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Nike’s business model is going to satisfy each group of customers. It is a high market segment strategic. Nike differentiates their products for specific customer groups by whether they have high innovative, excellent quality, and responsiveness.
Business model advantage
Due to Nike successfully differentiate their product and specific diversification, it increase penetration ability of Nike’s products. Therefore, it boost Nike’s market share rate. The reputation of Nike is also boosted up, because their high quality and responsiveness of product increase the utility to customer and brand loyalty. It can efficiently decrease the defection rate and keeping customer in relying on Nike’s products.
Nike make the industry become more consolidate and firm their competitive position. This business model built up a high barrier for potential competitors. So it can block the new entrants to entry Nike’s industry.
Strong bargaining power of Nike on pricing as a supplier or buyer. They customized product and emphasis on differentiation, so it can charge customer premium price, on the other hand, Nike has a strong position with supplier, many supplier survival on Nike’s order and Nike can force the cost down further.
Business model disadvantage
Now the population of all round world is getting older and older. “By 2025-2030, projections indicate that the population over 60 will be growing 3.5 times as rapidly as the total population (2.8 per cent compared to 0.8 per cent).” (Department of Economic and Social Affairs Population Division, 2007) then more elderly will participate in sport activities due to keeping health. Nike should devote on elderly this new market segment and devote the product innovation for elderly products.