Introduction
Nike Canada is one of the leading organizations in the market selling sports shoes, which is very popular. However, despite its continuing success, the company is concerned about changing trends regarding fashion, sustainability, and practicality. Thus, market analysis is necessary for the company to study its customer base, preferences, and values and develop a market positioning strategy that will help improve Nike’s activities. In addition, it provides the opportunity to learn more about the competition in the industry and what approaches can be applied to strengthen the business. Therefore, this paper aims to conduct a detailed analysis of the market and target audience and reflect on the activities related to the Nike Airforce 1 positioning.
Company Overview
Before conducting market research, an overview of the selected organization must be provided. This is necessary to understand the company’s business, its products and services, a brief scope of work that the organization performs, and present conditions. Nike is a well-known company worldwide that produces sportswear, shoes, and accessories. Research showed that in the 2020 survey, “31.91% of respondents chose Nike over any other running shoe brand” (Review Moose, 2022, para. 10). The organization has a large loyal customer base, including ordinary consumers and athletes and sports teams. Nike has a strong presence in the Canadian market and a vast distribution network, including physical retail stores and online platforms. It focuses on creating a solid marketing strategy, which includes collaborations with influential athletes, designers, and other celebrities.
The most famous product of this company is the Nike Airforce 1 shoe. This sneaker model is prevalent among buyers and is one of the company’s iconic and recognizable products. That is why it was chosen as the principal object for research within the framework of this paper. It is also worth noting that despite the popularity of traditional design, Nike constantly produces various collaborations and models of these shoes, from time to holidays and events, which are sold out at a fantastic rate.
The main goal of Nike in the last few years has been to expand and strengthen its e-commerce presence. The increased popularity of online shopping significantly facilitated this during the coronavirus pandemic. Consumers began to prefer to purchase products remotely and bypass the need to visit stores (Eger et al., 2021). It is worth noting that the company has been advocating for a long time to preserve the sustainability of the environment and minimize the harmful effects of activities on nature. Despite the promotion of e-commerce, the company pays considerable attention to limiting the negative imprint and reducing the number of emission gases from the activity of transporting goods to customers.
Market Situation Analysis: Porter’s Five Forces
The first step in conducting the assessment is to analyze the current market situation, considering external and internal environmental factors. Porter’s Five Forces analysis was employed to conduct this examination. This analytical tool is valuable because it simultaneously evaluates several central business aspects. Hence, among them are the threat of new entrants, substitute products, bargaining power of suppliers and buyers, and rivalry (Irfan et al., 2019). Conducting this analysis allows determining the degree of competition in the Nike market.
Threat of New Entrants
The threat of new entrants is the first aspect worth considering in this analysis. The sportswear, footwear, and accessories industry currently has many companies, ranging from little-known to global giants. However, at the same time, it has a low threshold for new entrants, as it requires high financial costs to surpass such companies as Nike in success and sales.
Moreover, creating a business that produces high-quality products while attracting a solvent and loyal base requires ample time (Yeo et al., 2020). This creates a high barrier for new companies because of high market competition. Consequently, this threat does not exist for Nike due to the presence of a strong brand reputation, marketing strategy, and distribution networks.
Threat of Substitutes
The next threat considered during Porter’s Five Forces analysis is the threat of substitute products. This aspect is critical for Nike since there are many alternatives in the sports shoe production market. Thus, if buyers cannot afford Nike Air Force 1, they can purchase lower-priced sneakers from another company.
Furthermore, due to the company’s popularity, the creation of dupes of this model, which cannot be distinguished from the original, has become widespread. Moreover, the constantly changing consumer preferences and fashion trends are worth noting. However, this aspect is slightly reflected in the sales of Nike Airforce 1, as they are considered an all-time classic model of footwear.
Bargaining Power of Suppliers
The bargaining power of suppliers in the athletic footwear market is low, representing Nike’s advantage. This is because, with the increase in the number of manufacturers, the number of raw materials and manufacturing services suppliers is also growing (Jiang, 2019). Thus, if there is a problem with supplies, the shoe manufacturer can contact another organization. Moreover, a wide selection of suppliers allows Nike to find the most profitable one that can provide high-quality materials. This means that suppliers do not have much leverage over companies like Nike.
Bargaining Power of Buyers
Regarding the bargaining power of buyers, the situation has the opposite side since the indicator of this aspect is relatively high. Due to many manufacturers, Nike must consider the fact that consumers have many options regarding athletic footwear. This implies both a financial and an aesthetic component, as people can find cheaper and more suitable models similar to the Nike Air Force 1.
Industry Rivalry
The last aspect in the framework of this analysis is the consideration of competitive rivalry among existing players. This indicator has a high impact on Nike due to the presence of other global and well-known manufacturers of sports shoes. The company’s strongest competitors are Adidas, Puma, and New Balance (Comparably, 2022). These brands also have a reasonably loyal consumer base, high-quality products, and a strong presence in the market.
SWOT Analysis
A clearer picture of the situation in the shoe manufacturing market can be provided by conducting a SWOT analysis (Appendix 1). It includes a study of such indicators as strengths, weaknesses, opportunities, and threats (Benzaghta et al., 2021). As part of this work will help determine significant trends and issues impacting the selected product.
Strengths
Therefore, the main strength of the company and its Nike Air Force 1 product is its strong presence on the market and recognition among buyers (Nica, Chiriță, and Ionescu, 2021). Moreover, the use of tools such as collaborations with famous personalities and brands and innovative technologies also contributes to strengthening the position of the organization and the value of the product for the customers (Armstrong et al., 2018).
Weaknesses
Regarding the weaknesses, it is essential to mention the relatively high prices for the chosen model of sneakers.It significantly narrows the circle of buyers since it cannot be afforded by many people. Another weakness is that despite its leading position in the global market, some of the company’s products are still not delivered to specific regions.
Opportunities
Further, one of the main opportunities for Nike is to expand into the emerging and developing markets of other countries.This is to provide an opportunity to increase sales and the consumer base of the manufacturer (Nica, Chiriță, and Ionescu, 2021). Furthermore, the company is already working to improve online shopping and e-commerce. This is because the expansion of this activity segment will satisfy customers’ desires and behavior, which “plays one of the key roles in establishing and achieving an enterprise’s main objectives” (Svatosova, 2020).
Threats
The main threat to Nike is changing consumer preferences and tastes, on which the success and popularity of the Nike Air Force 1 model depend. This may mean a reduction in the need for the production of these shoes due to fashion trends.
Market Segmentation Analysis
After analyzing the market in which Nike operates in Canada, it is necessary to consider market segmentation. This step represents an advantage as it further examines the needs and desires of the target audience (Armstrong et al., 2018). Moreover, it can provide an understanding of the social contribution and emotional component of the purchase by buyers of Nike Airforce 1. The main points of market segmentation in the framework of this analysis will be the following: demographic, psychographic, behavioral, and geographical.
Demographic
Demographic segmentation implies dividing the market based on age, gender, income, education, and occupation. Regarding the Airforce 1 model, a leading consumer base is a man or woman aged 18 to 35 with a high disposable income. This is due to the ability to purchase this pair of shoes without reducing income or saving money and the desire to follow fashion trends.
Psychographic
Psychographic segmentation includes consideration of such aspects as lifestyle and values (Liu et al., 2019). In this context, the company should focus on individuals leading an active lifestyle and following fashion and trends. Customers in the target market are currently looking for a popular brand that openly declares its position on environmental sustainability. The importance of this aspect is that people increasingly appreciate eco-friendly initiatives from manufacturers.Moreover, for this demographic, a balance between mola and convenience is preferred, which is reflected in the Nike Air Force 1.
Behavioral
Behavioral segmentation is based on benefits for consumers, usage rate, and loyalty to products manufactured by the company. For the Air Force 1, this item may refer to individuals who wish to have the advantages of comfortable, durable, versatile, and stylish footwear.
Geographic
Geographic segmentation refers to considering such aspects as region, climate, and the level of urbanization in the region (Mapspread, 2021). Thus, for Nike Air Force 1, the company must consider consumers in Canada and which parts of the country are most urbanized and developed. This is because trade and a large population density are more common in these segments.
Target Market Recommendations
Based on the market segmentation for the Nike Airforce 1 product, several essential recommendations can be given. (Nadube and Didia, 2018). The first of them focuses on the audience aged 18-35 years, who have a stable high income and are aware of fashion trends. Moreover, the criterion also becomes the conduct of an active lifestyle and the desire to have comfortable and durable shoes. It is also worth noting that the target audience of the company should live in regions with a high degree of urbanization and have the financial means to afford the product.
Positioning Recommendations
Positioning recommendations will be based on the information obtained during the market situation analysis and recommended target market segmentation. In addition, elements of the value pyramid can help create value for consumers. This is necessary to improve the activities and increase the efficiency of the company (Armstrong et al., 2018; Nadube & Didia, 2018).
The first recommendation is to consider the functional aspect of the pyramid, which implies the creation of high-quality and comfortable shoes. The emotional component has an extraordinary value, as it affects the loyalty of individuals who have decided to purchase a product (Nadube & Didia, 2018). The life-changing aspect implies improving the customer’s self-perception and emphasizing individuality. Finally, social impact implies including concepts such as sustainability and the safety of products for the environment.
Research stated that “brands that position themselves as socially responsible brands can impact and improve consumer awareness levels» (Eyada, 2020, p. 32). Consequently, the company should pay more attention to the dissemination of knowledge about its sustainable policy among consumers. This recommendation implies focusing on how the manufacturer encourages online purchases while doing everything possible to reduce waste and emissions of harmful gases from transportation.
Conclusion
In conclusion, the analysis of the market in which Nike in Canada operates provided valuable information for improving the company’s activities. Therefore, it was possible to identify recommendations on the positioning of the company and its Nike Airforce 1 product and determine the target audience using market segmentation. Porter’s five forces and SWOT analysis made it possible to identify the strengths and weaknesses of the shoe manufacturer, as well as highlight opportunities for further development and improvement of marketing activities.
References
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Armstrong, G. et al. (2018) Principles of marketing. Australia: Pearson.
Benzaghta, M.A. et al. (2021) ‘SWOT analysis applications: An integrative literature review,’ Journal of Global Business Insights, 6(1), pp. 55-73.
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Liu, H. et al. (2019) ‘Personality or value: A comparative study of psychographic segmentation based on an online review enhanced recommender system,’ Applied Sciences, 9(10), p. 1992.
Nadube, P. M. and Didia, J. U. D. (2018) ‘Market targeting and strategic positioning’, International Journal of Marketing Research and Management, 8(1), pp. 32-45.
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Svatosova, V. (2020) ‘The importance of online shopping behavior in the strategic management of e-commerce competitiveness,’ Journal of Competitiveness, 12(4), p.143.
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Yeo, S.F. et al. (2020) ‘Brand loyalty on sports shoes: A study of Nike,’ International Journal of Accounting, Finance, and Business, 5(30), pp.42-51.
Appendix 1
Nike SWOT Analysis Table