The Athletic Footwear IndustryJacob AngellRobert CarrozzoKendrick CoqJeremy Freeman

Agenda Industry Structure

Background Competition + Organization

Advertising Strategies Brand Case Study (FIFA WORLD CUP 2014)Analysis (Raw Data) Recommendations

Athletic Footwear Industry Why the Athletic Footwear Industry?

One of the strongest global markets Highly competitive market Success is closely related to the effectiveness of

advertising strategies Industry at a Glance (Nov. 2014)

Industry Timeline

1830-1870: Plimsolls Created

1895: First Running Shoe

1950s: Leisure Opportunities Expanded

1970s: Exercise Becomes Increasingly Popular

Today

1870 1900 1950 1970 2015

Quick Figures: Industry at a Glance

Industry Production and Supply Chain

DistributionManufacturer

Retailer

Customers

Customers

Understanding the Recession

Competition & EntryFor every dollar spent

on the labor industry spends only 8 cents on capital

Level of technology change low

Difficult to enter

*Note: Reebok is owned by Adidas and therefore is not shown

Competition of the Industry

Larger companies rely on vertical integration—Nike

Smaller companies try to find niche markets—Under Armour

High concentration

The industry is fairly concentratedFairly concentrated HHI, high CR4Lots of companies with smaller market shares

Advertising Strategies

Sponsorships/Events

Celebrity EndorsementsSocial Media

Sponsorships & Events

Celebrity Endorsement

Celebrity Endorsements Today

Social Media

New definition of “word-of-mouth” advertising

Incorporation of campaigns into hashtags

Use consumers to sell the products

Instagram and Twitter

Nike January 1964

Bill Bowerman and Phil Knight

Nike Swoosh

Brand Value - $19 Billion

Market Cap - $83.6 Billion

Just Do ItHeroism

Find Your Greatness

Endless Possibilities

Never Not Running

Make it Count

Nike + Apple

Nike + iPod Sports Kit

Nike + Sportband Kit

Nike Sportwatch

Application that uses accelerometer built in phone

Created a Social Networking for athletes

Decrease advertising cost, increase efficiency

Adidas Germany shoe manufacturer, 1925

Running/Training

Adolf “Adi” + Rudolf Dassler

Launched in U.S. in ‘68 and soon became leader in the industry

Three stripes brand recognition

1972 Olympic Games, Munich, Germany

Brand Value - $5.8 Billion

Market Cap - $16.8 Billion

All Day I Dream About Sports

“Play to Win” “Impossible is Nothing” “Adidas is all in” (more than sports) Brand built on passion and sporting lifestyle

Adidas & Android Adidas miCoach

World’s first web-based personalized training service

Case Study: FIFA World Cup 2014

Risk Everything All In or Nothing

Risk Everything Targeted more players Targeted host country

of Brazil 12 million views 30:1 like to dislike ratio

All In or Nothing Official sponsor of World Cup Targeted more teams instead of

individuals 30 Million views 5:1 like to dislike ratio

ResultsAdidas = World Cup

Nike = Global Market

Hero, Hub, Hygiene

Hero - Accelerates growthHub - Retains current subscribersHygiene - Attracts new subscribers

Raw Data Analysis

TV Ad-to-Sales

Low Ad to Sales Ratio Reasons

Great brand loyality Just TV ads for 2011 Advertise through other mediums Hard break down the data for just atheltic footwear

The Ad Time Placement Majority of Ads in the Afternoon (Noon-7PM)

Reason After school and house moms

Second Highest is the Overnight Reason

Late night shows Younger audience

41%

8%27%

24%

Time of Day of Advertising

Afternoon

Morning

Over Night

Prime

**Across the whole industry from the raw data

The Daily Ad Placement Weekend

Highest ad counts Kids home for school More time spent in front of the TV

SUN MON TUE WED THU FRI SAT0

2000

4000

6000

8000

10000

12000Day of the Week

Tot

al A

d C

oun

t O

ver

a Y

ear

Per

iod

The Ad Seasonality Spring Increase

Spring sports and outdoor activities

Back to School Increase Fall sports and outdoor activities

Holiday Increase Christmas presents

Nov-10 Jan-11 Feb-11 Apr-11 Jun-11 Jul-11 Sep-11 Nov-11 Dec-11 Feb-120

100

200

300

400

500

600

700Advertising Over a Year Period

Tot

al A

ds

per

day

Ad Program Placement Sports Center and Highlight Express

Target athletic audience

SpongeBob Younger audience

SPORTSC

ENTER

HIGHLIG

HT EXPRESS

SPONGEBOB SQ

UAREPANTS

AVATAR: THE LAST

AIR

BEND

FAIRLY O

DDPARENTS

DRAGON BALL Z K

AI

NFL TOTAL A

CCESS

ICARLY

COPS 2.0

PHINEAS A

ND FERB0

500

1000

1500

2000

2500

3000Top 10 Programs

Tot

al P

rogr

am C

oun

t O

ver

a Y

ear

Per

iod

Top Advertising Major companies

Skechers top advertiser, but not top spender Quantity over quality

Reebok top spender, but not top advertiser Quality over quantity

Skechers

Reebok Asics Nike Adidas New Balance

Under Armour

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Total Seconds Advertising

Reebok

Skec

hers

Nike

Adidas

Asics

New B

alance

Puma

$- $5

$10 $15 $20 $25 $30 $35 $40 $45

Top Spenders OverallT

otal

Dol

lars

Sp

ent

over

a Y

ear

Per

iod

(M

illi

ons)

Cost per Ad Time Slot Nike

Has more 60 and 90 second ads Targets prime ad slots

Skecher low cost per Ad Adidas values the 30 Second Ads

Nike Reebok Adidas Skechers $-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000 Average Cost per Ad Time Slots

15 Second Ads

30 Second Ads

Overall

Most Expensive Programs

PROFESSIO

NAL FOOTBALL - ...

COLLEGE BASK

ETBALL - GAM

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PROFESSIO

NAL BASK

ETBALL - ...

DRAMA/A

DVENTURE

CHILDRENS/

FAMIL

Y ENTERTAI...

SITUATIO

N COMEDY

SPORTSC

AST $-

$500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Cost Per Second of Ads

Cost Per Sec

Sports games are the most expensive times to advertise The most targeted viewship

Recommendation: Global Global Focus• Emerging markets in China and Brazil• The global athletic footwear market was valued at $74.7

billion in 2011 and is forecast to grow at a CAGR of 1.8% to reach $84.4 billion in 2018

Recommendation: Women• Opportunity in women’s athletic footwear• 2013 – women’s apparel, footwear, equipment and other products

made up < 25% of Nike’s revenue• Plans for additional $3B grown in division by 2017

• Exclusive women’s stores – Newport Beach, CA and Shanghai

Keep It Up!• Continue with technological advancements and partnerships

• Continue event and celebrity sponsorships