch supports led to the creation of his first running shoe in 1925. As part of a local running club, Riley capitalized on an opportunity to improve running shoes of the time and his designs became widely popular. His new running shoes became so popular that by the 1940’s that production spread from running to many other sports. Then the expansion of the manufacturing significantly increased as he realized a need to running shoes with more selection for wider feet, and
The concept of market structures and competitive strategies are important when attempting to compete in any market. Understanding what market structure your product falls under can help companies develop better competitive strategies and identify potential for loss and gains. The athletic footwear industry in the United States is highly profitable and continuously growing. In this paper I will identify market structure of the athletic footwear industry, the major retailers, and competitive strategies that can be used to maximize profits.
Threat of substitute product is any company can make an athletic shoe. Puma, Adidas, and Reebok all produce athletic shoes and apparel. These companies are Nike’s top competitors. They try to develop alternative brands to eliminate Nike from the market. Nikes utilizes trademarks on nearly all of their products and believe having distinctive marks that are readily identifiable is an important factor in creating a market for their goods. Nike identifies their brands and the company distinguishes their goods from the goods of others. Nike considers NIKE® and Swoosh Design® trademarks to be among their most valuable
Bargaining power of buyers is medium-high because of the low switching costs and wider spectrum of similar products selling at competitive prices due to the influence of developing countries
Nike is the leading and yet renowned supplier of athletic apparel and shoes. The company controls close to 33% of the global athletic shoe market (Dogiamis & Vijayashanker,2009).Nike was founded by Bill Power and Phil Knight in 1962 as a Blue Ribbon Support and then was later on renamed to Nike in the year 1968 (Patrow,2003).The company supplies very high quality product in close to 100 countries with major markets being located in the U.S,U,K, Asia Pacific as well as in the Americas. The company has managed to attain its lead and legendary position via the application of innovative and yet attractive product design which is backed by quality production as well as well crafted marketing strategies.
There are other footwear’s that provide the same level of comfort and satisfaction such as the shoes designed by Nike, Adidas, Bata etc. as well as sell at a competitive price.
Companies like Under Armour, Nike and Adidas/Reebok have high threats of substitute´s products. These companies share the sport apparel industry and are vulnerable to competitive pressure from the actions of buyers whenever they view that their products can be substituted for others. The availability of substitutes invites the costumer to compare performance, features, and ease of use as well as price. Under Armour’s major competitors are Nike and Adidas/Reebok because they have a similar or competing product offerings. The top sport apparel brands offer similar products and that is why each one of them needs to keep a high standard and produce good quality products in order for customers to keep buying their product.
Since its creation, Nike has proven itself as a popular brand and it has created niches by selling products such as footwear, apparels and various types of sports equipment. This paper will attempt to trace the product development of Nike shoes from its origins in conception and design to the manufacturing and production process located in contract factories in developing countries to advertising and marketing of Nike as a cultural commodity and finally, the retailing of the footwear around the world.
And with low prices, moms and dads can afford more than one pair that can be used for church, weddings, holidays, and other special times. Children at this young of age grow rapidly and usually need new shoes at least every six months. Some of the advertisements will show this problem, but the viewer will see that they can payless at Payless. College students will also be targeted. Students in college get more professional and will need dress shoes for internships, certain classes, school trips, or clubs. At this age, males are more flexible with their formal footwear and will appreciate the low prices. Once graduated, they will be young professionals getting out into the work force. And will be in need of new dress shoes. It is clear the Payless ShoeSource is missing out on a market opportunity. This recommendation will help Payless to bring in more males and have a larger client
Shoes have always been an important part of a daily outfit. Shoe manufacturing in the United States has become non-existent. Companies like Nike and Adidas are off shoring their products to cut cost and gain a larger profit.
Limited bargaining leverage helps Lululemon Athletica, which have a short-term positive impact on this entity, which adds to its value. "Large number of customers (Lululemon Athletica)" is a difficult qualitative factor to defend, so competing institutions will have an easy time overcoming it.
The threat of new entrants in the athletic shoe industry is very weak. Currently the market is dominated by three major competitors, and