Academic year 2009-2010

TYBMSProject Guide : Prof. Swapna

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ACKNOWLEDGEMENT

Co-ordination, Co-operation and Command of the people

at various levels go into the successful accomplishment

of any task assigned to them. It is impossible to thank

each of them individually but hereby I am making a

sincere effort to thank some of them.

In my whole endeavor to complete this project, I own immense gratitude to my project guide Prof. Swapna for extending her guidance and co-operation through this project.

I am highly indebted to NKBMS co-ordinator Prof. Mona Bhatia for her continuous support and encouragement.

Last but not least, I express my sincere gratitude to all the respondents who helped me in the project.

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Executive Summary

Title of the Project : Adidas Vs Nike From past many decades people are getting more into sports as a

recreation as well as an entertainment.

Hence, sports materials and equipments especially the shoes that are used in various sports are demanded much higher.

Nike is the leader in the athletic shoe industry after which comes Adidas.

So this clearly states that they are Giants in athletic footwear industry and are highly competing each other.

In this study most of the factors are covered that affects the competition of Nike and Adidas.

It contains all the details of Nike as well as Adidas.

And there also a survey conducted, considering various factors of Nike and Adidas.

Lastly, there is a conclusion which makes us understand that Nike is a bit better that Adidas but still Adidas is better in some areas which means that there is a healthy competition between them.

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Objectiveof the Study

Primary Objective

To understand the competition between two Giants in the market.

To measure the effectiveness of advertisement / promotional activities for a competing product class and corporate advertising.

To understand and measure various factors that affect brand-building, brand re-call and finally the choice of customers while buying it.

Secondary objective

To understand the competition between Nike and Adidas. To understand Athletic footwear industry. To know how they face their competitor’s strategies. To know how they survive in the cutthroat competition.

LIMITATIONS OF STUDY  

1. The sample size may not adequately represent the national market.

2.This study has not been conducted over an extended period of time, it do not consider any changes due to changes in the market conditions.

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Introduction to shoes

The History of Shoes

Introduction

Shoes have always held a special status for humans. Whether as symbols of wealth and status or as simple protection from jagged rocks, freezing snow, or other rugged terrain, the history of modern human development goes hand in hand - or would that be foot in shoe - with the history of shoes.According to scientific research, our ancestors, the first modern humans, walked out of Africa between 100,000 to 200,000 years ago and as they moved north into colder, more inclement climates of Europe and Asia, a need arose for foot coverings to protect the feet from the environment. Scientists believe that the first shoes were made during the Ice Age, although insulating foot coverings may have been in use as early as 500,000 years ago in the northern climates by other early hominids, such as Neanderthals and homo erectus. The idea of protective footwear or shoes came much later and shoes were not in widespread use until approximately 26,000 to 40,000 years ago. Science can't say for certain why humans stopped going barefoot, but the use of shoes does show in the skeletons from the time period. Prior to shoes, humans had large, strong, flexible toes used for gripping and balance. When hard-soled, protective footwear began to provide greater grip and balance, those regularly shod people lost the muscles and heavy bone structure in their feet, resulting in weaker, smaller toes.

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Primitive ShoesThe oldest shoes in the world, still in existence, are about 9,000 years old and were found in California, however, the largest discovery of primitive shoes was uncovered in Missouri and show evidence of being distinct right and left foot shoes - an innovation later lost to Western civilization. Because of the plant and animal used to make them, prehistoric shoes were highly perishable and little evidence exists of their design. Those shoes that scientists have been able to study consist of an oval piece of leather with the edges turned up and bound with strong leather thongs. Soles were made of cowhide and the shoes were filled with grass to keep the feet warm. Lengths of fur were attached sometimes to the leather soles and worn to protect the legs from the weather.

Late Middle Ages & the Tudor Era

By the late middle ages and the Tudor period (1450-1600), shoe designs had been standardized. Pattens or clogs became common as an overshoe for protection from water or mud. Advances in shoe construction technique allowed heavier soles to be attached to shoes and by 1480, the first shoes made right-side out on a last (a mold) were developed in Germany and spread throughout Europe. The simple turnshoe remained as a less expensive alternative for laborers, sailors, and other common folk.

The 17th and 18th Centuries / "Baroque" Era

In the 17th century, fashion of the previous eras reversed themselves. High heels became fashionable for men and flat shoes with criss-crossed ribbons in imitation of classical sandals were a mainstay for women. Square toed shoes were popular the beginning the century while in the early 18th century women began wearing high heeled slippers again.

Early American ShoesThe complexities and cost of carving compound curves into the last (the form that the shoe is molded over) and then making a mirror image for the other foot limited ownership of such shoes to the very rich. Colonial shoes

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were stiff leather shoes, with slight heels and buckles, but advances in shoemaking and the roots of the shoe industry in the U.S. began in Massachusetts.In 1828 a foreman by the name of Blanchard at the Springfield Armory in Massachusetts developed a duplicating lathe for the manufacture of gun stocks. A Philadelphia shoemaker thought that Blanchard's new duplicating lathe was also ideal for making shoe lasts and soon discovered that, by reversing the cam which guided the cutter, a mirror image could be produced.

Victorian Era

The Victorian Era, the time during the reign of English Queen Victoria, could be called a time of ridiculously proper manners. The social and moral values as well as fashion were influence by Queen Victoria. Victorian life also generated an interest in sports and other physical activities. In 1891, James Naismith created the game of basketball to tame a crowd of unruly students at Springfield College during the harsh New England winters. With the birth of basketball came the birth of the Sneaker Era.

The Sneaker Era

The word sneaker is traditionally defined a shoe consisting of a solid rubber sole attached to an upper made, usually, of canvas. While rubber soled shoes called plimsolls had been in use for some time for aristocratic lawn sports, and King Henry VIII was reported to have worn a sneaker-like shoe for playing tennis, the true life of the sneaker did not begin until

American inventor Charles Goodyear patented the process for vulcanization of rubber. Until that time, the sneaker as we know it now, was simply not possible. The oldest sneakers used for basketball are thought to be the Converse All Stars, first produced in 1917, but the Spalding company produced shoes in 1907 specifically for the game of basketball. Still these are not the oldest sneakers. A discovery at an estate sale has led experts to believe that the first basketball shoes were produced by Colchester Rubber Company of Colchester, Connecticut who went out of business in 1893. While there is no significant evidence to point to the use of these shoes for basketball, it seems that shoes that were produced

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just a few miles from the birthplace of basketball just two years after the invention of the game would certainly have been used for basketball.By the early 1900's, sneakers were being produced by small rubber companies who specialized in the production of bicycle tires. U.S. Rubber, a conglomerate of nine other rubber companies, introduced Keds in 1916 while Converse introduced the first mass marketed basketball sneaker in 1917 with their introduction of the Converse All Star . Other companies, including B.F. Goodrich and Spalding Co., were producing tennis shoes and smaller family-owned companies were manufacturing early cleated shoes. At first the market for sneakers was small and practically invisible, but after World War I, America turned to sports and physical health as a way to demonstrate moral fiber and patriotism. The market for sneakers grew steadily as young boys lined up to by sneakers endorsed by football player, Jim Thorpe and Converse All Stars endorsed by basketball player, Chuck Taylor. In the 1920's and 30's, manufacturers added traction to the soles of their sneakers and began marketing them for different sports. A major innovation of this time was the production of distinct models for boys and girls. Sneakers were known for comfort and used almost strictly for athletic endeavors. The revived Olympic Games provided exposure and heightened interest in sneakers and sports in general, leading to increased sales. It was at this time that the German sneaker manufacturer, Adidas would be founded in Herzogenaurach. German manufactured sport shoes would dominate the market until the late 1960's with the founding of current market leader, Nike.World War II interrupted production of sneakers for the public as factories switched to produce items in support of the massive war effort and raw materials became scarce. After the cessation of hostilities, the slow rise in the popularity of sneakers resumed. Another major brand, Puma, was also founded at this time after Rudolph Dassler split with Adi Dassler in a feud. Rudi Dassler set up shop across town and the Puma brand was born

The Sneaker Era Part IIThe 1950's witnessed another increase in the amount of leisure time available to families. The Baby Boom began and sneakers officially became the choice shoe for American youth as school dress codes relaxed.

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Hollywood officially sanctioned this fashion with a string of movies featuring actors in sneakers, including James Dean and his Converse Jack Purcells in West Side Story. Sales of sneakers soared to 600 million pairs a year in 1957, leading leather shoe manufacturers to issue ads claiming that sneakers were bad for children's feet and the sneaker manufacturers to respond with claims that sneakers cured the syndrome of "inhibited feet". Sneakers were imported from Japan in the early 60's, but accounted for only a small portion of the market until Nike founders Phil Knight and Bill Bowerman began importing Tiger shoes under the name Blue Ribbon Sports. Sneakers came into their own in the 70's as jogging became the new fashionable sport and created a need for a special shoe used just for the purpose of jogging. Technology created a need for exercise apart from work and the shoes to perform this exercise. Until this time, manufacturers had been concerned with high production, but now they began to focus on marketing shoes for a lifestyle purpose. Shoes for walking, running shoes, football shoes, basketball shoes-- every sport needed its own shoes- and then you needed another pair of sneakers for just casual wear. By the 80's, sneakers were everywhere. Woody Allen wore them to the ballet, Led Zeppelin wore them in their 1976 documentary, and Dustin Hoffman wore them while playing reporter Carl Bernstein in the movie All the President's Men. The shoes originally developed for sports became the mainstay for most people. Nike and Reebok were the market leaders while older brands Adidas and Converse were nearly in ruins. Newer companies came in and out of fashion and the industry began shelling out large amounts of money for sports endorsements. A major footnote in the Sneaker Era is the signing of basketball player Michael Jordan to a contract with Nike to produce and endorse his own signature line of shoes. Today, the Nike Swoosh and the Jordan Jumpman are icons and require no introduction.Hip hop performers popularized several brands during the late 80's and soon stories began appearing in the news about children being shot for their sneakers. Shoe companies perfected their fashion and marketing skills by the 1990's. Sports endorsements grew larger and marketing budgets went through the roof. Sneakers became a statement and definition of identity and personality rather than humble athletic aids. It is interesting to note that during the period of time between the 1970's and the 1990's, sneakers suddenly became athletic shoes and major brands like Nike and Reebok divorced themselves and their products from the humble rubber and canvas sneakers and their history as technology advanced. The history of sneakers or athletic shoes as manufacturers would prefer them to

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be called became diversified at this point and is reflected best in the individual histories of the major brands

Athletic shoes (Introduction)

An athletic shoe is a generic name for footwear designed for sporting and physical activities.

Athletic shoes, depending on the location and the actual type of footwear, may also be referred to as trainers (British English), sandshoes, gym boots or joggers (Australian English) running shoes, runners or gutties (Canadian English, Australian English, Hiberno-English), sneakers, tennis shoes (North American English, Australian English), gym shoes, tennies, sport shoes, sneaks, or takkies (South African English) and rubber shoes (Philippine English) canvers (Nigerian English).

Use in sports

The term athletic shoes is typically used for running in a marathon or half marathon, basketball, and tennis (amongst others) but tends to exclude shoes for sports played on grass such as association football and rugby football, which are generally known as "boots", or in North America as cleats.

Attributes of an athletic shoe include a flexible sole, appropriate tread for the function intended and ability to absorb impact. As the industry and design have expanded, the term "athletic shoes" is based more on the design of the bottom of the shoe than the aesthetics of the top of the shoe. Today's designs even include sandal, mary jane and even elevated styles suitable for running, dancing and jumping.

The shoes themselves are made of flexible compounds, typically featuring a sole made of dense rubber. While the original design was basic, manufacturers have since tailored athletic shoes for the different purposes that they can be used for.

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A specific example of this is the spiked shoe developed for track running. Many of these shoes are made up to a very large size because of athletes with large feet.

High-end marathon running shoes will often come in different shapes suited to different foot types, gait etc. Generally, these shoes are divided into neutral, overpronation and underpronation (supination) running shoes to fit the respective foot strike of the runners.

There are a variety of specialized shoes designed for specific uses:

Racing flats Track shoe Skate shoes Climbing shoe Approach shoe Wrestling shoes Cleats Football boot Dance Shoe

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Sneaker culture

Sneaker collectors, called "Sneakerheads", use sneakers as fashionable items. Casual sneakers like the Air Force One (Nike) or Superstar (Adidas) have become icons in today's pop culture. Artistically-modified sneakers can sell for upwards of $500.

Sneaker TechnologyWhen it comes to sneaker technology, shoes are divided into three major areas: the upper, the midsole, and the outsole. Depending on the materials and combinations used, one model of sneaker can vary greatly from another.

The UpperUppers, the top part of the shoe with the laces, fancy designs and bright colors that holds the shoe together, usually come in one of three materials, leather, synthetic leather, and mesh. Special editions, retro and vintage models, Converse and casual shoes like the Nike Vandal, the Air Force 1, and the Nike After Party for women may have a canvas upper. The most famous shoes to have an all canvas upper are the Converse All Stars.

The MidsoleMidsoles are used to cushion and provide support and protection for the foot. There are four types of materials used in commercially produced sneakers. Midsoles are often constructed of a combination of materials. Midsole materials are Phylon, polyurethane, Phylite, and EVA.

The OutsoleThe outsole, the part of the shoe that comes in contact with the ground, provides durability, and it is the first stage of cushioning for the shoe. Patterns on the

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outsole vary according to the needs of the sport. The five most commonly used materials for outsoles are as follows:

Brands

List of athletic shoe brands

Large brands include:

Adidas ASICS Clae Converse DC Shoes Fila Gola Heelys K-Swiss Keds Keen Lacoste Lonsdale Mizuno New Balance Nike Pony PF Flyers Puma Reebok Saucony Sperry Top-Sider Starbury Supra

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Vans

Sports shoe guide

The runner with the spikes should feel that he had more grip on the track.

The following table provides details about specific sports shoes. When viewing the table consider how much trainer technology has advanced in the last 100 years.

High JumpThis type of shoe has a much thicker sole. This gives maximum support and comfort.The shoe is light and flexible which helps the athlete achieve speed over a short distance before jumping.This shoe has to have spikes. The spikes at the front help the athlete to gain speed in the run-up. The four spikes t the heel provide grip when the athlete takes off.

Javelin This type of shoe has to be robust and durable. Athletes drag their feet along the ground during the throw. As a result the shoe has to be made from a tough, hardwearing material. Support is crucial. Javelin shoes look more like boots with protection around the ankle. Most of them feature strapping. This prevents the foot from moving in the shoe.

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Jumps and pole vault These events require speed both on the ground and in the air. In most cases straps have replaced the laces. The sole tends to be both firm and flexible allowing extra bounce in the jump. The spikes are once again very important. They provide the grip before the jump.Notice the spikes tend to be just at the front of the shoe.

The Throws The shoe has to allow the athlete to throw and spin. A hooked strap over the toe helps to prevent the feet from moving sideways during the build up to the throw.These types of shoes do not have spikes but have a hard sole. This lengthens the lifespan of the shoe.The sole tends to have circular grooves on the balls of the feet. These help the athlete to spin

Sprinting

This type of shoe has to be lightweight and offer flexibility at the front. They all tend to have spikes, which are located at the front. They are able to cope with lots of different types of surfaces. Most Olympic Athletes have their shoes specially made.

Long Distance These shoes have to be both durable and flexible. Comfort is a real priority, also this about the sweat factor.A mesh is sometimes added in the upper part of the shoe to allow the foot to breathe. The cushioning is also very important.Spikes are

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sometimes added but are not essential.

     

INTRODUCTION TO ATHLETIC FOOTWEAR INDUSTRY

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Market Analysis

The U.S. market for athletic footwear includes all producers of non-

cleated, rubber and plastic footwear designed in an athletic style or for athletic

use. The industry is a collection of smaller, segmented, yet often overlapping

markets, defined by both the price and the purpose of the shoes. For instance,

there are mini-markets for shoes designed for each of many sports and other

purposes: basketball, running, walking, tennis, and casual wear. The greatest

overlap between these categories is between performance shoes and casual

wear. Many people wear running shoes or basketball shoes on a daily basis in a

non-athletic setting. One can walk or play basketball in running shoes. Therefore,

there is some degree of overlap between most segments.

The industry is dominated by a few large firms, while the majority of other

players have less than 5% market share. The graph below shows the market share

breakdown by sales volume for 2004, before the merger of the #2 and #3 firms,

Adidas and Reebok.

Athletic Footwear Industry Market Share by Sales Volume

42%

27%

12%

6%

5%3%

2% 1%

1% Nike

Adidas

Reebok

Puma

New Balance

Skechers

K-Swiss

Vans

Asics

Saucony

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This graph shows market share after the merger of Adidas and Reebok.

These firms fight for market share through non-price competition, on

strategies such as strengthening brand image and increasing product

proliferation. The success of each firm is greatly dependent upon its marketing

campaigns. The brand image of the major firms is created by extensive marketing

campaigns and celebrity endorsements. Consumers associate themselves with a

particular brand and tend to stick with the brand with which they are

comfortable. Entry to the industry is difficult as brand loyalties are high.

The United States is

the world’s largest importer

of athletic footwear, which

is primarily manufactured in

Asian nations. The graph at

right shows the trend in US

footwear production and

Domestic Production vs. Imported Footwear (Millions of Pairs per Annum)

0

500

1000

1500

2000

2500

Imports

Domestic Production

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imports. Most firms design the sneakers and outsource their manufacturing to

foreign producers. The sneakers are then distributed to major retailers and are

sold to the consumer through a variety of channels.

The following provides an analysis of Porter’s Five Forces relating to the athletic footwear industry; internal rivalry, entry barriers, substitutes and complements, supplier power, and buyer power.

INTERNAL RIVALRY

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Market Description

Type of Shoe\

Company

Nik

e

Adid

as

Reeb

ok

New

Bal

ance

K-Sw

iss

Conv

erse

Miz

uno

Running X X X X X X X X X

Walking X X X X X

Basketball X X X X X X

Children’s X X X X X

Tennis X X X X X

Lifestyle X X X X X X X

Skating X X

Cross-Training X X X X

Soccer X X X X

Price competition in this industry is relatively non-existent in its traditional

form. The means by which firms compete with respect to price is by introducing

products at several different price levels in order to reach all areas of the market.

There are only a few firms who compete in every sector of the market with

regards to intended purpose (as well as price): namely Nike, Adidas, Reebok, and

New Balance. Smaller firms usually specialize in particular types of shoes. For

example, Brooks and Asics specialize in running, K-Swiss in tennis, and Vans in

skating and lifestyle shoes. This results in a collection of specialized markets with

far fewer firms competing than in the overall market for athletic footwear. The

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following chart shows the companies that participate in the various segments of

the market as defined by the left column.

In terms of growth and sales for individual categories, running footwear

accounts for 25% of total athletic shoe sales and has been experiencing the

strongest growth. As seen in the above table, this is the category with the most

participants. Its sales have increased by nearly 25% in certain countries. Other

sneakers, such as those designed for basketball have been experiencing no

growth at all. Women’s footwear sales were up 11-13% overall, while skating

shoe sales declined nearly 10%.

In the sneaker industry, the products are somewhat differentiated by

design but the players also try and emphasize the differences in their advertising.

As a result, there is an emphasis on non-price competition. With athletic

footwear, consumers consider both price and purpose, and firms attempt to

produce shoes that compete in several different price brackets. The U.S. sneaker

industry is considered a mature industry although the numbers in the table

below, on footwear sales in the last decade, suggest that there is still some

amount of growth in the overall market.

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U.S. Branded Athletic Footwear Sales (Millions of $)

Revenues 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

2005E

Nike 2529 3261 3797 3252 3325 3327 3128 3052 3005 3225 3358

Reebok 1405 1193 1229 1062 909 926 931 932 1036 1087 1141

New Balance 151 201 265 346 550 750 794 910 910 1022 1053

Adidas 355 390 465 910 845 840 700 810 750 790 822

K-Swiss 89 76 92 145 264 197 205 245 369 395 403

Converse 208 194 285 167 132 144 133 181 245 305 320

Puma 32 23 23 32 43 58 82 121 172 209 230

Other 2134 2170 2227 1826 1857 1961 2120 2290 2552 2766 2828

Total 6574 7215 7983 7396 7486 7804 7672 7994 8253 8890 9201

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Branded Athletic Footwear Market Share *Sales in millions of wholesale $

Company U.S. Sales* U.S. Market Share Global SalesGlobal Market

Share (%)

Nike 3225 36.3 6780 33.2

Reebok 1087 12.2 1963 9.6

New Balance 1020 11.5 1357 6.6

Adidas 795 8.9 3150 15.4

K-Swiss 395 4.4 480 2.4

Converse 305 3.4 905 4.4

Vans 275 3.1 395 1.9

Puma 209 2.4 1396 6.8

American Sporting Goods (Avia, Ryka, Nevados, Turntec) 205 2.3 303 1.5

Asics 197 2.2 920 4.5

Keds/Pro-Keds 136 1.5 203 1

Foot-Joy 124 1.4 180 0.9

Fila 120 1.3 305 1.5

Saucony 104 1.2 141 0.7

Sole Technology 100 1.1 140 0.7

And 1 95 1.1 175 0.9

Mizuno 59 0.7 287 1.4

Hi-Tec 59 0.7 191 0.9

Brooks 54 0.6 126 0.6

Lotto 7 0.1 141 0.7

Other 319 3.6 873 4.3

Total 8890 100 20411 100

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Founded: 24 January 1964

Founder(s): William J. "Bill" Bowerman , Philip H. Knight

Headquarters: Beaverton, Oregon, United States

Area served: Worldwide

Key people: Philip H. Knight(Chairman),Mark Parker(CEO) & (President)

Industry: Designing and Manufacturing- Sportswear,Sports equipment

Products: Athletic shoes, Apparel, Sports equipment, Accessories

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)

Employees 30,200 (2008)

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For the year ended 31st May 2004, Nike, a leader in the global sports shoes

industry announced a vastly improved performance, earning almost $1 billion on

sales of $12.3 billion. Earnings had increased by 27% while orders worldwide went

up by 10.7%. Nike's return on invested capital was 22%, up from 14% four years

ago. Having completed a $1 billion share repurchase, Nike had plans to buy back

shares worth $1.5 billion over the next four years.

Nike had faced a crisis in the late 1990s. Many analysts felt this was

because its creativity had not been backed by operational discipline. Nike had

operated on instinct, often guessing how many pairs of shoes to produce and

hoping it could offload them in the market. In the past few years, Nike had tried

to balance creativity with a strong business focus. Nike had overhauled its

information systems to get the right number of shoes to the market more quickly.

The company had also streamlined logistics and strengthened its management

team. It focused on more efficient management of its portfolio of brands -- Cole

Haan dress shoes, Converse retro-style sneakers, Hurley International skateboard

gear, and Bauer in-line and hockey skates.

As 2004 drew to a close, Nike realized it could not underestimate powerful

competitors such as adidas. When founder Phil Knight resigned on 18th

November 2004, it marked the beginning of a new era at Nike under the

leadership of William D. Perez. Perez had earlier been president and chief

executive of S.C. Johnson & Son.

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Nike's Business

Nike was involved in the design, development and worldwide marketing of

high quality footwear, apparel, equipment, and accessory products. The largest

seller of athletic footwear and athletic apparel in the world, Nike offered its

products through approximately 18,000 retailers in the US and various

independent distributors, licensees and subsidiaries in nearly 200 countries

around the world. Independent contractors manufactured most of Nike's

products. Footwear products were mostly produced outside the US, while apparel

and equipment were made both in the US and abroad.

Nike's athletic footwear products were worn for both casual or leisure

purposes. Running, basketball, children's, cross-training and women's shoes were

Nike's top-selling product categories.

Nike also offered shoes designed for outdoor activities like tennis, golf,

soccer, baseball, football, bicycling, volleyball, wrestling, aquatic activities, hiking,

and other athletic and recreational uses. Nike sold sports apparel, athletically

inspired lifestyle apparel, as well as athletic bags and accessory items.

Nike often marketed footwear, apparel and accessories in "collections" of

similar design or for specific purposes.

Nike also marketed apparel with licensed college and professional team and

league logos. Nike sold sports balls, timepieces, eyewear, skates, bats, gloves, and

other equipment designed for sports activities, swimwear, cycling apparel,

maternity exercise wear, children's clothing, school supplies, timepieces, and

electronic media devices.

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Nike also sold various plastic products to other manufacturers through its

wholly owned subsidiary, NIKE IHM, Inc. and plastic injected and metal products

to other manufacturers through its wholly-owned subsidiary, BAUER Italia S p A.

Nike sold a line of dress and casual footwear, apparel and accessories for

men and women under the brand names Cole Haan®, CH, Gseries by, Cole Haan,

and Bragano through its wholly-owned subsidiary, Cole Haan Holdings. Nike's

wholly-owned subsidiary, Bauer NIKE Hockey Inc., offered ice skates, skate blades,

in-line roller skates, protective gear, hockey sticks, and hockey jerseys, licensed

apparel and accessories under the Bauer® and NIKE® brand names. Bauer also

offered various products for street and roller hockey. Another wholly-owned

subsidiary Hurley International offered a line of action sports apparel (for surfing,

skateboarding, and snowboarding) and youth lifestyle apparel and footwear

under the Hurley brand name

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Early History

In 1958, Phil Knight, a keen athlete and an undergraduate at the University

of Oregon and his track coach Bill Bowerman realized the need for a good running

shoe. The leading track shoes of the time were being produced by European

companies, adidas and Puma...

The 1970s

In 1971, Knight and Bowerman decided to develop a distinctive trademark

and a new brand name 'Nike', inspired by the Greek winged Goddess of Victory...

The 1980s

In the early 1980s, Nike replaced adidas as the leading athletic shoe

company in the American market. When Nike went public, Knight became one of

the richest men in the world. But in the mid-1980s, after five years of rapid

growth at an annual rate of 44%, Nike failed to anticipate the emerging market

for aerobic shoes, having concentrated its efforts on casual shoes...

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Marketing Mix

Nike's marketing strategy is an important component of the company's success. Nike is positioned as a premium-brand, selling well-designed and expensive products. Nike lures customers with a marketing strategy centering around a brand image which is attained by distinctive logo and the advertising slogan:

"Just do it". Nike promotes its products by sponsorship agreements with celebrity athletes, professional teams and college athletic teams.

Product

Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts, baselayers etc. for a wide range of sports including track & field, baseball, ice hockey, tennis, Association football, lacrosse, basketball and cricket. Nike Air Max is a line of shoes first released by Nike, Inc. in 1987. The most recent additions to their line are the Nike 6.0, Nike NYX, and Nike SB shoes, designed for skateboarding. Nike has recently introduced cricket shoes, called Air Zoom Yorker, designed to be 30% lighter than their competitors'.[13] In 2008, Nike introduced the Air Jordan XX3, a high performance basketball shoe designed with the environment in mind.

Nike sells an assortment of products, including shoes and apparel for sports activities like association football, basketball, running, combat sports, tennis, American football, athletics, golf and cross trainingfor men, women, and children. Nike also sells shoes for outdoor activities such as tennis,

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golf,skateboarding, association football, baseball, American football, cycling, volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and recreational uses. Nike is well known and popular inyouth culture, chav culture and hip hop culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner's performance via a radio device in the shoe which links to the iPod nano. While the product generates useful statistics, it has been criticized by researchers who were able to identify users' RFID devices from 60 feet (18 m) away using small, concealable intelligence motes in a wireless sensor network.

In 2004, they launched the SPARQ Training Program/Division.

Some of Nike's newest shoes contain Flywire and Lunarlite Foam. These are materials used to reduce the weight of many types of shoes.

In the video game Gran Turismo 4 there is a car by Nike called the NikeOne 2022, designed by Phil Frank.

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Pricing Strategy

> Nike Comes under Ceiling price> The cost of making one pair of Shoesis less than $25> But it adds more than $15 forCompensating & paying for R&D,Advertisement and sales team> To add up the total cost for onepair of shoes will be $80

Strategies Policies

Accelerating growth through focused execution. Delivering superior, innovative products. Supply Chain a Competitive advantage Deepening relationships with customers.

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Promotion

Nike positioned its products as high performance shoes designed with high

technology features. Nike athletic shoes were targeted at men and women aged

between 18 and 34 years. Till 1976, except for the routine purchase of space in

running publications, Nike's advertising was largely in the form of cooperative

arrangements with retailers who inserted ads in local newspapers.

Nike is the world's #1 manufacturer and marketer of athletic footwear and

apparel. Almost out of the blue, the company established itself as one of the

world's most familiar brands during the 1980s and 1990s.and now 2000s. As

familiar as a Coke bottle or Big Mac, the Nike "swoosh" logo came to symbolize

not just sports culture, but street culture, as the appeal of the star players who

endorsed the brand was carried onto city streets. Nike is undisputed leader in

sports-oriented street wear. “Advertising Age estimated global measured

advertising expenditure of $308 million in 2006, making Nike the world's #89

advertiser .

Nike has been using the same logo ever since they established the famous swoosh. The swoosh logo is a graphic design created by Caroline Davidson in 1971. It represents the wing of the Greek Goddess Nike. Caroline Davidson was a student at Portland State University in advertising. She met Phil Knight while he was teaching accounting classes and she started doing some freelance work for his company. Phil Knight asked Caroline to design a logo that could be placed on the side of a shoe. She handed him the swoosh, he handed her $35.00. In spring of 1972, the first shoe with the Nike swoosh was introduced (from Nike Consumer Affairs packet, 1996). Not only does Nike have one of the famous logo, Nike also has one of the most famous slogans around: “Just Do It!” According to Nike

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company lore, it was coined at a 1988 meeting of Nike’s ad agency Wieden and Kennedy and a group of Nike employees. Dan Weiden, speaking admiringly of Nike’s can-do attitude, reportedly said, “You Nike guys, you just do it.” Then the brilliant slogan came about. Nike continues to lure customers with a marketing strategy centering around a brand image which is attained by th distinctive logo and advertising slogan.It is my belief that Nike's power to sell comes from deep-rooted desire for cultural...

From 1972 to 1982, Nike relied almost exclusively on print advertising in highly vertical publications including Track and Field News. Most of the early advertising was focused on a new shoe release, essentially outlining the benefits of the running, basketball or tennis shoe. In 1976, the company hired its first outside ad agency, John Brown and Partners, who created what many consider Nike's first 'brand advertising' in 1977. A print ad with the tagline "There is no finish line" featured a lone runner on a rural road and became an instant classic. The success of this simple ad inspired Nike to create a poster version that launched the company's poster business.

In 1982, Nike aired its first national television ads, created by newly formed ad agency Wieden+Kennedy, during the New York Marathon. This would mark the beginning of a remarkably successful partnership between Nike and W+K that remains intact today. The Cannes Advertising Festival has named Nike its 'advertiser of the year' on two separate occasions, the first and only company to receive that honor twice (1994, 2003).

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Place

Niketown at Oxford Street,London

Nike sells its product to more than 25,000 retailers in the U.S. (including Nike's own outlets and "Niketown" stores) and in approximately 160 countries in the world. The company also has a program called NIKEiD at nikeid.com, which allows customers to customize designs of some styles of Nike shoes and deliver them directly from manufacturer to the consumer. Nike sells its products in international markets through independent distributors, licensees, and subsidiaries.

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Business Segments - Nike

Footwear (52% of Revenue)

Nike specializes in athletic footwear, particularly in running, cross-training, basketball, and soccer, although Nike also sells sport-inspired casual footwear like its Air Force Ones footwear line. Footwear sales increased 14% in 2008, reaching about $9.7 billion, and accounted for 52% of Nike's 2008 revenue. Much of the growth in footwear revenue is attributed to the 8% increase in footwear sales in the EMEA region. Approximately 45% and 40% of the company's 2008 footwear sales occurred in the United States and EMEA regions, respectively.

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Apparel (28% of Revenue)

Nike sells sports apparel such as running shorts, t-shirts, and licensed apparel (with logos of college and professional sports teams). Apparel sales totaled $5.2 billion in 2008, a 14.4% increase from a year earlier. Nike attributes much of this revenue growth to a 25% increase in sales in emerging markets like Russia in the EMEA region as well as a currency-neutral 50% increase in revenues from China. The EMEA region accounts the majority of Nike's apparel sales, accounting for 40% the company's revenue earned from apparel.

Equipment (6% of Revenue)

Nike also sells sports equipment such as balls, protective equipment, and golf clubs. Sales of Nike branded equipment reached $1.07 billion in 2008, a 9.5% increase from 2007. This increase was driven primarily by an 18% increase in equipment sales in the EMEA region, which accounted for 40% of the company's equipment sales.

Other (14% of Revenue)

Nike also sells apparel and footwear under the Nike Golf, Cole Haan, Converse, Hurley International, and Umbro brand names. Nike earned approximately 14% of its revenue, or $2.6 billion in 2008, from these segments. This represents a 15% increase in sales from 2007, which can mainly be attributed to significant growth in the Nike Golf and Converse segments.

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SWOT Analysis OF NIKE

Strengths. Nike is a very competitive organization. Phil Knight (Founder and CEO) is often

quoted as saying that 'Business is war without bullets.' Nike has a healthy dislike of is competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike sponsored the top athletes and gained valuable coverage.

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, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.

Nike is a global brand. It is the number one sports brand in the World. Its famous 'Swoosh' is instantly recognisable, and Phil Knight even has it tattooed on his ankle. Strong management team and good corporate strategy in both North

American and overseas markets. First mover advantage in e-commerce. Brand recognition and reputation. Diversity and variety in products offered on the web (footwear, apparel,

sporting equipment, etc.) Strong control over its own distribution channel. Strong customer base. Strong financial position with minimal long term debts. Innovative designs in footwear enabling consumers to design their own

shoes online. Diversity and variety in products offered on the web. Emerging brand name.

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Weaknesses

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. This may leave it vulnerable if for any reason its market share erodes.

The retail sector is very price sensitive. Nike does have its own retailer in Nike Town. However, most of its income is derived from selling into retailers. Retailers tend to offer a very similar experience to the consumer. Can you tell one sports retailer from another? So margins tend to get squeezed as retailers try to pass some of the low price competition pressure onto Nike. Negative image portrayed by poor working conditions in its overseas

factories. E-commerce is limited to USA. The direct sale to consumers is creating conflicts with its own resellers. Currently available supply chain, manufacturing, and fulfillment

technologies aren't known for its researcheasily integrated with online build-to-order systems and development leading to innovative designs.

The e-commerce is limited to USA, however, has planned to expand to Canada and international in the near future.

Online customer service not "helpful" or easy to find.

Opportunities.

Product development offers Nike many opportunities. The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need to replace shoes.

There is also the opportunity to develop products such as sport wear, sunglasses and jewellery. Such high value items do tend to have associated with them, high profits.

The business could also be developed internationally, building upon its strong global brand recognition. There are many markets that have the disposable

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income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of consumers. There are also global marketing events that can be utilised to support the brand such as the World Cup (soccer) and The Olympics.

Threats.

Nike is exposed to the international nature of trade. It buys and sells in different currencies and so costs and margins are not stable over long periods of time. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands.

The market for sports shoes and garments is very competitive. The model developed by Phil Knight in his Stamford Business School days (high value branded product manufactured at a low cost) is now commonly used and to an extent is no longer a basis for sustainable competitive advantage. Competitors are developing alternative brands to take away Nike's market share.

As discussed above in weaknesses, the retail sector is becoming price competitive. This ultimately means that consumers are shopping around for a better deal. So if one store charges a price for a pair of sports shoes, the consumer could go to the store along the street to compare prices for the exactly the same item, and buy the cheaper of the two. Such consumer price sensitivity is a potential external threat to Nike. Continuing challenges in import/export duties.

Threats to free trade and foreign currency fluctuations.

Possibility of distress from growing beyond its capabilities. Growing Competition Fashion Shifts in Footwear market Adidas/Reebok Merger

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Nike and Converse

In 2003, Nike purchased Converse. One reason was to add a lifestyle shoe

to their product line that would appeal to a group that did not already buy Nike

products Converse was a good acquisition because Nike wanted to capture the

typical Converse consumer, who looks for retro sneakers like Converse’s long-

established Chuck Taylor line. Maintaining these customers required that Nike not

taint the Converse products with their own brand name, therefore, Nike has

allowed Converse to continue to operate as a separate entity (Marseille and Roos

2005).

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VIRTUAL VALUE CHAIN

PHYSICAL COSTS

• Outsource non-core activities

• Allows Nike to focus on their core competencies of:

• Product Design

• Marketing

• AIR SOLE Technology

• Having a virtual relationship with suppliers and the companies who assemble Nike products allows them to:

• Reduce administrative costs

• Payroll costs.

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• Switch to companies that provide low labor costs and a quality product.

SPEED

• Having a virtual supply chain, Nike can increase the speed their product flows through the supply chain.

• Send new designs to suppliers who produce shoe parts.

• Suppliers send these shoe parts to the assembly companies.

• Ship the finished products to distributors worldwide.

• This allows them cut down on the amount of time required from the initial design, to production and then distribution.

DIVERSITY OF SUPPLIERS

• A VSC allows a company to search for and use a wider range of suppliers.

• Although geography may separate them they can still communicate electronically.

• Having multiple suppliers that you can trust allows you to avoid emergencies in your supply chain.

• With more suppliers available a company is more flexible.

NIKE'S WORLDWIDE SUPPLY-CHAIN PROJECT

• Nike is using HP servers, software, and consulting services to run their new supply-chain project.

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• Nike chose to work with HP for several reasons such as HP’s single platform capable of running both UNIX and Microsoft Windows NT systems and HP’s clear understanding of what Nike needs to run a successful business.

• The goals of the project included:

• Enhancing Nike's ability to respond to changing conditions.

• Reducing inventory and capital investment risk.

The Road Ahead

By September 2004, Nike's Soccer sales were nearly $1 billion, or 25% of

the global market. For the first time, Nike's share of the soccer shoe market in

Europe (35%), exceeded that of adidas (31%).

Nike had achieved rapid growth in part by using the aggressive marketing

tactics that made it big in the US.

Nike paid the prestigious Manchester United club an unprecedented $450

million over 14 years to run its merchandising and uniform operations.

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Founded 1924 (registered in 1949)

Founder(s) Adolf Dassler

Headquarters Herzogenaurach, Germany

Key people Herbert Hainer (CEO), Erich Stamminger (CEO, Adidas Brand), Igor Landau (Chairman of supervisory board) (2009-)

Industry Designing and Manufacturing

Products Footwear, Sportswear, Sports equipmentToiletries

Revenue €10.799 billion ($15.6 billion)(2008)

Operating income

▲ €1.070 billion ($1.5 billion)(2008)

Profit ▲ €642 million ($933 million)(2008)

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Employees 38,980 (2008)

Adidas Inc. is a marketer of sports apparel and athletic shoes. The German manufacturer, through its marketing strategy which rests on a favorable brand image, has evolved into a large multinational enterprise. In keeping with the brand image is its association with the distinctive logo and its advertising slogan, "Impossible is Nothing." In order to maintain and sustain this image, the company makes huge investments in advertising and brand promotion. At the critical time of global economic crisis, Adidas will react to the consumers’ pessimistic attitude and stressful emotion during this period. It may become a good chance for Adidas because it can take advantage of its previous advertising way of “Impossible is Nothing” campaign by sponsoring sports stars to express the corporate philosophy of grit, determination, passion and humor, giving people more courage and psychological comfort in face of economic crisis. But besides that, we also focus more about family function especially in Asian countries which emphasize a lot on family, which can provide caring emotional communication. Therefore, from both strong-willed hero worship and water-like fork environment, customers can easily link Adidas image with not only strength, but also warmth. The preferred media we choose are TV, specific magazines, outdoor and internet.

INTRODUCTION

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Adidas was formed by German sports apparel by the founder Adi Dassler during the 1920’s. While Dassler was in his mother’s wash room he decided to begin an athletic shoe. After he made the shoe he had help from his brother and twelve other people to produce around 50 handmade shoes per day. These athletic shoes were made for running and training.

“For over 80 years, Adidas has been part of the world of sports on every level, delivering state-of-the-art sports footwear, apparel and accessories. Today, Adidas is a global leader not only in the shoe industry, but also in the sporting goods industry. Shoes from the Adidas are available in virtually every country of the world.”

Recently Adidas and the NBA joined forces and made “The Brotherhood”. “The Brotherhood” consists of Tracy McGRady of The Houston Rockets, Dwyane Wade of The Miami Heat, Tim Duncan of The San Antonio Spurs, Chauncey

Billups of the Detroit Pistons and Gilbert Arenas of the Washington Wizards . When it came down to it Adidas and the NBA came up with the slogan called “Basketball is a Brotherhood.”

The main focus of “The Brotherhood was Adidas to sponsor the NBA. The way these six players were selected was by their athletic ability which is why they are also known as all stars. Then these six players decided to form a series that would help kids to discover their dream by playing with NBA Stars.

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A strong advertising and public Relation events makes adidas as a worldwide recognized brand and it would be more sustainable in the world market.

HISTORY OF ADIDAS

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Adolf ("Adi") Dassler started to produce his own sports shoes in his mother's wash kitchen in Herzogenaurach, Bavaria, after his return from World War I. In 1924, his brother Rudolf (Rudi) Dassler joined the business which became Gebruder Dassler Schuhfabrik (Dassler Brothers Shoe Factory) and prospered.

At the 1928 Olympics, Dassler equipped several athletes, laying the foundation for the international expansion of the company. During the 1936 Summer Olympics on Berlin, Dassler equipped quadruple gold medal winner Jesse Owens of the U.S. with his shoes. Late in World War II, the shoe factory shifted to production of the Panzerschreck anti-tank weapon. The brothers split up in 1948, with Rudi forming Puma, and Adi forming adidas. The company formally registered as adidas AG (with lower case lettering) on 18 August 1949. The phrase All Day I Dream About Soccer, although sometimes considered the origin of the adidas name, was applied retroactively. The name is actually a portmanteau from "Adi" (a nickname for Adolf) and "Das" (from "Dassler").

German-based adidas-Salomon AG is the second largest manufacturer of sporting.The global footwear market is a growing market with an increase in consumer demand based on globally increasing consumer incomes. The sports footwear market is significantly characterized by the high speed of innovation, which forces the companies to invest more in development initiatives. At the same time the companies are trying to reduce costs through decreasing supplier prices in order to stay competitive. Looking forward, the footwear market is expected to steadily keep growing. The Adidas Group is a worldwide operating German sports apparel

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manufacturer with its head office in Herzogenaurach. The company was founded in August 1949 and named after its founder Adolf (Adi) Dassler. With the winning of the World Cup 1954 in Bern by the German national team, the Adidas soccer shoes became world-famous. The German team played with Adidas soccer shoes where you could replace the studs – a new innovation in those days. In the following years Adidas expanded its production beyond athletic footwear and produced sportswear and equipment. In 1989 the company became a corporation. In 2006 Adidas took over their British rival “Reebok” with the goal to accelerate its drive in the U.S. market and to approach Nike, the world market leader in the athletic footwear industry. Today, Adidas is still trailing Nike. The Adidas Group consists of the brands Adidas, Reebok and Tailor-Made. Adidas has always been a company that stands for revolutionary inventions in the athletic shoe industry. Adidas reported in 1996 one of the most successful years in its history after implementing new sales and marketing strategies. This could only be topped in 2001 where Adidas-Salomon achieved record-breaking sales. Another significant trend lies in long-term sponsoring contracts that Adidas gained within the last few years. In April 2006 they signed a contract to become the official NBA apparel provider for.

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Marketing Mix

Products:

Adidas - Footwear, apparel, and hardware such as bags and balls.

Salomon - Winter sports incl. skis, snowboards, snowblades, ski boots and bindings, inline skates, hiking, apparel.

Mavic -Cycle components,

Bonfire - Snowboard apparel.

Arc'Teryx - Outdoor apparel, climbing equipment,

Cliché - Skateboard equipment, footwear and apparel,

Taylor Made-Adidas Golf - Golf equipment, golf apparel, golf shoes and finally,

Maxfli - Golf balls, irons and accessories.

Accessories

Adidas also designs and makes watches, eyewear, bags, baseball caps, and socks.As well, Adidas has a branded range of male and

female deodorants, perfumes, aftershave and lotions.

In 1990, Adidas was holding on to just a two to three percent share of the U.S. market. Between 1988 and 1992 Adidas total sales dropped from nearly $2 billion to $1.7 billion. In the same period, Nike’s sales went from $1.2 billion to more

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than $3.4 billion. From being the U.S. market leader in the late 1970s, Adidas’s market share dropped to 3 percent in 1992. The European market shares dropped while Nike’s shares grew.

Adidas also have had problems with the upstream value activities in their value chain. Traditionally, the company have their own factories and wholly owned subsidiaries. What happened in the '70s and forward, during the Adidas recession, was that Adidas was unable to ship products when it was needed, and they had a long supply chain - it took 18 months to get a new shoe into the market.

Pricing

Adidas products are generally cheaper than Nike products, much of pricing can be directly proportional to the type of technology incorporated into the shoe.

This brand, which employs a premium-price strategy, is the root of the group's strength in Europe, with the brand generating 50% of all its sales there in 2008.

Advertising And Promotions:

Commercial advertising media can include wall paintings, billboards, street furniture components, printed flyers and rack cards, radio, cinema and television adverts, web banners, mobile telephone screens, shopping carts, web pop-ups, skywriting, bus stop benches, human billboards, magazines, newspapers, town criers, sides of buses, banners attached to or sides of airplanes ("logo-

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jets"), in-flight advertisements on seatback tray tables or overhead storage bins, taxicab doors, roof mounts and passenger screens, musical stage shows, subway platforms and trains, elastic bands on disposable diapers, stickers on apples in supermarkets, shopping cart handles (grabertising), the opening section of streaming audio and video, posters, and the backs of event tickets and supermarket receipts. Any place an "identified" sponsor pays to deliver their message through a medium is advertising.One way to measure advertising effectiveness is known as Ad Tracking. This advertising research methodology measures shifts in target market perceptions about the brand and product or service. These shifts in perception are plotted against the consumers’ levels of exposure to the company’s advertisements and promotions. The purpose of Ad Tracking is generally to provide a measure of the combined effect of the media weight or spending level, the effectiveness of the media buy or targeting, and the quality of the advertising executions or creative.Adidas use several advertising media to promote their product in the marketplace. Different advertising media use in the in the market like commercial advertisement, Print media advertisement, covert advertising, Infomercials, Celebrities advertisement, Online advertisement, Public transport advertisement, e-mail etc.

Covert advertisingCovert advertising is when a product or brand is embedded in entertainment and media. For example, in a film, the main character can use an item or other of a definite brand, as in the movie Minority Report, where Tom Cruise's character John Anderton owns a phone with the Nokia logo clearly written in the top corner, or his watch engraved with the Bulgari logo. Another example of advertising in film is in I, Robot, where main character played by Will Smith mentions his Converse shoes several times, calling them "classics," because the film is set far in the future. I, Robot and

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Spaceballs also showcase futuristic cars with the Audi and Mercedes-Benz logos clearly displayed on the front of the vehicles. Adidas also use this advertising technique.

Television commercialsThe TV commercial is generally considered the most effective mass-market advertising format, as is reflected by the high prices TV networks charge for commercial airtime during popular TV events. The majorities of television commercials feature a song or jingle that listeners soon relate to the product. Virtual advertisements may be inserted into regular television programming through computer graphics. It is typically inserted into otherwise blank backdrops or used to replace local billboards that are not relevant to the remote broadcast audience. Adidas has a large amount of TV commercial advertisements in the worldwide TV network like BBC, CNN etc.

Infomercials

There are two types of infomercials, described as long form and short form. Long form infomercials have a time length of 30 minutes. Short form infomercials are 30 seconds to 2 minutes long. Infomercials are also known as direct response television (DRTV) commercials or direct response marketing.

The main objective in an infomercial is to create an impulse purchase, so that the consumer sees the presentation and then

immediately buys the product through the advertised toll-free telephone number or website. Infomercials describe, display, and often demonstrate products and their features, and commonly have testimonials from consumers and industry professionals. Adidas arrange several infomercials in the sports based program.

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CelebritiesThis type of advertising focuses upon using celebrity power, fame, money, popularity to gain recognition for their products and promote specific stores or products. Advertisers often advertise their products, for example, when celebrities share their favorite products or wear clothes by specific brands or designers. Celebrities are often involved in advertising campaigns such as television or print adverts to advertise specific or general products. Adidas use David Bekham as their brand ambassador and many more celebrities in every region to promote their product. In 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.

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Place

Shoes from the Adidas are available in virtually every country of the world.

Adidas Group generates revenue by selling its products to retail stores or directly to the customer via one of the brands' concept stores, factory outlets, concession corners, or online stores. Of this revenue, 46% is from footwear, 42% from apparel, and 12% from hardware.In addition to selling its products to retailers, the brand has 1332 own-retail stores worldwide, included 329 new stores opened in 2008.In 2008, the adidas Group saw overall sales in North America decrease by 14% in conjunction with the United States' economic downturn. However, adidas has relatively low US exposure overall, with 24% of 2008 sales coming from all of North America. In contrast, adidas Group's continuing expansion into the growing economies in Asia and Latin America led to significant sales growth in those regions. The company aims to have emerging markets represent over 35% of global sales. The group has captured a majority of the premium athletic apparel market in several countries including India and Japan (it is tied with Nike in China). Latin America has had sales grow 53% and 38% the past two years. The company's strategy in these emerging markets is to target the wealthiest segments, establishing the group's output as premium products in the industry.

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Business Segments

72%

20%

8%

Net Sales by segment

AdidasReebokTaylor made adidas golf

43%

8%24%

25%

Net sales by region

EuropeLatin AmericaNorth americaAsia

The Adidas Group organizes its business segments by brand:

Adidas (72.5% of 2008 net sales) : The adidas brand is the ultimate profit driver for the adidas Group, accounting for 72.5% of all group sales in 2008. The brand, which was restructured during 2007, now consists of 2 segments: Sports Performance (80% of brand sales in 2008) and Sports Style (20%). The adidas segment has seen its revenues grow to €7.8 billion in 2008 from €7.1 billion in 2007

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Reebok (19.9% of 2008 net sales) : Reebok has three different divisions: Reebok (80% of brand revenue in 2008),Reebok-CCM Hockey (9%), and Rockport (11%). The brand also contributes to the group's strength in Europe, where it makes 32% of its sales.

TaylorMade-adidas Golf (7.5% of 2008 net sales) : TaylorMade-adidas Golf is comprised of TaylorMade (clubs and balls) and adidas Golf, (footwear and apparel). Golf clubs and accessories accounted for 71% of the segment's sales in 2008, with the remaining 29% from footwear and apparel sales. TaylorMade-adidas Golf generated $812 million in 2008 net sales.

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SWOT Analysis:

A SWOT analysis comprise of strength, Weakness, Opportunity and Threats. This four trends are analyze below.

STRENGTHS

Largest International portfolio of sport ambassadors. Sponsors football teams with maximum fan following in India and USA. Highest brand image in India according to our survey. Found in 1895, Reebok Intl. Ltd. Is steeped in history and heritage Has largest market share in India Has strived on street hip-hop image as its USP Compulsory centralized test for all sales staff Merger with Reebok Brand recognition and reputation. Diversity and variety in products offered on the web (footwear, apparel,

sporting equipment, etc.) Strong control over its own distribution channel. Strong customer base. Strong financial position with minimal long term debts. Innovative designs in footwear enabling consumers to design their own

shoes online. Diversity and variety in products offered on the web. Emerging brand name.

WEAKNESSES

• Rigid pricing structure.• Our survey shows Nike behind Adidas in market share in India.• Has not do well in Indian subcontinent market. • The direct sale to consumers is creating conflicts with its own resellers. • Currently available supply chain, manufacturing, and fulfillment

technologies aren't known for its researcheasily integrated with online build-to-order systems and development leading to innovative designs.

• The e-commerce is limited to USA, however, has planned to expand to Canada and international in the near future.

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• Online customer service not "helpful" or easy to find.

OPPORTUNITIES

• Has a great opportunity to expand international market.• Increasing demand on the sportswear.• Positive and increasing market trends can increase through the effective

advertising. • Launch adidas originals & style in India• Target the Achievers psychographic• Explore female market with Reebok• Compulsory standardized test for sales

THREATS

Adidas larger competitor Nike has a grater market share and having a big budget in marketing activity.

The newly born several brands like CAT, GAP has increase their advertising budget in recent years.

Amount of competitors increasing day by day.

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Case study - Adidas takes a run at Nike

Adidas-Salomon AG and Reebok MergerThe deal that has been making the largest headlines recently is that

between European giant Adidas-Salomon AG and strong U.S. competitor Reebok. This merger of two of the largest companies in the industry creates a combined $12 billion company to compete with the industry leader, Nike, which is valued at $14 billion (Carr 2005). This deal fulfills two strategic goals for Adidas. First, it allows Adidas to further expand into the “lifestyle” market. The second objective that Adidas seeks to achieve through the merger is to further solidify its position in the U.S. market, where Nike continues to be the dominant player.

The planned €3.1bn (£2.1bn) merger between Adidas-Salomon and Reebok is all about catching up with Nike, especially in the US.The US accounts for 50% of the sports footwear market. Nike has the lion's share, taking 36% of the $8.9bn (£5bn) US sports shoe market last year.

By contrast, Adidas's share was only 8.9%, while Reebok controlled 12%. But together, Adidas - based in Herzogenaurach, Germany - and Reebok, based in Canton, Massachusetts, could give Nike a run for its money.

That is what investors seemed to think , with both Reebok and Adidas shares making strong gains following news of the merger.

However, not everybody was convinced about the merits of the deal.

"I would watch the execution of the integration very carefully because it won't be easy to integrate the businesses - Adidas's focus is on sport but Reebok's is on lifestyle," Volker Riehm, a fund manager at Activest, told Reuters.

"Apart from that, Adidas is creating a load of work for itself when the World Cup is just around the corner."

Adidas is a major sponsor of the World Cup, which is taking place in Germany next year.But if the two companies manage to integrate properly - a big, because mergers are hard to pull off successfully - the combined firm could pose a serious challenge to Nike.

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Adidas has always made good products, but has failed to match Nike's marketing prowess. But things could have been different had Adidas, rather than Nike, signed up the basketball legend Michael Jordan.In 1984, Adidas had the chance to bag Jordan - then a promising National Basketball Association rookie. But Adidas, who in the past had signed basketball stars such as Kareem Abdul-Jabbar and the boxing legend Muhammad Ali, decided to give Jordan a miss.

Adidas's loss was Nike's gain. Nike offered Jordan a $2.5m contract, launched launch a $65 basketball shoe called the Air Jordan the following year and went on to become one of the world's most well-known companies, complete with swoosh logo and "just do it" motto.

Adidas will be relying heavily on Reebok's marketing nous to take on Nike in the US.

Once associated primarily with the aerobics boom of the 80s, Reebok has made inroads with the youth market by signing up the likes of the rapper 50 Cent. However, it had to drop ads featuring him in March amid complaints they glorified gun violence.

For its part, Adidas recently teamed up with the fashion designers Stella McCartney and Yohji Yamamoto on a line of trendy training kit sold through fashion boutiques.

Herbert Hainer, the chief executive of Adidas, described the merger as a "major strategic milestone" and "a once in a lifetime opportunity". He will be keeping his fingers crossed that Adidas-Reebok will not turn into a repeat of that calamitous German-US merger, DaimlerChrysler.

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Nike vs Adidas (Comparison)

Adidas

Adidas is competence in all sectors of sports

A.d.i.d.a.s - All Day I Dream About Sports

or from the original German founder of the company, Adolf "Adi" Dassler, more likely considering the company history and its German origins:

Adidas - AdiDassler

Nike

Nike came from the Greek name for the Goddess of Victory

Motto

adidas' motto is "Impossible is nothing."

Nike's motto is "Just do it."

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Footwear Technology

Adidas

adidas Footwear Technologies

Name Description

adiPRENE A neoprene-like material that feels somewhat like "nerf," it is most often used in the heel of a shoe. adiPRENE is quite durable, and is meant to respond to the cushioning needs of a active feet.

adiPRENE+ adiPRENE+ is similar to adiPRENE in that it is a neoprene-like material, however it is primarily found in the forefoot of a shoe. It is located in this region because it is designed to provide greater forefoot momentum at toe-off.

a3

Bounce

Torsion Torsion is a stability technology located in the midsole of the shoe; it is meant to provide natural rotation between the forefoot and the heel, ultimately allowing for better support in the midfoot.

Ground Control System (GCS)

Climacool

Nike

Nike Footwear Technologies

Name Description

Nike Ground

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

Zoom Air Zoom Air is among the more technologically advanced (and expensive) cushioning systems used by Nike. It essentially is a thin bag of pressurized air that, when inflated, has a thickness of 8mm. Inspite of its thin profile, it often provides more than adequate cushioning, and even has somewhat of a "bounce-back" response when compressed. Zoom air is often times preferred by athletes who rely on quickness and speed because the thin profile allows for better court/field feel because your center of gravity remains mostly unchanged, and your foot is located close to the ground.

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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 Air

A technique is used that forces air into a pre-formed shape, thus allowing for more pressurized gas to fit into a larger "bag." Max air is generally noth 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 atheletes who do not necessarily depend on quickness and speed, but rather atheletes who are larger in size, and need a more dependable and firm cushioning system.

Air Max 360 Air Max 180

Nike Shox

Nike Shox is a cushioning system developed by Nike that is comprised of polyurethane-foam columns that provide cushioning in a way that keeps the foot parallel to the ground; a benefit of this process is that the cushioning system provide 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.

Independent Podular Suspension (IPS)

Foamposite

A polyurethane-based material created by Nike that is both durable and lightweight; it is created from a single piece of molded material. When first worn, it is somewhat uncomfortable, but over time, the material actually molds to the shape of your foot, thus providing a tailored fit that feels quite natural.

Dynamic Fit Innersleeve

A seamless inner sleeve made of lycra that hugs the foot, and is meant to take the place of the shoe tongue. Because it is seamless, many prefer it because it reduces the chance of chafing and has a natural and comfortable feel to it.

Monkey Paw A thermoplstic urethane structure located either on the outside of the shoe, or between the lining and the outside. It is primarily located around the ankle region and helps to prevent ankle sprains due to ankle inversion.

Nike Free

Nike iD

Sponsorships

Sport / Entity

Adidas Nike

Universities UCLA USC (University of Southern

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University of Kansas California)

Basketball

"T-Mac" (Tracy McGrady) "Agent 0" (Gilbert Arenas) "KG" (Kevin Garnet) Tim Duncan Chauncey Billups Dwight Howard Josh Smith "Vincinaty" (Vince Carter)

"MJ" (Michael Jordan)

"Melo" (Carmelo Anthony - Jordan's) "CP3" (Chris Paul - Jordan's) "Kobe" (Kobe Bryant)

Steve Nash "King James" (Lebron James)

Football Reggie Bush Mario Williams

Adrian Peterson

Golf Sergio Garcia Tiger Woods

Boxing "PacMan" (Manny

Pacquiao)

Tennis

Novak Djokovic Jo-Wilfried Tsonga Fernando Gonzalez Fernando Verdasco

Roger Federer Rafael Nadal Maria Sharapova Juan Martin Del Potro

Baseball Derek Jeter (JJ)

Soccer

Kaka Messi Gerrard Beckham Lampard Raúl

C.Ronaldo Ronaldo de Assís Moreira (aka.

Ronaldinho) Fernando torres Wayne rooney Zlatan Ibrahimovic Didier drogba

Case Study

Nike vs Adidas, market and comprehensive competition analysis and case study

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“Competition of two Giants Nike & Adidas in relation with E-commerce”

EXECUTIVE SUMMARY

Since the birth of the Internet in 1969 to its commercial adoption in the 1990s, the World Wide Web has enabled businesses and consumers to connect with one another to exchange and share information, anywhere and anytime. The web has provided consumers and businesses with enormous advantages by reducing the transaction time and increasing the level of convenience.

As we leap into the twenty first century, it seems as though everyone is on the Internet and more companies are establishing an online presence to maintain their competitive edge. Along with high speed Internet connections, the Internet has become an essential tool for any business to compete domestically or globally. In today's high speed environment, one would be hard pressed to find a Fortune 500 company conducting business with either other businesses or consumers to not have its own web site . Businesses are developing web sites to provide their consumers and business partners with information and e-commerce. Large firms who have not adopted e-commerce as part of their strategic initiatives will miss out on opportunities to attain growth and competitive advantage.

Nike and Adidas are two primary footwear companies along with their competitors who have adopted an online e-commerce strategy to increase their sales and product awareness. Most importantly, companies like Nike and Adidas have invested heavily into online brand building and image development. Nike launched the nike.com web site in August 1996 primarily to provide information to its consumers. In 1996, there were no e-commerce capabilities present, however the web site served as a brand building tool for the company. In 1999, Nike redesigned their web site with expanded e-commerce functionality. Adidas launched their web site in the spring of 2000, which was later integrated with e-commerce capabilities during that summer.

Attaining market share is important to both Nike and Adidas. In order to maximize their market share, both Nike and Adidas have placed a great importance in developing their branding and marketing strategies on the net through web

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appearance and user friendly functionalities such as ease of purchase, speed, and navigation.

Nike and Adidas have adopted a merchant model which encompassed three pillars of their e-commerce strategy: pure-play e-tailer, bricks and clicks, and their online store. The main purposes of acquiring relationships with pure-play e-tailers is to promote and market products; focus on the content to create new exposure and; gather, gain and transfer market knowledge to their business counterparts.

The Internet has proven to be a useful tool for firms such as Nike and Adidas by increasing sales and reducing cost. But most importantly their web sites have provided them with an intangible asset such as market research and consumer buying behaviors. With the data retrieve from consumers, these firms are able to analyze and monitor the buying behaviors of their consumers. The data can also be used to exploit new marketing campaigns and promotions. Furthermore, the data collected can be used to produce innovative designs and improve their research capabilities.

Although, there are perceived benefits in conducting e-business over the Internet there are also potential barriers. The major barrier of e-commerce with respect to large firms such as Nike and Adidas is the technological barrier ranging from infrastructure to security. An ongoing battle the e-commerce industry faces is security. With time and additional research and resources, this problem will be mitigated. Meanwhile, both Nike and Adidas must minimize their technological risks.

While both Nike and Adidas currently have an essential advantage over their rivals, there are chances that their advantages will not last forever. The Internet has redefined competition therefore changing the evolution of competition. Although, Nike and Adidas have engaged in e-commerce there are apparent gaps within their e-business strategy. E-commerce is only available in restricted regions such as the United States and the United Kingdom, therefore opportunities exists within the global market to expand. The future will prove to be very interesting for both Nike and Adidas, and those who move quickly will dominate the market.

INTRODUCTION

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

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

ANALYSIS OF E-COMMERCE

Attaining market share is important to both Nike and Adidas. In order to maximize their market share, both Nike and Adidas have placed a great importance in developing their branding/ marketing strategies on the net through web

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appearance and user friendly functionalities. The analysis below represents the web site positioning map which identifies some of the key performance criterion in determining the web site positioning strategy for both Nike and Adidas. The upper right quadrant indicates a high rating in both web site appearance and user friendly functionalities. While the lower left quadrant indicates both a low web site appearance and user friendly functionalities. It's apparent in the figure below that Nike has the most favourable web site with both high web site appearance and user friendly functionalities. However, Adidas web site is slightly more favourable in user friendly functionalities while lagging on overall in web site appearance in comparison to Nike's web site.

OVERALL COMPANY VALUE CONFIGURATION

The value curve below illustrates an evaluation of Nike and Adidas's focusing on the company as a whole but with the focal point of e-commerce extension.

Nike.com

Adidas.com

The inputs to the e-commerce value configuration for both Nike and Adidas are: Brand Image, Price, Web site design, Service, and Innovation. Analyzing the graph, Nike.com has a slight edge over its arch rivals Adidas. Adidas with growing popularity has narrowed the gap from previous years. 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. In terms of e-commerce, both Adidas and Nike are analogous, however, Adidas' web site is a bit more user friendly and navigation is fairly easy. The functionalities are identical in both cases. Overall, Nike's continued efforts in innovation coupled with its brand image, is a unanimous leader of the athletic footwear and apparel industry. In terms of the e-commerce portion of the industry, Adidas with its web site design and functionality has narrowed the gap between the market leaders and the market follower. Nike.com's value proposition is an easy to use web site that is highly interactive, secure as well as its reputation and brand image of their product. For Adidas.com, similar to Nike, the value proposition is an interactive web site that is secure and easy to use. For the soccer industry, Adidas.com positions itself as the leading brand in apparel and footwear.

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The value chain configuration for both Nike and Adidas is supply chain. The value configuration has multiple components. To the right is a table which summarizes these components and the respective percentages for a $100 product (footwear). Because the operations of both companies are similar, the table below only lists Nike's value chain breakdown. Adidas' value chain although slightly different, is similar in nature in comparison to the industry. Essentially, the breakdown of the value chain indicates for both Adidas and Nike that the cost to produce and sell an item over the Internet costs these companies almost 50% of the price of the item.

Financial Analysis of Nike and Adidas

Below is the Nike and Adidas stock performance comparison in Euros. There is no question Nike is the market leader in not only the product aspect but also the financial aspect of this industry. However, over the last few years, Adidas has been slowly eroding the market share from Nike. The financial comparisons of

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both companies indicate Nike having a substantial financial advantage over Adidas. The operating margin and return on assets is slightly lower for Adidas. This could be indicative of the market leader and market follower relationship. Adidas needs to improve in both operating margin and return on assets to gain ground on Nike.

Measures Nike Adidas IndustryEmployees 23300 14716 23000Market Capital 16.36billion 13.97billion 240.81millionRevenues 10.70billion 6.523billion 482.62millionOperating Margin 10.89% 6.71% N/AReturns on Assets 11.97% 5.3% N/AReturn on equity 20.12% 21.1% N/A

This research was conducted in 1998, since this time, Adidas has comfortably moved to the second spot in this highly competitive industry. For Nike to successfully remain as the market leaders, it must continue to innovate and produce leading edge designs that attract the diverse markets. One important point to highlight is the market share Adidas has gained since 1998. Adidas evolved from a minor player in the industry to the second biggest company in the industry.

Emerging competitors

Both Nike.com and Adidas have strong positions in the footwear and apparel industry. Integrating e-business to its existing line of business is a key advantage to both companies relative to its competitors. For Nike, to overcome the potential threats, they must continue to be innovative and explore opportunities globally.

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Furthermore, Nike must focus their energy towards reducing the channel conflict caused by the introduction of e-commerce to Nike's strategy. Nike.com must balance out its efforts to reassure traditional retailers while expanding its own line of business through e-commerce. Very similar to Nike, for Adidas to overcome some of the potential threats they must continue to improve their strategic position in the industry by increasing their e-commerce reach to the global markets. For both companies, it's important to increase the market "pie" rather than increase their market share away from their retailers. Furthermore, the information, such as demographics and preferences, collected from directly selling to the end consumers should be used to market new goods and products.

Market Research Process

RESEARCH METHODOLOGY

Research methodology is a strategy that guides a research in providing answers to research questions and for this, research survey is being done. “Accuracy of the study depends on the systematic application of the method”. The researcher has

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to decide the method to be used that helps him to get a desired direction in a systematic way. This study in the following manner.

A) Methodology Adopted

Questionnaire Design

The questions were designed in an easily understandable way with the help of Prof. Prof. Swapna (Faculty Guide) and Prof. Mona Bhatia. That the respondents may not have any difficulty in answering them. The questionnaire contained 10 questions. This has to be done to get opinion of the people regarding the Nike & Adidas and the ongoing competition between them.

Random Sampling

Sampling can be defined as a part of population. Thus random sampling may be defined as the selection of a portion from the whole population in which each elements of the population has an equal chance of being selected. A more please definition is that each element in the population has a non-zero and known probability of selection a randomly drawn sample is an unbiased sample. In this research survey 50 people were surveyed at random to get the relevant information.

Sample Size: The sampling techniques used in this project are probability sampling techniques and the methods used in cluster sampling.

Sampling Unit: The respondents who were asked to fill out questionnaires are the sampling units. These comprise of employees of MNCs, Govt. Employees, and Self Employed etc.

Sample size: The sample size was restricted to only 50 between age group of 15-35, which comprised of mainly peoples from different regions of India.

Sampling Area: The area of the research was Mumbai, India.

B) Data Collection

Structured Questionnaire

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In this collection data, structured questionnaire is used as a tool by asking a set of standardized questions to know the perception of the giants regarding footwear industry of the masses. And which is better Nike or Adidas.

Interview

The next step involved in collecting information requires discussion with people. Thus valuable information was gathered informal friendly talks with the people.

Secondary Data Collection

Various websites & magazines were consulted to collect literature relevant to the topic.

Interpretation

Interpretation refers to the task of drawing inference from the collected facts after an analytical study, in fact it is a search for broader meaning of research findings. It is through interpretation that the researcher can well understand the abstract principle that respondents beneath his findings. The simple statistical tools will used to analyze the datacollection, Bar Graphs and pie chart have been used to illustrate the findings diagrammatically. The scores given by people were considered on various factors and were interpretated in graphs and pie charts.

Questionnaire:

1. Which is your favorite Sport?

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This Question is asked to figure out the demand of particular type of shoes according to the sport. i.e to understand which demand pattern according to the sports.

46%

24%

12%

6% 12%

Sports

CricketFootballTennisBasketballOthers

2. Which sports brand do you prefer?

This Question states demand pattern of athletic footwear brands.

42%

38%

10%

10%

Brand

NikeAdidasPumaOthers

3. Why you prefer this brand?

This states what kind of promotion is more effective for the footwear brands.

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Brand Ambas-sador

Sponsored Team Price Product

Word of mouth Any other

0

5

10

15

20

25

30

35Pe

rcen

tage

It could be seen that the major reasons for selecting a particular brand are Brand Ambassador and Product.

4. Which punchline motivates you more?Its simply to know which brand has more influential punchline.

60%

40%

Just Do It(Nike)Impossible is Nothing(Adidas)

5. Do you compromise quality for price?

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Higher brands have higher quality as well as higher prices. So common people have tendency to buy shoes that are cheaper and unbranded. So to know are people willing to pay for good quality.

44%

56%

Sales

YesNo

6. If you consider prices which brand is better?

Just to compare both the brands on the basis of prices that they offer on different products.

20%

80%

Brand

NikeAdidas

7. If you consider product quality which brand is better?

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68%

32%

Brand

NikeAdidas

8. If you consider product design which brand is better?

Comparision on the basis of product design.

40%

60%

Brand

NikeAdidas

9. Which Brand has better advertisements and promotions ?

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Just to analyze which brand is more effective with their AD campaigns.

58%

42%

Sales

NikeAdidas

10.Are you loyal to a particular brand?

This Questionnaire shows the nature of the customers i.e. are they loyal to a particular brand or not?

62%

38%

YesNo

11. Do you feel that athletic footwear industry can be affected by recession?

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This Questionnaire is asked to know are people willing to pay for the brands during recession.

24%

58%

18%

Sales

YesNot muchNot at all

Findings:

1. Price Premium

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Nike 1/2

Adidas

Nike in terms of satisfied and loyal customers are willing to pay a price premium,

while Adidas leads with loyal but less satisfied then Nike customers. In addition,

Adidas prices are also marginally less.

2. Satisfaction / Loyalty

Nike

Adidas 1/2

In terms of satisfaction, Nike leads with both very satisfied as well as satisfied

customers. Dissatisfaction level is low. Adidas dissatisfaction level is also less but

not more than Nike.

3. Perceived Quality

Nike

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Adidas

Here again, Nike edges out Adidas in terms of Product quality. But in terms of

Product design perceived Quality is better than Nike.

4. Leadership and Popularity

The results showed that majority of customers chose Nike as the company with

larger Brand image compared to Adidas. This reflected the “number one”

syndrome where the leader must have merit.

5. Perceived Value

The consistent responses by Adidas users perceive it as a value-for-money service.

Nike is perceived to be a bit expensive by its customers than Adidas.

6. Brand Personality:

The brand personality of Nike comes across as an exciting and competent brand.

Its vibrancy appeals to the customers who relate to the advertising messages. But

Adidas is also emerging as a better brand with some good promotional strategies.

7. Brand Awareness

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Brand awareness of the respondents was high with most being aware of both

Nike and Adidas. So the spoils are even for both the Brands here.

8. Market Prices and Distribution Coverage

The market prices of the Footwear manufacturers given by Nike and Adidas are

very similar. The difference if any is very marginal and is not considered. Also the

distribution coverage is properly established. Therefore, there is not much to

choose between the two Brands and the spoils are even.

Comparing the overall findings we see that Nike leads in four brand equity

measures (satisfaction/loyalty, perceived quality, leadership & popularity, market

share). The other three measures (brand personality, brand awareness, market

price and distribution coverage) have been shared by both Adidas and Nike.

To conclude, the Brand Equity of Nike is higher than Adidas, though marginally.

Conclusion

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“Adidas to overcome Nike”, once we spotted that the discussion over the two leading brands in the blogsphere is becoming very similar in its volume.

While for some it was hard to admit that Nike is losing its dominancy, most of the comments we received were in fact supporting initial assumption that Nike is facing hard competition coming from Adidas.

We profiled your evidence and personal preferences in favor of Nike, in favor of Adidas, and those found it hard to take one side only.

1. Nike:

“Adidas are spending more time blogging that being athletes…”

(a comment provided by Nike employee)

“When I look into new basketball shoes, I’ve always liked the Nike Brands, because they seem to have more heel and ankle support, but when I try to order online (which is how I purchase my B’ball shoes), I can never find my size 11 1/2 in stock.”“between the two (nike & adidas).. Nike”.

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2. Adidas:

“Adidas all the way…there is no shoe in the market, which is more comfortable, and pocket friendly than adidas. The shoe is reliable, trendy and sporty all the same.”

“I grew up a fan of Nike ……I am becoming more of an Adidas fan by the minute.”

“Mark Zuckerberg! His name is usually followed by the word “adidas”

“I’m a tennis sneaker kind of girl, but for my golf shoes, I bought the Adidas. It has a built in arch support which is great when you are walking 18-holes, carrying a full set of clubs on your back….I needed the extra support!”

3. Hard to compare: 1. Different styles:

“Nike is hard core technology for sports: it’s Nike Plus, it’s Dri Fit, it’s Air. It’s innovation. Adidas is different. Their products are more focused in style: Adidas Originals, Adidas Stella McCartney, Adidas Y-3. What’s also very significant about the two brands is their communication: Adidas is “impossible is nothing”, is about empowering people (which by the way is not very far from Nike positioning in the eighties). Nike is all about winning. About being the best.”

“In my honest opinion, that’s where the difference lies in my eyes. Nike appeals to the hardcore sport goers who thrive on competition and want the ‘best’ when competing, which Nike has well promoted themselves as; as being the ‘best’ and that you’ll win with them”.

“Adidas has long appealed to a large demographic of consumers, from athletic people to hip-hop dancers. They’ve created a more ‘chill’ feeling around their products that personally makes me feel and look relaxed but trendy at the same time. ‘Impossible is Nothing’ has been a great campaign

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that appeals to the Average Joe who always wanted to make it big and sees that it is possible for anyone.”

2. Different sports / functionality

“Nike, I have great products from them for basketball and other competitive sports. Adidas, I have for working out, running and notably casual wear”.

3. Many of the responses were in favor of other brands we haven’t discussed, mainly New Balance.

“New Balance for the win. NB finally figured out that sneakers are a fashion market and have been making some very cool looking NBs–but on top of that, New Balance are comfortable and don’t fall apart like a lot of hipper brands”.

As you can learn from the above reactions (we presented only few sample examples), opinions about the leading sporting shoe are indecisive. I’m sure ten years ago – we would have heard Nike’s fans shouting much louder.

So what has changed? Adidas is in fact bringing new challenges:

Adidas bought Reebok. Adidas carrier – David Beckham has significant mark on Adidas brand. Adidas and Nike show a close fight over global market share. Adidas is successfully communicating a stylish atmosphere. "Adidas gets soccer; Nike does not. Globally, Beckham is probably capable

of moving more product than Tiger Woods or any other Nike celebrity endorser. Soccer is exploding; other sports are just growing.

And yet, Adidas has a long way to go to overcome Nike.

Bibliography

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http://www.press.adidas.com/en/ Retrieved 7th June 2008

http://www.jdsports.co.uk/whatsnew.aspx?id=5375 Retrieved 7th June 2008

http://www.press.adidas.com/en/DesktopDefault.aspx/tabid-4/79_read-8621/ Retrieved 7th June 2008

http://www.fashiontrendsetter.com/content/fashion_events/2008/Adidas-Denim-by-Diesel-in-store-event-p1.html Retrieved 7th June 2008

http://www.jdsports.co.uk/whatsnew.aspx?id=5508 Retrieved 7th June 2008

http://www.champion.ie/

"Adidas Orginals - Extended House Party Film". http://www.adidas.com. Adidas. 2009-02-25.

`http://www.adidas.com/campaigns/originalsss2009/content/#/lifestyle/full-length-film. Retrieved on 2009-03-20.

*Adidas, Annual Report 2002 *Adidas, Annual Report 2001 *Nike, Annual Report 2002 *Nike, Annual Report 2001 *Industry Sector Analysis of Sporting Goods, U.S. and Foreign Commercial Service, 1998 *Multex Fundamentals / ProVestor Plus Company Report, Nike Inc., October 2003 *ShoeStats 2002, AAFA, January 2003 *http://www.channelseven.com/newsbeat/99features/news19990624.shtml, October 2003 *http://www.urlwire.com/newsarchive/062499.html, October 2003 *http://www.adidas-salomon.com/en/news/archive/2000/2000-07.asp, October 2003 *http://www.adidas-salomon.com/en/overview/welcome.asp, October 2003 *http://www.adidas-salomon.com/en/investor/strategy/default.asp, October 2003 *http://www.adidas-salomon.com/en/investor/reports/default.asp, October 2003 *http://www.adidas-salomon.com/en/overview/history/default.asp, October 2003 *http://www.cybersource.com/solutions/success_stories/nike.xml, October 2003 *http://www.nike.com/nikebiz/nikebiz.jhtml?page=1, October 2003 *http://www.nike.com/nikebiz/nikebiz.jhtml?page=15, October 2003 *http://www.nike.com/nikebiz/news/pressrelease.jhtml?year=1999&month=06&letter=d, October 2003 * "Nike - Channel Conflict." Graduate School of Business, Stanford University, February 2000 *Belch & Belch. "Advertising and Promotion." McGraw-Hill Irwin. New York. 2001. p.493 *"Companies point fingers over Nike Web site hijacking." Computerworld. June 30, 2000

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