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A COMPARITIVE ANALYSIS OF MARKETING STRATERGIES FOLLOWED BY NIKE AND ADIDAS

TEAM MEMBERS

ANUPAMA VENU 09014CLAES JOTORP 09126DEEPAK TUSHIR 09032GUSTAV TENERZ 09128SAIRAM KRISHNAN 09088SANJAY SHARMA 09090SUNANDA SURESH 09112

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INDEX

1. INTRODUCTION1.1. 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 INDUSTRY1.3.1.PORTER’S FIVE FORCES

1.4. PREDICTION FOR 2009-20101.5. THE COMPANY AND MAJOR PRODUCT LINES

1.5.1.BRIEF HISTORY OF COMPANY1.6. FLAGSHIP PRODUCTS, MAJOR PRODUCT LINES, RECENT FORAYS1.7. HISTORY OF THE BRANDS

2. MARKETING STRATERGY2.1. CUSTOMERS2.2. COMPETITORS2.3. COLLABORATORS2.4. COMPANY2.5. CONTEXT

2.5.1.TECHNOLOGY2.5.2.SOCIO CULTURAL2.5.3.ECONOMIC

3. SEGMENTATION, TARGETING, POSITIONING3.1. MARKET SEGMENTATION3.2. SEGMENTS TARGETED3.3. POD’S AND POP’S3.4. VALUE PROPOSITION3.5. POSITIOING3.6. EVOLUTION AS A BRAND

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

5. ANALYSIS REPORT5.1. CUSTOMER SURVEY5.2. MARKETING STRATERGIES5.3. PORTER’S GENERIC STRATERGIES5.4. CREATING VALUE5.5. CAPTURING VALUE

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5.6. SUSTAINING VALUE

6.REFERENCES

INTRODUCTION

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 world’s top corporations, with a worldwide presence. Our study will concentrate on the primary product these two firms make –Athletic 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 we’ll state our conclusions on the comparative marketing strategies of these firms.

The world’s athletes play using their products. Let’s see how they play the market. Welcome to

NIKE versus ADIDAS

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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? China’s huge middle class is rising and the country’s 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 Q1 2009. 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

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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. India’s GDP for footwear grew at the rate of 9.4% for the year 2008-2009 the country’s 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 into low-income, middle-income and high-income brackets, we will observe that consumer 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 world’s 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:

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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

Major players and Market Shares

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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 competitor on 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.

Major Forces shaping the Industry

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Porter’s Five Forces

Barriers to Entry – Low

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 easy one 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 buyers – High

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 Suppliers – Low

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

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conglomerates hold sway over the suppliers as they have mostly standardised their input procedures and hence can easily switch between substitutes. This gives them enormous power 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 Substitutes – Low

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 Competitors – High

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.

Prediction for 2009 – 10

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The Company and Major Product Lines11

Brief History of Company

Adidas

Adidas was formally registered on 18 August 1949 as Adidas AG, by Adolf ‘Adi’ Dassler, whose name formed the company’s title. Adolf Dassler was born in Bavaria and started making sports shoes in his mother’s kitchen after he returned from World War 1. He was joined in 1924 by his brother Rudolf Dassler and using their mother’s 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.

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, Adolf’s 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 long line of innovative products and successes later, Adidas is one of the world’s 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 Knight’s 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

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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 company’s 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.

Indian Operations

Nike has been present in India for over a decade through its seven year license agreement with Sierra enterprises, which didn’t help much in the bigger scheme of things as Reebok and Adidas came to the country with fully owned subsidiaries. This explains why the global market 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 team’s 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

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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 Adidas’s 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.

COPA MUNDIAL

Nike

Nike’s 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

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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 Nike’s 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 runner’s performance through a radio device linked to Apple’s ipod.

But Nike’s 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 world’s lightest shoes. Advertised using the slogan ‘Actually, it is Rocket Science’, it reiterates Nike’s commitment to technology.

SOLE COLLECTOR

History of the Brands

Adidas

The company’s clothing and shoe logo bear the trademark three stripes, which is the company’s corporate logo. Adidas also has a trefoil sign that it uses only on heritage

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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 events – like the World Cup. Adidas’s rapid growth in Asia, where revenue rose by 15 percent to US$ 878M last year, may be further propelled in 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 Adidas don’t only score high marks in their game – they also score high in their celebrity quotient. British football star David Beckham’s relationship with Adidas has no doubt lent itself well to the brand’s visibility in the UK. Recently dubbed "Captain of England," Beckham led his team to victory in the 2000 FIFA World Cup. With Europe as Adidas’s 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 Adidas’s 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 mountain biking, 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”.

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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 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 today’s competitive sporting goods market and is now duly recognized as the sneaker of yesterday 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 Nike’s 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

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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 BRS and 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.

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 and trainers 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.

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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 chosenEven 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

Both nike and adidas are a well known and accepted brands. Their main customers are athletes and sports enthusiasts but it doesn’t 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

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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 for Adidas, 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 be explained 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.

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 is less, compared to other markets.

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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 LeBron James. But nike’s athletes aren’t 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 world’s 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

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.

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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 Reebok’s 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

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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, the income 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 Goliath’s 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 60’s and 70’s, 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 need to immediately begin to take a proactive stance in regards to the working conditions of their factories.

Strengths of Adidas

Competitive pricing

Good financial position

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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 creation and distribution of a global brand, is allowed to foster under this manufacturing strategy, as they focus on their core competencies, and outsource their production.

Converse

With a market share of 3% and revenues of $280 million, Converse manufactures their products both domestically and internationally. It is important to note that the only product they continue to manufacture in the U.S. today, is the Chuck Taylor All Star, with plants in Lumberton, NC and Mission, TX. This is a product where the "Made in the USA" label is crucial to its success, and internalization is a source of competitive advantage. These two factors serving as the sole reason why the production remains within the U.S. All other shoe models are outsourced in Asia, with the explanation of reduced wages driving this strategy.

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Converse, like Adidas, must also generate a higher degree of internal monitoring of their subcontractors, or they will soon face increased scrutiny

New Balance

New Balance is the one company that has kept a substantial amount of manufacturing in the United States, and has a 3% market share with sales of $260 million. They currently operate five plants in New England, employing over 1400 workers, that produces 50% of their output. With this mixed strategy, of vertical integration and outsourcing, they are very unique, with their strategic reasoning based on the advantages gained through higher levels of quality domestically, and the "Made in the USA" label. They are in a highly specialized, niche business, running shoes, and closeness of factories is more essential to their customer base than the other companies because of special orders. For their most technical products they employ outsourcing, following the strategy of their competitors. Although there is something to be said for manufacturing domestically, they are straying away from the skills that they do better than anybody else – the design and marketing of the premier running shoe in the industry. Their long-term strategy should shift to a 100% outsourcing model, allowing them to control this niche for the future.

The basis for competition is to see who is better than the other and to win more consumers acceptance and to be the leading and most loved brand of consumers. Adidas and Nike are like by many and they have a strong base of brand loyalty yet they compete with each other and they bring out new, revised and improved products to keep up their competition with each other. Nike is the slightly over priced but yet the have their customer base. Their latest innovation was Nike + ipod. While Nike tries to bring in creative and out of the box technology favoring music and sports lovers Adidas brings in new products and expands the market that they are serving. They innovated shoes which had a chip in it which could detect and tell the time, calories and other information of the user. They compete to become the number one. While Nike is more accepted in U.S, Adidas has a strong base in German and the European market.

COLLABORATORS

Nike

One of the oldest collaboration was in 1985 with Michal Jordan and had introduced “Air Jordan”. 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

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maverick who looked towards the next frontier. His personality, independence and creativity are similar to the mindset of Nike’s 6.0 athletes 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 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 company’s official newest design 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 London’s Crooked Tongues, Toronto’s Livestock and Tokyo’s 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 company’s 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

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Customer focus Brand recognition Supply chain Collaboratively competitive The company launches every six months between 600 and 800 new designs in

footwear.

Core Competencies of Nike

Technology Customer focus Strategic Outsourcing

Strategic Outsourcing – An advantage for Nike and Adidas over competitors

Nike’s 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 firm’s proprietary skills/information by outsourcing?

The answer for both adidas and nike is NO. Therefore, in today’s 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 their organisations and that, coupled with their access to almost unlimited capital, makes them potent forces.

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ADIDAS

Revenue $15.6 billion (2008)

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

adiPRENEA 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.

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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.

TorsionTorsion 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.

Nike has 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 GroundNike Air is the most basic cushioning material used by Nike; it is made out of a polyurethane bladder filled with air. It provides adequate cushioning 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 the heel of the shoe

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

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Zoom AirZoom 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 top of each other, usually located in the heel

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

Max AirA 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 ShoxNike Shox is a cushioning system developed by Nike that is comprised of polyurethane-foam columns that provide cushioning in a way that keeps 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.

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FoampositeA 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 PawA 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.

SOCIO CULTURAL

ADIDAS

Since 70-s, customers are brand focused. Sport consumers prefer fashion and style which is a value proposition of both nike

and adidas. Young generation believes more on advertisements and internet. Since 90-s even women consumers dominate the athletic field and changed the

market. Children are becoming more brand conscious and opt for branded products. The tradition values and attitude is changing of the people using branded products is

a status symbol. As the income has changed people shift from normal to branded ones.

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NIKE

Brand conscious consumers Change in buying habits in younger people Generation Y prefers other types of footwear Increase in the female share of the market Corporate social responsibility

ECONOMIC

The economy depends on the current income, price, savings, debt and credit savings.

USA economic growth is in slow growth because of WTC. Contract manufacturing is chosen by many athletic shoes company. Slow down in the economy Reduction in consumer confidence Barriers of entry to the EU Contract manufacturing

COMPETITIVE FORCES

Competition is more tight with the coming of Reebok and Adidas for Nike and Nike, Puma for Adidas

Competition is happened around the world, globally, not locally Athletic shoe trend is going to be fashion-oriented

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SEGMENTATION, TARGETING, POSITIONING

Market SegmentationBoth 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

Nike pays top athletes in many different sports to use their products and promote/advertise their 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 América, 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.

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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.

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 men’s 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.

RunningAdidas 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 soon be 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.

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CricketIn the 1990s, Adidas signed the world No. 1 batsman Sachin Tendulkar and made shoes for him. He is still wearing Adidas shoes when he plays matches. Adidas even made action figures after Sachin Tendulkar.

BasketballAdidas 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.

SkateboardingAdidas SB (Skateboarding) is shoes made specifically for skateboarding. Many of the shoes Adidas previously made were redesigned for skateboarding.

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

POD’S AND POP’S

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NIKE & ADIDAS

In spite of all the technology that supposedly goes inside a typical sports shoe, if you take away the logos, it’s almost impossible to differentiate between a Nike, a Reebok and an Adidas. So, Nike/ Reebok/ Adidas have instead focused on differentiating themselves by converting their brands into cultural currency. Even non-athletic types have four pair of sports shoes — one for jogging, one for trekking, one for cross-training and one for tennis.

NIKE WITH APPLEThe Nike+ package consists of a pair of specially designed Nike+ running shoes, an iPod nano, and a Nike + iPod sport kit to connect the two. The kit consists of a sensor that fits into a built-in pocket beneath the insole of your left shoe and a receiver that fits into the iPod nano dock connector. The sensor uses a sensitive accelerometer to measure your activity, and then wirelessly transfers this data to the receiver.As you run, iPod tells you your time, distance, pace, and calories burned via voice feedback that adjusts music volume as it plays. In addition to progress reports, iPod also congratulates you when you’ve reached a personal best — your fastest pace, longest distance and time, or most calories burned. You can also choose a PowerSong that helps you run stronger and listen to it every time you need a boost.This in itself is incredible, but Nike+ also lets you save your running data at nikeplus.com, so that you can set goals and track progress. You can challenge friends and strangers to compete with you by sharing your running data with them. The Nike+ website also includes other web 2.0 features like user forums where you can meet and challenge other runners, ask questions, and give feedback; a challenge gallery where you can view all user created challenges; and a distance club where you can view everyone’s running milestones.

DESIGN YOUR OWN SHOES

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Nike allows customers to design their own shoes from a catalogue of predefined designs. Customers can choose their own colours and mascots to create shoes which define their personality.

ADIDAS

Adidas shoes are cheaper than Nike. It has grown from a minor player to the second biggest company in the industry. It has a huge scope for growth and innovation.

It has the largest international portfolio of sport ambassadors. Adidas introduced a sub brand in 1990 to serve the high-end products for all categories of shoes and apparel. The “Equipment” sub brand would represent the best, whatever the product was. The low-end products, for the “normal consumer” still have a high technology and level of innovation because of their inheritance of the older innovations and technology from the Equipment line. This strategy made the Adidas brand take on a different meaning; it still meant participation, emotion and performance. This was a success strategy for Adidas.

IN A NUTSHELL

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The brand image for both Nike and Adidas is immense; however Nike has attained a considerable competitive advantage due to its reputation for quality and innovation. Both Adidas and Nike have used the same theoretical systems to create their brand building programs. The companies are benchmarking each other, using the techniques from each other’s successes. Nike launched their sub brand product Alpha line which was benchmarked on Adidas already launched sub brand of the Equipment product line for the elite of sports men. We can find many similarities like endorsements strategies and the companies advertising strategies. What differs in the endorsement strategies is that Adidas focuses in sponsoring teams and global events, while Nike have their centre of attention on stars in specific sport like basketball and Michael Jordan or in golf and Tiger Woods. About advertising, both companies have about the same scale and scoop of advertising but they try to communicate different messages. The message from Adidas is; the only one you compete with is yourself whereas Nike communicates a provocative, aggressive winner attitude which can be related to the American sports attitude “You don’t win silver, you lose gold”. As we can understand the two companies are aiming at nearly the same targeted customer group but with a slightly differentiation of attitude. Adidas stand for a competing and winning over your self-attitude, and Nike stands for a winning over everyone attitude. This differentiation is based on the differences in culture between the two companies and between Europe and USA. Adidas chose a brand-building strategy that was built on the same theoretical criteria as Nike.

Adidas had the same strategy within creating equity value to their brand. They challenged Nike in endorsement strategy, and in advertising, but with a slight difference in communicated message, by doing it through the same media. To differentiate themselves, events like Adidas Streetball Challenge was created.

VALUE PROPOSITIONValue proposition consists of the whole cluster of benefits the company promises to deliver to its customers.

Both Nike and Adidas promise their customers sports shoes which will provide them with comfort and durability. They have a brand value and have established themselves as style statements. Nike and Adidas have a wide range of athletic footwear specialized for various sports like football, cricket, running, gym etc.

However, Nike offers customers more comfortable and durable athletic shoes at a higher price, while Adidas has a lower price range offering almost the same benefits.

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Nike communicates a provocative, aggressive winner attitude which can be related to the American sports attitude “You don’t win silver, you lose gold”. Adidas stand for a competing and winning over your self-attitude, and Nike stands for a winning over everyone attitude.

POSITIONINGThe core of Nike’s 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.

EVOLUTION AS A BRANDNIKE

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 BRS and 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.

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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.

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 and trainers 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.

Nike has continuously pushed back the boundaries of trainer design, staying focused under Phil Knight's guidance, and is going to take some dislodging.

DEVELOPING THE SWOOSH

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

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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.

ADIDASWhen 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 events – like the World Cup. Adidas’s rapid growth in Asia, where revenue rose by 15 percent to US$ 878M last year, may be further propelled in 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 Adidas don’t only score high marks in their game – they also score high in their celebrity quotient. British football star David Beckham’s relationship with Adidas has no doubt lent itself well to the brand’s visibility in the UK. Recently dubbed "Captain of England," Beckham led his team to victory in the 2000 FIFA World Cup. With Europe as Adidas’s 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 Adidas’s marketing strategy, but also for its product line. Eclectic, individual, 'no-rules' sports such as snowboarding, inline skating and surfing

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have grown into significant categories. Activities such as golf, hiking and mountain biking, 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 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 today’s competitive sporting goods market and is now duly recognized as the sneaker of yesterday and today.

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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

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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

Mats Pants & tights

Wrist band Tops

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Padding Shorts

Hats Sweatshirts

Socks Tracksuits

Dresses

Shirts

Skirts

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.

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.

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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 of Nike’s and have been wearing them for well over two years – a symbol of the durability of Nike shoes.

Style:

Nike’s 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 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.

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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 it’s 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 or dimensions 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 both men 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 company’s 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 manufacturer’s sales force, trade promotion, money or other means to induce intermediaries to carry, promote and sell the product to users. Pull strategy, the 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

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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.

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Adidas Beckham pulse

Price: U$723

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.

Nike’s 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.

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Nike Zoom Kobe MVP Sneakers

Price : $10,000

Comes in a Lucite box, signed by Kobe Bryant

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.

Nike’s 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.

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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.

Quality Durability Price Comfort Style Advertising Innovation0

2

4

6

8

10

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NikeAdidas

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

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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 the brands’ activities today. Both Nike and Adidas use celebrity and team endorsements as the base for marketing 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.

Porter’s Generic Strategies

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.

CREATING VALUENike 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

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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 Adidas use celebrity and team endorsements as the base for marketing their products. Nike traditionally sponsors teams and Adidas sponsors individual players.

Capturing Value

Pricing philosophy

The basic pricing philosophy of both brands is dependent upon the quality of the product. A product with a high degree of innovation also has a higher pricing. Their customers are willing to pay a higher price for their brand value and the benefits that their products offer. Considering the higher income of today’s generation and the increasing buying power of customers both Nike and Adidas have priced their products wisely.

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.

Sustaining ValueAccording to our survey, both brands have been successful at retaining customers. Adidas has higher brand loyalty among the two, but Nike’s cutting edge technology enables it to maintain its customer base. Adidas’s three stripes and the Nike’s swoosh are among the world’s top logos but the swoosh is dominant in most places.

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Both Nike and Adidas are fully exploiting the growing footwear market. Nike is forever trying to bring out cutting edge technologies and innovative ideas to meet their customers’ growing needs. Adidas and Nike 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.

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REFERNCES

WEBSITES

1. www.nike.com 2. www.adidas.com 3. www.wikipedia.com 4. www.press.adidas.com/en/retrieved 7th june 2008 5. www.jdsports.co.uk/whatsnew.aspx?id=5375 6. www.champion.ie 7. www.adidas.com/campaigns/orginalsss2009/content/#/lifestyle/full-length-film .8.

http://www.adidas-group.com/en/News/_downloads/pdfs/2009/Press_Release_Q42008_e.pdf.

9. www.indianfootwearindustry.com 10. www.adidasGroup.com/history 11. www.nike.com/historyofnike 12. www.nike.com/historyandtimeline 13. www.trap17.com 14. www.echeat.com 15. www.scribd.com 16. www.coolhunting.com 17. www.footwear-industry.com

BOOKS

Marketing Management by Philip Kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

- 13th edition

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