Marketing Strategy and Competitive Positioning pdf ebook
Adidas kicks off US drive to close in on Nike
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hooley graham et al marketing strategy and competitive posit
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Adidas kicks off US drive to close in on Nike
By Lindsay Whipp in Chicago and James Shotter in Frankfurt Source : Torontonian/Alamy Stock Photo. 138 CHAPTER 5 COMPETITOR ANALYSIS marketing’, she says. ‘The question is whether this is sustainable.’ A recent survey by analysts at UBS also found signs of Nike’s surge, particularly among the young. The survey looked at how many times consumers ‘liked’ Facebook pages associated with different sports brands, and found that Nike was far ahead of its rivals in all the big European markets – and recently overtook Adidas in Germany. UBS also found that the perception of Nike’s brand exceeded that of Adidas in London and Paris, two of the six cities around the world that Adidas is targeting as part of its efforts to regain ground on its US rival. ‘Adidas undoubtedly needs to improve brand perceptions among younger consumers. But the good news is that we think it has a big opportunity to achieve this by placing a bigger focus on social media, leveraging its sponsorship asset base, and creating more relevant product for the target teen- ager’, the analysts wrote. Adidas’s recent overhaul of its football boot offering – it replaced its famous Predator and F50 lines with two newcomers, Ace and X – is seen as one way in which it can renew its appeal among teenagers. The company has also taken steps to improve its position in the fast-growing area of fitness tracking, snapping up app developer Runtastic. Ms Pusz says focusing on sports software is the right way to go, but adds that Adidas is playing catch-up instead of setting the pace. Nike is already by far the trendsetter in its home market. Not only does it have the financial clout when it comes to endorsements, it was quick off the mark in recognising the importance of social media and advertisements uploaded on YouTube. During the recent women’s World Cup in Canada, although Adidas was the main sponsor, Nike emerged victo- rious in terms of social media engagement. Its ‘No Maybes’ campaign was 121 per cent more associ- ated with the World Cup than Adidas, according to Amobee Brand Intelligence. But it is an area again where it has the potential to catch up and win over more millennials. It plans to improve marketing, be more innovative with its products and bring them more quickly to market. ‘Adidas has made the right decisions to move global product and marketing to the US’, NPD’s Mr Powell says. ‘Hopefully they will develop a less European- centric point of view.’ It helps Adidas that the so-called athleisure wear trend is only growing stronger. As more people wear casual sports clothes in situations – even work – that were previously considered more formal, there is room for many companies to expand. This also means there are more companies to overtake it. Under Armour, a relative newcomer, last year sold more trainers, tracksuits and T-shirts than Adidas in the US. And fashion is fickle. Some analysts question whether sports brands really benefit by overly focus- ing on chasing trends or working with celebrities – as Adidas is doing with Kanye West after the pop star dropped his relationship with Nike. Paul Swinland of Morningstar, Inc. says that for a company whose raison d’être is performance – which breeds loyalty – chasing fashion ultimately only gives short-term gains and is ‘off brand’. As Adidas works its new strategy in the US, Nike’s challenge is maintaining the pace of growth investors have come to expect. ‘They’ve gotten such strong growth in apparel and basketball, it just can’t go on forever; you can’t have 15–20 per cent growth forever’, Mr Swinland says. Yet being Nike’s rival must feel a lot tougher. ‘Impossible is nothing’, or so goes Adidas’s well- known slogan. It will be hoping it does not prove itself wrong. Rivals take different approaches. When Adidas and Nike make headlines in China, it is often because workers at one of their suppliers in the ‘world’s workshop’ have gone on strike in manu- facturing centres such as Dongguan. But as Adidas seeks to make up ground on Nike, the two companies are paying attention to China as an important mar- ket in its own right. In announcing its second-quarter results on Thursday, Adidas highlighted a 19 per cent increase in its Greater China sales. With second-quarter revenues of €564m ($615m), Greater China is Adidas’s third-largest market, after western Europe and North America. But it is also the German company’s second-most profitable one, with a second-quarter gross margin of 59 per cent. Similarly, Nike’s Greater China earnings in the three months to the end of June ($266m) were almost as big as western Europe’s ($277m), despite a much smaller revenue base – $829m in Greater China com- pared with $1.2bn in western Europe. Reflecting the wealth disparities that make China both a manufacturing powerhouse and coveted mar- ket, a pair of Nike’s LeBron basketball trainers sell for the equivalent of $275 compared with a monthly minimum wage in Dongguan of $210. Analysts say that Adidas and Nike have adopted different approaches to the China market. ‘Nike has gone through the basketball route, focusing on 139 CASE STUDY celebrity endorsements, while Adidas has taken a more grassroots focus aimed at youth culture’, says Matthew Crabbe, a retail analyst with Mintel. Both will have to contend with a tougher retail climate as China’s economy is now growing at its slowest annual rate for 25 years. Source : from ‘Adidas struggles to catch up with Nike’s runaway success’, Financial Times, 07/08/15 (Whipp, L. and Shotter, J.). Discussion questions 1 Why is Adidas focusing on the US market? 2 Why has Adidas seemingly lost ground to Nike? 3 Should Adidas only benchmark itself against Nike? What steps should it follow when conducting benchmark- ing activities? |
