Nike vs. Reebok: SWOT Analysis and Brand Strategy

Introduction and Company Overviews

The rivalry between Nike and Reebok has been one defined by intense competition. As consumer products brands, their overall relevance depends heavily on the niche each occupies in the consumer's mind. Both companies have pursued dramatically different strategies in order to compete effectively in a highly competitive market.

Nike was founded in 1964 by Phil Knight and Bill Bowerman and was originally named Blue Ribbon Sports, operating primarily out of Eugene, Oregon. The brand slowly transformed itself into the dominant sports apparel company recognized today. Nike spends heavily on its brand, investing billions of dollars in advertising and marketing, and positions itself as a premium consumer products brand that provides the highest quality goods and services. The company also heavily leverages brand and athlete sponsorships to strengthen its position in the apparel market. The strategy is to align the Nike brand with the world's preeminent athletes, with the expectation that consumers who identify with those athletes' greatness will associate their achievements with Nike — creating even stronger demand for the company's apparel (Azam, 1999).

Reebok, founded in 1958, positioned itself as a more affordable option for consumers. Its price points were much lower than Nike's, a gap offset by higher sales volume. Like Nike, Reebok invests heavily in its brand and in research and development, though it focused its product lines on hockey, running, football, and basketball.

SWOT Analysis: Nike

SWOT Analysis: Reebok

Nike SWOT Discussion

When comparing Nike and Reebok, the most apparent difference is brand image and brand awareness. Nike has a much stronger brand than Reebok, and as a result is better able to charge premium prices for its apparel products. These higher prices are justified by the niche the brand occupies in the consumer's mind. Nike invests very heavily in branding, advertising, and marketing — investments that have made the brand synonymous with sports and athletic performance. Consumers who want to perform their best often default to Nike as their product of choice. This is accomplished through Nike's masterful use of sponsorships and endorsements with the world's best athletes. Through these sponsorships, Nike is frequently associated with many of the world's elite performers, and consumers who want to emulate those athletes often purchase Nike products in an effort to feel connected to their excellence. The most notable example is Michael Jordan and the widespread phenomenon of children purchasing his shoes in an effort to "Be Like Mike." Nike capitalized on this trend with comprehensive advertising campaigns built specifically around that athlete. With exclusivity rights secured, Reebok cannot effectively compete against these aggressive marketing tactics, leaving Nike able to command premium prices based on its association with greatness and its investment in quality (Azam, 1999).

The strong brand and consumer demand also compel retailers to carry a larger assortment of Nike products in order to address that demand. Retailers are effectively forced to hold more inventory and dedicate premium shelf space to Nike, which in turn reinforces the brand's image to consumers at the point of sale. This flywheel of reinforcing elements — advertising driving demand, demand driving shelf space, and shelf space reinforcing brand perception — creates a dominant and self-sustaining market position (Sadal, 2015).

Nike is not without its weaknesses and threats, however. The company must continue to manage negative publicity stemming from its labor practices abroad (Wilsey, 2015). It also remains dependent on retailer decisions regarding shelf placement, relying on stores such as Foot Locker, Foot Action, and Dick's Sporting Goods to display its products in meaningful locations. Additionally, Nike must contend with counterfeit goods, both internationally and domestically, from producers looking to capitalize on the brand's popularity. Counterfeit products could tarnish Nike's brand reputation by flooding the market with lower-quality imitations (Kazi, 2011).

References

1. Azam, F., 1999. NIKE and Child Labor. [online] Www1.american.edu. Available at:

2. Brookes, B. and Madden, P., 1995. The Globe-Trotting Sports Shoe. Christian Aid. Available at: http://oneworld.org/

3. Kazi, T., 2011. Superbrands, Globalization, and Neoliberalism: Exploring Causes and Consequences of the "Nike" Superbrand. Student Pulse, [online] 3(12). Available at: http://www.studentpulse.com/articles/604/superbrands-globalization-and-neoliberalism-exploring-causes-and-consequences-of-the-nike-superbrand

4. Sadal, P., 2015. Life Cycle of a Nike Shoe. [online] prezi.com. Available at: https://prezi.com/al-38qgvuc2c/life-cycle-of-a-nike-shoe/

5. Wilsey, M. and Lichtig, S., 2015. The Nike Controversy. [online] Web.stanford.edu. Available at: https://web.stanford.edu/class/e297c/trade_environment/wheeling/hnike.html