First and foremost, Nike is the largest seller of athletic footwear and apparel in the world, generating revenues of $10,697 million in the fiscal year ending May 2003, which is an increase of 8% on the previous year. This has come about partially due to the fact that they have a powerful footwear product line-up which is constantly under review to keep consumers interested. Examples of this are the improved, yet retro Jordans and the Air Force One, which was the top selling sneaker for the last two years. The Air Force Ones have been so popular there is even a top ten song about them. They have also added lines of other superior sports products, such as portable mp3 players, to hold even the most avid sports fanatics at bay. Basically, they know what the consumer wants and they are going to give it to them. Nike is also able to position itself as a visible global brand through key endorsements and marketing strategies. Nike is one of the main companies to take advantage of athletic endorsements which help to keep its profile in the consumer eye. This in turn enables people to associate their favorite sporting stars with the Nike brand. Nike has recently signed up future NBA icon LeBron James in hopes it will, as Michael Jordan did, increase consumer’s awareness and skyrocket sales.
Nike resides mainly in the footwear market, which is an extremely competitive field that is experiencing slower growth than in previous years; therefore they must do more to hold a competitive advantage. The industry as a whole is facing footwear deflation, which means industry average prices are dropping. To try to alleviate this problem Nike is improving its product line-up. Nike also has a heavy reliance on Foot Locker for sales, their product represents as much as 50% of sales for Foot Locker. Because of the decreasing prices, Nike’s relationship with Foot Locker is beginning to strain.