Global Marketing Strategies for Athletic Shoe Companies
For the past two decades, the sports shoe industry underwent an impressive and sporadic growth. In the mid-80’s, $5 billion was spent by American consumers alone, and over 250 million pair of shoes has been sold. Consumers have spent over $ billion, and purchased a plethora of 335 million pair of athletic shoes in 2001 alone. The wide array of models, price, and sports as made the athletic shoe industry vastly-segmented. Adidas, Reebok, and Nike have dominated the branded athletic shoe segment for decades already.The international athletic footwear market has been overwhelmed by the 70% share of the top ten sports shoe companies.
Nike has single-handedly overwhelmed Adidas and Reebok in the previous two decades. Nike is maintains its position as the world’s largest athletic shoe company. However, the athletic shoe industry has experienced a letdown in total revenues. Most consumers grew tired and felt that athletic shoe companies have been saturated with celebrity athletes in order for their brand to sell.
Furthermore, high-end signature brands like Lacoste, Ralph Lauren, and Tommy Hilfiger have penetrated the athletic shoe market as well; causing the athletic shoe company to be more competitive. With this in mind, there would be saturation and a stiff market share battle among longtime athletic shoe companies and signature brand companies. Overview and Background Nowadays, prominent athletic shoe companies are doing their share of market assessment and advertising techniques in order to reach old and new target markets.The internet has been a great aid in complementing the marketing strategies of these athletic shoe companies. Even though athletic shoe companies are not known for placing a premium in internet marketing and e-commerce trade, they are starting to realize that there is a big chunk of potential market segment in the internet.
These companies have augmented their marketing strategies through the proliferation of online websites and product catalogs in order to promote and expose their brands. It remains to be seen if electronic commerce can bolster the sales of athletic shoe companies.Bear in mind that consumers are particular about quality and visuals; causing them to be skeptic about purchasing online. However, some consumers find such as practical and convenient.
With this in mind, consumers are being exposed to a great degree of online marketing of athletic shoe companies. With the dawn of e-commerce, the concept of globalization has made a deliberate impact towards the athletic shoe company. Companies like Nike, Adidas, and Reebok have been adamant in augmenting their international marketing strategies in a myriad of market segments around the world.These companies consider their competitive advantage a subjective matter, which urges them to make environmental analysis in every country they are operating within. The synergy between a company’s competitive advantage and an environmental analysis aids a company in formulating apt global marketing strategies to generate revenues in order to be successful in the sports shoe industry. Nike International competitive similarity, market barriers to penetrate, and the eclectic cultures of each target market comprise the scope of Nike’s competitive advantage.
Nike’s rival company’s reaches from the U.S. all the way from Asia’s emerging markets among them are: Adidas, Reebok, Converse, and Puma. These manufacturers rival Nike in the saturated market of performance athletic shoes. Some of these companies attempted to overwhelm Nike with its line of shoes with unique fashion twists.
Nike’s market share and area of expertise are relatively threatened by such competitors, and generates international logic discrepancies. In addition, various market barriers and segments suggest that there are no secured areas in penetrating Nike’s competitive sphere, as well as other manufacturers.With this in mind, opportunities emerge from regional and global markets, which are accessible and will gradually be exploited by its competitors. This urges Nike to adapt to the distinct taste of a particular market segment. Such marketing strategy’s aim is to convey the unique taste that certain cultures clamor for in order to reach out to relative market segments as well (Porter et al.
, 2002). In order to address such international threat, Nike has adapted a marketing strategy in order to bolster its sales in Asia. It has signed up celebrity athlete endorsers in order to promote its brand.Its flagship endorser in Asia is Philippine boxer Manny “Pacman” Pacquiao. However, Nike considers Asia a potential basketball shoe market segment. Nike pushes its product proliferation in Asia by sponsoring local basketball teams in Asian leagues.
In China, the opening of one Nike store per day in that market has catapulted sales growth as much as 50%. Furthermore, the weakening of the dollar proved that it’s favorable for U. S. markets such as Nike.
A prominent company like Nike perceives that revenues from foreign currencies are eventually converted in greater dollar amounts (Bogoslaw, 2007).Nike’s revenues increased by 3% in the first quarter due to fluctuations of currency exchange rates. This included an added 7% to revenue growth in Europe, 4% in the Americas and 2% in the Asia-Pacific region (Bogoslaw, 2007). During the early ’80’s, 86% of Nike’s athletic footwear came from Korea and Taiwan. As Korea and Taiwan also began to develop, costs began to rise in these countries as well.
As a result, Nike began to urge its suppliers to re-locate their operations to other, lower-cost countries. The company worked with its lead suppliers to open up manufacturing plants in Indonesia, China and Vietnam.By guaranteeing a significant number of orders and by placing Nike employees at these new factories to help monitor product quality and production processes, Nike was able to help its lead vendors establish an extensive network of footwear factories throughout Southeast Asia (Locke, 2001). Reebok Upon being acquired by Germany’s Adidas-Salomon, Reebok has embraced an alternative approach in its marketing strategies.
Adidas purchased Reebok for $3. 78 billion, which amounts to $59 per share. The primary aim of the merger is to dethrone Nike perennial supremacy in the athletic shoe industry.Both companies perceived that synergy between them will result into better chances of overwhelming Nike. Adidas has 8.
9% and Reebok has 12. 2% in the athletic shoe market, which hopes to engulf some of Nike’s 36% market share. Adidas Chief Executive Herbert Hainer exclaims that “North America is the market where you have to be. We will expand our geographic reach, particularly in North America, and create a footwear, apparel, and hardware offering that addresses a broader spectrum of consumers and demographics.The Reebok-Adidas merger could give Nike an upfront challenge in terms of market share at an international scale (Kiley,2005). Jeffrey Bliss, president of Javelin Group, a sports marketing firm and a former New Balance executive has this to say on the Reebok-Adidas merger: “While the combination of Adidas and Reebok looks terrific on paper, successful mergers need to work between real people who, in this case, will have to break down cultural differences between companies with “two hugely different cultures.
The German mentality of control, engineering, and production, vs. the U. S. marketing- driven culture.
.. n reality, I don’t think [the merged company] is going to dent the market, because Nike is already too far ahead. ” ( Bliss, 2005).
Reebok and Adidas shows with its merger that it refuses to be an alternative brand for Nike. Adidas gives Reebok a significant asset in nurturing its brand in a plethora of emerging markets. Asian countries like China and Korea are known for being fashion-oriented markets. Both companies believed that it will complement each other’s marketing strategy. With the acquisition of Reebok, Adidas does not have to exert the much-needed effort to promote their brand in China.
Considering that Reebok has already made a deliberate impact with Yao Ming as their flagship endorser (Kiley,2005). Adidas Adidas International is embracing a fresh yet feasible marketing strategy called “ brand in the hand”, which enables consumers to be exposed in to the Adidas brand through the use of mobile phones and internet. In order to initiate such, a massive mobile marketing campaign was launched by Adidas in 2004. A mobile news ticker for the European soccer championships was the linchpin for the marketing campaign.This is simply one of the initial global marketing strategies for Adidas.
Today, Adidas is the official outfitter for the NBA. The National Basketball Association has opted to a decade of international merchandising deal with the German-based company. The deal pushed through after Adidas acquiring Reebok for $3. 8 billion.
The contract is expected to cost Adidas $400, which is more than the 10-year $250 Reebok deal with the NBA in 2001. Adidas began manufacturing NBA apparel in the 2006 season. Adidas doesn’t perceive such as a marketing plot to entice American men audience.Adidas sees this as an apt marketing strategy in order to lure market segments in emerging markets in Asia. With the broad coverage of the NBA, Adidas is able to augment its marketing campaign in a global scale. Obviously, the NBA has the largest global coverage among American professional team sports.
NBA pundits and Adidas executives have always noted that Asia has the largest chunk of market segment, and still continues to grow. In order to show how adamant Adidas is in overwhelming Asian markets, The company has sponsored the upcoming Beijing Olympics.Adidas has generated revenues from its 1,000 stores in China, Hong Kong, and Taiwan. The company expects overall revenues to reach $3.
45 billion in Greater China by 2010 (Balfour, 2007). Adidas has sponsored a summer league as well, which includes 1,000 teams from six Chinese cities. Adidas GM in Shanghai, Paul Pi has exclaimed that “This is more of a permanent league, not just a carnival event” (Pi, 2007). Furthermore, Adidas ensured that the Tracy McGrady Asian tour was well-funded. 800 pairs of limited edition T-Mac shoes were sold out in a day.The German-based company hopes that its young market segment in China will continue to patronize the brand through the course of the Beijing Olympics.
The Adidas insignia and its trademark triad of stripes will be etched and embossed by Chinese athletes during the Olympics. Adidas sees that China and the Olympics are crucial components in reviving the 78-year-old pioneer sports shoe company, which ushered the proliferation of athletic performance shoes. Adidas-Salomon AG’s chief executive, Herbert Hainer exclaimed that “The Beijing Olympics will be an Adidas event”.This is Adidas’ attempt at dethroning fierce rival Nike in ever-progressive China’s athletic shoe industry. The Olympics is Adidas’ catalyst in order to etch its brand on the minds of Chinese consumers. Adidas made a bid of $100 million in cash in order to acquire the rights to the Beijing Olympics sponsorship.
However, skeptic pundits say that $100 million is under the budget for such event. Adidas has yet to disclose the confidentiality of the total cost. Arguably, the Beijing Olympics organizers will benefit more from this deal.Adidas is gambling with such, and is confident in sponsoring the Olympics. With this in mind, Adidas’ marketing strategies in an emerging market such as China are in full throttle (MSNBC, 2006). Comparison of Global Marketing Strategies Sports shoe companies have been always competitive, and this is obvious in every marketing strategy they implement.
The concept of globalization has made a deliberate impact towards the athletic shoe company. Companies like Nike, Adidas, and Reebok have been adamant in augmenting their international marketing strategies in a myriad of market segments around the world.These companies consider their competitive advantage a subjective matter, which urges them to make environmental analysis in every country they are operating within. The synergy between a company’s competitive advantage and an environmental analysis aids a company in formulating apt global marketing strategies to generate revenues in order to be successful in the sports shoe industry. Nike has been promoting its brand by signing up celebrity athletes as endorsers.
This greatly helps Nike in promoting their brand in a very efficient way.Furthermore, Nike puts a premium in Research and Technology, which it considers its primary weapon in overwhelming its competitors. The company has always ensured that in each product they manufacture, their trademark technology is always present in order to entice each market segments in patronizing their products. Furthermore, Nike is generous when it comes to marketing its brand. In the Sydney Olympics, Reebok sponsored the event, but Nike sponsored the athletes that gave them exposure. Nike reaches potential emerging markets in the Asian region through sponsoring local basketball teams, which give them a broad coverage of promotions.
Nike considers Asia as a big basketball country, which makes it a potential target market for the company. In China, Nike has more than 20 factories that employ local people in order to produce their products. This helps the image of Nike on the aspect of social welfare. Nike has established itself in Asia as a high quality product.
Emerging markets are always willing to spend on premium products like Nike. Thanks to Nike’s massive advertising, the brand has been etched on people’s minds as a brand synonymous to success and victory.Nike’s advertising arsenal is its primary asset in enticing potential market segments, and to cover as much market share. Nike has even transcended its expectations when it overwhelmed Adidas as the leading athletic shoe company in the world.
Whereas, Adidas has remained at the bottom of Nike for quite some time now; Adidas has been solely focused on its European market. Though recently, Adidas has been adamant to overwhelm Nike as the leading athletic shoe company in Asia. Adidas is depending on its sponsorship deals like the Beijing Olympics and Winter Olympics in China.However, such marketing strategies might have a short term effect for the brand. Adidas will struggle to be at par with Nike. Due to the fact that Nike is synonymous with the sport of basketball, and Asia is a big basketball country.
Adidas’ marketing strategies in emerging markets have yet to be seen. Adidas conquered Europe with its marketing tactics. Europe is a large continent. Asia is a large continent as well. Adidas might prove after all that impossible is nothing.
The Beijing Olympics deal is proof that Adidas is willing to allocate a massive budget in order to overwhelm emerging markets.Reebok on the other hand, has been contented to play the athletic shoe contest with its own method of marketing strategies. Reebok’s marketing focus leans towards hip-hop fashion, and sports like American football and ice hockey. Reebok’s attempt to promote its brand in emerging markets have yet to make an impact; Reebok’s only move to cover emerging markets would be signing up Yao Ming as endorser in order for the Reebok brand to be promoted in China. With Adidas acquiring Reebok, the company will make progress by producing athletic footwear for obscure sports.Reebok can still be fixed, and the brand shows a lot of promise in the casual athletic footwear market.
Conclusion Nike has single-handedly overwhelmed Adidas and Reebok in the previous two decades. Nike is maintains its position as the world’s largest athletic shoe company. However, the athletic shoe industry has experienced a letdown in total revenues. Most consumers grew tired and felt that athletic shoe companies have been saturated with celebrity athletes in order for their brand to sell. Companies are always pressured to generate apt global marketing strategies for potential emerging markets.
With this in mind, apt marketing strategies are not enough to overwhelm market segments, and cover market shares in an instant. Constant market assessment and analysis should always be conducted athletic shoe companies in order to address the demands of consumers that will eventually lead to an increased market share in the athletic shoe industry. Market analysis will always aid companies in garnering a large chunk of market share. Such analysis will not only generate marketing strategies, but will be the foundation for revenue production as well.