Nike and the VRIO Framework

We are going to take a look at Nike Air® technology using the VRIO framework, and will expand on how the marketing of this technology has helped provide Nike with a sustained competitive advantage in the athletic shoe market.

When Nike introduced its first shoes that incorporated Nike Air® technology, they immediately gained a competitive advantage.  The reason  - athletic shoes were being constructed using polyurethane or rubber for the midsole, which would breakdown quickly or was too hard to begin with.  Nike Air® midsoles employed an air sole to absorb shock and slow the breakdown of the midsole.  In the beginning, the air sole was not visible.  Over the years, Nike has improved this technology to the point that the entire midsole is comprised of air soles on some models of running shoes.

Nike has enjoyed a sustained competitive because it created a technology to be used in shoes that was valuable, rare, costly to imitate, and has been exploited remarkably since its introduction.  Because Nike realized the value and rarity of this technology when it was developed, they knew that how it was handled would be important to the overall success of the company.  Through research and development, Nike was able to improve the technology frequently which made it very difficult for competitors to imitate.  And, as stated in a previous blog, the timing of the signing of Michael "Air" Jordan and the introduction of the Nike Air® technology couldn't have been better.  Nike used that timing to exploit the technology to the fullest.

Nike also learned a very important lesson about marketing during that process, and they continue to employ the same strategy today.  Nike hit the jackpot with Michael Jordan and recognized the value that came with athlete endorsement deals.  In the NBA, Nike (or Jordan brand) shoes are worn by 72% of the players (http://www.businessinsider.com/nike-nba-shoe-endorsements-2014-3).  The numbers aren't the same for all sports, but Nike has a presence in athletics unlike any of its competitors.  That presence has allowed Nike to sustain a competitive advantage in the athletic shoe industry for decades.


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