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Brad Jeschonek
Professor Elphick
ENG 105-01
1 November 2011
Nike’s Attempt at a Monopoly
Back in 1972, two men named Bill Bowerman and Phil Knight decided to start a
company called Nike. According to Nikebiz.com, these two men saw the potential to use
innovative thinking to create and sell products in order to help athletes be successful. These men
saw the potential to separate their company from the competition by creating many business
opportunities (par. 2). Nike now produces a large number of shoes and other types of athletic
apparel for athletes in many different sports including football, soccer, track, and basketball. The
company is known for dominating the athletic apparel industry through the creation of visually
appealing clothing and shoes. Nike is known for creating a number of epic commercials by
using a variety of famous professional athletes. Whenever you hear the word Nike or see their
famous “swoosh” logo, you instantly associate it with dominance and greatness. Whenever
somebody goes shopping for athletic shoes the first brand they think about purchasing is Nike.
There are even some people that will not wear anything but Nike on their feet. Nike is a pioneer
in the marketing world for three reasons. They are known for creating new methods of
advertising and pushing these advertisements to reach every single consumer out there. They are
also pioneers for creating communities for people to bond in through the use of Nike +.
Nike is often criticized for a number of reasons. People criticize Nike because they are
said to make products of bad quality, they produce their products in countries that allow cheap
labor, and they spend so much money on advertising in order to drown out the ads from other
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athletic apparel companies such as Adidas and Puma. Focusing on the advertisements, Nike
attempts to send the message of “buy our product” to any person willing to listen. Nike
advertises not only to men, but also to women. They advertise to athletes of any age or of any
athletic level. The company sees every person as an athlete (even the non-athletes) and aims to
market towards them as well. Nike is everywhere and again, through the use of their advertising
they attempt to drown out the competition and give consumers no other choice but to purchase
the Nike product. Now is this just capitalism at its finest, or is this an attempt made by Nike to
create a monopoly? Is this just a friendly oligopoly, or is this a full-fledged war to destroy any
company brave enough to compete with Nike? After conducting a large amount of research on
Nike it is clear that they are attempting to monopolize the athletic apparel industry through the
use of three advertising appeals which consist of the need for affiliation, the need to achieve, and
the need to dominate. As of now, Nike is in an oligopoly with Adidas, however eventually even
they will succumb to the crushing force of Nike and their marketing strategies. Nike is big on
advertising. They are everywhere - they are on the billboard that you pass on the freeway, they
are on the television that you watch when you go home, they are on the feet of the stranger
walking out of the gas station, they are even on the gloves that you put on when it gets cold
outside. The company focuses on three specific appeals when they advertise their product, and
the first is the need for affiliation.
The need for affiliation, simply put, is the need for people to be in company of others. It
is the need for people to associate with other people or objects. Jib Fowles, a professor of
communications at the University of Houston Clear Lake, says that “the need to associate with
others is widely invoked in advertising and is probably the most prevalent appeal” (par. 23). This
is probably because people like to affiliate with others a lot. Nike uses this most prevalent appeal
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in much of their advertising to promote an idea that people will be bonded together by
purchasing a Nike product. When people buy Nike products they are instantly affiliated with a
great company that is built on success, dominance, and athletics. This need to associate is made
very clear in Nike’s advertising schemes. For example, there is a Nike commercial with Lebron
James in which viewers are shown a scenario where Lebron is warming up for a basketball
game. The viewers are shown images of people bonding in a barber shop, along with the very
excited crowd at the basketball game. Nike creates the feeling that if you are not a part of this
excitement, then you are not going to be socially accepted. The commercial comes to an end with
the source of the affiliation and excitement: the shoes on the feet of Lebron James which are of
course, made by Nike (Nike Lebron). Nike also capitalizes on the need for affiliation without
necessarily using advertising. Nike created an online running community called Nike + which
allows people to connect their running shoes to a GPS which automatically uploads distance and
running routes to the Nike website. Bob Greenburg, the chairman and CEO of R/GA in New
York, says that Nike is able to use the need to affiliate without advertisements by creating
“experiences that are useful to their consumers rather than static marketing messages that aren’t”
(par. 5). It is clear that Nike is not only using marketing to advertise the fact that the product
allows you to affiliate with other people and great athletes, they also create places for these
people to affiliate with one another. The bottom line is that Nike is sending a message to the
consumer that says “buy our product and you will be affiliated with our company, great athletes,
and you will be a part of a great community.” But Nike does not stop there. No, they continue to
push consumers away from other companies by sending a message that says “if you buy this
other product, you will not be associated with greatness and you do not want that.” Nike attempts
to control the industry with the advertising strategy that attracts consumers to their product while
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taking them away from other companies. The need for affiliation is not the only appeal that Nike
takes advantage of in their advertising, however. They also like to use the need to achieve.
The need to achieve is a powerful appeal. Fowles says that the need to achieve is “the
drive that energizes people, causing them to strive in their lives and careers” (par. 47). People
want to be better than everybody else and they will do anything to get to a higher level. They
want to achieve goals, they want to win, and they want to succeed in life. Nike takes advantage
of this by advertising the idea that if the Nike product is purchased, then the athlete will achieve
success, dominance, or some other goal that they have. A prime example of Nike capitalizing on
this need to achieve comes from a visual advertisement focusing on a cheetah. The advertisement
asks the question “What’s the secret of speed?” and the answer appears on the bottom saying
“Ask the master” (Nike Advertisement). This advertisement focuses only on the need to achieve
speed. Nike understands that athletes wish to achieve speed in some way. Nike implies that they
are the masters of speed by placing the logo after the statement that says “Ask the master.” With
this advertisement Nike proves that they do not always need epic commercials with famous
athletes to sell their product. Nike simply sends a message to the consumer with an image of
nature and a few words. The company again is found to be attempting to create a monopoly by
telling consumers that if they wish to achieve speed that the only product that will do the job is a
Nike product. Nike tells the consumer that if they purchase the product from a different
company, they will not be able to achieve this speed, nor will they achieve success. Nike also
sends this message in their array of television advertisements. They use professional athletes to
convince the consumer that if they buy a Nike product they better their chances of achieving this
ultimate level of athleticism. While focusing on the idea of achievement, Nike intends to help the
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consumer achieve dominance in athletics. They focus on the need to dominate as another way to
advertise their product.
The need to dominate is not used as frequently as the need for affiliation, nor is it utilized
as easily as the need to achieve. The need to dominate is more of an instinctive appeal that is
buried deep within the personality of all people. Jib Fowles defines domination as “the craving to
be powerful” (par. 51). Everybody wants to be powerful, everybody wants to be in control, and
everybody wants to be able to achieve dominance the easiest way possible. Nike allows people to
achieve the dominance that they crave very easily. Nike sends a message to the consumer that
says “If you buy our product, you will instantly acquire the ability to dominate anywhere.” Nike
created a commercial titled “Ndamukong Equals Dominance” that visualizes this message for the
consumer. The commercial focuses on NFL player Ndamukong Suh, who is testing a new shoe
for Nike at the Nike World Headquarters in Beaverton, Oregon. Suh is shown wearing the new
Nike shoes, Nike socks, Nike shorts, a Nike shirt, and Nike gloves while a narrator says “What
does it take to dominate on game day next season?” The commercial then shows images of Suh
practicing for football (Ndamukong). The commercial is obviously geared more for football
players, but it still represents the appeal of dominance regardless of the sport being played. The
commercial reinforces the fact that Nike uses professional athletes to deliver their messages and
reinforces the message to the consumer that wearing Nike apparel will turn you into a
dominating machine. Nike has just used another appeal to attract consumers to their product.
Nike has successfully provided the idea that if the product is purchased then the athlete will
dominate, they will be affiliated with others, and they will be able to achieve anything that they
may dream of. Nike has just attracted a huge number of consumers to their product while
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simultaneously pushing them away from other companies. This is Nike’s fail-proof strategy that
they are using to create a monopoly over the athletic apparel industry and it is working.
A monopoly occurs when a company has complete control over a certain industry. This is
good for the company because it means that they will make more profit, but it is bad for
consumers because this eliminates choice in purchasing certain products. Andrew Beattie, the
author of an article about monopolies on investopedia.com, describes a monopoly as an extreme
case in capitalism that is caused by a lack of competition which allows poorly made products to
cost a lot (par. 2). Monopolies are completely legal in the United States and many have existed in
the past, however the government does have the ability to break apart a monopolizing company
through the Sherman Antitrust Act. Regardless of the facts, Nike has a plan to monopolize the
athletic apparel industry by drowning out competitors’ advertisements with Nike ads. How close
is Nike to completely dominating this industry? Currently Nike is in an oligopoly with Adidas.
An oligopoly is similar to a monopoly however there are a few companies dominating a market
as opposed to one. Hannah Frankel, a writer for the magazine Precision Marketing, writes that
the “global sporting goods sector is dominated by two big players, with Nike and Adidas
slugging it out for total supremacy” (par. 1). Although this article was written in 2002, the
industry is still dominated by these two companies proving that the oligopoly does indeed exist.
In this article titled “Reebok Aims to Break ‘Duopoly’” (Reebok failed at this as they are now a
subsidiary of Adidas) it is stated that both Nike and Adidas sponsored big events, endorsed
famous athletes, and used high profile ad campaigns to build their companies (Frankel par. 1).
This was true nine years ago and still holds true today. The only difference however, is that Nike
is starting to out-do Adidas and win this battle. According to Nikebiz.com, Nike’s revenue for
2010 was $19 billion (Nikebiz par. 2).This is much more than Adidas revenue for 2010 which is
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approximately $16.5 billion according to the Adidas Group income statement (par. 2). Clearly
Nike is winning the battle for revenue and sales which means that their strategy is working. Nike
is slowly creating a monopoly.
Although there is a large amount of evidence that proves that Nike is attempting to create
a monopoly there is always the possibility that they are not. There is data that proves that Adidas
is not going under. According to the Adidas Group Income Statement, revenue has increased
since 2010 and sales have gone up 9% (par. 2). With this fact, it seems that Nike will not be able
to create a monopoly as long as Adidas is making sales. But as long as Nike is increasing
revenue, their revenue remains higher than Adidas’, and they retain a higher market share the
possibility of a Nike monopoly will always exist. In 2002, Nike had owned 34% of the sporting
goods market share. Combined, Adidas and Reebok only had 26%, and 40% was owned by the
rest of the sporting goods producers which include Puma, Fila, Asics, Mizuno, and New Balance
(Sportswear 9). Nike may not achieve a monopoly right away, but they are most definitely on the
right track. According to Hannah Frankel, “Nike…is by far the most dominant force” (par. 2).
Nike is already number one, they have been number one, and with the strategy that they have
now they will remain number one. A Nike monopoly is inevitable and will occur soon. Now,
whether the U.S. government allows Nike to maintain a monopoly is a completely different
subject, but the bottom line is that it will happen.
All in all, Nike consistently uses three specific advertising appeals in their marketing
strategy. These three appeals are the need to affiliate, the need to dominate, and the need to
achieve. Nike puts these appeals in their ads in order to attract consumers to their product while
keeping them away from other companies’ products. By analyzing a few advertisements, articles
written by credible writers, and some data from Nike and Adidas a few conclusions may be
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drawn. First, Nike uses powerful appeals in their advertising to attract consumers. Next, Nike has
always been the top manufacturer in the athletic apparel market and they continue to lead that
group. Lastly, Nike has been said to lead the industry by creating new types of advertising along
with creating new methods of interaction between the company and the consumer. One subject
that should be studied further is whether Adidas and other small manufacturers have plans to
change their marketing strategies to be close to those of Nike in order to increase profits. Also,
the benefits and misfortunes of a Nike monopoly could be calculated and studied. Throughout
the prior seven pages evidence has been given to support the fact that Nike is on a roll and they
are going to be hard to stop. The greatness of their advertising may be seen in commercials
summarized in this work, highly credible writers have said themselves that Nike is winning, and
data has been given that supports the fact that they are just better. So what happens now? For
consumers the only thing that they can do is hope that Nike either does not achieve a monopoly,
or if they do then the government destroys it. For other manufacturers they can only hope for the
same. For Nike, they will make a lot of money over the next decade or two and will be the most
successful party in this situation.
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Works Cited
Beattie, Andrew. "A History Of U.S. Monopolies." Investopedia.com - Your Source For Investing
Education. 21 Nov. 2010. Web. 04 Nov. 2011.
<http://www.investopedia.com/articles/economics/08/hammer-antitrust.asp#axzz1chaiqdUK>.
Fowles, Jib. “Advertising’s Fifteen Basic Appeals.” The Manual for English 103. Salisbury University.
2010 ed. Print.
Frankel, Hannah. "Reebok Aims to Break "Duopoly"" Precision Marketing 11 Oct. 2002: 12.
MasterFILE Premier. Web. 4 Nov. 2011.
<http://search.ebscohost.com/login.aspx?direct=true&AuthType=ip,cookie,url,uid&db=f5h&AN
=7726139&site=ehost-live>.
Greenberg, Bob. "The Runner's High." Adweek 30 Apr. 2007: 18+. MasterFILE Premier. Web. 20 Oct.
2011.
"Income Statement." Adidas Group. Web. 4 Nov. 2011. <http://adidas-group.corporatepublications.com/2010/gb/en/group-management-report-financial-review/group-businessperformance/income-statement.html>.
Ndamukong Equals Dominance. Perf. Ndamukong Suh. YouTube. 4 May 2011. Web. 3 Nov. 2011.
<http://www.youtube.com/watch?v=_cl0ENohXdM>.
Nike. Advertisement. Desktop Nexus Entertainment. 2011. Web. 20 Oct. 2011.
<http://entertainment.desktopnexus.com/wallpaper/565982/>.
Nike Lebron Six “Chalk” Commercial. 9 May 2009. YouTube. Web. 20 October 2011.
"Nikebiz : Company Overview : The World's Leading Designer, Marketer and Distributor of Authentic
Product for Athletes." Nikebiz : NIKE, Inc. Official Site, the World’s Largest, Leading Athletic
Brand. Web. 02 Nov. 2011. <http://www.nikebiz.com/company_overview/>.
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Sportswear Industry Data and Company Profiles. Rep. 1 Mar. 2004. Web. 4 Nov. 2011.
<http://www.fairolympics.org/background/Company_Profiles.pdf>.