Competitive Rivalry In Footwear Industry
Ehlers & Lazenby (2010) states that competition within the industry is one of the most significant factor’s in Porters five forces model. With well-established players such as Puma, Nike, Adidas and Asics currently in the athletic footwear market, we will be entering into an industry that possess a great deal of competition. As a new entrant, gaining our desired market share in the short term will be no easy task as consumer preferences continue to change. Our initial short-term success will rely on the ability to offer the customer an innovative footwear that not only offers value for money but also appeals to the environmentalist in the consumer due to our green manufacturing. The initial market share that …show more content…
Barriers to entry are the first hurdle into a new industry. The greater the barriers to entry, the lesser the threat of a new entrant (Porter, 1998). Barriers to entry in the sporting apparel and footwear industry remain high due to the large economies of scale (Dogiamis, 2009).
Our business will not be able to profit from the economies of scale associated with manufacturing, distribution, marketing, research and development and other operations due to the low initial demand of our product.
Entering the footwear business requires high start-up capital to secure property, plant and equipment, and to develop a new product. In addition to the initial high capital investments, marketing and advertising costs associated with the development of an innovative product make the barriers to entry taller. In the athletic shoe industry, customers trend toward premium footwear with familiar brands that have trusted reputations, which may require years to build. In an attempt to gain economies of scale through high production, our business faces strong competitive retaliation from industry giants Nike and Adidas. Although capital requirements may be high it is not necessarily …show more content…
The process of securing our product with retailers may require price breaks and cooperative advertising allowances. A point worth mentioning is that making purchases from a Totalsports store will award a vitality member a discounted price. Unless our brand exists in the store, the customer remains likely to select one of the other brands available. It needs to be noted that other retailers could make the same offering to their customers.
The Threat of Substitute products
Studies prove an upward trend in the athletic footwear industry as consumers have increased their disposable income spent on sports and fitness (Jones, 2013). Healthier lifestyle choices move the sports apparel industry away from a niche market to a larger one, therefore the anticipated demand for sports footwear exists.
The substitutes to our product will come from Nike, Adidas, Puma, Asics and New Balance. Customers can easily switch between the products as price is not a differentiating