term paper nike vs addids

7/27/2019 Term Paper Nike vs Addids

1/44

A COMPARATIVE ANALYSIS OF MARKETING

STRATEGIES

FOLLOWED BY NIKE AND ADIDAS

Submitted by: NIKHIL KUMAR SINGH

Class: Section A

Enrolment no: A7004611I04

Under guidance of: Dr. RICHA RAGHUVANSHI

Faculty Guide

Designation

ABS, LUCKNOW


2/44

FACULTY CERTIFICATE

Forwarded here with a term paper report on COMPARATIVE ANALYSIS

OF MARKETING STRATEGIES FOLLOWED BY NIKE AND ADIDAS

submitted by . Enrollment., student of

B.COM(H)

This project work is partial fulfillment of the requirement for the degree of

Bachelors in B.COM(H) from Amity University Lucknow Campus, Uttar

Pradesh.

Dr. RICHA RAGHUVANSHI

Amity University,

Lucknow Campus


3/44

STUDENTS CERTIFICATE

Certified that this report is prepared based on the term paper project undertaken

by me on A COMPARATIVE ANALYSIS OF MARKETING STRATEGIES FOLLOWED BY

NIKE AND ADIDAS. fromunder the able guidance of (Dr./Mr./Ms.).. in

partial fulfillment of the requirement for award of degree of B.COM from Amity

University, Uttar Pradesh.

Date--------------------

--------------- ----------------- -----------------

(Student Name) (Faculty Guide Name Mr. V. P. Sahi

with Designation) Director (ABS)


4/44

Acknowledgement

Firstly, I thanks the all mighty by the grace of whom. This report was

undertaken and duly completed in time. I take the opportunity to express my

profound sense of gratitude and sincere indebtness to DR.Richa Ragunshi

under kind guidance of whom, I was able to complete this report. I am also

thankful to Director Professor VP Sahi to give me the opportunity to do this

project . I am also thankful to my parents who helped me morally and

financially in completion of this report.


5/44

INDEX

1.

EXECUTIVE SUMMARY1.1. BRIEF ANALYSIS OF INDUSTRY1.2. BRIEF DEFINITON OF INDUSTRY

1.2.1.TRENDS IN THE INDUSTRY1.2.2.MARKET ANALYSIS1.2.3.MAJOR PLAYERS AND MARKET SHARES

1.3. MAJOR FORCES SHAPING THE INDUSTRY1.4. THE COMPANY AND MAJOR PRODUCT LINES

1.4.1.BRIEF HISTORY OF COMPANY1.5. FLAGSHIP PRODUCTS, MAJOR PRODUCT LINES, RECENT FORAYS1.6. HISTORY OF THE BRANDS

2. MARKETING STRATERGY2.1. CUSTOMERS2.2. COMPETITORS2.3. COLLABORATORS2.4. COMPANY

3. SEGMENTATION, TARGETING, POSITIONING3.1. MARKET SEGMENTATION3.2. SEGMENTS TARGETED3.3. POSITIOING

4. MARKETING MIX4.1. PRODUCT4.2. PLACE4.3. PRICING4.4. PROMOTION

5. ANALYSIS REPORT5.1. CUSTOMER SURVEY5.2. MARKETING STRATERGIES5.3. RECOMMENDATION5.4. CONCLUSION5.5. BIBLIOGRAPHY


6/44

EXECUTIVE SUMMARY

Brief Analysis of Industry

Sport is an integral part of modern contemporary society. Sport has always been associated

with discipline, dedication and perfection and hence sportsmen have always been

respected, across borders, religions and races. Sportsmen, professional or amateur, need

quality gear, specific to their game, to be able to compete better. It is this market that the

two conglomerates, the subjects of our study, cater to. Both these companies started off as

footwear makers for the modern athlete, their innovative designs and technology creating

waves. But now these firms have diversified. They compete on the broader platform of

footwear, apparel, accessories and equipment. Today they are among the worlds top

corporations, with a worldwide presence. Our study will concentrate on the primary

product these two firms makeAthletic Footwear.

We will compare their marketing strategies, their targeting and their marketing mixes. We

will dissect their segmentation and examine their positioning on the global playing field. And

lastly well state our conclusions on the comparative marketing strategies of these firms.

The worlds athletes play using their products. Lets see how they play the market. Welcome

to

NIKE versus ADIDAS


7/44

Brief definition of Industry

Trends in the Industry

The latest picture of the industry has not been as rosy as it has been earlier. At this stage,

with the big four, Nike, Adidas, Reebok and Puma and the others such as Converse and New

Balance, the industry is experiencing hyper competition. The reasons for this being that the

demand for the products has been decreasing and at the same time, there has been an

increase in the popularity of alternate footwear. This inadvertently has resulted in

decreasing margins and the quest for new markets and innovation to get the profits up

again.

The worries seem to have ended, at least momentarily with the emergence of China,

Turkey, Brazil and Russia as huge untapped markets for their products. Of these, China is the

biggest bet for the big guns. Why? Chinas huge middle class is rising and the countrys ever

increasing wealth serve as a classic ingredient for market ignition. Both Nike and Adidas

realised this early and invested heavily in advertising during the 2008 Beijing Olympics.

Adidas partnered the games and Nike, as always focused on individual player and team

endorsements. The Chinese marker saw huge residual sales after the Olympics. Nike, for

example, saw its sales increase 50 pc in China in 2008 on a currency neutral basis and again

a 50 pc increase in sales in Q1 2009.

Turkey and Russia, similarly, had a 25 pc increase in sales in 2008 and another 30 pc in Q12009. Brazil alone had a 30 pc increase in Q1 2009. The opening up of these markets has

provided respite to the industry and they are making good use of it. Already most of these

firms use South Asia as their manufacturing base, to make use of the cheaper labour, in

particular. Now they have a greater incentive to move to South Asia as their market seems

to be shifting here too.

MARKET ANALYSIS

India has a large market for footwear and the brand loyalty is also growing. India is ranked

the 4th largest economy by GDP (in purchasing power parity term) and is expected to rank

3rd during 2010, just being behind USA & China in footwear industry both production and

consumption. Indias GDP for footwear grew at the rate of 9.4% for the year 2008-2009 the

countrys GDP stood at Rs 54 lakh crore, translating into a per capita income of Rs 48,450,

thus resulting in a compounded annual per capita income growth rate of 9.25 per cent

during 1951-2009.

If we analyze the consumption pattern of 70 different economies and segment them intolow-income, middle-income and high-income brackets, we will observe that consumer


8/44

spending on food, beverages and clothing & footwear account for 47 per cent, 34 per cent

and 22 per cent of their total consumer expenditures, respectively.

India is standing on the threshold of a retail revolution and witnessing fast changing retail

landscape, with footwear market is set to experience phenomenal growth.

India is the major source for supplying medium and low priced footwear and most of the

manufacturers, who have outsourced their production to China are planning to outsource it

to India. Some of the footwear industry who have turned to India are Adidas, Nike and

Puma.

INDIAN FOOTWEAR INDUSTRY

The Footwear Industry is a significant segment of the Leather Industry in India.

India ranks second among the footwear producing countries next to China.

India produces more of gents footwear while the worlds major production is in

ladies footwear.

The industry is labour intensive and is concentrated in the small and cottage industry

sectors. While leather shoes and uppers are concentrated in large scale units, the

sandals and chappals are produced in the household and cottage sector.

The major production centres India are Chennai, Ranipet, Ambur in Tamil Nadu, ,

Mumbai in Maharastra, Kanpur in U.P. , Jalandhar in Punjab, Agra and Delhi. The

following table indicates concentration of units in various parts of the country:

Region Large & Medium Scale SSI Household

Tamil Nadu 64 31 7

Delhi & up North 4 8 25

Agra, Kanpur 9 34 14

Calcutta 1 3 19

Bangalore 6 3 4

Mumbai 3 11

Others 13 10 32


9/44

Major players and Market Shares

The above graph clearly demarcates the market shares of the major players in the industry.

Nike is the leader with 31 pc of the global market with its closest competitor being Adidas

with 16 pc. They are very emphatically the major players on this pitch with the other big

guns being Puma and Reebok.

Reebok, incidentally, is owned by the Adidas group. The acquisition was completed in 2006.

Puma is a Germany based company, which also owns the brand Tretorn. It is a competitoron more fronts than footwear, with stakes in the apparel and equipment category too.

This completes the big four of the industry, with collective stakes in the market that make

the other companies look much smaller than they actually are. New Balance is in a highly

focused niche segment, running shoes and cannot be expected to compete with the giants.

Converse is owned by Nike and owns the All Star brand, coveted among teenagers. Notably,

Converse makes only the All Star shoes in the US. All its other products have been

outsourced abroad.
http://www.wikinvest.com/image/Footwear_market_shares.PNG


10/44

Major Forces shaping the Industry

Porters Five Forces

Barriers to EntryLow

The Barriers to entry to the athletic footwear industry are quite low. Though selling top

quality footwear for athletes is a highly competitive field, there is a huge potential for new

entrants. Due to the enormous scale of operations of both Nike and Adidas, there are able

to control their costs and hence maintain a competitive advantage over new and emerging

competitors. Their powerful brand identities give them an aura which is difficult for a new

entrant to pervade through and beat. Their brand images have a distinct competitive

advantage. Even with all these factors coming into play, the industry is a comparatively easyone for new manufacturers to enter. Also, there is a threat of other manufacturers to

expand their portfolio. These, with already strong regional brand names, might emerge

strong competitors. For example, in India Bata launched its Power brand of running and

athletic shoes which are still going strong. In addition to these, there is also the loss from

copies of their premium footwear, made mostly in the far eastern countries. They also result

in a huge loss of revenue. Though they do not strictly come under this category, they have

been included for sake of easy reference.

Bargaining power of buyersHigh

There are a huge number of buyers with respect to the number of brands in the industry.

Therefore these companies are in a constant struggle to differentiate their brand and use

other innovative means to market them differently and successfully. They must establish a

strong brand identity, essential to attract and retain the target consumer. Identity is the key

to brand trust and loyalty. Many buyers in new markets are cost sensitive and switching cost

is low for the buyer, hence the importance of the brand image. The buyers of sports

footwear have changed in the past decade and there has been an increase in woman

purchasing athletic footwear. The new generation has vastly different tastes and purchasing

methods. All in all, the buyers have a high amount of bargaining power.

Bargaining Power of SuppliersLow


11/44

Bargaining power of suppliers to this industry is virtually non-existent. There are a large

number of suppliers in the market and the materials needed for this industry, namely,

Cotton, Rubber and Leather are commodities readily available in the open market. The

conglomerates hold sway over the suppliers as they have mostly standardised their input

procedures and hence can easily switch between substitutes. This gives them enormouspower over their suppliers. The suppliers are usually dependent on these firms as a means

of survival. In this situation, bargaining power of suppliers is negligible.

Threat of SubstitutesLow

There are no real substitutes for athletic footwear. There may be substitutes for a fashion

item. But for a professional athlete, substitutes for his shoes do not exist. He cannot play

with boots or his bare feet. He cannot switch mainly due to his performance specifications

but he has little alternative to switch as well. A consumer is not likely to switch and so, the

threat of substitutes is very low.

Rivalry among existing CompetitorsHigh

The rivalry among existing competitors is very high in this industry. Nike, Adidas and others

in this field such as Puma and Reebok have grown tremendously in the last decade and each

of them have been offering more choice, more identity due to endorsements by top

sporting personalities and by aggressive marketing and sales strategies. The industry is in

hypercompetition and the rivalry is extremely fierce.

The Company and Major Product Lines

Brief History of Company

Adidas

Adidas was formally registered on 18 August 1949 as Adidas AG, by Adolf Adi Dassler,

whose name formed the companys title. Adolf Dassler was born in Bavaria and started

making sports shoes in his mothers kitchen after he returned from World War 1. He was

joined in 1924 by his brother Rudolf Dassler and using their mothers laundry as their

manufacturing base, they began operations. Famously, during the 1936 Olympics, Adi

Dassler drove to Munich and persuaded Olympic gold medallist Jesse Owens to wear his

shoes which established his reputation among the sporting world and gave him lots of

contracts and financial success.


12/44

After the Second World War, though, the brothers split up and Rudolf Dassler went on to

form his own company, which later became Puma. After the death of Horst Dassler, Adolfs

son, the company went through some troubled times. It was then bought by French

industrialist Bernard Tapie and subsequently by Robert Louis-Dreyfus. In 2001 Herbert

Hainer took over as CEO of Adidas and has been leading the conglomerate ever since. A longline of innovative products and successes later, Adidas is one of the worlds largest

corporate, with a product line to envy and worth millions of dollars. The trademark three

stripes and the slogan Impossible is Nothing are Adidas identity, a image it spends a

fortune to uphold. In 2005 Adidas acquired British giant Reebok to further strengthen its

market and customer base.

Indian Operations

Though Adidas entered into a license agreement with Bata in 1989, it formally began

operations only in 1996 with the establishment of Adidas India Marketing Private Limited. In

1998 Adidas pulled a masterstroke, they roped in Sachin Tendulkar as their brand

ambassador which proved a sound business decision. In 1999, keeping in mind the price

conscious Indian consumer, Adidas launched its cheapest ever shoes in India. In 2004,

Adidas India launched the advantage adidas campaign, which increased sales by 30%. In

2005, Andreas Gellner took over as Managing Director for Adidas India. Adidas sees India as

a huge growth market and according to Gellner, Adidas will invest huge sums to take on its

competitors here.

Nike

Bill Bowerman and Philip Knight started the company we know today as Nike in 1962. It was

originally known as Blue Ribbon Sports. Bowerman was Knights track and field coach at the

University of Oregon. Philip Knight went on to study at Stanford where he published a paper

on ending the German domination in the athletic footwear industry. He travelled to Japan

and entered into an agreement with the Onitsuka Tiger company and became their sole

distributor in the US. Bowerman and Knight received their first shipment of 200 shoes and

sold them at local meets to make a good profit. Bowerman, who had earlier designed shoes

for his athletes, joined hands with Tiger to make the famous Tiger Cortez shoes, which

became worldwide bestsellers and launched the business. In 1971, Knight and Bowerman

began to make their own shoes under the brand name of Nike, named after the Greek

goddess of victory and bearing the Nike swoosh, which is one of the companys biggest

strengths today. In 1972, Blue Ribbon Sports parted ways with Onitsuka Tiger and became

Nike Inc.

Today Nike is the world leader in athletic footwear, with market shares exceeding the other

major players by significant margins. The Swoosh and Just Do It slogan are huge brand

identities. Nike is a truly global player and seen as a model for innovation driven growth.


13/44

Indian Operations

Nike has been present in India for over a decade through its seven year license agreement

with Sierra enterprises, which didnt help much in the bigger scheme of things as Reebok

and Adidas came to the country with fully owned subsidiaries. This explains why the globalmarket leader is still lagging behind in India. In 2004, instead of renewing its franchise, it

became a subsidiary and started operating with more freedom and capital. The result was

that the market share rose and Nike became a force to contend with in the Indian market.

Probably the biggest sign of the change in guard was the heavy investment in Cricket by

Nike, culminating in its bagging of the Indian cricket teams jersey rights, worth Rs 200

Crores. Nike then launched its special range of cricket shoes and sponsored the Indian

football team as well. Though Nike has entered the market in earnest very late, the world

no.1 will stop at nothing to gain lost momentum in the Indian subcontinent.

Flagship Products, Major Product Lines and

Recent Forays

Adidas

Adidas manufactures running shoes under its adiStar and Supernova brands, which include

the adistar Ride, the adiStar Control 5, the Supernova Sequence and the Supernova Glide.

The famous Copa Mundial football boot is Adidass premier football boot, which later

developed into the Predator range. For basketball, Adidas is most famous for its Superstar

and Pro Model shoes.

Beside these Adidas makes jerseys for national and domestic cricket, football, rugby, and

tennis and lacrosse players with a separate line for gymnasts.

Adidas has recently entered the sports lifestyle market, following on the heels of Puma and

Reebok and has launched watches, eyewear and most recently, deodorants, aftershaves,perfumes and lotions.


14/44

COPA MUNDIAL

Nike

Nikes first products were track running shoes which came under the name Nike Air Max,followed recently by the Nike 6.0, Nike Nyx and the Nike SB skateboarding shoes. Recently,

Nike launched special cricket shoes for bowlers and batsmen called the Nike Air Zoom

Yorker and the Air Zoom Opener. But its bestselling line still remains the legendary Air

Jordan basketball shoes, named after Michael Jordan. Air Jordan still contributes more than

30% of Nikes shoe sales.

Like Adidas, Nike too entered the sports apparel and equipment market and makes jerseys

and specialist apparel for various sports. Recently Nike teamed up with Apple to launch the

Nike+ range, which can monitor a runners performance through a radio device linked toApples ipod.

But Nikes most recent product is the one making waves across the sports world. Called the

Lunar Glide, Nike is using Flywire (A thread developed by Nike, composed of Vectran, a

liquid crystal polymer) and Lunarlite Foam to make the worlds lightest shoes. Advertised

using the slogan Actually, it is Rocket Science, it reiterates Nikes commitment to

technology.


15/44

SOLE COLLECTOR

History of the Brands

Adidas

The companys clothing and shoe logo bear the trademark three stripes, which is the

companys corporate logo. Adidas also has a trefoil sign that it uses only on heritage

products since 1972. The three stripes logo represents performance and the future of the

Adidas Branding identity. It has become synonymous with Adidas and its dedication to

producing high quality athletic products to make athletes perform better.

When Adidas entered the marketplace some 50 years ago, its focus was to produce shoes

crafted specifically for soccer and running.

The new millennium has since brought about an Adidas renaissance; the brand has steadily

regained market share over the past five years to become the world's number two athletic

shoe company (behind Nike). How did it go about repositioning to once again be among the

coolest of kicks?

Adidas claims that, "the brand values of the company authenticity, inspiration, honesty

and commitment are derived from sport." Historically, this sensibility was demonstrated

through early and continued involvement with Olympic athletes, as well as active

sponsorship of major global sporting eventslike the World Cup. Adidass rapid growth inAsia, where revenue rose by 15 percent to US$ 878M last year, may be further propelled in


16/44

Japan and Korea when those two nations host the World Cup this year an event which is

expected to garner 2.5M spectators and one billion TV viewers worldwide.

However, the key to revitalized success seems to lie in the considerable endorsement deals

Adidas has developed with world class athletes. Recent sports figures representing Adidasdont only score high marks in their game they also score high in their celebrity quotient.

British football star David Beckhams relationship with Adidas has no doubt lent itself well to

the brands visibility in the UK. Recently dubbed "Captain of England," Beckham led his team

to victory in the 2000 FIFA World Cup. With Europe as Adidass largest market, exposure like

this reflects in the numbers; sales grew seven percent to US$ 2.7 billion, last year.

Reinvention was the key, not only for the Adidass marketing strategy, but also for its

product line. Eclectic, individual, 'no-rules' sports such as snowboarding, inline skating and

surfing have grown into significant categories. Activities such as golf, hiking and mountainbiking, which were seen as lifestyle and leisure activities, are now part of mainstream

sports. Increased product offerings in these categories have undoubtedly contributed to a

better score for the brand.

To keep up with the competition, Adidas generates close to 60 new foot-friendly designs

each year. The Adidas credo is to regard shoes as feet, resulting in a product with superior

fit and performance capabilities. Tactics have been revised in getting these products out for

consumption. As a result, products have been repositioned in higher-end and sports

specialty stores.

In 2002 Adidas footwear innovation, ClimaCool TM, made its debut. The new technology

added breathable materials to the shoe. In July, the Group completed its three-divisional

structure for its sore brand, Adidas, and positioned its third division as Adidas Sports Style.

In 2004 Impossible is nothing became the central message of a global campaign that

Adidas launched. It refers to the shared attitude with the athletes, of always pushing

yourself further, to beat the limits. In September, Adidas & designer Stella McCartney

announced their partnership, introducing the Adidas by Stella McCartney collection.

On January 2006, Adidas announced the acquisition of Reebok LTD. By combining two of the

most respected and well-known brands in the worldwide sporting goods industry, the new

Group will benefit from a more competitive worldwide platform, well-defined and

complementary brand identities, a wider range of products, and a stronger presence across

teams, athletes, events and leagues.

Adidas continues to prove itself as a brand built to last through a game plan of reinvention.

With the recent acquisition of a lifetime partnership with Orlando Magic's Tracy McGrady

(basketball) and its heavy involvement with 2002 World Cup, it continues to strike savvy


17/44

deals that capitalize on the star power of young athletes and increase its visibility in the

marketplace.

It appears that team Adidas has honed its strategy to become a revitalized contender in

todays competitive sporting goods market and is now duly recognized as the sneaker ofyesterday and today.

Nike

Nike positions itself as the market leader of sports footwear and uses the greatest athletes

and the record of their achievements in advertising. The swoosh logo was developed by

Carolyn Davidson in 1971. Together with the Just Do It slogan, the Swoosh logo perfectly

expresses the brand and its philosophy. It expresses a high ambition and a will for victory,

which is a part of Nikes brand image and corporate culture.

It was only 36 years ago that we had a world without Nike, and in that period Nike has gone

from the brash newcomer, to the number one mass-market leader. The Nike story begins

with the meeting of its co-founders at the University of Oregon. It was here that middle-

distance-running business student Phil Knight fell under the tutelage of the college athletics

coach, Bill Bowerman. Nike would go on to grow out of the fusion of Bawerman's sporting

innovation and Knight's marketing know-how.

Even at a very early stage it seemed that Knight had a far-reaching goal, to break the long-

established brand nomination of the U.S. marketed by the then main player, Adidas.

In order to achieve this aim, legend has it that Knight and Bowerman each put in $550 to

cement their partnership, and decided to call their new company Blue Ribbon Sports (BRS).

BRS was basically the American distributor of Onitsuka training shoes.

In 1965, after a period of selling Onitsuka shoes from the back of their van at athletic meets,

the company grew.

The company went from strength to strength, but after heated disagreements between BRSand Onitsuka, the new boss at BRS decided to split from Tiger in 1971 and create their own

company manufacturing their own shoes. It is said that Jeff Johnson came with the idea for

the new name, deciding to honour the Greek goddess of victory, and thus Nike was born.

It was also at this that the fledgling company had to decide on a logo for the brand, and

another of the legends that the company managed to create for itself was developed.

Nike took off virtually instantly in the United States, and within a year company sales were

at almost 2 million pairs. In 1981 Nike decided to take another major step, with the U.K.

becoming the company's first wholly owned foreign distributorship.


18/44

However it was in 1985 that Nike really became a major player. It was in this year that it

managed to persuade the then little known Chicago Bulls basketball rookie Michael Jordan

to endorse his own range of shoes. Even Nike could not have imagined the effect that this

single act would have on sales. The new Jordan endorsed range transported Nike andtrainers in general to a completely new lever of popularity.

It was after the introduction of the Jordan shoes and mass-marketing that went with them

that the "trainer wars" got underway. Each of the brands, desperate to stay one step ahead

of the competition, came up with a continuous stream of developments and inventions of

technical wizardry. For a while in the late 1980's Reebok actually overtook Nike to become

the number one player (at least in terms of sales), but Nike came back strongly with its 'just

do it' slogan in 1988, and regained the top spot in terms of market sales - a position they

retain to the present day.

In 2006, Nike entered the cricket market with a 5-year sponsorship of the Indian cricket

team for US$43m. Nike and Apple released the Nike+iPod sports kit, enabling runners to log

and monitor their runs via iTunes and the Nike+ website.

In 2008, Nike introduced shoes featuring new Flywire and Lunarlite Foam materials. Flywire

is a new technology made up of thin wires of vectran fibers, which are 5 times stronger than

steel and never lose strength. Lunar Foam is a material developed by NASA that gives the

shoe excellent shock absorption and a great feel with minimal weight.

Back in 1971, the newly created Nike Company was ready to hit the market with its shoes,

and a logo to represent the brand was urgently needed.

Phil Knight turned to an associate from his teaching life and commissioned graphic-design

student Carolyn Davison to work with his new brand. Knight wanted a design that would

represent movement. Davidson supplied Knight with a few designs one of which was the

initial 'Swoosh' so well known today. Knight was not particular enamoured with any of these

designs, but with deadlines to meet the Swoosh was chosen

Even though Davidson was initially paid only $35 for her design, the story doesn't end there.

In 1983, Knight took Davidson out for lunch and presented her with a diamond-encrusted

Nike ring, and also an envelope. The envelope contained Nike Stock.

Nike has continuously pushed back the boundaries of trainer design, staying focused under

Phil Knight's guidance, and is going to take some dislodging.

MARKETING STRATEGY

CUSTOMERS


19/44

Both nike and adidas are a well known and accepted brands. Their main customers are

athletes and sports enthusiasts but it doesnt limit there. Men women and even children are

well versed with the brands and use them. Children from the age of 15 to adults of the age

group 35 use both nike and adidas shoes.

For Nike and Adidas, the Beijing games are a brawl for 21st century dominance of the

sneaker world. Both the rivals are looking forward for the Olympics 2010. While every

Olympics is a dogfight for the longtime rivals, this year's games are a bigger deal for adidas

especially. Beijing's the doorway into a vast new market. There are 2.6 billion feet in China,

most of them without sneakers. Both companies expect the country to be its second-largest

market, after the U.S, within a few years. "It's the ultimate land grab," for both nike and

adidas. Despite the relative strength of Germany-based Adidas in Europe and weakness in

Nike's flagship U.S. market, Nike has expanded its global lead over its rival over the past

three years. Nike's 36 percent worldwide market share dwarfs the 21.8 percent share forAdidas, according to Sporting Goods Intelligence. The strategies adopted by Adidas have

been successfully implemented in several areas. They always ensure that the needs of

various consumer groups are fulfilled by going into partnership with high-end designers and

technology. Adidas has been consistently dragged down by the once-mighty Reebok brand,

which contributes about 6 percent to its parent's total.

OUR ANALYSIS (According to customer survey)

The customer analysis for both Nike and Adidas is largely similar and hence they will beexplained together and differences, if any, will be pointed out.

The Consumers are typically professional athletes, amateur sportsmen and young people

who identify with sport as a lifestyle, mostly in the age group of 15-35. But this age barrier

seems to be falling now, as our research told us. More children in the 12+ age category are

identifying with these brands mainly due to their addiction to European Football which has

gained a huge fan following. Also, the consumers are brand conscious adults and girls, who

look to them as status symbols, an image which both these brands strive to uphold by high

pricing and premier status.

The unsatisfied need for most customers in this market is primarily high end footwear which

helps them perform better in their chosen playing field, but at a lower cost than what these

brands offer. For the fashion conscious segment of the market, they come in with their

lifestyle products. The main problem they are trying to solve is the risk of injury and the

possibility that an athlete might underperform due to low quality footwear.

The principal decision makers in the process are the buyers themselves as they know best

their specific need for their specific sport.


20/44

Buyers generally buy these products as durable long lasting products that they use specially

for big game days. The quantity bought differs for team and individual sports, as teams

generally order a large number of performance footwear for all its players and individuals

usually buy a single pair. The places where the consumers mostly buy are original outlets

and franchises. Retail stores are largely low key sellers for them. The frequency of buying isless, compared to other markets.

WAR BETWEEN NIKE AND ADIDAS

The problem for Adidas is that, while it's staked out its turf as an official sportswear partner,

Nike has more top athletes. They include Swiss tennis ace Roger Federer and Australian

track star Craig Mottram, along with old standby basketball legends Kobe Bryant and LeBronJames. But nikes athletes arent guaranteed to win games, there is always a risk element

associated with their performance.

Nike has signed up 22 of China's 28 sports federations to outfit most of its athletes. The deal

is just one of 40 that Nike signed with various national federations, including the U.S,

Germany and Russia, ensuring that team members will be decked out in Nike gear during

play regardless of where they have their individual endorsements. So for many of 3,000

athletes in the Adidas stable who will compete in Beijing, donning the three stripes will be

limited to the medal stand. During play, they'll be in Nike gear.

COMPETITORS

NIKE is one of the most successful manufacturers of athletic footwear, competing with

Reebok, L.A. Gear and Adidas, as well as with manufacturers of casual footwear. Nike is the

worlds No.1 manufacturer and marketer of athletic footwear. Nike stands for success ,

excellence, high performance, fame etc.

Adidas Reebok Woodland Red tape Bata Liberty Puma New balance


21/44

Nike is the official kit sponsor for the Indian cricket team for 5 years. Nike beat Adidas and

Puma by bidding highest, US $ 43 million.

ADIDAS

The chief competitors of adidas are PUMA and Nike. In August 2005, the company

announced that it had made a deal to acquire rival Reebok for $3.8 billion. The acquisition

would increase its market share and to establish a stronger foothold in the Sports Industry.

This merger is indeed a success which has achieved significant sales growth. Merger of

Adidas & Reebok complement each other in competing with their competitors, Nike; and is

more cost efficient and beneficiary to both brands with Reeboks strong presence in US

market and the global recognition of Adidas.

Nike Red tape Bata Liberty Puma New balance

Nike

Nike enjoys a 47% market share of the domestic footwear industry, with sales of $3.77

billion. Nike has been manufacturing throughout the Asian region for over twenty-five years,

and there are over 500,000 people today directly engaged in the production of their

products. They utilize an outsourcing strategy, using only subcontractors throughout the

globe. Their majority of their output today is produced in factories in China, Indonesia, and

Vietnam, but they also have factories in Italy, the Philippines, Taiwan, and South Korea.

These factories are 100% owned by subcontractors, with the majority of their output

consisting solely of Nike products.

Strengths of Nike

Nike is a very competitive organization Nike has no factories. It does not tie up cash in buildings and manufacturing

workers. This makes a very lean organization.

Nike is strong at research and development Nike is a global brand. It is the number one sports brand in the World. Product Range Capacity for innovation
http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228http://www.experiencefestival.com/a/adidas%20-%20competitors/id/605228


22/44

Distribution expertise Single Brand Stars endorsement Contract manufacturing Large portfolio of products

Weaknesses of Nike

The organization does have a diversified range of sports products. However, theincome of the business is still heavily dependent upon its share of the footwear

market.

The retail sector is very price sensitive. Nike does have its own retailer in Nike Town.

Single Brand Too many stars endorsement Contract manufacturing Spread portfolio of products Reliant on retailers Reduction of target market

Adidas

Adidas is the main competitor for Nike. Adidas currently enjoying the fastest growth of any

brand domestically, with a market share of 6% and revenues of $500 million. They have

been shielded from bad publicity by the two Goliaths of the industry, Nike and Reebok, and

are reaping the rewards substantially. They have adjusted their manufacturing strategy,

from a vertical operation in Germany in the 60s and 70s, to an outsourcing focus today

throughout Asia. Unlike the big two, they do not have a code of conduct, and their factories

are considered to be the worst in the industry. It is just a matter of time before they are

exposed, with an underground swelling of negativity already occurring today. In order to

avoid the negative effects and lost revenues that Nike and Reebok have received, they needto immediately begin to take a proactive stance in regards to the working conditions of their

factories.

Strengths of Adidas

Competitive pricing

Good financial position


23/44

Effective Marketing Strategy Market Leadership Strong online presence Strong brand Strong international operations Strong distribution chain

Weaknesses of Adidas

High cost structure Over pricing Low quality products/services Limited product line

Reebok

Reebok, as the second leading manufacturer of footwear, has domestic revenues of $1.28

billion and a market share of 16%. Similar to Nike, they also utilize a 100% outsourcing

strategy and manufacture their products throughout Asia. They have created and

implemented their own code of conduct for manufactures to follow, but have less

infrastructure than Nike across the globe to enforce it. However, their strength, the creationand distribution of a global brand, is allowed to foster under this manufacturing strategy, as

they focus on their core competencies, and outsource their production.

COLLABORATORS

Nike

One of the oldest collaboration was in 1985 with Michal Jordan and had introduced AirJordan. This year nike has collaborated with Nemo for Nike Boots and Buzz Adrin for Nike

6.0. The partnership between Nike and Buzz Aldrin is based on a shared passion for

performance innovation. Buzz Aldrin serves as an icon of exploration, a space pioneer, and

maverick who looked towards the next frontier. His personality, independence and

creativity are similar to the mindset of Nikes 6.0 athle tes who are pushing the boundaries

of their respective sports. Nike and apple has announced a partnership targeting runners

and music lovers and has launched Nike+ipod which has hit the market and is creating a

trend it was one of the biggest success. Nike is also in collaboration with Black Coaches

Association, to provide scholarships, it gives sponsors to youth, and sports clinic to enhance


24/44

the opportunities for minorities in sports industry.Mia Hamm; Tiger Woods; Brazil Soccer

are the celebrity collaborators of nike.

Adidas has a new designer Stella McCartney who will be the companys official newestdesign collaborator and it would be called as Adidas by Stella McCartney. McCartney and

Adidas will co-host an exclusive soiree. Adidas Originals is hoping to be The Greatest

through its new partnership with boxing legend Muhammad Ali. The collaboration will

launch "Ali by Adidas. Ali has an old association with adidas. Adidas Consortium City Series

3 - Adidas Consortium city Series is back this time collaboration with Paris Colette Londons

Crooked Tongues, Torontos Livestock and Tokyos VA. Advertising partner of adidas

basketball shoes is 180LA agency. Adidas originals has teamed up with Cheez, Kalavinka and

Yoppi for football shoes. New York Yankees; University of Tennessee; Kobe Bryant are oher

collaborators for adidas.

Incentives and motives of the collaborators are to join with the best and fast moving sports

shoe which is used by many people around the world and is widely distributed and accepted

by people. Those collaborators get a opportunity and exposure. The celebrities are used by

the company to increase their market value and for acceptance by the consumers as they

have a urge to but those products that are endorsed or used by their favorite stars.

COMPANY

CORE COMPETENCY

A companys core competencies are those things that a company can do so as to be better

than their competitors in the central areas of the company where the most value is added

to your products.

Core Competencies of Adidas

Technology Customer focus Brand recognition Supply chain Collaboratively competitive


25/44

The company launches every six months between 600 and 800 new designs infootwear.

Core Competencies of Nike

Technology Customer focus Strategic Outsourcing

Strategic Outsourcing An advantage for Nike and Adidas over competitors

Nikes core competency is strategic outsourcing. The core skills that set nike and adidas

apart from the competition, are their marketing, distribution, and technological expertise.

The following questions are always asked by the expertise to the company:

Is internalization a source of competitive advantage? Is manufacturing a skill our firm does better than anybody else? Will firms be able to leverage their manufacturing expertise in the future? Are we releasing any of the firms proprietary skills/information by outsourcing?

The answer for both adidas and nike is NO. Therefore, in todays global environment, the

most strategically viable manufacturing strategy is the outsourcing of their products. The

efficiencies that are gained, in the form of shifting of risk, reduced capital requirements,

lower wages, and ability to focus on their core competencies, strongly outweigh all other

manufacturing options.

Both companies are huge conglomerates with an enviable turnover worldwide. They have

large media budgets and a large amount of money to throw around, which they do, with

incredible fervour and gusto. They are both pioneers in this field and hire the best talent

from the best universities across the world. Hence they have the best people in theirorganisations and that, coupled with their access to almost unlimited capital, makes them

potent forces.

ADIDAS

Revenue $15.6 billion (2008)


26/44

Operating income $1.5 billion (2008)

Profit $933 million) (2008)

NIKE

Revenue US$ 18.627 billion (2008)

Operating income US$ 2.199 billion (2007)

Net income US$ 1.883 billion (2008)

Total assets US$ 12.443 billion (2008)

Total equity US$ 7.825 billion (2008)

CONTEXT

TECHNOLOGY

Adidas was originally intended to be a product line for soccer sportswear. Currently,

however, adidas has spread its target to all sportswear.

Name Description

adiPRENE

A neoprene-like material that feels somewhat like "nerf," it is most

often used in the heel of a shoe. adiPRENE is quite durable, and is

meant to respond to the cushioning needs of a active feet.

adiPRENE+

adiPRENE+ is similar to adiPRENE in that it is a neoprene-like

material, however it is primarily found in the forefoot of a shoe. It is

located in this region because it is designed to provide greater

forefoot momentum at toe-off.


27/44

Torsion

Torsion is a stability technology located in the midsole of the shoe;

it is meant to provide natural rotation between the forefoot and the

heel, ultimately allowing for better support in the midfoot.

Nikehas integrated technology system to develop their product. Nike always adopted the

latest technology for their product and innovated new products.

Speed of change of product Design Ability Speed of News reporting

Name Description

Nike Ground

Nike Air is the most basic cushioning material used by Nike; it is made

out of a polyurethane bladder filled with air. It provides adequatecushioning for the casual wearer, but may not provide sufficient or

proper cushioning for serious atheletes with individual preferences.

Encapsulated Nike Air - Nike Air that is encapsulated within theheel of the shoe

Visible Nike Air - Nike Air that is positioned in the heel of theshoe, but is visible


28/44

Zoom Air

Zoom Air is among the more technologically advanced (and expensive)

cushioning systems used by Nike. It essentially is a thin bag of

pressurized air that, when inflated, has a thickness of 8mm. Inspite of

its thin profile, it often provides more than adequate cushioning, and

even has somewhat of a "bounce-back" response when compressed.Zoom air is often times preferred by athletes who rely on quickness

and speed because the thin profile allows for better court/field feel

because your center of gravity remains mostly unchanged, and your

foot is located close to the ground.

Double Stacked Zoom Air - two Zoom Air packs stacked on topof each other, usually located in the heel

Full Length Zoom Air - Zoom Air packs located both in theforefoot and heel, providing optimal cushioning

Max Air

A technique is used that forces air into a pre-formed shape, thus

allowing for more pressurized gas to fit into a larger "bag." Max air is

generally not larger in size and visible, meaning that the shoe puts the

wearer at a higher distance off the ground. Because of this, Max Air is

best suited for athletes who do not necessarily depend on quickness

and speed, but rather athletes who are larger in size, and need a more

dependable and firm cushioning system.

Air Max 360 Air Max 180

Nike Shox

Nike Shox is a cushioning system developed by Nike that is comprised

of polyurethane-foam columns that provide cushioning in a way thatkeeps the foot parallel to the ground; a benefit of this process is that

the cushioning system provides great stability and impact protection.

Nike Shox is generally located in the heel of the shoe, but there are an

increasing number of shoes that feature a full length shox-based

system

of cushioning.


29/44

Foamposite

A polyurethane-based material created by Nike that is both durable

and lightweight; it is created from a single piece of molded material.

When first worn, it is somewhat uncomfortable, but over time, the

material actually molds to the shape of your foot, thus providing a

tailored fit that feels quite natural

Dynamic Fit

Innersleeve

A seamless inner sleeve made of lycra that hugs the foot, and is meant

to take the place of the shoe tongue. Because it is seamless, many

prefer it because it reduces the chance of chafing and has a natural

and comfortable feel to it.

Monkey Paw

A thermoplstic urethane structure located either on the outside of the

shoe, or between the lining and the outside. It is primarily located

around the ankle region and helps to prevent ankle sprains due to

ankle inversion.

Waffle Sole Traction technology derived from rubber put on a hot waffle iron back

in 1972. Remains the premier low profile traction, second only to

actual spikes.

SEGMENTATION, TARGETING, POSITIONING

Market Segmentation

Both Adidas and Nike fall under niche marketing. They have a narrowly defined customer

group seeking a distinctive mix of benefits. Their products are mainly aimed at both men

and women looking for sports apparel. Adidas and Nike promise their customers comfort,

reliability, style and performance. Both the companies have lived up to their reputation in

the world of sports shoes.

Niche marketers aim to understand their customers needs so well that the customers are

willing to pay a premium. This is very true in the case of these two companies. Adidas and

Nike sports shoes are priced high. But customers are willing to spend the extra money for

the quality and service they receive.

NIKE


30/44

Nike pays top athletes in many different sports to use their products

andpromote/advertisetheir technology and design. Nike is the official kit sponsor for the

Indian cricket team for 5 years, from 2006 till end of 2010. Nike beat Adidas and Puma by

bidding highest. Nike also sponsors some of the leading clubs in world football, such as

Manchester United, Arsenal, FC Barcelona, Inter Milan, Juventus, Shakhtar, Porto, Steaua,Red Star, Club Amrica, Aston Villa, Celtic and PSV Eindhoven. Nike sponsors several of the

world's top golf players, including Tiger Woods, Trevor Immelman and Paul Casey.

ADIDAS

Adidas are the main sponsors and kit sponsors of the successful Australian Cricket Team and

the England Cricket Team. They are also the main sponsors of the Indian cricketers Sachin

Tendulkar and Virender Sehwag and English cricketers Kevin Pietersen and Ian Bell. Adidas

are the main sponsors of Australian Domestic Cricket Competitions - Pura Cup, KFC

Twenty20 Big Bash, Ford Ranger One Day Cup and the Indian Premier League teams Delhi

Daredevils and Mumbai Indians.

For the 2008 Summer Olympics in Beijing, China, Adidas spent 70 million sponsoring the

event, amid criticisms. Adidas also sponsors events such as the London Marathon.

SEGMENTS TARGETED

Both Nike and Adidas target aspiring athletes in the age group of 15-35.In the lifestyle and

apparel market targets consumers who identify with sport as a way of life and are brand

conscious.

ADIDAS

The unique Adidas Shoes compared with other sport shoes covers the largest market. Some

makes of athletic shoes have raced ahead of the pack in appreciation, among them Adidas

running shoes. These brands and a couple of others have gained the respect of thousands of

beginner and professional sportsmen around the world, because of great design, quality

construction and durability that rivals any other shoe.
http://en.wikipedia.org/wiki/Promotion_(marketing)http://en.wikipedia.org/wiki/Promotion_(marketing)http://en.wikipedia.org/wiki/Advertisehttp://en.wikipedia.org/wiki/Advertisehttp://en.wikipedia.org/wiki/Advertisehttp://en.wikipedia.org/wiki/Advertisehttp://en.wikipedia.org/wiki/Promotion_(marketing)


31/44

The company officially became the No. 1 driver in golf in 2005 and in 2008 Adidas made

their first major move in cricket market. At present, Adidas has slowly crawled its way back

up into the ranking of the top footwear manufacturers in the world. Adidas wants to reach

the pinnacle of success. Customer satisfaction is the main motive of the company.

Adidas mainly focuses on men and women who are brand conscious or are looking for

comfort and performance in the area of footwear. It has more than 200 varieties of mens

footwear and more than 150 women footwear. Adidas also makes sports specific shoes. It

has got an entire line of shoes devoted to sports like basket ball, football, tennis, golf and

running.

A major chunk of their customers include athletes who are looking for sports shoes which

are customized according to their needs. Adidas constantly comes up with new technologies

to help sportsmen improve their performance by providing comfortable shoes. They are

consumer focused and therefore continuously improve the quality, look, feel and image of

the products and organizational structures to match and exceed consumer expectations and

to provide them with the highest value. They seek to help athletes of all skill levels achieve

peak performance with every product they bring to market.

Running

Adidas currently manufactures several running shoes, including the adiStar Control 5, the

adiStar Ride (the replacement for the adiStar Cushion 6), the Supernova Sequence (the

replacement for the Supernova Control 10), and the Supernova Cushion 7 (which will soonbe replaced by the Supernova Glide), among others. In addition, their performance apparel

is widely used by runners. Adidas also uses kangaroo leather to make their more expensive

shoes.

Cricket

In the 1990s, Adidas signed the world No. 1 batsmanSachin Tendulkarand made shoes for

him. He is still wearing Adidas shoes when he plays matches. Adidas even made action

figures after Sachin Tendulkar.

Basketball

Adidas has been a long time basketball shoe manufacturer and is one of the leading

basketball brands in the world. They are most famous for their iconic Superstar and Pro

Model shoes, affectionately known as "shelltoes" for their stylized hard rubber toe box.

Skateboarding

Adidas SB (Skateboarding) is shoes made specifically for skateboarding. Many of the shoes

Adidas previously made were redesigned for skateboarding.
http://en.wikipedia.org/wiki/Sachin_Tendulkarhttp://en.wikipedia.org/wiki/Sachin_Tendulkarhttp://en.wikipedia.org/wiki/Sachin_Tendulkarhttp://en.wikipedia.org/wiki/Sachin_Tendulkar


32/44

NIKE

Nike has divided its customers into the following way

Women Men Girls

3-36 months 3-8 years 8-15 years

Boys

3-36 months 3-8 years 8-15 years

POSITIONING

The core of Nikes brand positioning is the Just Do It slogan. It means being what you are

and concentrating on what is important to you.

Adidas represents passion, elegance and durability.


33/44

MARKETING MIX

PRODUCT

CORE NEEDS

The fundamental level is the core benefit; the benefit here is to protect the foot and provide

comfort.

BASIC PRODUCT

This is the second level here the marketer has to convert the core needs into the basic

product of the customer. Sturdy footwear with a comfortable body, a lasting sole and value

for money is the basic

AUGUMENTED PRODUCTS

Augmented products are those that the marketer provides to their customers, which

exceeds their expectations.

PRODUCT LINE WIDTH OF NIKE


34/44

Footwear Accessories Sports

wear

Sports

Equipment

Body care

Football Bags T- shirts Basket ball Deo

Running Backpacks Hoodies Football

Cricket Sunglasses Track suits Golf equipments

Basket ball Gloves Track jackets

Cycling Wind runner

Tops

Shorts

Pants

PRODUCT DEPTH

Nike has different shoes for different sports like for running on hard surface, smooth

surface, cycling, basket ball, cricket.

PRODUCT LINE WIDTH OF ADIDAS

Foot wear Accessories Sports wear Sport

Equipments

Body Care

Foot ball Bags Jackets Foot ball Deo

Running Eye gear Jerseys Basket ball Shower gel

Tennis Watches Scarves Football pump Perfumes

Basket ball Water bottles Swimwear Cricket bats After shave


35/44

PRODUCT DEPTH

Under football sports shoes include -Soft ground, hard ground, firm ground, turf rugby,

Astroturf, leisure wear, asphalt, multi surface and rugby.

COLLECTION OF FOOTWEAR

Adipore, Classics, Clubs, F50, Predator

PRODUCT PROFILE

NIKE

Apart from delivering a pair of comfortable sports shoes Nike also provides a number of

value-added features with its products. The features that are a part of every Nike sports

shoe are as follows.

High Performance Sports Shoes:

Nike has patented the Air system and has made it into a regular feature in most of its

models. Many models feature an air pocket in the shoe that reduces the weight of the shoe

and reduces pressure on the heels. Besides the overall design and compactness of the shoes

have made it a favorite of many professional athletes around the world.

Mats Pants & tights

Wrist band Tops

Padding Shorts

Hats Sweatshirts

Socks Tracksuits

Dresses

Shirts

Skirts


36/44

Comfort:

Nike shoes are renowned all over the world for the comfort they provide. Well padded and

cushioned, they provide a tremendous level of comfort to the wearer and reduce the strain

to his feet while playing.

Lightweight:

This attribute is in line with the two described above. A lightweight shoe provides greater

mobility and eases the pressure on the feet of the wearer.

Durability:

People purchasing a pair of shoes at such a high price often feel that they have made an

investment. They would obviously want to see their shoes last a long time. To prove this

point we draw the example of the authors of this marketing plan. All of us own a pair ofNikes and have been wearing them for well over two years a symbol of the durability of

Nike shoes.

Style:

Nikes designs are considered to be the most stylish in the industry and beat all others as far

as looks are concerned. Attractively packaged, it is a delight to bring a pair home. Add to this

the Swoosh the most recognizable symbol in sports and you have a product that would

give the user a definite sense of pride.

ADIDAS

Adidas shoes are very comfortable, light weight, stylish and great value for money.

The soles are designed really well and give you great grip across all terrains.

The shoes are very easy on the legs and they protect you from any kind of twists or sprains.

PLACE

CHANNEL LEVELS

The producer and the final customer are part of every channel. A zero level channel or a

direct channel is one in which the product reaches the customers hand directly from the

manufacturer. Nike and adidas follows a one level channel or an indirect channel method

where there is a manufacture who manufactures the goods and then they get it to the retail


37/44

outlets and then it reaches to the customers. Nike has out sourced their production to South

Asian countries like Taiwan China Indonesia and Korea who produces the goods and then

sends them to the retailers. There is only a single channel in between the manufacturer and

the customer.

CHANNEL LENGTH

The number of intermediaries that a product has to go through before it reaches the final

consumer. Both Nike and adidas has only one intermediary before the final good reaches

the consumer from the manufacturer and its the retailer.

CHANNEL BREADTH

The number of different entities that are involved for the same distribution function at

different stages in a distribution channel. There are no entities involved during any stages of

the production or the distribution for both Nike and Adidas

PRODUCT & BRAND EXTENTION

The introduction of a product that is known to a company but which has features ordimensions which are new to consumers, there are three types of product extensions

revisions, additions and repositioning. Bats are already a product for adidas but the launch

of Adidas ST a new range of bats with the signature of Sachin Tendulkar is an example for

product extension. Another extension is the different types of shoes that adidas has for

football. While Nike has

The use of a well known brand name to launch a new product, of an unrelated category into

the market is brand extension. Nike has extended its brand from sports shoes and

sportswear it has launched a new range of watches, apparel, bags and deodorants for bothmen and women. Adidas has also extended its brand to causal wears and toiletries for both

men and women; water bottles, bags and sports equipment.

CHANNEL MANAGEMENT PRACTICES

The channel chosen affects all other marketing decisions. The companys pricing depends on

whether it uses mass merchandises or high quality boutiques. In managing the

intermediaries the firm must decide how many efforts to devote to push and pull strategy.

Push strategy uses the manufacturers sales force, trade promotion, money or other means

to induce intermediaries to carry, promote and sell the product to users. Pull strategy, the


38/44

manufacturer uses advertising, promotion and other forms of communication, to persuade

the consumers to demand the product from intermediaries, thus inducing the

intermediaries to order it.

Nike and adidas use both push and pull strategy of channel marketing. Push strategy uses

the resources of the company and they promote the products and with the help of pull

strategy they persuade the consumers with the advertisements and other mediums so that

they demand for the product before it is in the market for sale and continues the

advertisements which persuades the consumers so that the demand goes up and more

demand is created in the market.

PRICING

Basic Pricing Strategies

The prices vary from depending upon the products offered, each one is different from the

other and hence the pricing strategy is varied for each line. The bottom line is that both

brands are priced on the upper end of the scale, with market leader Nike being marginally

higher priced than Adidas and still commanding a large market.

The prices are set by the company themselves and the dealers have no say in these matters.

The MRP is also set by the company and the retailers make about 20 to 30% profit on the

MRP for each sale. There are annual and bi-annual discounts at the stores which attract

better business than at normal business days.

Adidas Beckham pulse

Price: U$723


39/44

PROMOTION

Promotions are mainly focused on the consumer with prices at trade promotions increasing

or decreasing with the context of the specific promotion drive. Both Nike and Adidas are

into a lot of sponsorships and advertising.

Nike centred their brand equity model on the platforms, the endorsement focus strategy,

creating a dominant media presence, development of Flagship stores, NikeTown and sub

branding. The Adidas strategies were based on, endorsement focus strategy, advertising,sponsorship programs focusing on major global events, sports associations, and teams, and

sub-brands. To create brand awareness both companies have been using endorsement

strategies in their brand-building programs. What differs is that Adidas focuses on

sponsorship of teams and events e.g. national teams and big sport events like the Olympic

Games and different World Championship events. This will help them to create awareness

with help from different types of media. In contrast Nike has their focus on individuals like

M. Jordan and T. Woods and their success stories.

Nikes advertising strategy was to create dominant presence in media. Nike created media

presence in several trend setting United States cities. TV ads linking Nike to a city were used,

but real drivers were huge oversized billboards and murals on buildings that blanketed cities

with messages featuring key Nike-sponsored athletes, not products. Adidas took up the

competition with Nike through raising their advertising budget to a level that made it

possible to compete with Nike on the same conditions and the same strength as Nike did to

capture the consumer interest. Adidas did not just spend more money; they made an impact

with brilliant executions. They made TV and other advertising campaigns. The company

communicate their heritage of innovation, technology and big success stories with

personalities like Emil Zatopek, Mohammad Ali.

Nike Zoom Kobe MVP Sneakers

Price : $10,000

Comes in a Lucite box, signed by

Kobe Bryant


40/44

Adidas tried to spread meanings like We know then- we know now and There is nothing

between you and success, so exceed your own expectations and limitations and Earn it.

The success was obvious and after hard work and striving toward a top position in the

industry Adidas was back in business.

Nikes third strategy was to develop, flag ship stores, Nike Town shops in bigger cities, first

national, and then abroad. Nike was the first company to establish flagship stores and it

turned out to be a sensation. Adidas choice was with which they made great success.

Examples of that is the Adidas Streetball Challenge a local three-person team basketball

tournament, this event started out as a trail in Berlin in the beginning Chart-03: Adidas

market Share comparison of the 1990s as one time occasion. In the mid 1990s it had

become a huge sport event with about 500,000 participants all over the bigger cities in

Europe. In the finals in Germany it attracted 3200 players and 40.000 spectators. Adidas

made hereby a brand-building success

ANALYSIS REPORT

CUSTOMER SURVEY

We conducted a customer survey to find out the customer preference and why people

prefer a certain brand. Our survey consisted of people in the age group 15-40. Most of them

preferred Nike to Adidas, but felt that Nike was overpriced. Those who preferred Adidas,

however showed great brand loyalty to the brand. We asked them to rate attributes like

quality, price, durability, comfort, style, advertising and innovation on a scale of 10. The

results that we obtained is graphically shown below.


41/44

Marketing Strategies

Both Nike and Adidas are in the maturity stage of the product life cycle. The market is

basically experiencing a slowdown in sales growth because the products have achieved

acceptance by their most potential buyers. Profits are stabilising and declining because of

the hyper competition phenomenon explained earlier. Both Nike and Adidas help athletes

perform at the peak of their ability and this goal continues the drive t he brands activities

today. Both Nike and Adidas use celebrity and team endorsements as the base formarketing their products. Nike traditionally sponsors teams and Adidas sponsors individual

players.

The overall marketing strategy adopted by both firms is highly researched and successful.

They must keep innovating and achieve profits through high volume and low cost.

0

2

4

6

8

10

12

Quality Durability Price Comfort Style Advertising Innovation

Nike

Adidas


42/44

Overall cost leadership

Nike has always been higher priced than Adidas and both of them use this difference against

each other, Nike trying to reiterate its high performance premium stand and Adidas trying

to capture the market with lower prices.

Differentiation

Nike offers its consumers the option to customise their own shoes on its website, a huge

differentiation that Adidas does not have. Nike also has a large array of innovative products,

including the Nike+, in collaboration with Apple. Adidas stands for competing and winning

over yourself attitude, aptly represented by their slogan Impossible is Nothing. Nike

communicates a provocative and aggressive winner attitude with their Just Do It slogan.

Focus

Nike and Adidas focus on aspiring athletes between the age of 15-35. They also cater to the

needs of people who consider in sport as a way of life and are willing to pay a premium for

the brand value of the products.

RECOMMENDATION

Nike and Adidas provide customers the best goods in athletic footwear. They give

importance to comfort, durability and value for money. Nike is known for coming out with

innovative products like Nike+. Adidas on the other hand offers customers the same value

but at a marginally lower cost. Both Nike and Adidas are taking full advantage of the newly

expanding footwear market. They offer discounts during strategic occasions and increase

sales. Nike and Adidas are continuously coming out with new and cutting edge technology

which keep up with the needs of the customers. They provide a brand value and have

established themselves in the market of footwear industry and consumers are proud to be

associated with them.

Nike and Adidas have a variety of sports shoes which suit various needs of various

customers. From basketball to gym shoes, they cater to all needs in the athletic shoes

industry.

Nike and Adidas are into extensive advertising campaigns which reflect their positioning in

the minds of their customers. Adidas stands for competing and winning over yourself

attitude, aptly represented by their slogan Impossible is Nothing. Nike communicates a

provocative and aggressive winner attitude with their Just Do It slogan. Both Nike and


43/44

Adidas use celebrity and team endorsements as the base for marketing their products. Nike

traditionally sponsors teams and Adidas sponsors individual players.

They have been largely successful with recovering the value generated as the market is

mostly receptive to their innovative and advanced products. The younger generation loves

the brand value and are willing to pay a premium price for the products offered. With the

increase in awareness among people about the importance of wearing the right kind of

shoes for a particular sport and the quantum leap in the buying power of customers, the

athletic footwear has been fast growing.

Adidass three stripes and the Nikes swoosh are among the worlds top logos but the

swoosh is dominant in most places.

LLIIMMIITTAATTIIOONNSS

The research project has been completed with ease and comfort.No particular l imitation or shortcoming was realized during the

analysis.

Also, due to time constraints, enough justice could not be done tothe project.

CONCLUSION

According to survey, both brands have been successful at retaining customers. Adidas has

higher brand loyalty among the two, but Nikes cutting edge technology enables it to

maintain its customer base. are competing with each other to gain the No. 1 position. The

increase in the buying power of the customers has also been fully utilised by both the

brands. They have priced their products with a huge margin that people are willing to pay

because of the brand value associated with them.


44/44

BIBLIOGRAPHY

Books:

PHILIP KOTLER, MARKETING MANAGEMENT, EDITION 2005. V.S RAMASWAMY AND S. NAMAKUMARI MARKETING MANAGEMENT, SECOND

EDITION.

WILLIAM STANTON.J, MICHALL J.ETJEC, BRUCE J.WALKER FUNDAMENTALOF MANAGEMENT.

RAVICHANDRAH.N COMPETITION IN INDIAN INDUSTRY.

Web Sites

www.adidas.com www.indiainfoline.com www.webcrawler.com www.indiatimes.com

Class Notes is referred

Magazines

A&M Business India India Today Business Today

Newspapers

The Times of India The Hindustan Times The Economic Times
http://www.webcrawler.com/http://www.webcrawler.com/

term paper nike vs addids

Documents