NIKE NUTRITION

Nike Nutrition's competitive advantage and resultant market share will be fuelled by it's ability to appeal to those consumers previously unreachable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1: Dissatisfied Customers

 

Cause

• Within the sports supplements industry, the majority of dissatisfied customers stem from their unwillingness to pay the price placed on products, such as protein shakes and supplements.

• Companies such as Maximuscle and Optimum charge such high margins on their products, on the belief that consumers are willing pay a higher fixed price, owing to the general uncertainty regarding the quality of alternatives.

• This general satisfaction manifests in a lack of brand relationship within the industry, further aiding it’s fragmented nature, limiting any single company from gaining a substantial market share.

 

Nike Nutrition

• Nike Nutrition, owing to its significant brand identity and reputation of excellence, has the ability to undercut the market in this sense, due to economies of scale and its ability to offset overhead costs such as marketing and distribution over a larger scale of output.

• Furthermore, the majority of competitors such as Optimum and Muscle Foods incur a far greater distribution costs, such as delivery, due to their immature supply chain, and lack of relationships with courier services. These costs are then reflected in the price to consumers. Nike’s mature and expansive distribution network will result in a far smaller cost incurred, and thus a far smaller reflection in the price of the final product.

• Nike will be able to charge a far smaller margin on products owing to the dependable quality and mature distribution network that the company ensures; the result is that it will be able to undercut competitors and appear far more accessible to consumers.

 

 

Tier 2: Consumers Who Actively Use Substitutes

 

Causes

• Customers who attach themselves to substitutes, such as natural muesli bars, smoothies, and traditional nutrition such as chicken, do so due to a lack of education and understanding of sports nutrition and the array of benefits that such product offer.

• The appetite of such customers to adopt sports nutrition in their diet has been further inhibited due to the uncertainty of quality over various products, and perceived issues of “drug-like” supplements in end products.

 

Nike Nutrition

• Nike looks to overcome this is two ways. Firstly, via its educationally orientated marketing campaign it will seek to resurrect this preconceived ignorance, whilst also fostering the image amongst consumers of Nike Nutrition as an enlightening partner in their ambitions of health.

• Secondly, Nike Nutrition’s reconstruction of the previously narrow market for traditional bodybuilding towards a more all-encompassing approach to personalised nutrition, will allow such products to appear more accessible. The brand identity that Nike possess, and consumer base that it already possesses will no doubt overlap with those who use substitutes to Sports Nutrition. This will enhance Nike’s ability to penetrate Tier 2 consumers.

 

 

Tier 3: Unexplored Customers

 

Causes

• Customers that are not active in the sports nutrition industry have either been marginalised,  owing to the lack of education on supplements and their benefits, and the focus within the industry on unattainable aesthetic within marketing. Marketing using hypermasculine material isolates and distances the "everyday user".

• A lack of interest in health, and an unawareness of the importance of balanced nutrition.

• Lack of engagement with Sports Nutrition.

 

Nike Nutrition

• Unlike its competitors, Nike has the marketing ability to reach such consumers, either through formal marketing channels, or through their affiliations with the NBA and NFL.

• As the most recognisable brand in US Sport, Nike already possesses a relationship with almost the entire Tier 3 consumer base; when coupled with Nike Nutrition's educational approach to marketing and reputation of excellence it possesses to ability to create and obtain a huge level of consumer demand, subsequently nullifying competitors.

• As the social trend of healthy eating promotes awareness of the importance of balanced nutrition, the Tier 3 consumers that were previously unaware are suddenly confronted by a sense of responsibility to adopt such lifestyle changes. The convenience of Nike Nutrition, when coupled with its cost leadership  and reputation will place it perfectly to capture and benefit this new influx of demand