The Industry Comprises of Sporting Goods - Assignment Example

THE SPORTS INDUSTRY According Economic watch (Sports Industry), the sports industry today is one of the most important revenue generators in world economy. The industry comprises of sporting goods equipment, sports apparel, fitness equipment, recreational transport equipment and athletic footwear. In recent times this industry has grown many times over and this is mainly due to live coverage of sporting events like the Olympics, the football world cup, world athletic meet, formula1racing, basketball championships, the Wimbledon and other important tennis matches. Endorsements, media advertisements and telecasting rights also form a major part of the sports industry. The sports business means different things to different people , most importantly the athletes who require the use of the sporting goods to achieve fame and personal fulfillment, secondly the business people where in sports provides a continually growing market place worthy of investing, for the developers and the local government where in revenue is built from tourists and local fans. In the U.S, the ‘Big 4’ leagues bring in about $17 billion in annual revenue, the sporting good sales at retail stores roughly contribute about $ 41 billion yearly. On an annual basis around $400- $425 billion is contributed by the U.S sports market alone. The industry is so vast and complex that it makes it difficult to put an all encompassing figure to the yearly revenue. Many of the workforces in nations like U.S, Europe, Australia and Japan rely on the sports industry for their livelihoods, with figures increasing constantly for professional athletes, coaches, scouts, umpires, referees, and other officials etc. The global meltdown in 2008-09 had a big impact on the sports industry. Manufacture of sports equipment dropped, even the sale of tickets were difficult, since tickets for professional games were very expensive. Golf courses suffered revenue declines and some of them even closed. Most affected were the sale of high end sports and recreation items. The sports industry faced significant challenges in controlling expenses while pricing products and services such that they would still retain and attract new customers. (Introduction to Sports Industry, n.d) Like in any industry politics play a very important role, this comes into play when sports completions cross borders, for example in another country, city or even locally. In countries like China it is the national policy that drives decision making at higher levels. Following of national policies closely can help predict potential changes or opportunities. These policy changes need to be balanced considering consumer behavior. Consumers can reform and develop markets even before the policy changes have been implemented; this was proved successful during the early Heineken tennis tournaments in Shanghai in the late 1990s and early 2000s, where in the developers worked really hard to get the tournament to be played in China even before the approval. (Brad and Dennis,2008) Sports marketing is the marketing of sport/sports products or the marketing of non sport products through the association of sports. Here non sport companies associate their brand with sports attributing them to strength, fitness, power etc... Many of these companies endorse their brands by sponsoring teams in baseball, football, cricket, formula one racing thus branding their names on the uniform or car of the teams taking part. Sports media and sports tourism have taken the sports industry to a new height in terms of economic growth. Some of the internationally acclaimed sports goods and apparel manufacturers are Nike, Reebok, Addidas, Puma, Wilson, Stiga, Dunlop, Yonex etc... (Sports Marketing, Business Exchange)- See Appendix A Nike: The Company is based near Beaverton in Oregon, a part of the Portland Oregon area. Nike was founded On January 25, 1964 under the name of Blue ribbon sports and officially became Nike Inc in 1978. Nike deals with designing, distributing and marketing of sports equipment, accessories, apparel, and footwear. This is a fortune 500 company with employee strength of over 30,000 and earned revenue of $16 billion in 2007(Sports Industry) Nike started its website in the early 1990,s but was not an interactive website for the first six months. key issue influencing Nike’s marketing strategy is the Internet; Nike uses the net to gain market entry, selling and marketing communication of their products. Nike is one o the leading innovators of Internet branding and marketing (Angeletti, 2005) Nike’s website is one of the most jaw dropping, heart thumping websites sites ever created, with many awards to its credit. They haven’t sopped with one amazing flash website they have developed an entire network of sites which all lead to the central hub which leads to the stores thus creating more buzz, more traffic and ultimately more sales.(Nike.com,2007) The 4p’s of marketing, the base around which every marketing company is surrounded. Nike pioneers in their branding; they treat the internet like they would treat the rest of their marketing plan. Their products diversify on a large scale; these products are widely available on all their websites with pictures and detailed explanation for each of their products. Thus giving the customer an insight to all their products which they normally wouldn’t get in television ads or even a retail store. Their pricing is competitive with other premium sports companies; however they also have various segments. Their pricing is based on the premium segment as target customers. Pricing of products through the internet are not very different from the prices that they can be bought from in a regular store, however there are offers available in most of their websites around the world , where in shipping charges are free, along with other offers and promotions in select countries. They normally do not discount the products so as to not undercut their retails partners Technically Nike sales are carried out in multi brand stores and exclusive Nike stores around the world; they have also captured the internet as a source of marketing. As time goes by consumers are becoming more and more comfortable with integrating web surfing in their daily routines, this makes it important for a company like Nike to keep up with today’s trends of online marketing and presence. The details available also help the consumer to select a shop in his/her locality if they require seeing the product before investing. As far as promotion goes, Nike has a lot of famous athletes who serve as brand ambassadors like Tiger Woods, Roberto Carlos, Renaldo, Jermane O’Neil, Lance Armstrong etc, and use any of them for online presence. Apart from this they also sponsor many events like football, basketball, marathons etc and give intimate details on these sports online. They have a vast range of products for running, football, tennis and even customized products. It is their brand power; quality products and their loyal customer base that helps it maintain its high revenues. Their in-depth use of the internet marketing techniques makes it one of the biggest success stories for online presence in the world over (Gwendolyn Cuizon,2009). They are also known for their online campaigns from time to time. As far as advertising goes, all their products possess the logo and the Nike website address.(Angeletti, 2005) There are challenges of Internet marketing faced, the inability to touch, feel and try the product before buying. The abundance of products available online to look into to review by providing pictures, colors so that the customers knows exactly what he is getting, this helps in reducing the risk of buying on the internet (E- Marketing strategies: A comparative Analysis of the Athletic Shoe Industry, 2009).Then, there is also the question of the website which might be too complicated for a perspective buyer, and the possibility of the website/s not being secure enough for visitors. A company like Nike offers their products online backed with international guarantee, return policies and other promotions in this way ensuring a form of security for online buyers (Angeletti, 2005) The Nike website is EDS- automated operations; they are ranked number 1 as the safest hosting providers. All of their websites are very user friendly and are available in many languages, so even the lay man can navigate through the web site with ease. (Nike.com, Nike 2007) Adidas: Addidas is based in Herzogenaurach, Germany; they deal with the manufacture and distribution of footwear, accessories and apparel. Taylor made adidas Golf Company, Reebok sportswear and Rockport are co brands under the adidas umbrella. Adidas is the second leading maker of sports goods in the world. The revenue for 2007 was marked at around $ 15.6 billion. (Sports Industry) Like Nike, adidas also incorporates the use of the internet into their marketing strategy; this helps a great deal in keeping costs down while maximizing sales. Though Adidas started in Germany their first buyers online were people in the U.S the reason being that majority of Internet users were from U.S.A. Initially only American users could purchase products online, but today these shoes and other apparel are sold worldwide both in retail outlets and also online. Adidas brought in US Interactive Inc to help with their online business; they provided business strategy, digital marketing and technology skills. But unlike Nike.com, users may find the adidas site slightly difficult to navigate. For any company to be successful they need to have a strong marketing mix, adidas.com portrayed just that. They ranked second as far as website designs and sales were concerned, rather than selling items on their website they promoted their website with contests and involved many of their endorsed athletes. (Angeletti, 2005) Some of the athletes that endorsed adidas are Anna Kournikova, Ciara (R& B Singer), David Beckham, the New York Yankees etc. In terms of pricing Adidas also possessed many segments it catered to, their products were priced slightly lower that the market leader Nike. As far as location, all the products that are available in all its stores and other premium retails outlets are also available on their website. Their prognosis was developing the popularity of the website more than the sales. The website now caters to different countries in regional languages. They have also developed a store locator incase the customer wants to see and feel the products before buying. A unique offering is that surfers can find sports specific workouts from basketball to wrestling. (E- Marketing strategies: A comparative Analysis of the Athletic Shoe Industry, 2009) Currently both Nike and Addidas have certain advantages over its other competitors, however these advantages will not last forever, today there are many companies trying to capitalize on internet marketing strategies and e commerce (Angeletti, 2005) Fila: Fila was founded in Italy in 1911, it is Italy’s largest sportswear manufacturing company. The company originated with manufacturing and marketing of underwear, but in the 1970’s they moved into sports wear (Fila, company). Fila holdings Spa of Italy reported a loss of$8.7 million or 32 cents per American depository receipt ending March 31, 2000. Appendix B shows a table with the complete ranking of top 3 sports companies (E- Marketing strategies: A comparative Analysis of the Athletic Shoe Industry, 2009). A company in the U.S hedge fund Cerberus Capital management bought out Fila from its Italian ownership in 2003.Its holding company Sports brand International operated all of Fila businesses around the world with an exception to Fila Korea, which was a separate company operating under brand license. However in 2007, the Fila brand was bought out by Fila Korea making it the largest Korean sports wear company. (Fila, company). Fila designs and markets all types of sports wear, casual wear and active wear for men, women and children. Initially fila.com offered free shipping and handling charges for their regular and perspective customers online and the pricing on the website compliments the pricing in those of the retail stores. One of the drawbacks of the fila.com website is that it doesn’t have its mission statement online; this plays a major role in enticing the customer to buy their products. Both Nike.com and adidas.com have their mission statements online with a number of other promotional statements. The Fila website is updated every quarter to keep the site fresh for its users. Some of the well-known stars that endorse Fila are Wta star Anna Chakvetadze, New York rapper Nas, Jerry Stackhouse etc. One of the promotion highs of the fila website are the shoe lines that and be bought or won before they reach retail stores and the online chats with their famous athlete endorsers. (E- Marketing strategies: A comparative Analysis of the Athletic Shoe Industry, 2009) All of these websites face common challenges in today’s online marketing world. The absence to touch, feel, smell the product before buying, also many people are not very confident on buying through the internet , as there have been instances wherein the product displayed and the product that arrives are very different. But brands like Nike, Adidas and even Fila have the brand backing that gives the customer certainty of products ordered and delivered, all of them have their products described in detail with many angles of the same product, some of these websites even offer customization on their products offered(E- Marketing strategies: A comparative Analysis of the Athletic Shoe Industry,2009) Another major barrier with reference to these big brands is the technological barrier that ranges infrastructure to security. As of now the biggest problem the e-commerce industry faces is security, in time and research this problem will be brought under control. Right now Nike, Fila and Adidas need to work on minimizing their technological risks. (Angeletti, 2005) The future of internet marketing will give the customer or perspective buyer a better feel of the website, these websites will only get more personal with the online community of buyers. Internet marketing through audio newsletters will be one of the commonly used modes to attract target audiences. The internet will become a vital resource for businesses in the sports industry. Experts foresee the enhanced usage of pod casts, interactive and personalized audio newsletters and web pages. (Future of Internet Marketing- Emerging Trends and Future Forecasting) E-commerce today is becoming one of the fastest revolutions in marketing today. As far as website ranking goes, Nike.com leads when comparing their marketing mix variables, adidas.com second and fila.com third. The marketing mixes, mission statements, marketing strategies are very important in having a successful online presence and web domination. There is still plenty of growth possible over the internet, as of now the sports industry has been comparatively slow, but there has be continuous growth in this industry over the past few years in making their presence felt over the world wide web. (’E- Marketing strategies: A comparative Analysis of the Athletic Shoe Industry, 2009) Appendix A- Ranking of 4 Sports Companies (E- Marketing strategies: A comparative Analysis of the Athletic Shoe Industry, 2009) Appendix B- Nike Sales Trends (Kim Enderle, Dan Hirsch, Lisa Micka, 2000) Appendix C- UK Internet Search for Adidas in 2008 Appendix C- UK internet Traffic to sports websites (Olympic Winners- Sports sites, bike retailers and Sportswear manufacturers, 2008) Literary Reference Angeletti, (2005), ‘Nike versus Adidas case summary and Competitive analyses, retrieved from Brad R. Humphreys., & Dennis R. Howard (2008)’ Business of sports, Perspectives on the sports Industry’, Westport, CT, Praeger Publishers Fila (Company) (n. d) retrieved from wiki http://en.wikipedia.org/wiki/Fila_(company) ‘Future of Internet Marketing- Emerging Trends and Future Forecasting’, Retrieved from Gwendolyn Cuizon (2009), ‘Audit on Nike’s marketing strategies’, retrieved from < http://corporate-marketing-branding.suite101.com/article.cfm/audit_on_nikes_marketing_strategies> ‘Introduction to Sports Industry’, Plunkett Research, Ltd, retrieved from http://www.plunkettresearch.com/Industries/Sports/SportsTrends/tabid/274/Default.aspx> Kim Enderle, Dan Hirsch, Lisa Micka, (2000) Nike sales Trend N.B, ‘Sports Industry’, Economy watch, retrieved from N. b, ‘Sports marketing’, Business Exchange, retrieved from ‘Nike.com, Nike’ (2007), Retrieved from N.B.(2009)’E- Marketing strategies: A comparative Analysis of the Athletic Shoe Industry ‘retrieved from N.B (2008), Olympic Winners- Sports sites, bike retailers and Sportswear manufacturers retrieved from < http://weblogs.hitwise.com/robin-goad/2008/08/olympics_winners_sports_sites.html#comments> Read More