How Sports Brands' Marketing Strategies Make Them Competitive - Case Study Example

How sports brands’ (Adidas, Nike and Puma) marketing strategies make them competitive in the sporting industry and influence customers Introduction Marketing is very crucial for any company or organization that operates in competitive business environments. The concept of marketing helps in differentiating a firm from the others in the same industry depending on the effectiveness and competitiveness of the respective marketing strategies. This dissertation looks at how sports brands (Adidas, Nike and Puma) manage their marketing strategies and how they make them competitive within the sporting industry. The effectiveness and competitiveness of the marketing strategies of each sports brand helps in differentiating them form each other. This paper focuses on the difference between the marketing strategies of each of these sports brands and how they influence their customers. This is done through comparing the financial performance of each of the given brands. Adidas, Nike and Puma are the 3 top sporting brands in the world. This dissertation seeks to compare the marketing strategies of each of the three sporting brands in marketing their sportswear brands. The most effective marketing strategies will be determined at the end, depending on financial and market performances of each of the brands. This research paper is divided into various sections, some of which have other subsections. The first section is the abstract which summarizes the findings of the paper, the second section is the introduction and represents the topic of the study as well as the research questions that need to be answered at the end of the research. The introduction section is followed by the third section which is the literature review. The literature review seeks to present already existing information and data about the topic. The methodology section follows the literature review and it describes the procedures used in the collection and analysis of the collected data (Aaker &Joachimsthaler 2011, pp. 99). Research topic: How sports brands’ (Adidas, Nike and Puma) marketing strategies make them competitive in the sporting industry and influence customers Research questions This part ensures that the study remains relevant and is focused on what it intends to achieve at the end. The main research questions for this study will be: Which sportswear among Nike, Adidas and Puma employs the most effective marketing strategies based on their market performance? How the marketing strategies applied by each of the sports brands make them competitive How the marketing strategies applied by each of the sports brands help influence and attract customers What are the current marketing strategies applied by Nike brand? What are the current marketing strategies applied by the Adidas brand? What are the current marketing strategies applied by the Puma brand? What criteria does Nike brand use to measure the efficiency of its marketing strategies? What criteria does Adidas brand use to measure the efficiency of its marketing strategies? What criteria does Puma sportswear brand use to measure the efficiency of its marketing strategies? Based on the performance criteria, which are the most effective marketing strategies used by Adidas? Based on the performance criteria, which are the most effective marketing strategies used by Nike? Based on the market performance of the three sports brands, which marketing strategies are most effective? Literature review Nike, Adidasand Puma are the three most famous sportswear and equipment brands in the world. The popularity of these three brands immensely increased to an extent that they are considered to be household names. The common factor between the threecompanies is their target market. The three sportswear brands mainly target the lovers of football and other sports. Nike is a sportswear brand which is very popular today; a factor that is attributed to the numerous celebrity sponsorships that the brand has been engaging in. The key market for Nike are runners and basket ballers (Frisch, 2014 pp. 21).Thus, the products of this company are meantto meet the needs of these two categories of people. In the past, Nike’s market was purely in the U.S. However, in the recent past, the company has expanded internationally and the company’s sponsorships on athletes has become a common story. Adidas’ main market is people who love tennis and soccer. Initially, Adidas market was solely found in Europe but the brand has gained international recognition. This is a factor that is attributed to their connection to soccer which is described as the world’s sport because it is the most popular sport when compared to others such as basketball and tennis. There are two companies which operate under Adidas. These two companies are Rockport and Reeboks and they immensely market the Adidas sportswear brand. Puma sportswear brand sells its products, mainly shoes, in more than 120 countries especially in the Europe continent and employs more than 9,000 people worldwide to represent the brand as well as promote and increase the sales of the company. Puma sponsors mainly FIFA related activities such as the world cup and this acts as a means of advertisement through creating a strong reputation for the brand. Adidas, Nike and Puma are the top three sportswear brands in the world and have been competing for decades. The level of competition in the sporting industry is so high such that it even becomes hard to determine the best of the three. The difference in their marketing strategies is believed to be the main point of difference in terms of their competitiveness in the market. These three sporting brands have been competing in the industry so as to become the best represented sports’ wear company on the planet. Nike has been proved to be the leader in this industry, followed by Adidas and then Puma comes third (Frisch, 2014 pp. 26). This paper will look at the different marketing strategies applied by each brand and how these strategies have made who they are. Adidas is said to be experiencing an exponential growth in the industry is even becoming a threat to Nike. The three sporting brands have been applying different marketing strategies in order to ensure that they beat each other in the competitive sporting industry. The effectiveness of marketing strategies applied by each brand is measured by the financial performance of each brand (Aaker &Joachimsthaler 2011, pp. 121). Nike, Adidas and Puma are the three most famous sporting brands in the world and deal in developing sporting attires and equipment. The competitiveness and the popularity of each of these brands has become so vast, courtesy of their marketing strategies. This section describes the various marketing strategies applied by each sport brands and how these strategies make them maintain their competitive edge in the market. Nike Social media marketing-This is a marketing strategy that almost each brand uses so as to reach to a wide range of customers irrespective of their geographical locations (Chernatony& McDonald 2013). Nike brand shifted its focus to soccer and basketball and through this, the company has been able to attain international recognition. Nike redefined the whole issue of sports marketing when they signed Michael Jordan as their ambassador and created the Air Jordan line. This has been the basis of its marketing strategies and has put the company on the right path of dominance as indicated by its performance in the market. When Nike signed Michael Jordan, the company’s sales stood at $150 million. After one year, the sales for the new Air Jordan on its own stood at $100 million (Statista 2016).The use of Michael Jordan as a celebrity meant that Nike was not only marketing its new Air Jordan, but it was also trying to market the entire company and through this, a lot has been achieved. Sonny Vaccaro, the then Nike executive, signed Jordan believing that he was the perfect promotional vehicle as well as the company’s brand ambassador and they had to pay him all the money that he required. At first, this was seen as a risky business, but it is very clear that Nike’s Association with Michael Jordan has put the company as one of the top sporting companies in the world (Katz 2004, pp. 16). Nike’s tagline is also another strategy that the company has been using to market itself. The tagline states, “If you have a body, you are an athlete”, and is in line with the desires of most of the people to be fit and strong. Bill Boweman, The co-founder of the company, understood the importance of people taking part in sports irrespective of their financial, geographical or social circumstances. The ability of Nike to understand the basic human desire to excel has made the company to become a global leader in sportswear and equipment and these people have been acting as ambassadors to the company (Frisch, 2014 pp. 19). Adidas Adidas employs more than 50,000 people in over 160 countries expected to market the brand and produce over 660 million units of its products. These figures may suggest that Adidas Group is quite a complex organization but the truth of the matter is that the company keeps its operations simple and fast. The main marketing strategies applied by Adidas are segmentation, targeting and positioning. Adidas, the strongest sporting band in Europe, is segmented upon demographic, behavioral and psychographic factors. Adidas is divided into four brands within its portfolio, namely: Adidas, Reebok, Rackport and Taylor made, all of which are meant to reach various customer groups. The company applies the concept of differentiated target strategy so as to target various age groups including children, young adults and adults who have passion in sports and fitness. Adidas also uses different mechanisms to secure a market in North America. Since 1949, it has been using focus differentiation strategy focusing on golf and soccer. As a result, the brand has been enjoying high sales in areas where soccer was popular such as in South America and in Europe. In an effort to compete with Nike which takes an estimated 95 percent of the market in North America, Adidas decided to increase its financial allocation to marketing. This is a clear indication that the company has been focusing on increasing its competitive position(Statista 2016). Adidas also applies the marketing strategies of the user and benefit based positioning which means that it focuses on creating a distinctive image in the minds of the consumer. This is achieved through putting emphasis on the vale and quality of Adidas products and through this, Adidas has been able to maintain its brand essence not only in Europe but also across the world. Adidas holds its competitive advantage form its distribution network, brand quality and equity as well as the quality of products. As at 2014, Adidas had a total of 2400 stores worldwide with $4.3 billion business (Statista 2016). Adidas has been able to sponsor various sport events such as FIFA, UEFA, NBA, Olympics and Cricket. At the same time, this sporting company is well known for its products in the market which are always comfortable and long lasting. Adidas maintains strong relationships with various organizations such as the International Finance Corporation and the International Labor Organization, all of which are well known and established brands with immense reputation across the globe. This has given Adidas a competitive edge over its main competitors for a sustainable business. Puma Puma distributes its products, mainly shoes, in more than 120 countries especially in the continent of Europe and employs more than 9,000 people worldwide to represent the brand as well as promote and increase the sales of the company. Puma sponsors main FIFA activities such as the world cup and this acts as a means of advertisement through creating a strong reputation for the brand. Puma is one of the sporting brands that believe in partnerships as part of the marketing strategies. For instance, Puma partners with vehicle heavyweights, BMW and Ferrari. Participating in corporate social responsibilities also forms part of the marketing strategies at Puma. Some of the CSR activities that Puma participates in include the Anti-child labor Campaigns, sports scholarships, promotion of sports culture, activities aimed at controlling environmental pollution, among others (Financial Reports 2009). Puma’s advertisement strategy in India focuses on generating revenues from cricketing equipment as well as sponsoring of the Ranji trophy. In addition, Pumas makes use of the print media, creative billboards and focus on football gear revenue for marketing purposes. Other marketing strategies that Puma applies include the use of TV commercials, apparel packaging, online customization and sales promotion comprising of short-term incentives aimed at encouraging more purchase and trial for their products. Puma partners with various celebrities who endorsed the company as a brand and accepted to act as ambassadors to the company. These celebrities include SainaNehwal (badminton), SomdevDevramman (Tennis gears), GautamGambhir (cricket equipment) and Shilpa Shetty (Health academy). Puma is also playing its cards well in terms of public relations where they sponsor trophies so as to promote and protect their image (Statista 2016). In the current world, these three brands make us of the social media as a marketing platform with all registering Facebook and Twitter accounts where they share with their customers and other stakeholders. The Facebook presence of these brands can be described as immense. The three brands employ various approaches aimed at increasing the number of the supporters who follow them on the social media sites such as Twitter, Facebook, and Instagram. Some of these approaches are similar for the three brands while other approaches are different. However, all these approaches can be considered to have made the three brands successful with respect to social media marketing. One of the main things to note about these companies is that their strategies are able to target specific audiences by use of different pages on Facebook, twitter and Instagram and can also use various names but refer to the same company. These brands have created various social networking sites and pages which are dedicated to specific types of sportswear and equipment. Likewise, the companies have various networking sites dedicated to particular sports such as baseball, cricket and soccer. In addition to this, some brands such as Nike have createdvarious pages that are specifically designed for specific countries. Examples of these pages include Nike Spain and Nike India. The presence of these pages enables the brand to obtain a lot of information about the use of their products in these countries. This is a practice which has not been implemented by Adidas as at 2012. Facebook marketing is one of the mostly applied forms of social networking sites especially for the lovers of football and other sports. Adidas uses Twitter and instagram to communicate with its audience in Russia. This is in addition to creating online communities with different themes. Some of these communities are more general while other communities are specific such as football community. All these platforms are meant to increase the market share for Adidas. Another vital community that Adidas maintains is the Adidas Originals. The main reason behind the formation of this community is to facilitate direct communication with customers. Through the use of this community, customers can comment on the size of shoes that they want, and the color of the shoes that they want and have their queries answered on the same comments sections. This serves as a customer service for the brand. This community has managed to get more than 188, 630 followers (Chernatony& McDonald 2013). Nike has also created its football community which has attracted more than 230, 000 followers. The community is designed to create a platform on which various queries can be raised and answered. This is a marketing strategy that the brand is using to reach to a wide range of customers irrespective of their geographical locations (Chernatony& McDonald 2013). These three brands also uses YouTube for marketing purposes and to ensure that their new products are well known to the consumer. Puma allows its fans to purchase goods directly from its social media sites and this is new way that has aligned the company’s sales and marketing. The use of symbols for purposes of marketing The three brands use symbols as a way of marketing and making them recognized globally. The symbol used by Nike which is referred to as “Swoosh” was developed in 1971. The symbol was meant to uniquely identify the brand and hence serve as a marketing strategy. Adidas used three strips as a symbol for its performance. The trefoil found on Adidas products represents the original Adidas line of products. Puma designed their first logo in 1948 and since then the logo has projected the company’s products and services as well as its image. This logo still dominates the world in terms of delivering a big message to athletes across the globe to be challenging and courageous. All these strategies are designed to ensure that these brands are uniquely represented to their potential customers (Chernatony& McDonald 2013). Puma basically deals in sports shoes and sportswear such as track suits and it is believed to be the source of durable shoes and other sportswear. Puma is also the main sponsor of more than 30 national football teams across different FIFA confederations. In addition, Puma has also enjoyed immense endorsements of some famous soccer stars and legends such as Pele, Diego Maradona, Enzo Francescoli, Johan Cruyff and LotherMatthaus. These great legends have acted as ambassadors to the brand and this has greatly publicized the company. The figure below summarizes the financial performance for each of the three sporting brands from 2006 to 2015 (Statista 2016). From the literature reviewed it is clear that Nike is theleader in the sportswear industry, though Adidas and Puma are experiencing exponential growth in the same industry providing a stiff competition to Nike. It has been predicted that the competition among the three sportswear brands will get stiffer since every brand is trying as far as possible to beat competition and be on top of the other. The three brands have been using different marketing strategies (as discussed) in order to ensure that they outdo each other in the competitive sporting industry. The effectiveness of marketing strategies as measured by the financial performance of each brand indicates that Nike leads followed by Adidas and Puma comes at number 3. 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Statista. 2016. Global revenue of Adidas, Nike and Puma from 2006 to 2015 (in billion euros)* retrieved from http://www.statista.com/statistics/269599/net-sales-of-adidas-and-puma-worldwide/ Read More