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.PORTER S 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. POD S AND POP S
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. PORTER S 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 world s top
corporations, with a worldwide presence. Our study will concent rate on the primary
product these two firms make Athletic Footwear.

We will compare their marketing strategies, their targeting and their marketing mixes. We
will dissect their segmentation and examine their positioning on the global playing field. And
lastly we ll state our conclusions on the comparative marketing strategies of these firms.
The world s athletes play using their products. Let s see how they play the market. Welcome
to

NIKE versus ADIDAS

Brief definition of Industry

Trends in the Industry
The latest picture of the industry has not been as rosy as it has been earlier. At this stage,
with the big four, Nike, Adidas, Reebok and Puma and the others such as Converse and New
Balance, the industry is experiencing hyper competition. The reasons for this being that the
demand for the products has been decreasing and at the same time, there has been an
increase in the popularity of alternate footwear. This inadvertently has resulted in
decreasing margins and the quest for new markets and innovation to get the profits up
again.

The worries seem to have ended, at least momentarily with the emergence of China,
Turkey, Brazil and Russia as huge untapped markets for their products. Of these, China is the
biggest bet for the big guns. Why? China s huge m iddle class is rising and the country s ever
increasing wealth serve as a classic ingredient for market ignition. Both Nike and Adidas
realised this early and invested heavily in advertising during the 2008 Beijing Olympics.
Adidas partnered the games and Nike, as always focused on individual player and team
endorsements. The Chinese marker saw huge residual sales after the Olympics. Nike, for
example, saw its sales increase 50 pc in China in 2008 on a currency neutral basis and again
a 50 pc increase in sales in Q1 2009.

Turkey and Russia, similarly, had a 25 pc increase in sales in 2008 and another 30 pc in Q1
2009. Brazil alone had a 30 pc increase in Q1 2009. The opening up of these markets has
provided respite to the industry and they are making good us e 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. India s GDP for footwear grew at the rate of 9.4% for the year 2008 -2009 the
country s GDP stood at Rs 54 lakh crore, translating into a per capita income of Rs 48,450,
thus resulting in a compounded annual per capita income growth rate of 9.25 per cent
during 1951-2009.

If we analyze the consumption pattern of 70 different economies and segment them into
low-income, middle-income and high-income brackets, we will observe that consumer
5

spending on food, beverages and clothing & footwear account for 47 per cent, 34 per cent
and 22 per cent of their total consumer expenditures, respectively .
India is standing on the threshold of a retail revolution and witnessing fast changing retail
landscape, with footwear market is set to experience phenomenal growth.
India is the major source for supplying medium and low priced footwear and most of the
manufacturers, who have outsourced their production to China are planning to outsource it
to India. Some of the footwear industry who have turned to India are Adidas, Nike and
Puma.

INDIAN FOOTWEAR INDUSTRY

The Footwear Industry is a significant segment of the Leather Industry in India.
India ranks second among the footwear producing countries next to China.
India produces more of gents footwear while the world s major production is in
ladies footwear.
The industry is labour intensive and is concentrated in the small and cottage industry
sectors. While leather shoes and uppers are concentrated in large scale units, the
sandals and chappals are produced in the household and cottage sector.
The major production centres India are Chennai, Ranipet, Ambur in Tamil Nadu, ,
Mumbai in Maharastra, Kanpur in U.P. , Jalandhar in Punjab, Agra and Delhi. The
following table indicates concentration of units in various parts of the country:

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

32

Majo players and Market hares

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Major Forces shaping the Industry

Porter s Five Forces
Barriers to Entry Low
The Barriers to entry to the athletic footwear industry are quite low. Though selling top
quality footwear for athletes is a highly competitive field, there is a huge potential for new
entrants. Due to the enormous scale of operations of both Nike and Adidas, there are able
to control their costs and hence maintain a competitive advantage over new and emerging
competitors. Their powerful brand identities give them an au ra 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 s ake 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 purc hasing
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 specification s
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, Adid as and others
in this field such as Puma and Reebok have grown tremendously in the last decade and each
of them have been offering more choice, more identity due to endorsements by top
sporting personalities and by aggressive marketing and sales strategies. The industry is in
hypercompetition and the rivalry is extremely fierce.

Prediction for 2009 10

10

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 company s title. Adolf Dassler was born in Bavaria and started
making sports shoes in his mother s kitchen after he returned from World War 1. He was
joined in 1924 by his brother Rudolf Dassler and using t heir mother s laundry as their
manufacturing base, they began operations. Famously, during the 1936 Olympics, Adi
Dassler drove to Munich and persuaded Olympic gold medallist Jesse Owens to wear his
shoes which established his reputation among the sporting world and gave him lots of
contracts and financial success.

After the Second World War, though, the brothers split up and Rudolf Dassler went on to
form his own company, which later became Puma. After the death of Horst Dassler, Adolf s
son, the company went through some troubled times. It was then bought by French
industrialist Bernard Tapie and subsequently by Robert Louis-Dreyfus. In 2001 Herbert
Hainer took over as CEO of Adidas and has been leading the conglomerate ever since. A long
line of innovative products and successes later, Adidas is one of the world s largest
corporate, with a product line to envy and worth millions of dollars. The trademark three
stripes and the slogan Impossible is Nothing are Adidas identity, a image it spends a
fortune to uphold. In 2005 Adidas acquired British giant Reebok to further strengthen its
market and customer base.

Indian Operations
Though Adidas entered into a license agreement with Bata in 1989, it formally began
operations only in 1996 with the establishme nt 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 launch ed its cheapest ever shoes in India. In 2004,
Adidas India launched the advantage adidas campaign, which increased sales by 30%. In
2005, Andreas Gellner took over as Managing Director for Adidas India. Adidas sees India as
a huge growth market and according to Gellner, Adidas will invest huge sums to take on its
competitors here.

Nike
Bill Bowerman and Philip Knight started the company we know today as Nike in 1962. It was
originally known as Blue Ribbon Sports. Bowerman was Knight s track and field coach at the

11

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 company s biggest
strengths today. In 1972, Blue Ribbon Sports parted ways with Onitsuka Tiger and became
Nike Inc.

Today Nike is the world leader in athletic footwear, with market shares exceeding the other
major players by significant margins. The Swoosh and Just Do It slogan are huge brand
identities. Nike is a truly global player and seen as a model for innovation driven growth.

Indian Operations
Nike has been present in India for over a decade through its seven year license agreement
with Sierra enterprises, which didn t help much in the bigger scheme of things as Reebok
and Adidas came to the country with fully owned subsidiaries. This explains why the global
market leader is still lagging behind in India. In 2004, instead of renewing its franch ise, it
became a subsidiary and started operating with more freedom and capital. The result was
that the market share rose and Nike became a force to contend with in the Indian market.
Probably the biggest sign of the change in guard was the heavy investment in Cricket by
Nike, culminating in its bagging of the Indian cricket team s jersey rights, worth Rs 200
Crores. Nike then launched its special range of cricket shoes and sponsored the Indian
football team as well. Though Nike has entered the market in earnest very late, the world
no.1 will stop at nothing to gain lost momentum in the Indian subcontinent.

12

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 Adidas s premier football boot, which later
developed into the Predator range. For basketball, Adidas is most famous for its Superstar
and Pro Model shoes.

Beside these Adidas makes jerseys for national and domestic cricket, football, rugby, and
tennis and lacrosse players with a separate line for gymnasts.
Adidas has recently entered the sports lifestyle market, following on the heels of Puma and
Reebok and has launched watches, eyewear and most recently, deodorants, aftershaves,
perfumes and lotions.

COPA MUNDIAL

13

Nike
Nike s first products were track running shoes which came under the name Nike Air Max,
followed recently by the Nike 6.0, Nike Nyx and the Nike SB skateboarding shoes. Recently,
Nike launched special cricket shoes for bowlers and batsmen called the Nike Air Zoom
Yorker and the Air Zoom Opener. But its bestselling line still remains the legendary Air
Jordan basketball shoes, named after Michael Jordan. Air Jordan still contributes more than
30% of Nike s shoe sales.

Like Adidas, Nike too entered the sports apparel and eq uipment market and makes jerseys
and specialist apparel for various sports. Recently Nike teamed up with Apple to launch the
Nike+ range, which can monitor a runner s performance through a radio device linked to
Apple s ipod.

But Nike s most recent product is the one making waves across the sports world. Called the
Lunar Glide, Nike is using Flywire (A thread developed by Nike, composed of Vectran, a
liquid crystal polymer) and Lunarlite Foam to make the world s lightest shoes. Advertised
using the slogan Actually, it is Rocket Science , it reiterates Nike s commitment to
technology.

SOLE COLLECTOR

14

History of the Brands

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

When Adidas entered the marketplace some 50 years ago, its focus was to produce shoes
crafted specifically for soccer and running.
The new millennium has since brought about an Adidas renaissance; the brand has steadily
regained market share over the past five years to become the world's number two athletic
shoe company (behind Nike). How did it go about repositioning to once again be among the
coolest of kicks?

Adidas claims that, "the brand values of the company authenticity, inspiration, honesty
and commitment are derived from sport." Historically, this sensibility was demonstrated
through early and continued involvement with Olympic athletes, as well as active
sponsorship of major global sporting events like the World Cup. Adidas s rapid growth in
Asia, where revenue rose by 15 percent to US$ 878M last year, may be further propelled in
Japan and Korea when those two nations host the World Cup this year an event which is
expected to garner 2.5M spectators and o ne billion TV viewers worldwide.

However, the key to revitalized success seems to lie in the considerable endorsement deals
Adidas has developed with world class athletes. Recent sports figures representing Adidas
don t only score high marks in their game they also score high in their celebrity quotient.
British football star David Beckham s relationship with Adidas has no doubt lent itself well to
the brand s visibility in the UK. Recently dubbed "Captain of England," Beckham led his team
to victory in the 2000 FIFA World Cup. With Europe as Adidas s largest market, exposure like
this reflects in the numbers; sales grew seven percent to US$ 2.7 billion, last year.

Reinvention was the key, not only for the Adidas s marketing strategy, but also for its
product line. Eclectic, individual, 'no -rules' sports such as snowboarding, inline skating and
surfing have grown into significant categories. Activities such as golf, hiking and mountain
biking, which were seen as lifestyle and leisure activities, are now part of mainstream
sports. Increased product offerings in these categories have undoubtedly contributed to a
better score for the brand.

15

To keep up with the competition, Adidas generates close to 60 new foot -friendly designs
each year. The Adidas credo is to regard shoes as feet, resulting in a product with superior
fit and performance capabilities. Tactics have been revised in getting these products out for
consumption. As a result, products have been repositioned in higher -end and sports
specialty stores.

In 2002 Adidas footwear innovation, ClimaCool TM, made its debut. The new technology
added breathable materials to the shoe. In July, the Group completed its three-divisional
structure for its sore brand, Adidas, and positioned its third division as Adidas Sports Style .

In 2004 Impossible is nothing became the central message of a global campaign that
Adidas launched. It refers to the shared attitude with the athletes, of always pushing
yourself further, to beat the limits. In September, Adidas & designer Stella McCartney
announced their partnership, introducing the Adidas by Stella McCartney collection.

On January 2006, Adidas announced the acquisition of Reebok LTD. By combining two of the
most respected and well-known brands in the worldwide sporting goods industry, the new
Group will benefit from a more competitive worldwide platform, well-defined and
complementary brand identities, a wider range of products, and a stronger presence across
teams, athletes, events and leagues.

Adidas continues to prove itself as a brand built to last through a game plan of reinvention.
With the recent acquisition of a lifetime partnership with Orlando Magic's Tracy McGrady
(basketball) and its heavy involvement with 2002 World Cup, it continues to strike savvy
deals that capitalize on the star power of young athletes and increase its visibility in the
marketplace.

It appears that team Adidas has honed its strategy to become a revitalized contender in
today s competitive sporting goods market and is now duly recognized as the sneaker of
yesterday and today.

16

Nike
Nike positions itself as the market leader of sports footwear and uses the greatest athletes
and the record of their achievements in advertising. The swoosh logo was developed by
Carolyn Davidson in 1971. Together with the Just Do It slogan, the Swoosh logo perfectly
expresses the brand and its philosophy. It expresses a high ambition and a will for victory,
which is a part of Nike s brand image and corporate culture.

It was only 36 years ago that we had a world without Nike, and in that period Nike has gone
from the brash newcomer, to the number one mass-market leader. The Nike story begins
with the meeting of its co-founders at the University of Oregon. It was here that middledistance-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 longestablished brand nomination of the U.S. marketed by the then main player, Adidas.

In order to achieve this aim, legend has it that Knight and Bowerman each put in $550 to
cement their partnership, and decided to call their new company Blue Ribbon Sports (BRS).
BRS was basically the American distributor of Onitsuka training shoes.

In 1965, after a period of selling Onitsuka shoes from the back of their van at athletic meets,
the company grew.

The company went from strength to strength, but after heated disagreements between BRS
and Onitsuka, the new boss at BRS decided to split from Tiger in 1971 and create their own
company manufacturing their own shoes. It is said that Jeff Johnson came with the idea for
the new name, deciding to honour the Greek goddess of victory, and thus Nike was born.

It was also at this that the fledgling company had to decide on a logo for the brand, and
another of the legends that the company managed to create for itself was developed.

Nike took off virtually instantly in the United States, and within a year company sales were
at almost 2 million pairs. In 1981 Nike decided to take another major step, with the U.K.
becoming the company's first wholly owned foreign distributorship.

However it was in 1985 that Nike really became a major player. It was in this year that it
managed to persuade the then little known Chicago Bulls basketball rookie Michael Jordan
to endorse his own range of shoes. Even Nike could not have imagined the effect that this
single act would have on sales. The new Jordan endorsed range transported Nike and
trainers in general to a completely new lever of popularity.

17

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 Lunarlit e Foam materials. Flywire
is a new technology made up of thin wires of vectran fibers, which are 5 times stronger than
steel and never lose strength. Lunar Foam is a material developed by NASA that gives the
shoe excellent shock absorption and a great feel with minimal weight.

Back in 1971, the newly created Nike Company was ready to hit the market with its shoes,
and a logo to represent the brand was urgently needed.

Phil Knight turned to an associate from his teaching life and commissioned graphic -design
student Carolyn Davison to work with his new brand. Knight wanted a design that would
represent movement. Davidson supplied Knight with a few designs one of which was the
initial 'Swoosh' so well known today. Knight was not particular enamoured with any of these
designs, but with deadlines to meet the Swoosh was 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.

18

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

For Nike and Adidas, the Beijing games are a brawl for 21st century dominance of the
sneaker world. Both the rivals are looking forward for the Olympics 2010. While every
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

19

lifestyle products. The main problem they are trying to solve is the risk of injury and the
possibility that an athlete might underperform due to low quality footwear.
The principal decision makers in the process are the buyers themselves as they know best
their specific need for their specific sport.
Buyers generally buy these products as durable long lasting products that they use specially
for big game days. The quantity bought differs for team and individual sports, as teams
generally order a large number of performance footwear for all its players and individuals
usually buy a single pair. The places where the consumers mostly buy are original outlets
and franchises. Retail stores are largely low key sellers for them. The frequency of buying is
less, compared to other markets.

WAR BETWEEN NIKE AND ADIDAS

The problem for Adidas is that, while it's staked out its turf as an official sportswear partner,
Nike has more top athletes. They include Swiss tennis ace Roger Federer and Australian
track star Craig Mottram, along with old standby basketball legends Kobe Bryant and LeBron
James. But nike s athletes aren t guaranteed to win games, there is always a risk element
associated with their performance.

Nike has signed up 22 of China's 28 s ports federations to outfit most of its athletes. The deal
is just one of 40 that Nike signed with various national federations, including the U.S,
Germany and Russia, ensuring that team members will be decked out in Nike gear during
play regardless of where they have their individual endorsements. So for many of 3,000
athletes in the Adidas stable who will compete in Beijing, donning the three stripes will be
limited to the medal stand. During play, they'll be in Nike gear.

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

Adidas

y
y
y

Reebok
Woodland
Red tape

Bata
20

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 Reebok s strong presence in US
market and the global recognition of Adidas.

y
y
y
y
y

Nike
Red tape
Bata
Liberty
Puma

New balance

Nike
Nike enjoys a 47% market share of the domestic footwear industry, with sales of $3.77
billion. Nike has been manufacturing throughout the Asian region for over twenty -five years,
and there are over 500,000 people today directly engaged in the production of their
products. They utilize an outsourcing strategy, using only subcontractors throughout the
globe. Their majority of their output today is produced in factories in China, Indonesia, and
Vietnam, but they also have factories in Italy, the Philippines, Taiwan, and South Korea.
These factories are 100% owned by subcontractors, with the majority of their output
consisting solely of Nike products.

Strengths of Nike
y
y

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.

21

Nike is strong at research and development

Nike is a global brand. It is the number one sports brand in the World.

y
y
y
y
y
y

Product Range
Capacity for innovation
Distribution expertise
Single Brand
Stars endorsement
Contract manufacturing

Large portfolio of products

Weaknesses of Nike
y

y
y
y
y

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

y
y

Spread portfolio of products

Reliant on retailers

Reduction of target market

Adidas
Adidas is the main competitor for Nike. Adi das currently enjoying the fastest growth of any
brand domestically, with a market share of 6% and revenues of $500 million. They have
been shielded from bad publicity by the two Goliath s of the industry, Nike and Reebok, and
are reaping the rewards substantially. They have adjusted their manufacturing strategy,
from a vertical operation in Germany in the 60 s and 70 s, to an outsourcing focus today
throughout Asia. Unlike the big two, they do not have a code of conduct, and their factories
are considered to be the worst in the industry. It is just a matter of time before they are
exposed, with an underground swelling of negativity already occurring today. In order to
avoid the negative effects and lost revenues that Nike and Reebok have received, they need
to immediately begin to take a proactive stance in regards to the working conditions of their
factories.

22

Strengths of Adidas
y
y
y
y
y
y

Competitive pricing
Good financial position
Effective Marketing Strategy
Market Leadership
Strong online presence
Strong brand
Strong international operations
Strong distribution chain

y
y

Weaknesses of Adidas
y
y
y

High cost structure

Over pricing
Low quality products/services
Limited product line

Reebok
Reebok, as the second leading manufacturer of footwear, has domestic revenues of $1.28
billion and a market share of 16%. Similar to Nike, they also utilize a 100% outsourcing
strategy and manufacture their products throughout Asia. They have created and
implemented their own code of conduct for manufactures to fol low, 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 outs ource 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. toda y, 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

23

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 tech nical products
they employ outsourcing, following the strategy of their competitors. Although there is
something to be said for manufacturing domestically, they are straying away from the skills
that they do better than anybody else the design and marketing of the premier running
shoe in the industry. Their long-term strategy should shift to a 100% outsourcing model,
allowing them to control this niche for the future.

The basis for competition is to see who is better than the other and to win more consume rs
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 com petition 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 Nike s 6.0 athletes who are pushing the boundaries

24

of their respective sports. Nike and apple has announced a partnership targeting runners
and music lovers and has launched Nike+ipod which has hit the market and is creating a
trend it was one of the biggest success. Nike is also in collaboration with Black Coaches
Association, to provide scholarships, it gives sponsors to youth, and sports clinic to enhance
the opportunities for minorities in sports industry. Mia Hamm; Tiger Woods; Brazil Soccer
are the celebrity collaborators of nike.

Adidas has a new designer Stella McCartney who will be the company s official newest
design collaborator and it would be called as Adidas by Stella McCartney . McCartney and
Adidas will co-host an exclusive soiree. Adidas Originals is hoping to be The Greatest
through its new partnership with boxing legend Muhammad Ali. The collaboration will
launch "Ali by Adidas . Ali has an old association with adidas. Adidas Consortium City Series
3 - Adidas Consortium city Series is back this time collaboration with Paris Colette London s
Crooked Tongues, Toronto s Livestock and Tokyo s VA. Advertising partner of adidas
basketball shoes is 180LA agency. Adidas originals has teamed up with Cheez, Kalavinka and
Yoppi for football shoes. New York Yankees; University of Tennes see; Kobe Bryant are oher
collaborators for adidas.

Incentives and motives of the collaborators are to join with the best and fast moving sports
shoe which is used by many people around the world and is widely distributed and accepted
by people. Those collaborators get a opportunity and exposure. The celebrities are used by
the company to increase their market value and for acceptance by the consumers as they
have a urge to but those products that are endorsed or used by their favorite stars.

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

Core Competencies of Adidas

y
y

Technology
Customer focus

25

Brand recognition

Supply chain

y
y

Collaboratively competitive
The company launches every six months between 600 and 800 new designs in
footwear.

Core Competencies of Nike

y

Technology

y
y

Customer focus
Strategic Outsourcing

Strategic Outsourcing An advantage for Nike and Adidas over competitors

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

Is internalization a source of competitive advantage?

y
y
y

Is manufacturing a skill our firm does better than anybody else?

Will firms be able to leverage their manufacturing expertise in the future?
Are we releasing any of the firm s proprietary skills/information by outsourcing?

The answer for both adidas and nike is NO. Therefore, in today s global environment, the
most strategically viable manufacturing strategy is the outsourcing of their products. The
efficiencies that are gained, in the form of shifting of risk, reduced capital requirements,
lower wages, and ability to focus on their core competencies, strongly outweigh all other
manufacturing options.

Both companies are huge conglomerates with an enviable turnover worldwide. They have
large media budgets and a large amount of money to throw around, which they do, with
incredible fervour and gusto. They are both pioneers in this field and hire the best talent
from the best universities across the world. Hence they have the best people in their
organisations and that, coupled with their access to almost unlimited capital, makes them
potent forces.

26

ADIDAS
Revenue

$15.6 billion (2008)

Operating income

$1.5 billion (2008)

Profit

$933 million) (2008)

NIKE
Revenue

US$ 18.627 billion (2008)

Operating income

US$ 2.199 billion (2007)

Net income

US$ 1.883 billion (2008)

Total assets

US$ 12.443 billion (2008)

Total equity

US$ 7.825 billion (2008)

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

Description

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.

27

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.

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.

Nike has integrated technology system to develop their product. Nike always adopted the
latest technology for their product and innovated new products.
y
y

Speed of change of product

Design Ability
Speed of News reporting

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 ind ividual 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

28

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 adequ ate 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.

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 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.

y
y

Nike Shox

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, provid ing optimal cushioning

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.

29

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

Foamposite

Dynamic
Innersleeve

A seamless inner sleeve made of lycra that hugs the foot, and is meant
Fit 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

Waffle Sole

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
y
y

y
y

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.

30

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

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

USA economic growth is in slow growth because of WTC.

Contract manufacturing is chosen by many athletic shoes company.

Slow down in the economy

y
y
y

Reduction in consumer confidence

Barriers of entry to the EU
Contract manufacturing

COMPETITIVE FORCES
y

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

y
y

Athletic shoe trend is going to be fashion -oriented

31

SEGMENTATION, TARGETING, POSITIONING

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 sp onsoring the
event, amid criticisms. Adidas also sponsors events such as the London Marathon.

32

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 o f 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 b ack
up into the ranking of the top footwear manufacturers in the world. Adidas wants to reach
the pinnacle of success. Customer satisfaction is the main motive of the company.

Adidas mainly focuses on men and women who are brand conscious or are looking for
comfort and performance in the area of footwear. It has more than 200 varieties of men s
footwear and more than 150 women footwear. Adidas also makes sports specific shoes. It
has got an entire line of shoes devoted to sports like basket ball, football, tennis, golf and
running.

A major chunk of their customers include athletes who are looking for sports shoes which
are customized according to their needs. Adidas constantly comes up with new technologies
to help sportsmen improve their performance by providing comfortable shoes. They are
consumer focused and therefore continuously improve the quality, look, feel and image of
the products and organizational structures to match and exceed consumer expectations and
to provide them with the highest value. They seek to help athletes of all skill levels achieve
peak performance with every product they bring to market.

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 wi ll soon
be replaced by the Supernova Glide), among others. In addition, their performance apparel

33

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
y

Women

Men

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

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

34

POD S AND POP S

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

NIKE WITH 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 ti me, distance, pace, and calories burned via voice feedback
that adjusts music volume as it plays. In addition to progress reports, iPod also
congratulates you when you ve reached a personal bestyour fastest pace, longest
distance and time, or most calories burned. You can also choose a PowerSong that helps you
run stronger and listen to it every time you need a boost.
This in itself is incredible, but Nike+ also lets you save your running data at nikeplus.com, so
that you can set goals and track progress. You can challenge friends and strangers to
compete with you by sharing your running data with them. The Nike+ website also includes
other web 2.0 features like user forums where you can meet and challenge other runners,
ask questions, and give feedback; a challenge gallery where you can view all user created
challenges; and a distance club where you can view everyone s running milestones.

35

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 th e 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.

36

IN A NUTSHELL
The brand image for both Nike and Adidas is immense; however Nike has attained a
considerable competitive advantage due to its reputation for quality and innovation. Both
Adidas and Nike have used the same theoretical systems to create their brand building
programs. The companies are benchmarking each other, using the techniques from each
other s successes. Nike launched their sub brand product Alpha line which was
benchmarked on Adidas already launched sub brand of the Equipment product line for the
elite of sports men. We can find many similarities like endorsements strategies and the
companies advertising strategies. What differs in the endorsement strategies is that Adidas
focuses in sponsoring teams and global events, while Nike have their centre of att ention on
stars in specific sport like basketball and Michael Jordan or in golf and Tiger Woods. About
advertising, both companies have about the same scale and scoop of advertising but they
try to communicate different messages. The message from Adidas is; the only one you
compete with is yourself whereas Nike communicates a provocative, aggressive winner
attitude which can be related to the American sports attitude You don t win silver, you lose
gold . As we can understand the two companies are aiming at nearly the same targeted
customer group but with a slightly differentiation of attitude. Adidas stand for a competing
and winning over your self-attitude, and Nike stands for a winning over everyone attitude.
This differentiation is based on the differenc es 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 wide range of athletic footwear specialized for various
sports like football, cricket, running, gym etc.

37

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 don t win silver, you lose gold . Adidas stand for a competing
and winning over your self-attitude, and Nike stands for a winning over everyone attitude.

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

EVOLUTION AS A 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 mass-market leader. The Nike story begins
with the meeting of its co-founders at the University of Oregon. It was here that middledistance-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 longestablished brand nomination of the U.S. marketed by the then main player, Adidas.

In order to achieve this aim, legend has it that Knight and Bowerman each put in $550 to
cement their partnership, and decided to call their new company Blue Ribbon Sports (BRS).
BRS was basically the American distributor of Onitsuka training shoes.

In 1965, after a period of selling Onitsuka shoes from the back of their van at athletic meets,
the company grew.

The company went from strength to strength, but after heated disagreements between BRS
and Onitsuka, the new boss at BRS decided to split fr om Tiger in 1971 and create their own
38

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 continu ous 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, an d 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, enabli ng 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 th an
steel and never lose strength. Lunar Foam is a material developed by NASA that gives the
shoe excellent shock absorption and a great feel with minimal weight.

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

DEVELOPING THE SWOOSH

Back in 1971, the newly created Nike Company was ready to hit the market with its shoes,
and a logo to represent the brand was urgently needed.

Phil Knight turned to an asso ciate from his teaching life and commissioned graphic-design
39

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 fo r 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). How did it go about repositioning to once again be among the
coolest of kicks?

Adidas claims that, "the brand values of the company authenticity, inspiration, honesty
and commitment are derived from sport." Historically, this sensibility was demonstrated
through early and continued involvement with Olympic athletes, as well as active
sponsorship of major global sporting events like the World Cup. Adidas s rapid growth in
Asia, where revenue rose by 15 percent to US$ 878M last year, may be further propelled in
Japan and Korea when those two nations host the World Cup this year an event which is
expected to garner 2.5M spectators and one billion TV viewers worldwide.

However, the key to revitalized success seems to lie in the considerable endorsement deals
Adidas has developed with world class athletes. Recent sports figures representing Adidas
don t only score high marks in their game they also score high in their celebrity quotient.
British football star David Beckham s relationship with Adidas has no doubt lent itself well to

40

the brand s visibility in the UK. Recently dubbed "Captain of England," Beckham led his team
to victory in the 2000 FIFA World Cup. With Europe as Adidas s largest market, exposure like
this reflects in the numbers; sales grew seven percent to US$ 2.7 billion, last year.

Reinvention was the key, not only for the Adidas s marketing strategy, but also for its
product line. Eclectic, individual, 'no -rules' sports such as snowboarding, inline skating and
surfing have grown into significant categories. Activities such as golf, hiking and mountain
biking, which were seen as lifestyle and leisure activities, are now part of mainstream
sports. Increased product offerings in these categories have undoubtedly contributed to a
better score for the brand.

To keep up with the competition, Adidas generates close to 60 new foot -friendly designs
each year. The Adidas credo is to regard shoes as feet, resulting in a product with superior
fit and performance capabilities. Tactics have been revised in getting these products out for
consumption. As a result, products have been repositioned in higher -end and sports
specialty stores.

In 2002 Adidas footwear innovation, ClimaCool TM, made its debut. The new technology
added breathable materials to the shoe. In July, the Group completed its three-divisional
structure for its sore brand, Adidas, and positioned its third division as Adidas Sports Style .

In 2004 Impossible is nothing became the central message of a global campaign that
Adidas launched. It refers to the shared attitude with the athletes, of always pushing
yourself further, to beat the limits. In September, Adidas & designer Stella McCartney
announced their partnership, introducing the Adidas by Stella McCartney collection.

On January 2006, Adidas announced the acquisition of Reebok LTD. By combining two of the
most respected and well-known brands in the worldwide sporting goods industry, the new
Group will benefit from a more competitive worldwide platform, well-defined and
complementary brand identities, a wider range of products, and a stronger presence across
teams, athletes, events and leagues.

Adidas continues to prove itself as a brand built to last thr ough a game plan of reinvention.
With the recent acquisition of a lifetime partnership with Orlando Magic's Tracy McGrady
(basketball) and its heavy involvement with 2002 World Cup, it continues to strike savvy
deals that capitalize on the star power of young athletes and increase its visibility in the
marketplace.

It appears that team Adidas has honed its strategy to become a revitalized contender in
today s competitive sporting goods market and is now duly recognized as the sneaker of
yesterday and today.

41

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

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

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

42

PRODUCT LINE WIDTH OF NIKE

Footwear Accessories

Sports
wear

SportsBody care
Equipment

Football

Bags

T- shirts

Basket ball

Running

Backpacks

Hoodies

Football

Cricket

Sunglasses

Track suits

Golf equipments

Basket ball

Gloves

Track jackets

Cycling

Deo

Wind runner
Tops
Shorts
Pants

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

PRODUCT LINE WIDTH OF ADIDAS

Foot wear

Accessories

Sports wear

Sport
Equipments

Body Care

Foot ball

Bags

Jackets

Foot ball

Deo

Running

Eye gear

Jerseys

Basket ball

Shower gel

Tennis

Watches

Scarves

Football pump

Perfumes

43

Basket ball

Water bottles

Swimwear

Mats

Pants & tights

Wrist band

Tops

Padding

Shorts

Hats

Sweatshirts

Socks

Tracksuits

Cricket bats

Dresses
Shirts
Skirts

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

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

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

44

After shave

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

Style:
Nike s designs are considered to be the most stylish in the industry and beat all others as far
as looks are concerned. Attractively packaged, it is a delight to bring a pair home. Add to this
the Swooshthe most recognizable symbol in sports and you have a product that would
give the user a definite sense of pride.

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

PLACE
CHANNEL LEVELS
The producer and the final customer ar e 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

45

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 b efore the final good reaches
the consumer from the manufacturer and it s the retailer.

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

PRODUCT & BRAND EXTENTION

The introduction of a product that is known to a company but which has features or
dimensions which are new to consumers, there are three types of product extensions
revisions, additions and repositioning. Bats are already a product for adidas but the launch
of Adidas ST a new range of bats with the signature of Sachin Tendulkar is an example for
product extension. Another extension is t he different types of shoes that adidas has for
football. While Nike has

The use of a well known brand name to launch a new product, of an unrelated category into
the market is brand extension. Nike has extended its brand from sports shoes and
sportswear it has launched a new range of watches, apparel, bags and deodorants for both
men and women. Adidas has also extended its brand to causal wears and toiletries for both
men and women; water bottles, bags and sports equipment.

CHANNEL MANAGEMENT PRACTICES

The channel chosen affects all other marketing decisions. The company s pricing depends on
whether it uses mass merchandises or high quality boutiques. In managing the
intermediaries the firm must decide how many efforts to devote to push and pull strategy.
Push strategy uses the manufacturer s sales force, trade promotion, money or other means
to induce intermediaries to carry, promote and sell the product to users. Pull strategy, the

46

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PROMOTION
Promotions are mainly focused on the consumer with prices at trade promotions increasing
or decreasing with the conte t of the specific promotion drive Both Nike and Adidas are
f
g
into a lot of sponsorships and advertising.
Nike centred their brand e uity hmodel on the platforms the endorsement
focus strategy
i
creating a dominant media presence development of Flagship stores NikeT wn and subo
i
branding. The Adidas strategies were basedi on, endorsement focus strategy, advertising,
sponsorship programs focusing on major global events, sports associations, and teams, and
sub-brands. To create brand awareness both companies have been usi endorsementng
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 themto create awareness
with help from different types of media. In contrast Nike has their focus on individuals like
M. Jordan and T. Woods and their success stories.

Nike ps 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 moremoney they made an impact
with brilliant e ecutions. They made TV and other advertising campaigns. The company
communicate their heritage of innovation, technology and big success stories with
q
personalities like Emil Zatopek, Mohammad Ali.
f

48

Adidas tried to spread meanings like We know then- we know now and There is nothing
between you and success, so exceed your own expectations and limitations and Earn it .
The success was obvious and after hard work and striving toward a top position in the
industry Adidas was back in business.

Nike s third strategy was to develop, flag ship stores, Nike Town shops in bigger cities, first
national, and then abroad. Nike was the first company to establish flagship stores and it
turned out to be a sensation. Adidas choice was with which they made great success.
Examples of that is the Adidas Streetball Challenge a local three-person team basketball
tournament, this event started out as a trail in Berlin in the beginning Chart-03: Adidas
market Share comparison of the 1990s as one time occasion. In the mid 1990s it had
become a huge sport event with about 500,000 participants all over the bigger cities in
Europe. In the finals in Germany it attracted 3200 players and 40.000 spectators. Adidas
made hereby a brand-building success.

49

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 A didas,
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.

12

10

Nike

Adidas
4

Quality

Durability

Price

Comfort

Style

Advertising Innovation

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

50

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 endors ements 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 prof its through high volume and low cost.

Porter s Generic Strategies

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

Differentiation
Nike offers its consumers the option to customise their own shoes on its website, a huge
differentiation that Adidas does not have. Nike also has a large array of innovative product s,
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 val ue
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 e dge technology

51

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 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 produ ct. A
product with a high degree of innovation also has a higher pricing. Their customers are
willing to pay a higher price for their brand value and the benefits that their products offer.
Considering the higher income of today s generation and the increa sing 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 c ustomers, 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 Nike s cutting edge technology enables it to
maintain its customer base. Adidas s three stripes and the Nike s swoosh are among the
world s top logos but the swoosh is dominant in most places.

52

Both Nike and Adidas are fully exploiting the growing footwear market. Nike is forever trying
to bring out cuttin g 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
WEBSITES
brands. They have priced their products with a huge margin that people are willing to pay
because of the brand value associated with them.
1. www.nike.com
2. www.adidas.com
3. www.wikipedia.com
4. www.press.adidas.com/en/retrieved 7th june 2008
5. www.jdsports.co.uk/whatsnew.aspx?id=5375
6. www.champion.ie
7. www.adidas.com/campaigns/orginalsss2009/content/#/lifestyle/full-length-film.
8. http://www.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

REFERNCES

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

13th edition

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