Nike’s Moat
Growing up as a kid with a passion for sports, I would always turn to Nike for my source of soccer cleats, running shoes, socks, shorts, jackets, and many more. Why did I go to Nike and nowhere else? Maybe it was the fact that all my cool friends wore the Nike brand and I’d be cool too, or maybe it was because Nike was all I knew. Having a broader perspective on the market as a late teen, I realize now the efforts that Nike put into making an athletic kid like me grow up in the comfort of “Nike’s moat.” Mr. Mourdoukoutas explains Nike’s moat, the limiter of “the entry of new competitors to its business,” as a product of five premier factors: branding, scale, scope, customization, and innovation. Nike has a strong image that psychologically draws people to them, they are a huge company that has close to $29 billion in revenues, their products are basically unlimited, catering to a various and numerous client base, they give customers what the actually want with customization, and their products sometimes “[seduce] customer fantasy.” Nike’s business model exploits and executes all five of these characteristics to an extreme level, creating a “moat” around its industry to gain an advantage over its competitors. No wonder I loved Nike as a kid—and still do.