INTRODUCTION

Market Structure in economics, depicts how firms are differentiated and categorized
based on types of goods they sell and how their operations are affected by external factors and
elements. Market structure makes it easier to understand the characteristics of diverse markets.

TYPE OF MARKET STRUCTURE:

A variety of market structures will characterize an economy. Such market structures

essentially refer to the degree of competition in a market. There are other determinants of market
structures such as the nature of the goods and products, the number of sellers, number of
consumers, the nature of the product or service, economies of scale etc. We will discuss the four
basic types of market structures in any economy.

One thing to remember is that not all these types of market structures actually exist. Some of them
are just theoretical concepts. But they help us understand the principles behind the classification of
market structures.

MARKET STRUCTURE
ANALSIS
MONOPOLISTIC COMPETITION - NIKE
SUBMITTED BY:
SHYAMBHAVI TRIYAR
MBA 1 – B
0211MBA268
Monopolistic Competition:

Monopolistic markets competition are markets where a certain product or service is

offered by only one company. A monopolistic market structure has the features of a pure
monopoly, where a single company fully controls the market and determines the supply and
price of a product or service. Hence, a monopolistic market is a non-competitive market.

This is a more realistic scenario that actually occurs in the real world. In monopolistic
competition, there are still a large number of buyers as well as sellers. But they all do not sell
homogeneous products. The products are similar but all sellers sell slightly differentiated products.
Now the consumers have the preference of choosing one product over another. The sellers can also
charge a marginally higher price since they may enjoy some market power. So the sellers become
the price setters to a certain extent.

For example, the market for cereals is a monopolistic competition. The products are all similar but
slightly differentiated in terms of taste and flavor’s. Another such example is toothpaste.

Characteristic of Monopolistic Competition:

In a competitive market, numerous companies are present in the market and supply
identical products. Its demand curve is flat, whereas, in a monopolistic market, the demand curve
is downward sloping. Companies that are operating in a competitive market can sell any desired
quantity at the market price.

The following are the characteristics of a monopolistic market:

 Single supplier: A monopolistic market is regulated by a single supplier. Hence, the

market demand for a product or service is the demand for the product or service provided
by the firm.

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 Barriers to entry and exit: Government licenses, patents, and copyrights, resource
ownership, decreasing total average costs, and significant start-up costs are some of the
barriers to entry in a monopolistic market. When one supplier controls the production and
supply of a certain product or service, other companies are unable to enter the
monopolistic market. If the government believes that the product or service provided by
the monopoly is necessary for the welfare of the public, the company may not be allowed
to exit the market. Generally, public utility companies –such as electricity companies and
telephone companies –may be prevented from exiting the respective market.

 Profit maximizer: In a monopolistic market, the company maximizes profits. It can set
prices higher than they would’ve been in a competitive market and earn higher profits.
Due to the absence of competition, the prices set by the monopoly will be the market
price.

 Unique product: In a monopolistic market, the product or service provided by the

company is unique. There are no close substitutes available in the market.

 Price discrimination: A company that is operating in a monopolistic market can change

the price and quantity of the product or service. Price discrimination occurs when the
company sells the same product to different buyers at different prices. Considering that
the market is elastic, the company will sell a higher quantity of the product if the price is
low and will sell a lesser quantity if the price is high.

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 NIKE

INTRODUCTION:
Nike was established on January 25, 1964, as Blue Ribbon Sports by Bill Bower man and

Phil Knight. It formally became Nike, Inc. on May 30, 1971. The company earns its name from

Nike, the Greek goddess of triumph. Nike markets its merchandise under its brand, as well as

Nike Golf, Nike Pro, Air Max, Air Force 1 and several other brands. In addition to

manufacturing sportswear and apparatus, the company operates retail stores under the Nike town

name. Nike sponsors many great profile athletes and sports teams around the globe, with the

highly documented symbols of "Just Do It" and the Swoosh sign (Suddaby, 2016). Nike, Inc. is

an American international corporation that is involved in the design, manufacturing and

worldwide marketing and sales of footwear. The company is headquarters are based in

Washington County, Oregon, USA. It is the world's foremost supplier of athletic shoes and

apparel and a chief manufacturer of sports equipment. The company has employed more than

44,000 people worldwide. In 2017, the Nike brand is valued at $29.6 billion (Sheng, 2018).

The Nice, Inc. logo is as shown above. The Nike logo indicates that the company is

shaped to that it yields quality products at an affordable price to the people. The check mark is an

assenting symbol of convenience where it conspicuously indicates success. In spite of its variants

in other cultures and variants. This universality is what a global brand seeks for in building its

recognition and value. An athlete is no exclusion, and he or she always go for success and

desires for achievements(Whitby,2013).

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COMPETITORS:
Nike like any other company has direct and indirect business competitors. Nike
competitors entail any brand that is selling sports shoes and gear. The rivalry in the sportswear is
compelling. Nike competes with numerous athletic and leisure shoes and apparel companies all
over the world. The brand faces brutal competition in every aspect of the business like its
product offerings, technologies, marketing, pricing costs of manufacturing and customer
facilities(Burgelman,2017). These competitor companies include;

 Adidas

 Reebok

 Puma

 Fila

 New Balance

 Under Armour

 Asics

 K-Swiss

 Li Ning

Nike is ahead of even the 2nd upper most participant who is Adidas, and it is only rising in
acceptance. One of the motives for Nike's Popularity is its unrestricted roots in western nations,
where it gets its chief margins. (Wolfsmayr, 2015).

 PRICING STRATEGY-There are different pricing strategies that Nike used

effectively for expanding its branding all over the world. Nike implements its pricing
strategy based on the product’s understanding and determining which price point will be
best for their products. Nike was able to raise its price range while other U.S. apparel
industries dropped their prices and offered heavy promotional discounts. In 2014, Nike

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 implemented its new pricing strategy after determining from a market analysis that its
customers appreciated the value that the brand provided.

Few of Nike’s pricing strategies are-

 Value-Based Pricing Strategy of Nike

Nike uses a value-based pricing strategy in order to set its prices according to the consumer
perceptions about the value of the company’s products. Nike focuses on delivering the highest
quality products at the right price to ensure the best customer experience whereas the other
companies use the idea to sell products at the cheapest rate as it will generate more sales. This
strategy ascertains how much maximum price consumers are eager to pay for the company’s
products such as sports apparel, sports shoes and equipment. This was Nike’s commendable idea
to ask people how much they can pay for certain products. This pricing strategy worked for Nike
as it came to know about its product’s value amongst the customers and the company started to
get profits and prices of its merchandise started to rise.

 Nike Price Leadership Strategy

This strategy is suitable for an oligopolistic market environment and Nike runs its business
in the oligopolistic market. Nike is one of the leading players in the oligopolistic market
which is related to the sports equipment industry. Therefore, the company can effectively
practice the price leadership strategy. With the help of this strategy, the company can
determine its product prices, uses competitive prices, and set attractive prices for different
market segments according to its market dominance.

 Premium Pricing Strategy of Nike

Nike applies the premium pricing strategy to make its products’ prices higher than the prices of
the competitors based on product quality. The company owners and employees know that these
prices will not only reflect the quality of their company’s products but also the image which will
be portrayed by the consumers who wear the Nike logo. Once Nike develops its exclusive
products, it becomes recognizable to consumers in the market place. And Nike’s premium
pricing strategy drives its perceived value to a higher level especially with the limited editions of
the Air Jordan’s. Nike sets this pricing strategy for the products which create a high level of
brand loyalty and also for its leading-edge technology.

 Nike Skimming Pricing Strategy

Nike applies a price skimming type strategy whenever it produces expensive products especially
which are limited editions. When the company brings out new design products into the market,
Nike uses this strategy to set high initial prices. By implementing this strategy, Nike tries to skim
money from the customers who want the product and are willing to purchase it at that price.
After a newly designed product has been out in the market for a while, Nike lowers the price of
those products. According to the Principles and Practice of Marketing (David Jobber), Nike

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executes a rapid skimming pricing strategy of setting high prices in the products and investing
heavily in promoting the newly designed products. Normally, Nike shoes last for a period of 3 to
6 months when the company sells those at peak prices. After that period, there comes an activity
called closeout where Nike reduces the prices gradually.

 PRODUCTDIFFERENTIATION-Big part of Nike's product

differentiation strategy is its relationships with its customers.  Being the worldwide leader
of athletic textiles for the better part of half century has given Nike a sort of "high
ground" in the market.  Customers feel that Nike's reputation in athletics is somewhat
superior over all others and by default pick their products more often than not just
because of this.  Also Nike is well known for their great marketing techniques with many
of the world's most well-known athletes serving as spokes models, witty ads
and commercials, and the "Just Do It" slogan that is synonymous with the brand.
Additionally, Nike reaches out to the consumers with product customization offerings to
further offer a different product experience as well; i.e. the Nike ID brands of clothing,
equipment and footwear that allow customers to modify the colors, materials and even
monogram their products however they see fit. 

CONCLUSION:

Nike is an example of monopolistic competition because they have the

aspects that a perfect competition has, except their products are not exactly like
their competitors such as Adidas and Under Armour. Product differentiation is the
real or perceived differences between competing products in the same industry.