Competitive Advantage of Nike: Applying ole Models to Attract Consumers

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Research Proposal

Purpose of the Study

The purpose of this research is to know the reasons of why Nike Inc. is successful, and why it’s chosen ahead of all others organization. In addition, what are the variables that give Nike a “competitive advantage” or a lead over other sport companies. Moreover, to figure out those factors that makes Nike Inc. the leader in its industry, and how do they execute their plans.

Research Question

Why do customers prefer Nike Inc. over other sports organizations?

Scope of the Study

This research presents and analyzes the variables or the aspects that gives Nike Inc. a competitive advantage over their competitors in the same industry.

Relevance of the Study

Nike Inc. is one of the most successful organizations in the world. As an innovative company Nike Inc. produces great products that satisfies customers needs. In the sports industry there is fierce competition, as there are many corporations and organization such as Nike, Adidas, and Puma. However, Nike finds a way to be the most significant one, as they have a step ahead of all these competitors. Why? How? Those are the answers that the researcher (me) wants to find out. Nike execute their plan in a really efficient way, as their goal is to sustain competitive advantage. In this research the researcher (me) will find what variables that gives Nike such advantage.

Research Design

Data collection method used in this research is interviews with customers who bought something from Nike Inc. In addition, asking them why did they choose Nike Inc. over other shops. I am doing this study to know why customers in general prefer Nike over Adidas or Puma, and what do Nike have that others do not. Moreover, this study helps people to recognize and know the reasons of why Nike Inc. Is a special at what they do.

Executive Summary

The research focuses on the excellence of execution of a company like Nike Inc. They set the tone in the industry, as they are the leading organization. Nike Inc. has a competitive advantage over other organizations. They produce quality products that include technological touch. In addition, innovation plays a huge role within the organization, as they depend on it to develop their products. Nike’s reputation in the society is respected among people. Nike Inc. is a 1st class corporation, and that allows Nike Inc. to have a valuable brand name that customers would respect and it in perspective. Nike Inc. sponsor the best athletes in the world such LeBron James, Cristiano Ronaldo, Roger Federer, and Tiger Woods. That helps in the marketing segment because customers would buy products that these athletes wear because they inspire them in different type of ways. In this research there is a question and hypothesis to try to figure out why Nike Inc. is Special Corporation and why it is preferred among people.

Key Words:

Product Quality
Competitive Advantage
Brand Name
Role Models
Innovation

I. Introduction

i. Brief about the organization

Nike Inc. is an American corporation that manufactures, develops, and designs sportswear, clothing, and footwear. Phil Knight and Bill Bowerman founded Nike Inc. On January 25, 1964. The word Nike comes from the Greek language, which means “goddess of victory.” Nike Inc. sponsors the best athletes and soccer teams in the worlds, and takes pride of being the ultimate force in the sports industry. Nike Inc. mission is “To bring inspiration and innovation to every athlete in the world.” Nike has more than 700 stores in 45 different countries. Nike’s headquarter is located in Beaverton, Oregon. Nke has more than 48,000 employees.

ii. Broad problem area

Customer’s satisfaction is an important factor of making organizations successful. Companies seek to deliver the best possible goods and services to satisfy customers needs and wants. To do that, an organization needs to deliver quality products that meet with the customers’ expectations. In every industry there is competition between companies as both have similar goods and service and goals and objectives. Their strong market position depends on their strong portfolio. According to the sports industry, Nike Inc. is the leading corporation in the sports manufacturing and designing industry.

iii. Research Question

Why do customers prefer Nike Inc. over other sports organizations?

II. Theoretical Framework

My dependent value is purchasing from Nike Inc. and it is influenced by three independent variables, which are product quality, brand name, and imitating role models.

According to Businessdictionary.com, it defines product quality as “The group of features and characteristics of a saleable good which determine its desirability and which can be controlled by a manufacturer to meet certain basic requirements.” Product quality can be differentiated among people because every person might have his or her own definition of quality. In addition, it defines brand name as “Word(s) that identify not only a product but also its manufacturer or producer.” Nike, Apple, Pepsi etc. are all examples of brand name. Imitating a role model means that a person tries to copy another persons actions and appearance because they look up to them as motivators.

There are three independent variables, and those variables play a huge factor because they are influceing the dependent variables, which is purchasing from Nike Inc. Every variable affects the decision making of the customer who wants to buy a product from the sport industry. Usually, it depends what is the customers mindset because every customer has his own views.

Based on the literature review, this schematic diagram that has the research theories will analyze and summarize the hypothesis that will either be accepted or rejected.

i. Hypotheses:

Product Quality is an important factor of why customers prefer Nike Inc. over other organizations.
Brand Name plays a huge role on customer preference when it comes to selecting Nike Inc. rather than other competitors.
Customers are buying products from Nike to imitate sponsored role models.

III. Research Approach and Methodology

i. Approach

The research is qualitative, where I am gathering information that shows customers beliefs and understandings. The purpose of the study is to know why Nike Inc. is a successful organization, and what are the variables that they have that gives them a competitive advantage over other sports companies and organizations. In addition, how will those variables will affect the decision making of the customers. The type of investigation in this research is correlation, as purchasing from Nike (dependent variable) is influenced by the independent variables. Because its correlational, the study setting is non-contrived where the study is done in a natural environment.

ii. Methodology

Time horizon

The time horizon is Cross- sectional, because the data is gathered only once.

Participants:

The participants are random customers (individuals), as the data is gathered from those individuals seen in a Nike Store.

Data collection methods

The Data collection method used in this research is interviews and questioners with random customers. Interviews enables the researcher (me) more flexibility to ask any type of question. The interview was face-to-face interview where I interviewed customers directly. Structured interviews were used, where I asked 4 customers the same questions, and letting them to elaborate and take as much time they want. By elaborating and giving their reasons that gives me plenty of data because they’ll be able to express themselves more. In addition, 10 questioners where handed to customers to answer. In questionnaires it helps me to gather efficient data and information I need to gather. Closed-ended questions were asked to customers, to get reliable answers rather than false answers given from those customers

Procedure

The researcher “which is me” went to a Nike Branch in Mall Of Emirates and Interviewed 4 random customers who purchased something from that store. Customers were interviewed face-to-face, and had to answer the research question, which is why do they prefer Nike over other sports stores, because they bought something from Nike Store before asking them. I didn’t ask customers who were wondering around the store because they won’t give me the answers I need, as they did not purchase anything from Nike Inc. Customers that were interviewed were the ones who purchased something, and those are the ones who could answer the research question. The questioners were handed to the customers who did not buy something from the store because I wanted to get different kinds of opinion from the ones who did not buy products from Nike. Those people answered some questions about the preferences and why do they think Nike Inc. is special.

IV. The quality of the products give Nike Inc. a competitive advantage

Nike Inc. has been in the sports industry for a really longtime. Nike Inc. always tries to fulfill the customers’ expectations and wants, which developed a relationship between Nike and customers. Nike produces different types of products such as sports wear and sports shoes. Nike takes pride of their products that they produce, which they use different type of technologies to make it better. Through the years, technology developed massively and Nike used it to develop their products and make them special and unique. In addition, Nike is innovative in a lot of ways, as they try to evolve their products to the better. Their quality of their products is astonishing because they deliver the goods the best way possible. Customers have different definitions of the quality of a product. Some may say how long it could last. A year. A two. And so on. Others look at the material used in the product and how valuable it is. Some might view a product by its appearance and whether it looks good or not. Customers really focus on the quality of the products available, because they want to get satisfied from that good or service. Nike has it all, Life span, materials, appearance when it comes to their products. For instance, the new Nike Running Shoes is super light, and made from leather. The shoes look really attractive, the material is used is very good, and it lasts for long, if the person takes care of it. Such things make customers go ahead and buy those products because of their quality. Nike Inc. has a large fan base from all over the world. Why? Because they produce products that are well developed by using technologies. By producing a high product quality, that give Nike a competitive advantage over competitive such as Adidas and Puma. When a corporation has a competitive advantage over others that means they are the leaders in the industry. Those corporations are steps ahead, and customers would prefer them to others. Customers from Nike Store expressed their opinions on the product quality of Nike products. All of them had greats past experience with the products that are produced by Nike. Most said that the lifespan of the product is astonishing as it stays for a long time. In addition others said that the products appearance is out of the world. Moreover others hinted that the products are comfortable to use especially those who bought football products. The new Hypervenom shoes are so comfortable as if someone is playing with no shoes.

V. Brand Name plays a huge role on why Nike Inc. has a competitive advantage

Whenever someone says Apple, the first thing that comes to his or her mind is IPhone, which is the best selling phone in the world. Brand name plays a huge role in general of why customers buy goods and services from a particular place. Customers take in perspective the Brand name, as it defines their image in the society. In 2013, Nike achieved the Climate Counts award for the 6th time in a row because Nike Inc. is the number one company that produces apparels and accessories. In addition they won the C.K.Prahalad Award for being the best company in the industry when it comes to its sustainability and innovation. Last but not least, Fast Company names Nike Inc. as the number 1 company as the most innovators in their products. Nike has the best brand name in their industry because they produce the best quality of products. That gives Nike Inc. a competitive advantage over other organizations. How? A customer who is need for a new sport shoes, he’ll surely take in perspective the brand name of the store before buying from that particular store. Customers will eventually know that the most unique place to buy from is Nike Inc., and that gives Nike a step ahead of all companies. Some may say how does Nike Inc. have a good Brand name? The answer is simple, Brand name depends on two things the product quality and its reputation in the society. Without those two aspects a company cannot build a brand name that will affect the decision of the customer. Customers that I interviewed in Nike Store really cared about the Brand Name about Nike, as they care about their personal appearance. In addition, they all agree that Nike’s reputation is well respected because they work hard to try to satisfy the need of people, which is very important. Also, they acknowledge that Nike are the best in the business because they know that Nike won several awards and it has a lot of fan base because they are the best in what they do. In the interviews and questioners all bought up brand name because they care about their image in the society. In addition, there is trust that links both parties as, customers trusts Nike to produce the best products possible, and Nike trust customers to buy those products and use them. Nike’s brand name is always taken under recognition and Nike knows that so they work hard to improve and produce products that will help to develop their brand. Reputation is immense for Nike, and they do a good job to sustain it.

VI. Customers purchase products to imitate role models

Every person has a role model, that he or she looks up too because those figures motivate them. Nike sponsors the best athletes and sports teams in the world. Nike sponsor football teams such as Barcelona, Man.Utd, and Juventus etc. Those big clubs have a huge fan base, so they buy their products from Nike because they manufacture and design them. When a teenager is a fan of a particular athlete or team he or she would buy what they’re wearing to imitate them. In football Nike sponsor Cristiano Ronaldo who is currently one of the best players in the world. There are a lot of Cristiano Ronaldo fans all around the world, so they would buy his products that he wears from Nike. Same in basketball, Nike sponsor LeBron James who is the best player in the world, all LeBron fans including me would go and buy his products. That started from the 1990’s for Nike because of Michael Jordon. Nike sponsored Michael Jordon, and Jordon was the best player at that time because he transformed the game of basketball. In addition, he was a figure and an icon in the black community and the American society as a whole. People would tune in and watch basketball just to watch Jordon play. Teenagers, kids, and also men wanted to imitate Michael Jordon because he was a hero. Nike opened a line called Air Jordon where they produce all products that Jordon wears with his famous logo. To imitate Jordon and to be like him, customers purchase those products. Nike sponsors a lot of athletes who themselves inspire millions of people. I interviewed a women u bought products to her son, she said to me that her son is a huge LeBron James fan, as he loves basketball. She bought the new LeBron 11 shoes, and she also said her sons role model and inspiration in sports is James, so it was a gift for him because he passed this year in high school. Role models influence teenagers and they try to imitate them in many ways, how they look, dress, and even the way the play the game. Nike sponsor those athletes, and the supply them the best shoes and clothes etc. to preform at a top level. Kids also buy those products because they think that if they actually buy those shoes they will eventually preform like they player they like. Sponsoring is tough job because Nike has to choose the right athlete to represent Nike Inc. and themselves in the best way possible. As a result, Nike Inc. does a spectacular job because they sponsor the best athletes in all sports.

VII. Conclusion:

This research was done too identify why customers prefer Nike Inc. over other sports organizations. In addition, to classify the variables that gives Nike a competitive advantage over competitors. The hypothesis was product quality, brand name, and imitating sponsored role models are important factors of why customers prefer Nike Inc. over other organizations. According to the interviews and the questioners given to the customers, the hypothesis is accepted. Customers gave the same answers that the hypothesis theories assumed. In the interviews, three customers who did buy products from Nike gave the exact answers as the hypothesis, which are the product quality, and the brand name. The last customer was a teenager, and he answered me by saying “I bought this new Nike Hypervenom because I am a huge Neymar fan.” That shows that there are customers that are affected by their role models. For further researcher, it is recommended to study more about the customer’s mindset on buying products, and to focus more on the psychological aspect of the decision-making. I faced several limitations as I wanted to know from the company itself how are they are able to sustain such advantage; however, employees couldn’t help me with that because they are limited with information. In addition, I wanted to get interview with the one of the managers of the store but I could not because he was not there when I came. For future search, I think other organizations should be studied to check why they are producing products like Nike. In addition, comparing the differences between those corporations. For instance check why are Puma are not as the same level as Nike Inc., and what are the things to do to reach that level. I leaned a lot from this research paper, as I discovered a lot of new things about Nike Inc. and how great and special they are as an organization.

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