Nike and Adidas - Consumer and Behaviour Theory - Case Study Example

Contents Executive Summary.................................................................................................2 Introduction.............................................................................................................3 An overview of Air Jordan........................................................................................4 An overview of Adidas Sports performance.................................................................5 Theories and concepts used to market Air Jordan..................................................... ...6 Benefits of a sociological model to Nike.....................................................................9 Theories and concepts used to market Adidas Performance...........................................10 Benefits of psychoanalytical model to Adidas.............................................................12 Conclusion.............................................................................................................13 References..............................................................................................................15 Appendix...............................................................................................................21 Nike and Adidas: Consumer and Behaviour Theory Executive Summary This report will examine two companies, Nike Inc and Adidas AG with regards to their sports shoe brands namely Air Jordan and Adidas Sports Performance. The two companies use different consumer behaviour theory and concepts to market their brands. Nike uses a sociological model to market its Air Jordan brand whereas Adidas uses a psychoanalytic model to market its Adidas performance brand. Over time, these brands have managed to maintain their competitive edge in the market and experience tremendous growth and success due to the consumer behaviour theories and concepts that they use. This report will examine the theories and concepts used to market the two brands and depict the results and benefits that each company realizes for using these consumer behaviour theories and concepts. Introduction Nike Inc is one of the world’s largest manufacturers and supplier of sports apparel and equipments based in the United States. The company was founded in 1962 and has since grown to become a market leader in the supply of sportswear and equipments. Nike’s primary product is athletic footwear, over the years, the company has introduced into the market different footwear brands under its trademark name. Air Jordan is one of Nike’s most successful footwear brand, it was introduced into the market in 1985 and since then new designs have been released each year. The success and growth of the Air Jordan footwear brand over the years can be attributed to the marketing strategies and concepts used to market the brand (Carrol & Buchholtz, 2008). On the other hand, Adidas is a German based manufacturer and supplier of sports apparel founded in 1948. In Europe, Adidas is one of the largest manufacturer and supplier of sportswear and the second largest in the World, with Nike being the largest. The Adidas brand is divided into three main categories namely; Adidas sports performance, Adidas sport heritage and Adidas sport style. Adidas Sports Performance is one of Adidas most successful brands that mainly centers on performance over style (Wong, 2009). This report will examine two companies, Nike Inc and Adidas AG with regards to their sports shoe brands namely Air Jordan and Adidas Sports Performance. When marketing these brands, the two companies employ different consumer behavior theories and concepts in order to appeal to their target markets. Nike markets its Air Jordan brand by using a sociological model whereas Adidas markets its Adidas performance brand using the psychoanalytical model. Foremost, this report will provide a brief overview of the Air Jordan and Adidas Sport Performance brand. Subsequently, it will examine the theories and concepts used to market the two brands and depict the results and benefits that each company realizes for using the alleged consumer behaviors theories and concepts. An overview of Air Jordan Air Jordan also referred to as Jordans are a brand of basket ball shoes designed, produced and released by Nike in 1985. Originally, this brand was designed for and endorsed by Micheal Jordan, a NBA champion and one of the greatest players in the history of basketball (Ferrell & Hartline, 2008). Currently, the Air Jordan line is supplied by the Jordan Brand which is a subsidiary of the Nike brand. Since the launch of the Air Jordan brand, each year a new design is released, the unveiling of the brand is often received by much anticipation from consumers, the industry and the media. The Air Jordan brand perennially dominates the market in demand and sales. Each year, the release of the Jordan model epitomizes a high benchmark standard in innovation, performance and design for the athletic footwear industry (SneakerNews, 2010). Over time, Air Jordan has become a very popular and successful brand. In the 1980’s and 1990’s Air Jordan advertising campaign was rated as one of the most popular campaign. The brand proved to be very popular such that, if the brand had its own company it would be among the largest shoe company in the world. The success of the brand has been mainly attributed to its association with Micheal Jordan one of the world’s best basketball player. The designers of the brand take into account his ideas, ideals, hobbies, feeling and incorporate these factors in the different designs of the shoes. Several Jordans have been designed after Micheal Jordan’s car models. The Air Jordan line has been associated with high-end trend, style and fashion. The brand has become a household name attracting loyalty from consumers from different social strata and ages. Besides the brand’s association with Micheal Jordan, the success of the brand can also be attributed to the theories and concepts used to market the brand to its target market (Solepedia, 2006). An overview of Adidas Sports performance Adidas performance is a product line of Adidas that mainly focuses on providing footwear products that enable athletes to improve and surpass their performance. This line is one of Adidas’ key brands that generate the company most of its revenue. It is estimated that this brand contributes upto 80 % of the company’s total worldwide revenue (Moerke & Storz, 2007). Adidas performance shoes are specifically designed to attract and maintain the loyalty of sports men and women. The features of the shoes are mainly centred on innovation and functionality (Haig, 2011). The design of the brand provides innovative features geared towards promoting optimum functionality. For instance, the brand features spikes for running shoes, studs for soccer boots and nylon soles. These innovations have over the years helped to build the Adidas brand since they provide features that enhance performance in different sporting activities (Haig, 2011). The concept behind this brand is to help sports men and women to effectively utilise their abilities and improve their performance. Adidas performance focuses on satisfying the needs of athletes and other sports participants. Furthermore, the company has always found new ways of improving this brand so as to adapt to the ever changing needs of the market (Haig, 2011). Over the years the brand has incorporated new technologies to provide innovative products that meet the specific needs of its consumers. Other brands in the market like Nike and Puma evidently act as major competitions for the Adidas performance brand. In order to keep its competitive edge in the market, sponsorships and advertising have been used as the key marketing strategy of this brand. However, the company does not compromise on the original intentions of the brand which is to provide cutting-edge and function-based products that enhance the performance of sports men and woman. Performance enhancement is the key goal of this brand (Haig, 2011). Theories and concepts used to market Air Jordan A sociological model is one of the models that Nike uses to market its Air Jordan brand. According to this model consumer behaviour is determined by social influences and not completely on utility. This model accentuates that the needs and behaviours of individuals are mainly determined and shaped by social forces and groups. In their book “Consumer Behaviour” Reddy & Naik (1999) observes that people tend to base their needs, wants and how to fulfil them from their family, reference groups, social groups, cultures and sub-cultures (Reddy & Naik, 1999). In the 19th century social theorist like Thorstein Veblen, suggested that each individual belongs in a particular social group and under normal circumstances they tend to conform to the unwritten but powerful behavioural standards and norms of the social groups that they belong to. In some instances, individuals tend to emulate norms or behaviours of high status groups that they aspire to belong to. Over the years, a number of social researchers have confirmed that consumer behaviour is strongly influenced by social groups and norms that they belong to or aspire to belong to (Reddy & Naik, 1999). Over time, it has become evident that Nike taps into the sociological model to market and advertise its Air Jordan brand. Since the launch of Air Jordan line 25 years ago, the brand has managed to maintain its competitive edge in the market. Pop culture is one of the marketing concepts that Nike uses to market the Air Jordan brand. According to Storey (2006), pop culture is the totality of perspectives, ideas, images and attitudes that are preferred within the mainstream of a particular society through an informal consensus. Popular culture is significant in that it influences consumer behaviour. For example, the fashion or clothing style of celebrities or pop idols greatly influences consumer habits of young people. Most young people are bound to purchase what they see celebrities purchase so as to identify themselves with the alleged celebrity (Danesi, 2008). Popular culture can be thought of as a central force in society that influences what people do, watch, think about and wear (Dolby, 2003). In the American society and other places around world, “Air Jordan” shoes are considered as high end and “cool” products linked to a certain class or group of people. This brand is not only dominant in sports particularly basketball but it is also popular amongst pop music celebrities. For instance, Kanye West has been frequently spotted wearing Air Jordan 8 Aqua; Rapper Fat Joe has been spotted with the fire red Air Jordan III sneakers; Bow wow is also said to be a frequent buyer of Air Jordan (John, 2011). Nike marketers target consumers who have embraced the social status or intimacy associated with this brand. They target consumers who care less about the need or functionality of the product and care more about the social status linked to the product (Shukla, 2010). Marketers of this brand take advantage of the social status associated with the Air Jordan brand and that is why they set high prices for the brand. For example, a pair of Air Jordan shoes goes for $200, as compared to other brands $200 is a very high sum for a pair of shoes. It is therefore worth questioning whether a pair of Air Jordan shoes is worth $200. Nevertheless, the justification of buying the shoes at $200 is not based on the fact that it provides value for the money paid for it but rather the main justification of buying the shoes at such as a high price is based on the social status attached to the product (McKee, 2007). In addition to this, the Air Jordan brand capitalizes on celebrity endorsements. Nike has spent millions of dollars on celebrity endorsements especially those involving Micheal Jordan. The millions of dollars spent in advertising show the crucial role that celebrity endorsements play in advertising (Daneshvary & Schwer, 2000; Kambitis, 2002). Over the years, the brand has accentuated and epitomised the image of Micheal Jordan. The Air Jordan brand is mainly marketed on the persona of Micheal Jordan, a six time NBA champion and one of the greatest players in the history of basketball (Ferrell & Hartline, 2008). For instance, one of Nike’s early commercial was the “Jordan Flight “commercial aired in 1985. The commercial featured Micheal Jordan moving across a basketball court at twilight with the Chicago skyline at the background. Subsequently, Jordan slam dunks the basketball he was holding however he remains suspended in the air for the ten final seconds of the commercial. The catchwords of this commercial are “Who said man can’t fly? “The commercial portrays Jordan’s incredible athleticism, it also portrays the power of the Air Jordan brand that he wears (Johnstone, 2001). Some studies show that eight out of ten advertisements that feature popular celebrities realise high viewing and response from consumers (Taleja, 2010; Khatri, 2006).Nike marketers recognize the influence that Micheal Jordan has on consumers, thus they use him to endorse the Air Jordan brand. As a result, a good number of consumers particularly young consumers have formed loyalty to the brand so as to relate and identify themselves with Micheal Jordan (Kotler, Cunningham & Turner, 2001). Benefits of a sociological model to Nike A sociological model or approach to consumer behaviour has proved to be beneficial to Nike since it has helped the company to draw on to social influences in order to successfully market its brand to a high-end market. This approach has enabled marketers to understand that consumers are not only inspired to purchase brands due to their functionality but also due to the social status attached to a particular brand or product (Reddy & Naik, 1999). Consequently, Nike marketers have managed to effectively take advantage of Air Jordan’s social status characterised by its association with Micheal Jordan and its pop culture reception. This has in turn helped the Air Jordan brand to maintain its competitive edge in an ever changing market. The brand has also realised tremendous growth and success over the past 25 years, it has also helped the company to increase its revenues. As a result of this marketing approach, Air Jordan has over time become Nike’s most successful brand. Despite the fact that the pricing of this brand is high as compared to other brands, Air Jordan shoes enjoy a high customer loyalty especially from consumers from the high end market. Nike continues to be world’s largest shoe producer and supplier. The company dominates the U.S footwear market, it controls over 20 % of U.S footwear market. In the 2005 financial year the company the company’s revenue increased from 12% to 13.7% billion (Miller-Jones, 2010). Theories and concepts used to market Adidas Performance The Adidas Company uses the psychoanalytical model of consumer behaviour to market its Adidas performance brand. This models draws on to Sigmund Freud’s psychoanalytic theory. This model asserts that consumers have a complex and deep seated set of motives that cause them to portray certain buying decisions. Consumers have an unconscious or private world characterised by suppressed desires, subjective longing and hidden fears. As a result their consumer decisions are influenced by these longings, desires and fears. In this theory Freud, dispelled the notion that human beings had power over their personal psyche and argues that these unconscious psychological forces greatly influence behaviour however people are not able to completely understand their motivation (Yu-Hui, & Stuart, 2007). According to this theory, every individual’s personality has three parts namely; the ID, Super Ego, and the Ego. The “ID” is the key source of energy that drives one to carry out an action. “The Super Ego” is the conscience which dictates what is socially approved whereas the Ego acts as the conscious influencer to the “ID”. Basically, the ID represents the consumer’s impulses and urges for immediate and complete satisfaction, such instincts are sometimes anti-social. The super-ego represents one’s idealised behaviour pattern that can be influenced through forces such as the media. On the other hand, the Ego mediates between the ID and the Super Ego by direction ones behaviour so as to fulfil the needs of the “ID” and “Super Ego” (Elfriede & Margaret, 2011; Swarbrooke & Horner, 2007). Marketers of the Adidas performance brand draw on to the psychoanalytic concepts of consumer behaviour with reference to Freud’s psychoanalysis theory. For instance the company’s “Impossible is nothing” advertisement campaign reflects on a concept that encourages people to realise their impossible dreams (Riggs, 2006; Berger, 2008). The ad campaign features over 30 prominent athletes from around the world sharing their personal stories on how they overcame impossible challenges to become stars in their sports. For example the advertisement campaign featured Lionel Messi, a player for the Barcelona football club. His story revolves around how he managed to overcome a growth hormone problem at the age of 11 to become one of the best football players in the world. This Adidas performance advertisement campaign portrays a thought provoking, powerful and edgy campaign with the core message that “Impossible is Nothing.” The campaign aims at encouraging consumers to wear the Adidas performance brand as they take the first step towards reaching their impossible dreams. This advertisement campaign draws on to the psychoanalytical model of consumer behaviour by exploring the unconscious or private world of consumers characterised by suppressed desires, subjective longing and hidden fears that determine consumer behaviour (Riggs, 2006; Berger, 2008). In line with its “Impossible is nothing” advertisement campaign, Adidas company has aired advertisements that portray how the design of its brand provides innovative features geared towards promoting optimum functionality (Haig, 2011). These advertisements have over the years helped to show consumers how the Adidas performance brand provides features that enhance performance in different sporting activities. In addition, Adidas performance advertisements portray how its footwear help sports men and women to effectively utilise their abilities and improve their performance (Riggs, 2006; Berger, 2008). Benefits of psychoanalytical model to Adidas The psychoanalytic model to consumer behaviour helps marketers of the Adidas performance brand to become aware of the fact that consumers are motivated by both functional and symbolic aspects of products (Yu-Hui, & Stuart, 2007). “Impossible is nothing” advertisement campaign connotes the aspiration of most consumers to overcome the impossible in order to realise their dreams. The advertisement campaign has helped to encourage consumers to wear the Adidas performance brand as they take the first step towards reaching their impossible dreams (Riggs, 2006; Berger, 2008). The model has also helped Adidas marketers to address the unconscious psychological needs, desires and aspirations by insinuating that the Adidas performance brands can help them fulfil their needs to perform and overcome the impossible. In reference to the Freudian psychoanalytical model, Adidas Company has been able to launch an aggressive and effective marketing campaign for its Adidas performance brand. The company’s advertisement campaigns have managed to convince consumers that this brand incorporate functionality features that enhance performance in different sporting activities. Unlike other brands like Air Jordan and Puma which are known for having a niche in the market due to their attractiveness, social status and association with popular culture, the Adidas performance brand is mainly known for having effective functionality features that enhance the performance of athletes in different sporting activities. The company is recognised for its innovation in footwear features that enhance functionality. The Adidas performance brand provides innovative features geared towards promoting optimum functionality. For instance, the brand features spikes for running shoes, studs for soccer boots and nylon soles. These innovations have over the years helped to build the Adidas brand since they provide features that enhance performance in different sporting activities (Haig, 2011). Consequently, the Adidas performance brand has over the years become Adidas’ key brand that generates the company most of its revenue. It is estimated that this brand contributes upto 80 % of the company’s total worldwide revenue (Moerke & Storz, 2007). Conclusion This report has examined two companies, Nike Inc and Adidas AG with regards to their sports shoe brands namely Air Jordan and Adidas Sports Performance. The two companies employ different consumer behaviour theories and concepts when marketing these brands. Nike markets its Air Jordan brand by using a sociological model whereas Adidas markets its Adidas performance brand using the psychoanalytical model. Over the years, these brands have managed to maintain their competitive edge in the market and experience tremendous growth and success due to the consumer behaviour theories and concepts that they use. For instance, a sociological model or approach to consumer behaviour has proved to be beneficial to Nike since it has helped the company to draw on to social influences in order to successfully market its brand to a high-end market and continuously increase its profitability since the introduction of the Air Jordan brand 25years ago (Reddy & Naik, 1999). On the other hand, the psychoanalytic model to consumer behaviour has helped Adidas marketers to become aware of the fact that consumers are motivated by both functional and symbolic aspects of products (Yu-Hui, & Stuart, 2007). This model has helped the company to launch an aggressive and effective marketing campaign for its Adidas performance brand. For instance, the “Impossible is nothing” is considered to be a successful and influential campaign that connotes the aspiration of most consumers to overcome the impossible in order to realise their dreams. Through this campaign the company has managed to convince consumers that this brand incorporates functionality features that enhance performance in different sporting activities. From this study it is therefore evident that consumer behaviour theories and concepts help to influence consumer decisions and behaviour (Sheth & Parvartiyar, 1995). References Berger, C. (2008). Strategic Sports Marketing- The impact of sport advertising upon consumers: Adidas- A case study. Munich: GRIN Verlag. Carrol, A. & Buchholtz, A. (2008). Business and Society: Ethics and Stakeholder Management. New York: Cengage Learning. Danesi, M. (2008). 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Appendix Micheal Jordan, key endorser of the Air Jordan brand The Air Jordan 16 released on Michael Jordan's 38th birthday “Jordan Flight “commercial aired in 1985 Adidas performance shoes with studs to enhance performance Adidas running shoes - molded EVA midsole for lightweight cushioning “Impossible is nothing” campaign featuring Lionel Messi Read More