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Nike, Cultural Relevance, and Market Dominance

Nike ReebokThe recent news of a potential bid by an investor group to buy Reebok from Addidas (which purchased Reebok in 2006) is interesting not necessarily because of Reebok’s struggle to remain relevant ever since its pinnacle with the phenomenon known as “The Pump” – but because of the utter dominance that Nike has over the U.S. sneaker market. This is not so much a story about what Reebok has done wrong or what Nike has done right, but about Nike’s identity as an American cultural icon.

Nike’s market share has grown from 35% in 2005 to 60% in 2014, while Addidas’s market share has been nearly cut in half and Reebok’s market share is a one-quarter of what it was in 2005. While it is conceivable that Reebok can gain back some of its lost market share it is hard to imagine Nike, with all of its cultural cachet, ever falling from its perch atop the sneaker industry. In a category that is ostensibly driven by athletic functionalism, Nike transcends consumer expectations of athletic shoes to be a brand that more broadly reflects being a part of a tribe driven by a determination to achieve excellence.

Well – Nike has clearly achieved excellence in the sneaker market. As both Nike and Red Bull have shown, cultural relevance and market dominance is achieved not through offering products or solutions bounded by the limitations of category expectations, but instead through offering inspiration to transcend expectations. Unfortunately for Reebok, it is going to take much more than changing the logo or a singular focus on fitness (or another gimmicky shoe) to turn its fortunes around.

 

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