How does Nike continue to defeat the competition?

The athletic shoe market is extremely competitive, and once Nike became the industry leader it has never looked back.

Nike has had to deal with many "imitators" over the years.  Since it introduced its air technology in the '80s, the competition has tried to imitate or surpass the technology with its own version of shock absorption.  Fortunately for Nike, it holds a patent for this technology, giving it the advantage that they need to remain at the top.

The most recent threat to Nike, Under Armour, is struggling in the athletic shoe market.  They were successful in building their brand from a simple compression line of sports under garments to a full line of athletic products.  However, they lacked the "know how" in the footwear area and have had to deal with a learning curve that has been a major factor in the lackluster performance of the footwear line.

Because of the volume of goods it produces, Nike has favorable access to the raw materials required to produce its products.  And, because of this, it can produce products at a lower cost than would be competitors.  A good example of this occurring recently is the entry of Big Baller Brand and its ZO2 basketball shoe.  The company put a price tag of $495 per pair (Nike shoes endorsed by NBA superstars rarely sell for more than $230 per pair) on the shoes and began taking pre-orders, selling less than 500 pair in the first week.  Although pre-orders were a good idea, Big Baller Brand quickly found out that the market for its shoes was much smaller than anticipated.

Nike has been successful in deterring entry of competitors and using its years of experience and proprietary technologies to remain at the top of a highly competitive market.

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