Individual Contribution Part I
Module Title: Strategic Marketing Analysis
Submitted To: Shaun Hayden
Submitted By: Arif Raihan
ID: 20063124
Topic: Evaluation of a Nike’s MICRO Environment
In this analysis, the bargaining power of buyers in Nike micro-environment is examined
based on Porters Five Forces. These factors are the high ease of substitute of sports
shoes, with buyers seeing little functional distinction between Nike and a rival such as
Adidas (Karunaratna, 2015), when combined with the fact that e-commerce websites
make it convenient to compare products and switch between brands (Kim & Kim, 2021).
The importance of price sensitivity cannot be underestimated as more than one-third of
buyers prefer to opt for cheaper alternatives because of financial constraints (McKinsey
& Company, 2024), and Nike does not have significant flexibility in setting prices (Jones
et al., 2018). The power of retailers is significantly high, given that wholesalers supply
56 percent of Nike products (NIKE, Inc., 2024), and they can use their volumes hold on
to special terms. Also, buyers’ prospects are redefined by digital transparency (Chiu et
al., 2014) and sustainability assumptions (Wiese et al., 2015), and brand loyalty for Nike
(Pandey & Srivastava, 2025) and direct-to-consumer (DTC) channels are the balancing
factors.
I worked on the section of Buyers Bargaining Power and made three key contributions.
Firstly, I encompassed around the theoretical framework developed by Porter (1979,
pp. 137, 140) to place the issues facing Nike in perspective by directly associating the
aspects such as ease of substitute of products and the volume of retailers with higher
buyer power. Second, I addressed few key statistics, such as the FY2024 revenue mix
(44% DTC and 56% wholesale) of Nike, the fact that McKinsey (2024) demonstrated
brand switching based on price, or the thoughts of S&P Global (2023) on shelfplacement tactics. Third, I showed how Nike has strategically retaliated against these
threats: emotional brand loyalty against alternate option threats (Pandey & Srivastava,
2025), and the repressive Amazon deal of 2017 in which third-party sellers were
restricted to ensure brand equity (CNBC, 2017; Reuters, 2019). Each of the sources has
been referenced and checked according to the Harvard referencing style with specific
page numbers referenced in the case of Porter.
There are two references which have been used more widely. The contribution made by
Pandey & Srivastava (2025) explains the Nike brand loyalty interfering with the ease of
substitute posed by Porter. The reference enhances the arguments regarding the
consumers’ association with emotion when tapping into DTC strategies. NIKE, Inc.
(2024) Annual Report presents vital data on revenues streams (44% DTC vs. 56%
wholesale) of Nike, which is pivotal in the analysis of retailer bargaining power in any
financial or operational strategy sections. Both are academically sound sources and
have been directly applied to our analysis of micro-environment.