NIKE, Inc. is an American multinational corporation that designs, markets, and distributes athletic footwear, apparel, equipment, and accessories for men, women and children.
Famous for its logo derived from the wing of the Greek Goddess of Victory Nike, “the Swoosh”, the company’s 2022 revenue amounted to 46.71 billion U.S. dollars.
After previously analyzing a few SWOT analysis examples, this SWOT Analysis of Nike will reveal Nike’s strengths, weaknesses, opportunities and potential threats in the face of the modern market.
SWOT analysis of Nike
The 4 components of the SWOT analysis of Nike are examined in order to identify the factors influencing the company’s actions, strategies or initiatives.
SWOT analysis of Nike: strengths
1. Strong brand awareness
Brand awareness describes the degree of consumer recognition of a product. Nike is one of the most easily recognizable brands in the world with the Swoosh representing its core values – inspiration, innovation, authenticity, power and dominance.
Nike’s slogan “Just do it”, coined back in 1988 serves as a motivation that is both universal and intensely personal.
2. Market share and brand value
As of 2022 the Nike brand was valued at more than 33 billion U.S. dollars with a market share of more than 25% on the global athletic footwear market.
This easily makes Nike not only the most valuable sports clothing brand, but also the most valuable apparel brand on the planet. They offer more products to more customers in more countries than any other sports brand.
This is a key strength in the SWOT Analysis of Nike.
3. Large customer base
A customer base is a targeted demographic with similar interests, which make their interest in a product more likely.
Although Nike’s customer base is extremely broad, they primarily target customers who are between the ages of 15 and 40, catering to the needs of male and female athletes equally.
The company has put an increasing focus on teens in order to cultivate long-term loyal customers. The customer profile includes individuals who are active, fashionable and sport is part of their lifestyle.
This immediately speaks to millions of people around the world.
Image source: forbes.com. SWOT analysis of Nike
4. Outstanding Marketing
A very important strength in the SWOT Analysis of Nike is their superior marketing.
One aspect is Nike’s great marketing campaigns focused on positioning products carefully, selling heart-warming stories, not just products, ensuring a smooth online shopping experience and using the full power of social media marketing.
The Nike brand is famous for the iconic partnerships with high-profile athletes like Michael Jordan, LeBron James, Tiger Woods and Serena Williams.
Additionally, the company has just announced the acquisition of RTFKT Studios, a virtual shoe company that makes NFTs. Nearly 7 million people from around the world have already visited Nikeland, Nike’s Metaverse store that opened 5 months ago.
Alongside with that, it’s important to note that Nike has an incredibly high marketing budget. In the 2022 fiscal year alone, the advertising and promotion costs amounted to 3.11 billion U.S. dollars, an outstanding budget many companies can only dream of.
5. Low product cost
Nike does not own and operate its own factories and facilities, but instead outsources its manufacturing to other countries. All of the apparel, equipment and most footwear is produced in “contracted” factories in countries like China, Indonesia, Vietnam and Mexico.
Since the wages and production costs in these countries are very low, it translates to high profit margin on the sale of a product for Nike.
6. Multiple brands
Nike has spent over 305 million U.S. dollars in the acquisitions of brands to expand its portfolio. Fully owned subsidiaries include Converse, Cole Haan, Hurley, Umbro and others.
There are many reasons why companies make such acquisitions like diversification, greater market shares and cost reductions, all of which contribute as a strength to the parent brand.
Over two decades ago Nike set a path towards a more sustainable future. Their “Move to Zero” campaign is dedicated towards reaching zero carbon emissions and zero waste in the making of their products.
Currently Nike features apparel labeled with “sustainable” material which is made with at least 50% recycled content. Their aim is clear – to help protect the future of sport.
SWOT Analysis of Nike: Weaknesses
After examining the first part of the SWOT Analysis of Nike, its strengths, it’s time to focus on the second part and explore its weaknesses.
1. Outsourced manufacturing with poor labor conditions abroad
Nike has a big profit margin from outsourcing its manufacturing to other countries. However, the company has been accused multiple times of issues like forced labor, child labor, unacceptable working conditions, extremely low wages, long hours and worker abuse.
Nike factory workers worldwide have gone on strikes multiple times and eventually the company has made some improvements like raising the minimum wages and focusing more on monitoring. Still, there is room for a lot to be desired in this area.
2. Debts and high operational costs
Nike’s total long-term debts as of 2022 amounts to 8.92 billion U.S. dollars, which poses potential financial threats, even though the company seems to be prospering financially.
Also, since the beginning of the pandemic, Nike faced multiple issues in the supply chain management like shipping container shortages and lockdowns in different countries. This has shown to impact the operational costs of the company.
It is normal for famous brands to undergo their fair share of lawsuits while big on the market and Nike is no exception. Nike and Adidas have had several feuds in court, including multiple patent infringement claims over knitted footwear technology and apps.
Four women, who used to work for Nike have filed a federal lawsuit for gender discrimination, which poses a serious threat for the company’s image. These are just some of the examples of potential weaknesses for Nike in the future.
4. Dependency on the US market
Nike has established itself globally for many years, however, its sales and revenue still seem to come primarily from the U.S. market. Speaking in figures, 39% of the company’s sales are from North America solely. The other 61% amount to the global sales.
5. The problem with retailers
A very high percent of Nike’s products is sold directly to retailers and other wholesalers. This translates to a problem with the pricing structures and the direct reach of customers.
Recently Nike has put some serious efforts into withdrawing its products from several retailers and accelerating its direct-to-consumer strategy.
Are you enjoying this SWOT analysis of Nike? You might want to check our article Nike Mission Statement: The Ultimate Analysis in 2022.
SWOT analysis of Nike: Opportunities
1. Emerging markets
When it comes to identifying opportunities, Nike has already established its presence globally, but there is a massive potential for expansion in Asia and Latin America.
The increasing economic prosperity of the countries in these regions, alongside with the huge interest in sports is expected to bring a high demand of Nike’s products.
There is an outstanding marketing plan being developed for the Brazilian market that is supposed to surpass all previous efforts for the World Cup and the Olympics.
2. Innovation and technology
Nike is a leader in innovation, surpassing all competitors with the Nike Flyware support system, Lunarlite foam cushioning and many others.
Nike Air uses the technology of “supergases” encased in urethane in order to provide the incredible cushioning of the shoes. However, there is a lot more to be explored in the field of innovation and technology, including AI and digital marketing.
The first steps are set in “wearable technology” and Nike could benefit from diving into that area.
3. Product diversification
Nike is seen primarily as a footwear and sportswear manufacturer, but not as a fashion giant. The company could expand its product portfolio by adding accessories, sunglasses and other premium products. This could prove as a great potential strategy for growth.
4. Cutting ties with distributors
In the previous part of the SWOT Analysis of Nike, the company’s dependency on retailers was pointed out as a weakness. Therefore, focusing on Direct to Consumer Strategy (D2C) could really benefit the business.
This strategy promotes directly to the consumer without intermediaries and helps the brand oversee the entire consumer experience.
SWOT analysis of Nike
5. Investing in startups
In its mission towards sustainability Nike plans to start investing in “green” startups, focused on sustainable products, manufacturing and marketplaces.
This could be a win-win strategy since it could be both a profitable investment and yet another affirmation of Nike’s “Move to Zero” campaign.
SWOT analysis of Nike: threats
1. Market competition pressure
When it comes to identifying threats in Nike’s SWOT analysis, there is a very intense competition in the sportswear industry. Even though Nike is a market leader, it faces potential threats in all aspects of the business, including product portfolio, marketing, manufacturing costs and others.
Companies like Adidas, New Balance and Skechers are advancing quickly in their effort to claim a bigger % of the market share, endorse superstars and take advantage of the emerging markets.
So it’s crucial for Nike to focus on innovative products and meeting the ever-evolving needs of the athletes around the world.
2. Fake products
A counterfeit product uses someone else’s trademark without their permission. In the field of sportswear this usually means products made with cheap materials that do not meet the industry standards of the brand.
Nike has teamed up with the U.S. Customs and Border Protection in order to prevent fakes from entering the country. The company has also donated proprietary technology which will be able to identify counterfeit products. This issue is still a key potential threat, though.
3. Budget pressure
In the current situation of low economy and fluctuating foreign exchange risk it’s extremely difficult to keep up with the budget of the competition. If Nike wants to stay a leader in the sportswear industry, it needs to spend a whole lot of money on marketing.
The constantly evolving digital channels for marketing open new possibilities, but also create new budget needs.
4. Conflicts on patents
Some of the lawsuits mentioned in the “weaknesses” part of the SWOT Analysis of Nike are the patent infringement lawsuits with Adidas.
The most famous one is the Nike Flyknit versus the Adidas Primeknit technology, where the court has granted Nike’s injunction on several claims. These conflicts and patent controversies seem to be a liability and potential threat for a prosperous functioning of the business.
5. Maintaining reputation
One of the most difficult tasks of being a market leader is the constant pressure to maintain good reputation among the customers.
With the poor labor conditions in the countries with outsourced manufacturing and the need to prove itself as a sustainable company that cares about its ecological impact it’s extremely difficult for Nike to maintain its reputation.
The brand suffers criticism and receives praise at the same time, so it’s crucial for the company to focus efforts on preserving balance.