[Type the company name]

adidas VS nike A bird’s eye view of the e-marketing concepts incorporated by the giants of sports apparel.

Deepak Krishnamurthi 8/20/2007

Contents1. Introduction2. Porter’s Competitive Forces3. SWOT Analysis of Adidas and Nike4. E-Business Model5. Effectiveness of E-Business

INTRODUCTION

A daring dream began in 1920 when Adi Dassler fashioned his first shoe in Herzogenaurach, Germany. In 1948, Adidas was founded along with its identifying trademark, the three stripes. From its inception, Adidas has faithfully adhered to three guiding principles embedded deep into its DNA: Produce the best shoe for the requirements of the sport, protect the athlete from injury, and make the product durable. As time has passed, Adidas has evolved and is now one of the premier global leaders in sporting brands offering athletic footwear, apparel and accessories. This feat has been cultivated through continuous innovation and a broad product portfolio. This led to the development of www.thestore.adidas.com, an e-commerce site focused on interactively profiling Adidas's extensive product offerings accompanied by detailed product information.

Initially, what started as Blue Ribbon Sports in 1962 became Nike Inc. in 1972, based in Beaverton, Oregon. (Nike – Greek Goddess of Victory) The founders were Bill Bowerman, a track & field coach and Phil Knight, a runner under Bowerman. From their modest start, Nike has grown to be a global leader in the sporting goods industry. It is recognized as the world's leading designer, marketer and distributor of athletic footwear, apparel, and accessories for a wide variety of sports and fitness activities. For Nike, an established and growing organization, a strong Internet presence felt like a natural extension to their already globally focused strategy. Today www.niketown.com, Nike's e-commerce site offers a unique experience, products and product information for its potential and existing customers.

MICHAEL PORTER'S FIVE COMPETITIVE FORCES

Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a market or market segment : industry competitors, potential entrants, substitutes, buyers and suppliers.

INTENSE SEGMENT RIVALRY

The rivalry among existing competitors in the footwear industry is quite high. Large firms such as Nike and Adidas have grown immensely over the last two decades. Their global reach has expanded through all continents; this is attributed to the emergences of the Internet and e-commerce. Online selling has enlarged the reach for these firms allowing them to increase sales while minimizing operating costs. Most individuals in North America have access to high speed Internet and online purchasing has become the new trend for the twenty first century.

THREAT OF NEW ENTRANTS

Due to the large scale of both Nike and Adidas, these firms are able to control their costs to retain performance advantage over emerging competitors in the industry. Their web sites are more sophisticated and enticing to browse. The capital injection into web site development is high and must be updated frequently with new promotions and added features to attract online shoppers. Selling footwear online is highly competitive; however, barriers to enter into this e-commerce industry are quite low. The capital requirement for setting up an online shop is comparatively lower than setting up a traditional bricks and mortar establishment. Therefore, the online footwear industry is highly abundant with hundreds of online merchants.

THREAT OF SUBSTITUTE PRODUCTS

Consumer substitutes for athletic footwear products are low because there are little alternatives to switch, some substitutes for athlete footwear could be boots, sandals, dress shoes or bear feet. Consumers are not likely to substitute due to the performance specification of the product. For instance, a basketball player would not wear boots to play basketball. Therefore, there are no real substitutes for athletic footwear.

THREAT OF BUYER’S GROWING BARGAINING POWER

There are a large number of buyers relative to the number of firms in this industry. Therefore, companies like Nike and Adidas must continuously market their product and differentiate their brands against competitors, in order to increase sales and market share. The use of online tools has helped to enhance the accessibility of users. For example, Nike's "nikeid.com" link allows consumers to customize and design their own footwear by permitting customers to specify the desired colours and the option to personalize the footwear with their name.

THREAT OF SELLER’S GROWING BARGAINING POWER

There are many suppliers in this industry. There is very little differentiation among the suppliers, which eliminates suppliers' bargaining power. Leather, rubber, and cotton are commodities available abundantly in the market. Companies such as Nike and Adidas have a definite advantage and power over their suppliers. These suppliers become dependent on these firms for survival. Moreover, Nike and Adidas have standardized their input procedures pertaining to the materials used, their labor force, supplies, services, and logistics. Firms are able to switch between suppliers quickly and cheaply, due to the globalised networks of cheap labour.

SWOT ANALYSIS OF NIKE AND ADIDAS

(With respect to e-commerce)

STRENGTHS

1. First movers advantage in e-commerce.2. Brand recognition and reputation.3. Diversity in products offered on the

web. (footwear, apparel, sporting equipment etc).

4. Strong control over its own distribution channel.

5. Innovative designs in footwear enabling consumers to design their own shoes online.

6. Secondary websites (eg., soccerevolution.com)

WEAKNESSES

1. Negative image portrayed by poor working conditions in its overseas factories.

2. E-commerce is limited to USA.3. Online customer service not “helpful”

or easy to find.4. The direct sale to consumers is creating

conflicts with its own resellers.

OPPORTUNITIES

1. Increased demand in the industry for products available online.

2. E-commerce will reduce the cost of goods sold.

3. Expand e-commerce to global markets.4. Possibility of outsourcing web

development and e-commerce to a third party developer.

5. Expand e-commerce to global markets6. Growing reputation in non-basketball

sports will boost e-business.

THREATS

1. Increase in price of providing technological solutions (e-commerce).

2. Strong competition from some of its major challengers in all branches of the business.

3. Negative image created by the sponsored athletes (i.e. Kobe Bryant and his sexual assault case).

4. Possibility of distress from growing beyond its capabilities.

E-BUSINESS MODEL

Nike and Adidas have adopted a merchant model which has three pillars of their e-commerce strategy:

1. Pure-play e-tailer2. Tricks and clicks 3. Their online store.

The main purpose of acquiring relationships with pure-play e-tailers is to promote and market products on an international level. Nike has landed a deal with Fogdog Sports which will sell their entire Nike product line on its web site. Adidas signed an agreement with SportsLine.com and Sports.com. Fogdog.com, Sports.com, and SportsLine.com have the initial coverage in the US, UK and eventually in Asia. Nike and Adidas will also operate their traditional o, while selling their specialty products on their e-commerce web sites. This business model is referred to as "Bricks and Clicks." The primary goals of operating a bricks and click site is to increase sales, reduce cost, increase market reach, applying competitive pressure, promoting new products, improving customer service, and progress in addressing user concerns.

EFFECTIVENESS OF E-BUSINESS

Nike's ability to realize the potential of the Internet has placed them in the e-commerce leadership position among other sporting goods companies. Through its initiative to be the first to market with its e-commerce web site launch back in 1999. By continuously relying on innovative companies to redesign the site, Nike acquired the luxury of owning a site that's every bit as inspirational as it is informational, an important milestone for a market leader. Today, Nike's store enables online consumers to design key elements of the shoes they purchase. This program is the first time a company has offered such mass customization of footwear.

Adidas's approach to e-commerce was that of a follower since Nike was first. As a result, Adidas relentlessly pursued innovation and refreshing content to differentiate itself from Nike. Adidas also realized that in order to be successful it has to be fully committed to this initiatie. That's why it included adidas.com as part of its three pillar strategy along with pure play e-tailers, bricks and clicks. The final result is a web site that successfully portrays Adidas's product portfolio in an interactive and informational manner.

Nike and Adidas seem to follow similar online strategies but Adidas experienced a greater transformation from being a minor, insignificant player back in 1998 to the number two position in the athletic footwear and apparel industry. Part of this success is due to Adidas's ability to thoroughly leverage the Internet as a marketing and e-commerce medium, most of it at the expense of Reebok. In the Nike's case the online strategy ensured its strong leadership position in the intensely competitive market. No other athletic footwear company is able to outshine these two firms when it comes to e-commerce.

VS

References :

1. google.com2. wikipedia.com3.