VS

A COMPARITIVE ANALYSIS OF MARKETING

STRATERGIES FOLLOWED BY NIKE AND ADIDAS

TEAM MEMBERS

ANUPAMA VENU
CLAES JOTORP
DEEPAK TUSHIR
GUSTAV TENERZ
SAIRAM KRISHNAN
SANJAY SHARMA
SUNANDA SURESH

09014
09126
09032
09128
09088
09090
09112

INDEX

1.

INTRODUCTION
1.1.BRIEF ANALYSIS OF INDUSTRY
1.2.BRIEF DEFINITON OF INDUSTRY
1.2.1. TRENDS IN THE INDUSTRY
1.2.2. MARKET ANALYSIS
1.2.3. MAJOR PLAYERS AND MARKET SHARES
1.3.MAJOR FORCES SHAPING THE INDUSTRY
1.3.1. PORTERS FIVE FORCES
1.4.PREDICTION FOR 2009-2010
1.5.THE COMPANY AND MAJOR PRODUCT LINES
1.5.1. BRIEF HISTORY OF COMPANY
1.6.FLAGSHIP PRODUCTS, MAJOR PRODUCT LINES, RECENT FORAYS
1.7.HISTORY OF THE BRANDS

2.

MARKETING STRATERGY
2.1.CUSTOMERS
2.2.COMPETITORS
2.3.COLLABORATORS
2.4.COMPANY
2.5.CONTEXT
2.5.1. TECHNOLOGY
2.5.2. SOCIO CULTURAL
2.5.3. ECONOMIC

3.

SEGMENTATION, TARGETING, POSITIONING

3.1.MARKET SEGMENTATION
3.2.SEGMENTS TARGETED
3.3.PODS AND POPS
3.4.VALUE PROPOSITION
3.5.POSITIOING
3.6.EVOLUTION AS A BRAND

4.

MARKETING MIX
4.1.PRODUCT
4.2.PLACE
4.3.PRICING
4.4.PROMOTION

5.

ANALYSIS REPORT
5.1.CUSTOMER SURVEY
5.2.MARKETING STRATERGIES
5.3.PORTERS GENERIC STRATERGIES
5.4.CREATING VALUE
5.5.CAPTURING VALUE
5.6.SUSTAINING VALUE

6.

REFERENCES

INTRODUCTION
Brief Analysis of Industry
Sport is an integral part of modern contemporary society. Sport has
always been associated with discipline, dedication and perfection and
hence sportsmen have always been respected, across borders, religions
and races. Sportsmen, professional or amateur, need quality gear, specific
to their game, to be able to compete better. It is this market that the two
conglomerates, the subjects of our study, cater to. Both these companies
started off as footwear makers for the modern athlete, their innovative
designs and technology creating waves. But now these firms have
diversified. They compete on the broader platform of footwear, apparel,
accessories and equipment. Today they are among the worlds top
corporations, with a worldwide presence. Our study will concentrate on
the primary product these two firms make Athletic Footwear.
We will compare their marketing strategies, their targeting and their
marketing mixes. We will dissect their segmentation and examine their
positioning on the global playing field. And lastly well state our
conclusions on the comparative marketing strategies of these firms.
The worlds athletes play using their products. Lets see how they play the
market. Welcome to

NIKE versus ADIDAS

Brief definition of Industry

Trends in the Industry
The latest picture of the industry has not been as rosy as it has been
earlier. At this stage, with the big four, Nike, Adidas, Reebok and Puma
and the others such as Converse and New Balance, the industry is
experiencing hyper competition. The reasons for this being that the
demand for the products has been decreasing and at the same time, there
has been an increase in the popularity of alternate footwear. This
inadvertently has resulted in decreasing margins and the quest for new
markets and innovation to get the profits up again.
The worries seem to have ended, at least momentarily with the
emergence of China, Turkey, Brazil and Russia as huge untapped markets
for their products. Of these, China is the biggest bet for the big guns.
Why? Chinas huge middle class is rising and the countrys ever increasing
wealth serve as a classic ingredient for market ignition. Both Nike and
Adidas realised this early and invested heavily in advertising during the
2008 Beijing Olympics. Adidas partnered the games and Nike, as always
focused on individual player and team endorsements. The Chinese marker
saw huge residual sales after the Olympics. Nike, for example, saw its
sales increase 50 pc in China in 2008 on a currency neutral basis and
again a 50 pc increase in sales in Q1 2009.
Turkey and Russia, similarly, had a 25 pc increase in sales in 2008 and
another 30 pc in Q1 2009. Brazil alone had a 30 pc increase in Q1 2009.
The opening up of these markets has provided respite to the industry and
they are making good use of it. Already most of these firms use South Asia
as their manufacturing base, to make use of the cheaper labour, in
particular. Now they have a greater incentive to move to South Asia as
their market seems to be shifting here too.

MARKET ANALYSIS
India has a large market for footwear and the brand loyalty is also
growing. India is ranked the 4th largest economy by GDP (in purchasing
power parity term) and is expected to rank 3rd during 2010, just being
behind USA & China in footwear industry both production and
consumption. Indias GDP for footwear grew at the rate of 9.4% for the
5

year 2008-2009 the countrys GDP stood at Rs 54 lakh crore, translating

into a per capita income of Rs 48,450, thus resulting in a compounded
annual per capita income growth rate of 9.25 per cent during 1951-2009.
If we analyze the consumption pattern of 70 different economies and
segment them into low-income, middle-income and high-income brackets,
we will observe that consumer spending on food, beverages and clothing
& footwear account for 47 per cent, 34 per cent and 22 per cent of their
total consumer expenditures, respectively.
India is standing on the threshold of a retail revolution and witnessing fast
changing retail landscape, with footwear market is set to experience
phenomenal growth.
India is the major source for supplying medium and low priced footwear
and most of the manufacturers, who have outsourced their production to
China are planning to outsource it to India. Some of the footwear industry
who have turned to India are Adidas, Nike and Puma.

INDIAN FOOTWEAR INDUSTRY

The Footwear Industry is a significant segment of the Leather

Industry in India.

India ranks second among the footwear producing countries next to

China.

India produces more of gents footwear while the worlds major

production is in ladies footwear.

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

cottage industry sectors. While leather shoes and uppers are
concentrated in large scale units, the sandals and chappals are
produced in the household and cottage sector.

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

Tamil Nadu, , Mumbai in Maharastra, Kanpur in U.P. , Jalandhar in
Punjab, Agra and Delhi. The following table indicates concentration
of units in various parts of the country:

Region

Large & Medium Scale

SSI

Household

Tamil Nadu

64

31

Delhi & up North

25

Agra, Kanpur

34

14

Calcutta

19

Bangalore

Mumbai

11

Others

13

10

Major players and Market Shares

32

The above graph clearly demarcates the market shares of the major
players in the industry. Nike is the leader with 31 pc of the global market
with its closest competitor being Adidas with 16 pc. They are very
emphatically the major players on this pitch with the other big guns being
Puma and Reebok.
Reebok, incidentally, is owned by the Adidas group. The acquisition was
completed in 2006.
Puma is a Germany based company, which also owns the brand Tretorn. It
is a competitor on more fronts than footwear, with stakes in the apparel
and equipment category too.
This completes the big four of the industry, with collective stakes in the
market that make the other companies look much smaller than they
actually are. New Balance is in a highly focused niche segment, running
shoes and cannot be expected to compete with the giants. Converse is
owned by Nike and owns the All Star brand, coveted among teenagers.
Notably, Converse makes only the All Star shoes in the US. All its other
products have been outsourced abroad.

Major Forces shaping the Industry

Porters Five Forces
Barriers to Entry Low
The Barriers to entry to the athletic footwear industry are quite low.
Though selling top quality footwear for athletes is a highly competitive
field, there is a huge potential for new entrants. Due to the enormous
scale of operations of both Nike and Adidas, there are able to control their
costs and hence maintain a competitive advantage over new and
emerging competitors. Their powerful brand identities give them an aura
which is difficult for a new entrant to pervade through and beat. Their
brand images have a distinct competitive advantage. Even with all these
factors coming into play, the industry is a comparatively easy one for new
manufacturers to enter. Also, there is a threat of other manufacturers to
expand their portfolio. These, with already strong regional brand names,
might emerge strong competitors. For example, in India Bata launched its
Power brand of running and athletic shoes which are still going strong. In
addition to these, there is also the loss from copies of their premium
footwear, made mostly in the far eastern countries. They also result in a
huge loss of revenue. Though they do not strictly come under this
category, they have been included for sake of easy reference.

Bargaining power of buyers High

There are a huge number of buyers with respect to the number of brands
in the industry. Therefore these companies are in a constant struggle to
differentiate their brand and use other innovative means to market them
differently and successfully. They must establish a strong brand identity,
essential to attract and retain the target consumer. Identity is the key to
brand trust and loyalty. Many buyers in new markets are cost sensitive
and switching cost is low for the buyer, hence the importance of the brand
image. The buyers of sports footwear have changed in the past decade
and there has been an increase in woman purchasing athletic footwear.
The new generation has vastly different tastes and purchasing methods.
All in all, the buyers have a high amount of bargaining power.

Bargaining Power of Suppliers Low

Bargaining power of suppliers to this industry is virtually non-existent.
There are a large number of suppliers in the market and the materials
needed for this industry, namely, Cotton, Rubber and Leather are
commodities readily available in the open market. The conglomerates
hold sway over the suppliers as they have mostly standardised their input
procedures and hence can easily switch between substitutes. This gives
them enormous power over their suppliers. The suppliers are usually
dependent on these firms as a means of survival. In this situation,
bargaining power of suppliers is negligible.

Threat of Substitutes Low

There are no real substitutes for athletic footwear. There may be
substitutes for a fashion item. But for a professional athlete, substitutes
for his shoes do not exist. He cannot play with boots or his bare feet. He
cannot switch mainly due to his performance specifications but he has
little alternative to switch as well. A consumer is not likely to switch and
so, the threat of substitutes is very low.

Rivalry among existing Competitors High

The rivalry among existing competitors is very high in this industry. Nike,
Adidas and others in this field such as Puma and Reebok have grown
tremendously in the last decade and each of them have been offering
more choice, more
identity due to endorsements by top sporting
personalities and by aggressive marketing and sales strategies. The
industry is in hypercompetition and the rivalry is extremely fierce.

10

Prediction for 2009 10

11

The Company and Major Product

Lines
Brief History of Company
Adidas
Adidas was formally registered on 18 August 1949 as Adidas AG, by Adolf
Adi Dassler, whose name formed the companys title. Adolf Dassler was
born in Bavaria and started making sports shoes in his mothers kitchen
after he returned from World War 1. He was joined in 1924 by his brother
Rudolf Dassler and using their mothers laundry as their manufacturing
base, they began operations. Famously, during the 1936 Olympics, Adi
Dassler drove to Munich and persuaded Olympic gold medallist Jesse
Owens to wear his shoes which established his reputation among the
sporting world and gave him lots of contracts and financial success.
After the Second World War, though, the brothers split up and Rudolf
Dassler went on to form his own company, which later became Puma.
After the death of Horst Dassler, Adolfs son, the company went through
some troubled times. It was then bought by French industrialist Bernard
Tapie and subsequently by Robert Louis-Dreyfus. In 2001 Herbert Hainer
took over as CEO of Adidas and has been leading the conglomerate ever
since. A long line of innovative products and successes later, Adidas is one
of the worlds largest corporate, with a product line to envy and worth
millions of dollars. The trademark three stripes and the slogan Impossible
is Nothing are Adidas identity, a image it spends a fortune to uphold. In
2005 Adidas acquired British giant Reebok to further strengthen its market
and customer base.

Indian Operations
Though Adidas entered into a license agreement with Bata in 1989, it
formally began operations only in 1996 with the establishment of Adidas
India Marketing Private Limited. In 1998 Adidas pulled a masterstroke,
they roped in Sachin Tendulkar as their brand ambassador which proved a
sound business decision. In 1999, keeping in mind the price conscious
Indian consumer, Adidas launched its cheapest ever shoes in India. In
12

2004, Adidas India launched the advantage adidas campaign, which

increased sales by 30%. In 2005, Andreas Gellner took over as Managing
Director for Adidas India. Adidas sees India as a huge growth market and
according to Gellner, Adidas will invest huge sums to take on its
competitors here.

Nike
Bill Bowerman and Philip Knight started the company we know today as
Nike in 1962. It was originally known as Blue Ribbon Sports. Bowerman
was Knights track and field coach at the University of Oregon. Philip
Knight went on to study at Stanford where he published a paper on ending
the German domination in the athletic footwear industry. He travelled to
Japan and entered into an agreement with the Onitsuka Tiger company
and became their sole distributor in the US. Bowerman and Knight
received their first shipment of 200 shoes and sold them at local meets to
make a good profit. Bowerman, who had earlier designed shoes for his
athletes, joined hands with Tiger to make the famous Tiger Cortez shoes,
which became worldwide bestsellers and launched the business. In 1971,
Knight and Bowerman began to make their own shoes under the brand
name of Nike, named after the Greek goddess of victory and bearing the
Nike swoosh, which is one of the companys biggest strengths today. In
1972, Blue Ribbon Sports parted ways with Onitsuka Tiger and became
Nike Inc.
Today Nike is the world leader in athletic footwear, with market shares
exceeding the other major players by significant margins. The Swoosh and
Just Do It slogan are huge brand identities. Nike is a truly global player
and seen as a model for innovation driven growth.

Indian Operations
Nike has been present in India for over a decade through its seven year
license agreement with Sierra enterprises, which didnt help much in the
bigger scheme of things as Reebok and Adidas came to the country with
fully owned subsidiaries. This explains why the global market leader is still
lagging behind in India. In 2004, instead of renewing its franchise, it
became a subsidiary and started operating with more freedom and
capital. The result was that the market share rose and Nike became a
force to contend with in the Indian market. Probably the biggest sign of
the change in guard was the heavy investment in Cricket by Nike,
culminating in its bagging of the Indian cricket teams jersey rights, worth
Rs 200 Crores. Nike then launched its special range of cricket shoes and
sponsored the Indian football team as well. Though Nike has entered the
13

market in earnest very late, the world no.1 will stop at nothing to gain lost
momentum in the Indian subcontinent.

Flagship Products, Major Product

Lines and Recent Forays
Adidas
Adidas manufactures running shoes under its adiStar and Supernova
brands, which include the adistar Ride, the adiStar Control 5, the
Supernova Sequence and the Supernova Glide. The famous Copa Mundial
football boot is Adidass premier football boot, which later developed into
the Predator range. For basketball, Adidas is most famous for its Superstar
and Pro Model shoes.
Beside these Adidas makes jerseys for national and domestic cricket,
football, rugby, and tennis and lacrosse players with a separate line for
gymnasts.
Adidas has recently entered the sports lifestyle market, following on the
heels of Puma and Reebok and has launched watches, eyewear and most
recently, deodorants, aftershaves, perfumes and lotions.

14

COPA MUNDIAL

Nike
Nikes first products were track running shoes which came under the
name Nike Air Max, followed recently by the Nike 6.0, Nike Nyx and the
Nike SB skateboarding shoes. Recently, Nike launched special cricket
shoes for bowlers and batsmen called the Nike Air Zoom Yorker and the Air
Zoom Opener. But its bestselling line still remains the legendary Air Jordan
basketball shoes, named after Michael Jordan. Air Jordan still contributes
more than 30% of Nikes shoe sales.
Like Adidas, Nike too entered the sports apparel and equipment market
and makes jerseys and specialist apparel for various sports. Recently Nike
teamed up with Apple to launch the Nike+ range, which can monitor a
runners performance through a radio device linked to Apples ipod.
But Nikes most recent product is the one making waves across the sports
world. Called the Lunar Glide, Nike is using Flywire (A thread developed by
Nike, composed of Vectran, a liquid crystal polymer) and Lunarlite Foam to
make the worlds lightest shoes. Advertised using the slogan Actually, it is
Rocket Science, it reiterates Nikes commitment to technology.

15

SOLE COLLECTOR

History of the Brands

Adidas
The companys clothing and shoe logo bear the trademark three stripes,
which is the companys corporate logo. Adidas also has a trefoil sign that
it uses only on heritage products since 1972. The three stripes logo
represents performance and the future of the Adidas Branding identity. It
has become synonymous with Adidas and its dedication to producing high
quality athletic products to make athletes perform better.
When Adidas entered the marketplace some 50 years ago, its focus was to
produce shoes crafted specifically for soccer and running.
The new millennium has since brought about an Adidas renaissance; the
brand has steadily regained market share over the past five years to
become the world's number two athletic shoe company (behind Nike).
How did it go about repositioning to once again be among the coolest of
kicks?
Adidas claims that, "the brand values of the company authenticity,
inspiration, honesty and commitment are derived from sport."
Historically, this sensibility was demonstrated through early and continued
involvement with Olympic athletes, as well as active sponsorship of major
global sporting events like the World Cup. Adidass rapid growth in Asia,
16

where revenue rose by 15 percent to US$ 878M last year, may be further
propelled in Japan and Korea when those two nations host the World Cup
this year an event which is expected to garner 2.5M spectators and one
billion TV viewers worldwide.
However, the key to revitalized success seems to lie in the considerable
endorsement deals Adidas has developed with world class athletes.
Recent sports figures representing Adidas dont only score high marks in
their game they also score high in their celebrity quotient. British
football star David Beckhams relationship with Adidas has no doubt lent
itself well to the brands visibility in the UK. Recently dubbed "Captain of
England," Beckham led his team to victory in the 2000 FIFA World Cup.
With Europe as Adidass largest market, exposure like this reflects in the
numbers; sales grew seven percent to US$ 2.7 billion, last year.
Reinvention was the key, not only for the Adidass marketing strategy, but
also for its product line. Eclectic, individual, 'no-rules' sports such as
snowboarding, inline skating and surfing have grown into significant
categories. Activities such as golf, hiking and mountain biking, which were
seen as lifestyle and leisure activities, are now part of mainstream sports.
Increased product offerings in these categories have undoubtedly
contributed to a better score for the brand.
To keep up with the competition, Adidas generates close to 60 new footfriendly designs each year. The Adidas credo is to regard shoes as feet,
resulting in a product with superior fit and performance capabilities.
Tactics have been revised in getting these products out for consumption.
As a result, products have been repositioned in higher-end and sports
specialty stores.
In 2002 Adidas footwear innovation, ClimaCool TM, made its debut. The
new technology added breathable materials to the shoe. In July, the Group
completed its three-divisional structure for its sore brand, Adidas, and
positioned its third division as Adidas Sports Style.
In 2004 Impossible is nothing became the central message of a global
campaign that Adidas launched. It refers to the shared attitude with the
athletes, of always pushing yourself further, to beat the limits. In
September, Adidas & designer Stella McCartney announced their
partnership, introducing the Adidas by Stella McCartney collection.
On January 2006, Adidas announced the acquisition of Reebok LTD. By
combining two of the most respected and well-known brands in the
worldwide sporting goods industry, the new Group will benefit from a more
competitive worldwide platform, well-defined and complementary brand
identities, a wider range of products, and a stronger presence across
teams, athletes, events and leagues.
17

Adidas continues to prove itself as a brand built to last through a game

plan of reinvention. With the recent acquisition of a lifetime partnership
with Orlando Magic's Tracy McGrady (basketball) and its heavy
involvement with 2002 World Cup, it continues to strike savvy deals that
capitalize on the star power of young athletes and increase its visibility in
the marketplace.
It appears that team Adidas has honed its strategy to become a revitalized
contender in todays competitive sporting goods market and is now duly
recognized as the sneaker of yesterday and today.

Nike
Nike positions itself as the market leader of sports footwear and uses the
greatest athletes and the record of their achievements in advertising. The
swoosh logo was developed by Carolyn Davidson in 1971. Together with
the Just Do It slogan, the Swoosh logo perfectly expresses the brand and
its philosophy. It expresses a high ambition and a will for victory, which is
a part of Nikes brand image and corporate culture.
It was only 36 years ago that we had a world without Nike, and in that
period Nike has gone from the brash newcomer, to the number one massmarket leader. The Nike story begins with the meeting of its co-founders
at the University of Oregon. It was here that middle-distance-running
business student Phil Knight fell under the tutelage of the college athletics
coach, Bill Bowerman. Nike would go on to grow out of the fusion of
Bawerman's sporting innovation and Knight's marketing know-how.
Even at a very early stage it seemed that Knight had a far-reaching goal,
to break the long-established brand nomination of the U.S. marketed by
the then main player, Adidas.
In order to achieve this aim, legend has it that Knight and Bowerman each
put in $550 to cement their partnership, and decided to call their new
company Blue Ribbon Sports (BRS). BRS was basically the American
18

distributor of Onitsuka training shoes.

In 1965, after a period of selling Onitsuka shoes from the back of their van
at athletic meets, the company grew.
The company went from strength to strength, but after heated
disagreements between BRS and Onitsuka, the new boss at BRS decided
to split from Tiger in 1971 and create their own company manufacturing
their own shoes. It is said that Jeff Johnson came with the idea for the new
name, deciding to honour the Greek goddess of victory, and thus Nike was
born.
It was also at this that the fledgling company had to decide on a logo for
the brand, and another of the legends that the company managed to
create for itself was developed.
Nike took off virtually instantly in the United States, and within a year
company sales were at almost 2 million pairs. In 1981 Nike decided to
take another major step, with the U.K. becoming the company's first
wholly owned foreign distributorship.
However it was in 1985 that Nike really became a major player. It was in
this year that it managed to persuade the then little known Chicago Bulls
basketball rookie Michael Jordan to endorse his own range of shoes. Even
Nike could not have imagined the effect that this single act would have on
sales. The new Jordan endorsed range transported Nike and trainers in
general to a completely new lever of popularity.
It was after the introduction of the Jordan shoes and mass-marketing that
went with them that the "trainer wars" got underway. Each of the brands,
desperate to stay one step ahead of the competition, came up with a
continuous stream of developments and inventions of technical wizardry.
For a while in the late 1980's Reebok actually overtook Nike to become
the number one player (at least in terms of sales), but Nike came back
strongly with its 'just do it' slogan in 1988, and regained the top spot in
terms of market sales - a position they retain to the present day.
In 2006, Nike entered the cricket market with a 5-year sponsorship of the
Indian cricket team for US$43m. Nike and Apple released the Nike+iPod
sports kit, enabling runners to log and monitor their runs via iTunes and
the Nike+ website.
In 2008, Nike introduced shoes featuring new Flywire and Lunarlite Foam
materials. Flywire is a new technology made up of thin wires of vectran
fibers, which are 5 times stronger than steel and never lose strength.
19

Lunar Foam is a material developed by NASA that gives the shoe excellent
shock absorption and a great feel with minimal weight.
Back in 1971, the newly created Nike Company was ready to hit the
market with its shoes, and a logo to represent the brand was urgently
needed.
Phil Knight turned to an associate from his teaching life and commissioned
graphic-design student Carolyn Davison to work with his new brand.
Knight wanted a design that would represent movement. Davidson
supplied Knight with a few designs one of which was the initial 'Swoosh' so
well known today. Knight was not particular enamoured with any of these
designs, but with deadlines to meet the Swoosh was chosen
Even though Davidson was initially paid only $35 for her design, the story
doesn't end there. In 1983, Knight took Davidson out for lunch and
presented her with a diamond-encrusted Nike ring, and also an envelope.
The envelope contained Nike Stock.
Nike has continuously pushed back the boundaries of trainer design,
staying focused under Phil Knight's guidance, and is going to take some
dislodging.

MARKETING STRATEGY
CUSTOMERS
Both nike and adidas are a well known and accepted brands. Their main
customers are athletes and sports enthusiasts but it doesnt limit there.
Men women and even children are well versed with the brands and use
them. Children from the age of 15 to adults of the age group 35 use both
nike and adidas shoes.

20

For Nike and Adidas, the Beijing games are a brawl for 21st century
dominance of the sneaker world. Both the rivals are looking forward for
the Olympics 2010. While every Olympics is a dogfight for the longtime
rivals, this year's games are a bigger deal for adidas especially. Beijing's
the doorway into a vast new market. There are 2.6 billion feet in China,
most of them without sneakers. Both companies expect the country to be
its second-largest market, after the U.S, within a few years. "It's the
ultimate land grab," for both nike and adidas. Despite the relative strength
of Germany-based Adidas in Europe and weakness in Nike's flagship U.S.
market, Nike has expanded its global lead over its rival over the past three
years. Nike's 36 percent worldwide market share dwarfs the 21.8 percent
share for Adidas, according to Sporting Goods Intelligence. The strategies
adopted by Adidas have been successfully implemented in several areas.
They always ensure that the needs of various consumer groups are
fulfilled by going into partnership with high-end designers and technology.
Adidas has been consistently dragged down by the once-mighty Reebok
brand, which contributes about 6 percent to its parent's total.

OUR ANALYSIS (According to customer survey)

The customer analysis for both Nike and Adidas is largely similar and
hence they will be explained together and differences, if any, will be
pointed out.
The Consumers are typically professional athletes, amateur sportsmen
and young people who identify with sport as a lifestyle, mostly in the age
group of 15-35. But this age barrier seems to be falling now, as our
research told us. More children in the 12+ age category are identifying
with these brands mainly due to their addiction to European Football
which has gained a huge fan following. Also, the consumers are brand
conscious adults and girls, who look to them as status symbols, an image
which both these brands strive to uphold by high pricing and premier
status.
The unsatisfied need for most customers in this market is primarily high
end footwear which helps them perform better in their chosen playing
field, but at a lower cost than what these brands offer. For the fashion
conscious segment of the market, they come in with their lifestyle
products. The main problem they are trying to solve is the risk of injury
and the possibility that an athlete might underperform due to low quality
footwear.
The principal decision makers in the process are the buyers themselves as
they know best their specific need for their specific sport.
21

Buyers generally buy these products as durable long lasting products that
they use specially for big game days. The quantity bought differs for team
and individual sports, as teams generally order a large number of
performance footwear for all its players and individuals usually buy a
single pair. The places where the consumers mostly buy are original
outlets and franchises. Retail stores are largely low key sellers for them.
The frequency of buying is less, compared to other markets.

WAR BETWEEN NIKE AND ADIDAS

The problem for Adidas is that, while it's staked out its turf as an official
sportswear partner, Nike has more top athletes. They include Swiss tennis
ace Roger Federer and Australian track star Craig Mottram, along with old
standby basketball legends Kobe Bryant and LeBron James. But nikes
athletes arent guaranteed to win games, there is always a risk element
associated with their performance.
Nike has signed up 22 of China's 28 sports federations to outfit most of its
athletes. The deal is just one of 40 that Nike signed with various national
federations, including the U.S, Germany and Russia, ensuring that team
members will be decked out in Nike gear during play regardless of where
they have their individual endorsements. So for many of 3,000 athletes in
the Adidas stable who will compete in Beijing, donning the three stripes
will be limited to the medal stand. During play, they'll be in Nike gear.

COMPETITORS
NIKE

is one of the most successful manufacturers of athletic footwear,

competing with Reebok, L.A. Gear and Adidas, as well as with
manufacturers of casual footwear. Nike is the worlds No.1 manufacturer
and marketer of athletic footwear. Nike stands for success, excellence,
high performance, fame etc.

Adidas

Reebok

Woodland

Red tape

22

Bata

Liberty

Puma

New balance

Nike is the official kit sponsor for the Indian cricket team for 5 years. Nike
beat Adidas and Puma by bidding highest, US $ 43 million.

ADIDAS
The chief competitors of adidas are PUMA and Nike. In August 2005, the
company announced that it had made a deal to acquire rival Reebok for
$3.8 billion. The acquisition would increase its market share and to
establish a stronger foothold in the Sports Industry. This merger is indeed
a success which has achieved significant sales growth. Merger of Adidas &
Reebok complement each other in competing with their competitors, Nike;
and is more cost efficient and beneficiary to both brands with Reeboks
strong presence in US market and the global recognition of Adidas.

Nike

Red tape

Bata

Liberty

Puma

New balance

Nike
Nike enjoys a 47% market share of the domestic footwear industry, with
sales of $3.77 billion. Nike has been manufacturing throughout the Asian
region for over twenty-five years, and there are over 500,000 people
23

today directly engaged in the production of their products. They utilize an

outsourcing strategy, using only subcontractors throughout the globe.
Their majority of their output today is produced in factories in China,
Indonesia, and Vietnam, but they also have factories in Italy, the
Philippines, Taiwan, and South Korea. These factories are 100% owned by
subcontractors, with the majority of their output consisting solely of Nike
products.

Strengths of Nike

Nike is a very competitive organization

Nike has no factories. It does not tie up cash in buildings and
manufacturing workers. This makes a very lean organization.
Nike is strong at research and development
Nike is a global brand. It is the number one sports brand in the
World.
Product Range
Capacity for innovation
Distribution expertise
Single Brand
Stars endorsement
Contract manufacturing
Large portfolio of products

Weaknesses of Nike

The organization does have a diversified range of sports products.

However, the income of the business is still heavily dependent upon
its share of the footwear market.
The retail sector is very price sensitive. Nike does have its own
retailer in Nike Town.
Single Brand
Too many stars endorsement
Contract manufacturing
Spread portfolio of products
Reliant on retailers
Reduction of target market

Adidas
Adidas is the main competitor for Nike. Adidas currently enjoying the
fastest growth of any brand domestically, with a market share of 6% and
24

revenues of $500 million. They have been shielded from bad publicity by
the two Goliaths of the industry, Nike and Reebok, and are reaping the
rewards substantially. They have adjusted their manufacturing strategy,
from a vertical operation in Germany in the 60s and 70s, to an
outsourcing focus today throughout Asia. Unlike the big two, they do not
have a code of conduct, and their factories are considered to be the worst
in the industry. It is just a matter of time before they are exposed, with an
underground swelling of negativity already occurring today. In order to
avoid the negative effects and lost revenues that Nike and Reebok have
received, they need to immediately begin to take a proactive stance in
regards to the working conditions of their factories.

Strengths of Adidas

Competitive pricing

Good financial position

Effective Marketing Strategy

Market Leadership

Strong online presence

Strong brand

Strong international operations

Strong distribution chain

Weaknesses of Adidas

High cost structure

Over pricing

Low quality products/services

Limited product line

25

Reebok
Reebok, as the second leading manufacturer of footwear, has domestic
revenues of $1.28 billion and a market share of 16%. Similar to Nike, they
also utilize a 100% outsourcing strategy and manufacture their products
throughout Asia. They have created and implemented their own code of
conduct for manufactures to follow, but have less infrastructure than Nike
across the globe to enforce it. However, their strength, the creation and
distribution of a global brand, is allowed to foster under this
manufacturing strategy, as they focus on their core competencies, and
outsource their production.

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

New Balance
New Balance is the one company that has kept a substantial amount of
manufacturing in the United States, and has a 3% market share with sales
of $260 million. They currently operate five plants in New England,
employing over 1400 workers, that produces 50% of their output. With
this mixed strategy, of vertical integration and outsourcing, they are very
unique, with their strategic reasoning based on the advantages gained
through higher levels of quality domestically, and the "Made in the USA"
label. They are in a highly specialized, niche business, running shoes, and
closeness of factories is more essential to their customer base than the
other companies because of special orders. For their most technical
products they employ outsourcing, following the strategy of their
competitors. Although there is something to be said for manufacturing
domestically, they are straying away from the skills that they do better
26

than anybody else the design and marketing of the premier running
shoe in the industry. Their long-term strategy should shift to a 100%
outsourcing model, allowing them to control this niche for the future.
The basis for competition is to see who is better than the other and to win
more consumers acceptance and to be the leading and most loved brand
of consumers. Adidas and Nike are like by many and they have a strong
base of brand loyalty yet they compete with each other and they bring out
new, revised and improved products to keep up their competition with
each other. Nike is the slightly over priced but yet the have their customer
base. Their latest innovation was Nike + ipod. While Nike tries to bring in
creative and out of the box technology favoring music and sports lovers
Adidas brings in new products and expands the market that they are
serving. They innovated shoes which had a chip in it which could detect
and tell the time, calories and other information of the user. They compete
to become the number one. While Nike is more accepted in U.S, Adidas
has a strong base in German and the European market.

COLLABORATORS
Nike
One of the oldest collaboration was in 1985 with Michal Jordan and had
introduced Air Jordan. This year nike has collaborated with Nemo for Nike
Boots and Buzz Adrin for Nike 6.0. The partnership between Nike and Buzz
Aldrin is based on a shared passion for performance innovation. Buzz
Aldrin serves as an icon of exploration, a space pioneer, and maverick
who looked towards the next frontier. His personality, independence and
creativity are similar to the mindset of Nikes 6.0 athletes who are pushing
the boundaries of their respective sports. Nike and apple has announced a
partnership targeting runners and music lovers and has launched
Nike+ipod which has hit the market and is creating a trend it was one of
the biggest success. Nike is also in collaboration with Black Coaches
Association, to provide scholarships, it gives sponsors to youth, and sports
clinic to enhance the opportunities for minorities in sports industry. Mia
Hamm; Tiger Woods; Brazil Soccer are the celebrity collaborators of nike.

Adidas

has a new designer Stella McCartney who will be the

companys official newest design collaborator and it would be called as
27

Adidas by Stella McCartney. McCartney and Adidas will co-host an

exclusive soiree. Adidas Originals is hoping to be The Greatest through
its new partnership with boxing legend Muhammad Ali. The collaboration
will launch "Ali by Adidas. Ali has an old association with adidas. Adidas
Consortium City Series 3 - Adidas Consortium city Series is back this time
collaboration with Paris Colette Londons Crooked Tongues, Torontos
Livestock and Tokyos VA. Advertising partner of adidas basketball shoes is
180LA agency. Adidas originals has teamed up with Cheez, Kalavinka and
Yoppi for football shoes. New York Yankees; University of Tennessee; Kobe
Bryant are oher collaborators for adidas.
Incentives and motives of the collaborators are to join with the best and
fast moving sports shoe which is used by many people around the world
and is widely distributed and accepted by people. Those collaborators get
a opportunity and exposure. The celebrities are used by the company to
increase their market value and for acceptance by the consumers as they
have a urge to but those products that are endorsed or used by their
favorite stars.

COMPANY
CORE COMPETENCY
A companys core competencies are those things that a company can do
so as to be better than their competitors in the central areas of the
company where the most value is added to your products.

Core Competencies of Adidas

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

Core Competencies of Nike

28

Technology
Customer focus
Strategic Outsourcing

Strategic Outsourcing An advantage for Nike and Adidas over

competitors
Nikes core competency is strategic outsourcing. The core skills that set
nike and adidas apart from the competition, are their marketing,
distribution, and technological expertise. The following questions are
always asked by the expertise to the company:

Is internalization a source of competitive advantage?

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

The answer for both adidas and nike is NO. Therefore, in todays global
environment, the most strategically viable manufacturing strategy is the
outsourcing of their products. The efficiencies that are gained, in the form
of shifting of risk, reduced capital requirements, lower wages, and ability
to focus on their core competencies, strongly outweigh all other
manufacturing options.
Both companies are huge conglomerates with an enviable turnover
worldwide. They have large media budgets and a large amount of money
to throw around, which they do, with incredible fervour and gusto. They
are both pioneers in this field and hire the best talent from the best
universities across the world. Hence they have the best people in their
organisations and that, coupled with their access to almost unlimited
capital, makes them potent forces.

ADIDAS
Revenue

$15.6 billion (2008)

Operating income$1.5 billion (2008)

29

Profit

$933 million) (2008)

NIKE
Revenue

US$ 18.627 billion (2008)

Operating incomeUS$ 2.199 billion (2007)

Net income

US$ 1.883 billion (2008)

Total assets

US$ 12.443 billion (2008)

Total equity

US$ 7.825 billion (2008)

CONTEXT
TECHNOLOGY
Adidas was originally intended to be a product line for soccer
sportswear. Currently, however, adidas has spread its target to all
sportswear.
Name
adiPRENE

adiPRENE+

Torsion

Description
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+ 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.
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.

30

Nike has integrated technology system to develop their product. Nike

always adopted the latest technology for their product and innovated new
products.

Speed of change of product

Design Ability
Speed of News reporting

Name
Nike Ground

Description
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

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Zoom Air

Zoom Air is among the more technologically advanced

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

Double Stacked Zoom Air - two Zoom Air packs

stacked on top of each other, usually located in the
heel

Max Air

Full Length Zoom Air - Zoom Air packs located both

in the forefoot and heel, providing optimal
cushioning
A technique is used that forces air into a pre-formed
shape, thus allowing for more pressurized gas to fit into
a larger "bag." Max air is generally not larger in size and
visible, meaning that the shoe puts the wearer at a
higher distance off the ground. Because of this, Max Air
is best suited for athletes who do not necessarily depend
on quickness and speed, but rather athletes who are
larger in size, and need a more dependable and firm
cushioning system.

Nike Shox

Air Max 360

Air Max 180

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 provides great stability and impact protection.
Nike Shox is generally located in the heel of the shoe,
but there are an increasing number of shoes that feature
a full length shox-based system
of cushioning.

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Foamposite

Dynamic
Innersleeve

Monkey Paw

Waffle Sole

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

A seamless inner sleeve made of lycra that hugs the

Fit 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.
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.
Traction technology derived from rubber put on a hot
waffle iron back in 1972. Remains the premier low profile
traction, second only to actual spikes.

SOCIO CULTURAL
ADIDAS

Since 70-s, customers are brand focused.

Sport consumers prefer fashion and style which is a value
proposition of both nike and adidas.
Young generation believes more on advertisements and internet.
Since 90-s even women consumers dominate the athletic field and
changed the market.
Children are becoming more brand conscious and opt for branded
products.
The tradition values and attitude is changing of the people using
branded products is a status symbol. As the income has changed
people shift from normal to branded ones.
33

NIKE

Brand conscious consumers

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

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

USA economic growth is in slow growth because of WTC.

Contract manufacturing is chosen by many athletic shoes
company.
Slow down in the economy
Reduction in consumer confidence
Barriers of entry to the EU
Contract manufacturing

COMPETITIVE FORCES

Competition is more tight with the coming of Reebok and Adidas

for Nike and Nike, Puma for Adidas
Competition is happened around the world, globally, not locally
Athletic shoe trend is going to be fashion-oriented

34

SEGMENTATION,
POSITIONING

TARGETING,

Market Segmentation
Both Adidas and Nike fall under niche marketing. They have a narrowly
defined customer group seeking a distinctive mix of benefits. Their
products are mainly aimed at both men and women looking for sports
apparel. Adidas and Nike promise their customers comfort, reliability, style
and performance. Both the companies have lived up to their reputation in
the world of sports shoes.
Niche marketers aim to understand their customers needs so well that
the customers are willing to pay a premium. This is very true in the case
of these two companies. Adidas and Nike sports shoes are priced high. But
customers are willing to spend the extra money for the quality and service
they receive.

NIKE
Nike pays top athletes in many different sports to use their products
and promote/advertise their technology and design. Nike is the official kit
sponsor for the Indian cricket team for 5 years, from 2006 till end of 2010.
Nike beat Adidas and Puma by bidding highest. Nike also sponsors some
of the leading clubs in world football, such as Manchester United, Arsenal,
FC Barcelona, Inter Milan, Juventus, Shakhtar, Porto, Steaua, Red Star,
Club Amrica, Aston Villa, Celtic and PSV Eindhoven. Nike sponsors
several of the world's top golf players, including Tiger Woods, Trevor
Immelman and Paul Casey.

ADIDAS
Adidas are the main sponsors and kit sponsors of the successful Australian
Cricket Team and the England Cricket Team. They are also the main
sponsors of the Indian cricketers Sachin Tendulkar and Virender Sehwag
and English cricketers Kevin Pietersen and Ian Bell. Adidas are the main
sponsors of Australian Domestic Cricket Competitions - Pura Cup, KFC
Twenty20 Big Bash, Ford Ranger One Day Cup and the Indian Premier
League teams Delhi Daredevils and Mumbai Indians.
For the 2008 Summer Olympics in Beijing, China, Adidas spent 70 million
sponsoring the event, amid criticisms. Adidas also sponsors events such
as the London Marathon.
35

SEGMENTS TARGETED
Both Nike and Adidas target aspiring athletes in the age group of 15-35. In
the lifestyle and apparel market targets consumers who identify with sport
as a way of life and are brand conscious.

ADIDAS
The unique Adidas Shoes compared with other sport shoes covers the
largest market. Some makes of athletic shoes have raced ahead of the
pack in appreciation, among them Adidas running shoes. These brands
and a couple of others have gained the respect of thousands of beginner
and professional sportsmen around the world, because of great design,
quality construction and durability that rivals any other shoe.
The company officially became the No. 1 driver in golf in 2005 and in 2008
Adidas made their first major move in cricket market. At present, Adidas
has slowly crawled its way back up into the ranking of the top footwear
manufacturers in the world. Adidas wants to reach the pinnacle of
success. Customer satisfaction is the main motive of the company.
Adidas mainly focuses on men and women who are brand conscious or are
looking for comfort and performance in the area of footwear. It has more
than 200 varieties of mens footwear and more than 150 women footwear.
Adidas also makes sports specific shoes. It has got an entire line of shoes
devoted to sports like basket ball, football, tennis, golf and running.
A major chunk of their customers include athletes who are looking for
sports shoes which are customized according to their needs. Adidas
constantly comes up with new technologies to help sportsmen improve
their performance by providing comfortable shoes. They are consumer
focused and therefore continuously improve the quality, look, feel and
image of the products and organizational structures to match and exceed
consumer expectations and to provide them with the highest value. They

36

seek to help athletes of all skill levels achieve peak performance with
every product they bring to market.

Running
Adidas currently manufactures several running shoes, including the
adiStar Control 5, the adiStar Ride (the replacement for the adiStar
Cushion 6), the Supernova Sequence (the replacement for the Supernova
Control 10), and the Supernova Cushion 7 (which will soon be replaced by
the Supernova Glide), among others. In addition, their performance
apparel is widely used by runners. Adidas also uses kangaroo leather to
make their more expensive shoes.

Cricket
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.

Basketball
Adidas has been a long time basketball shoe manufacturer and is one of
the leading basketball brands in the world. They are most famous for their
iconic Superstar and Pro Model shoes, affectionately known as "shelltoes"
for their stylized hard rubber toe box.

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

NIKE
Nike has divided its customers into the following way

Women

Men

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

37

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

PODS AND POPS

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

NIKE WITH APPLE

The Nike+ package consists of a pair of specially designed Nike+ running
shoes, an iPod nano, and a Nike + iPod sport kit to connect the two. The
kit consists of a sensor that fits into a built-in pocket beneath the insole of
your left shoe and a receiver that fits into the iPod nano dock connector.
The sensor uses a sensitive accelerometer to measure your activity, and
then wirelessly transfers this data to the receiver.
As you run, iPod tells you your time, distance, pace, and calories burned
via voice feedback that adjusts music volume as it plays. In addition to
progress reports, iPod also congratulates you when youve reached a
personal best your fastest pace, longest distance and time, or most
calories burned. You can also choose a PowerSong that helps you run
stronger and listen to it every time you need a boost.
This in itself is incredible, but Nike+ also lets you save your running data
at nikeplus.com, so that you can set goals and track progress. You can
challenge friends and strangers to compete with you by sharing your
38

running data with them. The Nike+ website also includes other web 2.0
features like user forums where you can meet and challenge other
runners, ask questions, and give feedback; a challenge gallery where you
can view all user created challenges; and a distance club where you can
view everyones running milestones.

DESIGN YOUR OWN SHOES

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

ADIDAS
Adidas shoes are cheaper than Nike. It has grown from a minor player to
the second biggest company in the industry. It has a huge scope for
growth and innovation.
It has the largest international portfolio of sport ambassadors. Adidas
introduced a sub brand in 1990 to serve the high-end products for all
categories of shoes and apparel. The Equipment sub brand would
represent the best, whatever the product was. The low-end products, for
the normal consumer still have a high technology and level of
innovation because of their inheritance of the older innovations and
technology from the Equipment line. This strategy made the Adidas brand
take on a different meaning; it still meant participation, emotion and
performance. This was a success strategy for Adidas.

39

IN A NUTSHELL

40

The brand image for both Nike and Adidas is immense; however Nike has
attained a considerable competitive advantage due to its reputation for
quality and innovation. Both Adidas and Nike have used the same
theoretical systems to create their brand building programs. The
companies are benchmarking each other, using the techniques from each
others successes. Nike launched their sub brand product Alpha line which
was benchmarked on Adidas already launched sub brand of the
Equipment product line for the elite of sports men. We can find many
similarities like endorsements strategies and the companies advertising
strategies. What differs in the endorsement strategies is that Adidas
focuses in sponsoring teams and global events, while Nike have their
centre of attention on stars in specific sport like basketball and Michael
Jordan or in golf and Tiger Woods. About advertising, both companies have
about the same scale and scoop of advertising but they try to
communicate different messages. The message from Adidas is; the only
one you compete with is yourself whereas Nike communicates a
provocative, aggressive winner attitude which can be related to the
American sports attitude You dont win silver, you lose gold. As we can
understand the two companies are aiming at nearly the same targeted
customer group but with a slightly differentiation of attitude. Adidas stand
for a competing and winning over your self-attitude, and Nike stands for a
winning over everyone attitude. This differentiation is based on the
differences in culture between the two companies and between Europe
and USA. Adidas chose a brand-building strategy that was built on the
same theoretical criteria as Nike.
Adidas had the same strategy within creating equity value to their brand.
They challenged Nike in endorsement strategy, and in advertising, but
with a slight difference in communicated message, by doing it through the
same media. To differentiate themselves, events like Adidas Streetball
Challenge was created.

VALUE PROPOSITION
Value proposition consists of the whole cluster of benefits the company
promises to deliver to its customers.
Both Nike and Adidas promise their customers sports shoes which will
provide them with comfort and durability. They have a brand value and
have established themselves as style statements. Nike and Adidas have a
41

wide range of athletic footwear specialized for various sports like football,
cricket, running, gym etc.
However, Nike offers customers more comfortable and durable athletic
shoes at a higher price, while Adidas has a lower price range offering
almost the same benefits.
Nike communicates a provocative, aggressive winner attitude which can
be related to the American sports attitude You dont win silver, you lose
gold. Adidas stand for a competing and winning over your self-attitude,
and Nike stands for a winning over everyone attitude.

POSITIONING
The core of Nikes brand positioning is the Just Do It slogan. It means
being what you are and concentrating on what is important to you.
Adidas represents passion, elegance and durability.

EVOLUTION AS A BRAND
NIKE
It was only 36 years ago that we had a world without Nike, and in that
period Nike has gone from the brash newcomer, to the number one massmarket leader. The Nike story begins with the meeting of its co-founders
at the University of Oregon. It was here that middle-distance-running
business student Phil Knight fell under the tutelage of the college athletics
coach, Bill Bowerman. Nike would go on to grow out of the fusion of
Bawerman's sporting innovation and Knight's marketing know-how.
Even at a very early stage it seemed that Knight had a far-reaching goal,
to break the long-established brand nomination of the U.S. marketed by
the then main player, Adidas.
In order to achieve this aim, legend has it that Knight and Bowerman each
put in $550 to cement their partnership, and decided to call their new
company Blue Ribbon Sports (BRS). BRS was basically the American
distributor of Onitsuka training shoes.
42

In 1965, after a period of selling Onitsuka shoes from the back of their van
at athletic meets, the company grew.
The company went from strength to strength, but after heated
disagreements between BRS and Onitsuka, the new boss at BRS decided
to split from Tiger in 1971 and create their own company manufacturing
their own shoes. It is said that Jeff Johnson came with the idea for the new
name, deciding to honour the Greek goddess of victory, and thus Nike was
born.
It was also at this that the fledgling company had to decide on a logo for
the brand, and another of the legends that the company managed to
create for itself was developed.
Nike took off virtually instantly in the United States, and within a year
company sales were at almost 2 million pairs. In 1981 Nike decided to
take another major step, with the U.K. becoming the company's first
wholly owned foreign distributorship.
However it was in 1985 that Nike really became a major player. It was in
this year that it managed to persuade the then little known Chicago Bulls
basketball rookie Michael Jordan to endorse his own range of shoes. Even
Nike could not have imagined the effect that this single act would have on
sales. The new Jordan endorsed range transported Nike and trainers in
general to a completely new lever of popularity.
It was after the introduction of the Jordan shoes and mass-marketing that
went with them that the "trainer wars" got underway. Each of the brands,
desperate to stay one step ahead of the competition, came up with a
continuous stream of developments and inventions of technical wizardry.
For a while in the late 1980's Reebok actually overtook Nike to become
the number one player (at least in terms of sales), but Nike came back
strongly with its 'just do it' slogan in 1988, and regained the top spot in
terms of market sales - a position they retain to the present day.
In 2006, Nike entered the cricket market with a 5-year sponsorship of the
Indian cricket team for US$43m. Nike and Apple released the Nike+iPod
sports kit, enabling runners to log and monitor their runs via iTunes and
the Nike+ website.
In 2008, Nike introduced shoes featuring new Flywire and Lunarlite Foam
materials. Flywire is a new technology made up of thin wires of vectran
fibers, which are 5 times stronger than steel and never lose strength.

43

Lunar Foam is a material developed by NASA that gives the shoe excellent
shock absorption and a great feel with minimal weight.
Nike has continuously pushed back the boundaries of trainer design,
staying focused under Phil Knight's guidance, and is going to take some
dislodging.

DEVELOPING THE SWOOSH

Back in 1971, the newly created Nike Company was ready to hit the
market with its shoes, and a logo to represent the brand was urgently
needed.
Phil Knight turned to an associate from his teaching life and commissioned
graphic-design student Carolyn Davison to work with his new brand.
Knight wanted a design that would represent movement. Davidson
supplied Knight with a few designs one of which was the initial 'Swoosh' so
well known today. Knight was not particular enamoured with any of these
designs, but with deadlines to meet the Swoosh was chosen
Even though Davidson was initially paid only $35 for her design, the story
doesn't end there. In 1983, Knight took Davidson out for lunch and
presented her with a diamond-encrusted Nike ring, and also an envelope.
The envelope contained Nike Stock.

ADIDAS
When Adidas entered the marketplace some 50 years ago, its focus was to
produce shoes crafted specifically for soccer and running.
The new millennium has since brought about an Adidas renaissance; the
brand has steadily regained market share over the past five years to
become the world's number two athletic shoe company (behind Nike).
44

How did it go about repositioning to once again be among the coolest of

kicks?
Adidas claims that, "the brand values of the company authenticity,
inspiration, honesty and commitment are derived from sport."
Historically, this sensibility was demonstrated through early and continued
involvement with Olympic athletes, as well as active sponsorship of major
global sporting events like the World Cup. Adidass rapid growth in Asia,
where revenue rose by 15 percent to US$ 878M last year, may be further
propelled in Japan and Korea when those two nations host the World Cup
this year an event which is expected to garner 2.5M spectators and one
billion TV viewers worldwide.
However, the key to revitalized success seems to lie in the considerable
endorsement deals Adidas has developed with world class athletes.
Recent sports figures representing Adidas dont only score high marks in
their game they also score high in their celebrity quotient. British
football star David Beckhams relationship with Adidas has no doubt lent
itself well to the brands visibility in the UK. Recently dubbed "Captain of
England," Beckham led his team to victory in the 2000 FIFA World Cup.
With Europe as Adidass largest market, exposure like this reflects in the
numbers; sales grew seven percent to US$ 2.7 billion, last year.
Reinvention was the key, not only for the Adidass marketing strategy, but
also for its product line. Eclectic, individual, 'no-rules' sports such as
snowboarding, inline skating and surfing have grown into significant
categories. Activities such as golf, hiking and mountain biking, which were
seen as lifestyle and leisure activities, are now part of mainstream sports.
Increased product offerings in these categories have undoubtedly
contributed to a better score for the brand.
To keep up with the competition, Adidas generates close to 60 new footfriendly designs each year. The Adidas credo is to regard shoes as feet,
resulting in a product with superior fit and performance capabilities.
Tactics have been revised in getting these products out for consumption.
As a result, products have been repositioned in higher-end and sports
specialty stores.
In 2002 Adidas footwear innovation, ClimaCool TM, made its debut. The
new technology added breathable materials to the shoe. In July, the Group
completed its three-divisional structure for its sore brand, Adidas, and
positioned its third division as Adidas Sports Style.
In 2004 Impossible is nothing became the central message of a global
campaign that Adidas launched. It refers to the shared attitude with the
athletes, of always pushing yourself further, to beat the limits. In

45

September, Adidas & designer Stella McCartney announced

partnership, introducing the Adidas by Stella McCartney collection.

their

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

combining two of the most respected and well-known brands in the
worldwide sporting goods industry, the new Group will benefit from a more
competitive worldwide platform, well-defined and complementary brand
identities, a wider range of products, and a stronger presence across
teams, athletes, events and leagues.
Adidas continues to prove itself as a brand built to last through a game
plan of reinvention. With the recent acquisition of a lifetime partnership
with Orlando Magic's Tracy McGrady (basketball) and its heavy
involvement with 2002 World Cup, it continues to strike savvy deals that
capitalize on the star power of young athletes and increase its visibility in
the marketplace.
It appears that team Adidas has honed its strategy to become a revitalized
contender in todays competitive sporting goods market and is now duly
recognized as the sneaker of yesterday and today.

MARKETING MIX
PRODUCT
CORE NEEDS
The fundamental level is the core benefit; the benefit here is to protect
the foot and provide comfort.
46

BASIC PRODUCT
This is the second level here the marketer has to convert the core needs
into the basic product of the customer. Sturdy footwear with a comfortable
body, a lasting sole and value for money is the basic

AUGUMENTED PRODUCTS
Augmented products are those that the marketer provides to their
customers, which exceeds their expectations.

PRODUCT LINE WIDTH OF NIKE

Footwea
Accessor
r
ies

Sports
wear

Sports
Equipme
nt

Football

Bags

T- shirts

Basket ball

Running

Backpacks

Hoodies

Football

Cricket

Sunglasses

Track suits

Golf
equipments

Basket ball

Gloves

Track jackets

Cycling

Wind runner
Tops
Shorts
Pants

47

Body
care

Deo

PRODUCT DEPTH
Nike has different shoes for different sports like for running on hard
surface, smooth surface, cycling, basket ball, cricket.

PRODUCT LINE WIDTH OF ADIDAS

Foot wear

Accessor
ies

Sports
wear

Sport
Body Care
Equipmen
ts

Foot ball

Bags

Jackets

Foot ball

Deo

Running

Eye gear

Jerseys

Basket ball

Shower gel

Tennis

Watches

Scarves

Football pump

Perfumes

Basket ball

Water
bottles
Mats

Swimwear

Cricket bats

After shave

Wrist band

Tops

Padding

Shorts

Hats

Sweatshirts

Socks

Tracksuits

Pants & tights

Dresses
Shirts
Skirts

PRODUCT DEPTH
Under football sports shoes include -Soft ground, hard ground, firm
ground, turf rugby, Astroturf, leisure wear, asphalt, multi surface and
rugby.

COLLECTION OF FOOTWEAR
Adipore, Classics, Clubs, F50, Predator

48

PRODUCT PROFILE
NIKE
Apart from delivering a pair of comfortable sports shoes Nike also provides
a number of value-added features with its products. The features that are
a part of every Nike sports shoe are as follows.
High Performance Sports Shoes:
Nike has patented the Air system and has made it into a regular feature
in most of its models. Many models feature an air pocket in the shoe that
reduces the weight of the shoe and reduces pressure on the heels.
Besides the overall design and compactness of the shoes have made it a
favorite of many professional athletes around the world.

Comfort:
Nike shoes are renowned all over the world for the comfort they provide.
Well padded and cushioned, they provide a tremendous level of comfort to
the wearer and reduce the strain to his feet while playing.
Lightweight:
This attribute is in line with the two described above. A lightweight shoe
provides greater mobility and eases the pressure on the feet of the
wearer.
Durability:
People purchasing a pair of shoes at such a high price often feel that they
have made an investment. They would obviously want to see their shoes
last a long time. To prove this point we draw the example of the authors of
this marketing plan. All of us own a pair of Nikes and have been wearing
them for well over two years a symbol of the durability of Nike shoes.
Style:
Nikes designs are considered to be the most stylish in the industry and
beat all others as far as looks are concerned. Attractively packaged, it is a
delight to bring a pair home. Add to this the Swoosh the most
recognizable symbol in sports and you have a product that would give the
user a definite sense of pride.

49

ADIDAS
Adidas shoes are very comfortable, light weight, stylish and great value
for money.
The soles are designed really well and give you great grip across all
terrains.
The shoes are very easy on the legs and they protect you from any kind of
twists or sprains.

PLACE
CHANNEL LEVELS
The producer and the final customer are part of every channel. A zero
level channel or a direct channel is one in which the product reaches the
customers hand directly from the manufacturer. Nike and adidas follows a
one level channel or an indirect channel method where there is a
manufacture who manufactures the goods and then they get it to the
retail outlets and then it reaches to the customers. Nike has out sourced
their production to South Asian countries like Taiwan China Indonesia and
Korea who produces the goods and then sends them to the retailers. There
is only a single channel in between the manufacturer and the customer.

CHANNEL LENGTH
The number of intermediaries that a product has to go through before it
reaches the final consumer. Both Nike and adidas has only one
intermediary before the final good reaches the consumer from the
manufacturer and its the retailer.

CHANNEL BREADTH
The number of different entities that are involved for the same distribution
function at different stages in a distribution channel. There are no entities
involved during any stages of the production or the distribution for both
Nike and Adidas

50

PRODUCT & BRAND EXTENTION

The introduction of a product that is known to a company but which has
features or dimensions which are new to consumers, there are three types
of product extensions revisions, additions and repositioning. Bats are
already a product for adidas but the launch of Adidas ST a new range of
bats with the signature of Sachin Tendulkar is an example for product
extension. Another extension is the different types of shoes that adidas
has for football. While Nike has
The use of a well known brand name to launch a new product, of an
unrelated category into the market is brand extension. Nike has extended
its brand from sports shoes and sportswear it has launched a new range of
watches, apparel, bags and deodorants for both men and women. Adidas
has also extended its brand to causal wears and toiletries for both men
and women; water bottles, bags and sports equipment.

CHANNEL MANAGEMENT PRACTICES

The channel chosen affects all other marketing decisions. The companys
pricing depends on whether it uses mass merchandises or high quality
boutiques. In managing the intermediaries the firm must decide how
many efforts to devote to push and pull strategy. Push strategy uses the
manufacturers sales force, trade promotion, money or other means to
induce intermediaries to carry, promote and sell the product to users. Pull
strategy, the manufacturer uses advertising, promotion and other forms of
communication, to persuade the consumers to demand the product from
intermediaries, thus inducing the intermediaries to order it.
Nike and adidas use both push and pull strategy of channel marketing.
Push strategy uses the resources of the company and they promote the
products and with the help of pull strategy they persuade the consumers
with the advertisements and other mediums so that they demand for the
product before it is in the market for sale and continues the
advertisements which persuades the consumers so that the demand goes
up and more demand is created in the market.

PRICING
Basic Pricing Strategies
The prices vary from depending upon the products offered, each one is
different from the other and hence the pricing strategy is varied for each
51

line. The bottom line is that both brands are priced on the upper end of
the scale, with market leader Nike being marginally higher priced than
Adidas and still commanding a large market.
The prices are set by the company themselves and the dealers have no
say in these matters. The MRP is also set by the company and the retailers
make about 20 to 30% profit on the MRP for each sale. There are annual
and bi-annual discounts at the stores which attract better business than at
normal business days.

Adidas Beckham pulse

Price: U$723

Nike Zoom Kobe MVP

Sneakers
Price : $10,000
Comes in a Lucite box,
signed by Kobe Bryant

PROMOTION
Promotions are mainly focused on the consumer with prices at trade
promotions increasing or decreasing with the context of the specific
promotion drive. Both Nike and Adidas are into a lot of sponsorships and
advertising.

52

Nike centred their brand equity model on the platforms, the endorsement
focus strategy, creating a dominant media presence, development of
Flagship stores, NikeTown and sub branding. The Adidas strategies were
based on, endorsement focus strategy, advertising, sponsorship programs
focusing on major global events, sports associations, and teams, and subbrands. To create brand awareness both companies have been using
endorsement strategies in their brand-building programs. What differs is
that Adidas focuses on sponsorship of teams and events e.g. national
teams and big sport events like the Olympic Games and different World
Championship events. This will help them to create awareness with help
from different types of media. In contrast Nike has their focus on
individuals like M. Jordan and T. Woods and their success stories.
Nikes advertising strategy was to create dominant presence in media.
Nike created media presence in several trend setting United States cities.
TV ads linking Nike to a city were used, but real drivers were huge
oversized billboards and murals on buildings that blanketed cities with
messages featuring key Nike-sponsored athletes, not products. Adidas
took up the competition with Nike through raising their advertising budget
to a level that made it possible to compete with Nike on the same
conditions and the same strength as Nike did to capture the consumer
interest. Adidas did not just spend more money; they made an impact with
brilliant executions. They made TV and other advertising campaigns. The
company communicate their heritage of innovation, technology and big
success stories with personalities like Emil Zatopek, Mohammad Ali.
Adidas tried to spread meanings like We know then- we know now and
There is nothing between you and success, so exceed your own
expectations and limitations and Earn it. The success was obvious and
after hard work and striving toward a top position in the industry Adidas
was back in business.
Nikes third strategy was to develop, flag ship stores, Nike Town shops in
bigger cities, first national, and then abroad. Nike was the first company
to establish flagship stores and it turned out to be a sensation. Adidas
choice was with which they made great success. Examples of that is the
Adidas Streetball Challenge a local three-person team basketball
tournament, this event started out as a trail in Berlin in the beginning
Chart-03: Adidas market Share comparison of the 1990s as one time
occasion. In the mid 1990s it had become a huge sport event with about
500,000 participants all over the bigger cities in Europe. In the finals in
Germany it attracted 3200 players and 40.000 spectators. Adidas made
hereby a brand-building success.

53

ANALYSIS REPORT
CUSTOMER SURVEY
We conducted a customer survey to find out the customer preference and
why people prefer a certain brand. Our survey consisted of people in the
age group 15-40. Most of them preferred Nike to Adidas, but felt that Nike
was overpriced. Those who preferred Adidas, however showed great brand
loyalty to the brand. We asked them to rate attributes like quality, price,
durability, comfort, style, advertising and innovation on a scale of 10. The
results that we obtained is graphically shown below.

54

12

10

6
Nike
Adidas
4

Marketing Strategies
Both Nike and Adidas are in the maturity stage of the product life cycle.
The market is basically experiencing a slowdown in sales growth because
the products have achieved acceptance by their most potential buyers.
Profits are stabilising and declining because of the hyper competition
phenomenon explained earlier. Both Nike and Adidas help athletes
perform at the peak of their ability and this goal continues the drive the
brands activities today. Both Nike and Adidas use celebrity and team
endorsements as the base for marketing their products. Nike traditionally
sponsors teams and Adidas sponsors individual players.
The overall marketing strategy adopted by both firms is highly researched
and successful. They must keep innovating and achieve profits through
high volume and low cost.

Porters Generic Strategies

55

Overall cost leadership

Nike has always been higher priced than Adidas and both of them use this
difference against each other, Nike trying to reiterate its high performance
premium stand and Adidas trying to capture the market with lower prices.

Differentiation
Nike offers its consumers the option to customise their own shoes on its
website, a huge differentiation that Adidas does not have. Nike also has a
large array of innovative products, including the Nike+, in collaboration
with Apple. Adidas stands for competing and winning over yourself
attitude, aptly represented by their slogan Impossible is Nothing. Nike
communicates a provocative and aggressive winner attitude with their
Just Do It slogan.

Focus
Nike and Adidas focus on aspiring athletes between the age of 15-35.
They also cater to the needs of people who consider in sport as a way of
life and are willing to pay a premium for the brand value of the products.

CREATING VALUE
Nike and Adidas provide customers the best goods in athletic footwear.
They give importance to comfort, durability and value for money. Nike is
known for coming out with innovative products like Nike+. Adidas on the
other hand offers customers the same value but at a marginally lower
cost. Both Nike and Adidas are taking full advantage of the newly
expanding footwear market. They offer discounts during strategic
occasions and increase sales. Nike and Adidas are continuously coming
out with new and cutting edge technology which keep up with the needs
of the customers. They provide a brand value and have established
themselves in the market of footwear industry and consumers are proud
to be associated with them.
Nike and Adidas have a variety of sports shoes which suit various needs of
various customers. From basketball to gym shoes, they cater to all needs
in the athletic shoes industry.
Nike and Adidas are into extensive advertising campaigns which reflect
their positioning in the minds of their customers. Adidas stands for
competing and winning over yourself attitude, aptly represented by their
56

slogan Impossible is Nothing. Nike communicates a provocative and

aggressive winner attitude with their Just Do It slogan. Both Nike and
Adidas use celebrity and team endorsements as the base for marketing
their products. Nike traditionally sponsors teams and Adidas sponsors
individual players.

Capturing Value
Pricing philosophy
The basic pricing philosophy of both brands is dependent upon the quality
of the product. A product with a high degree of innovation also has a
higher pricing. Their customers are willing to pay a higher price for their
brand value and the benefits that their products offer. Considering the
higher income of todays generation and the increasing buying power of
customers both Nike and Adidas have priced their products wisely.
They have been largely successful with recovering the value generated as
the market is mostly receptive to their innovative and advanced products.
The younger generation loves the brand value and are willing to pay a
premium price for the products offered. With the increase in awareness
among people about the importance of wearing the right kind of shoes for
a particular sport and the quantum leap in the buying power of customers,
the athletic footwear has been fast growing.

Sustaining Value
According to our survey, both brands have been successful at retaining
customers. Adidas has higher brand loyalty among the two, but Nikes
cutting edge technology enables it to maintain its customer base. Adidass
three stripes and the Nikes swoosh are among the worlds top logos but
the swoosh is dominant in most places.
Both Nike and Adidas are fully exploiting the growing footwear market.
Nike is forever trying to bring out cutting edge technologies and
innovative ideas to meet their customers growing needs. Adidas and Nike
are competing with each other to gain the No. 1 position. The increase
in the buying power of the customers has also been fully utilised by both
the brands. They have priced their products with a huge margin that
57

people are willing to pay because of the brand value associated with
them.

REFERNCES
WEBSITES
58

1.
2.
3.
4.
5.
6.
7.

www.nike.com
www.adidas.com
www.wikipedia.com
www.press.adidas.com/en/retrieved 7th june 2008
www.jdsports.co.uk/whatsnew.aspx?id=5375
www.champion.ie
www.adidas.com/campaigns/orginalsss2009/content/#/lifestyle/fulllength-film.
8. http://www.adidasgroup.com/en/News/_downloads/pdfs/2009/Press_Release_Q42008_e
.pdf.
9. www.indianfootwearindustry.com
10.
www.adidasGroup.com/history
11.
www.nike.com/historyofnike
12.
www.nike.com/historyandtimeline
13.
www.trap17.com
14.
www.echeat.com
15.
www.scribd.com
16.
www.coolhunting.com
17.
www.footwear-industry.com

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

13th edition

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