Target Markets and Positioning Strategies: Nike vs Adidas - Research Paper Example

Nike’s Target Markets and Positioning Strategies Nike as a company has a market share of over 35 percent in the athletic apparel and footwear. The target market has been professional athletes, active males, teenagers and middle-age people. This has been driven by the stiff competition from Adidas and Reebok (Deng 103). Among its market targets especially the young people, the Nike symbol reflects an attitude of a particular lifestyle. For example, the Airwalk product brand has gained a significant market share as a result of the company’s application of this strategy. This is because young people associate the image of Airwalk shoe with extreme sports (Greco, Mazze and Michman 123). Adidas’ Target Markets and Positioning Strategies The target market for Adidas is the professional athletes like the NBA players. It is more concerned in selling upper-end performance shoes. Their main focus is on sports rather than lifestyle (Kiley 1). The Adidas Company has merged with Reebok in order to expand its positioning within the market. With Reebok concentrating more on the lifestyle products and Adidas concentrating on sports product, the two shoe and apparel companies would expand their penetration in the target market (Kiley 2). Nike’s Product Strategies and Tactics In order to develop more shoe products, Nike has a new strategy of off-shore contract production. This means that it has overseas contract factories. Another strategy used is the multi-product branding. Although the products are high priced, the consumers are able to find a wide range of products from soccer gears to running shoes all with the Nike brand. Nike campaign strategy “Just Do It” has given it a competitive edge in the shoe making industry. The use of celebrities in publicizing its brand has also become very successful giving its consumers the sense of belonging and hipness (Centre for Applied Research 2). Adidas’ Product Strategies and Tactics Adidas uses the virtual retail store for distribution of its branded virtual shoes. The company is able to advertise and promote its brand in the world with signage and events. The products are priced in a competitive manner taking into consideration the value of the brand proposition. The distribution of the products is through virtual manufacturers and retail storefront. The Adidas products are promoted throughout the world through the integration of public relations tactics and advertising. Adidas gains more benefits form utilizing the virtual world in capturing its consumers. The company is able to attract both the virtual enthusiasts and brand enthusiasts (Tuten 56). Nike’s pricing and Place Strategies Nike’s pricing strategy is based on the premium segment as the target customers. The Nike brand has a high premium and its pricing strategy is based on the vertical integration. They have participants in different channel levels and this has enabled Nike to control costs and influence the product pricing (Cuizon 1). Place strategies involve the regions and markets in which a particular company sells its products. Nike’s products are carried by multi-brand stores and the exclusive stores across the globe. The company (Nike) distributes its products to about 20,000 retail accounts in the United States and in almost 200 countries around the world. Across the world, Nike sells its products through independent distributors. Adidas’ Pricing and Place Strategies Adidas utilizes the premium-price strategy and it sells a wide range of items in apparel, footwear and fashion. The pricing strategy allows Adidas to deal with multiple ranges of consumer needs and exploit the market opportunities (Adidas Group 1). Adidas employs the use of two place strategies to get its products to its consumers. The strategies are the wholesale and retail strategies. With these strategies, Adidas is able to cater for the multiple consumer and customers needs. The company is also able to become responsive to the market developments and manage the channel synergies through best practices. In the wholesale strategy, the consumer pays for his or her purchase to a non-Group retailer and in the retail strategy; the consumer pays directly for his or her purchase to an agent of the Adidas Group (Adidas Group 1). The Group’s sale in the first nine months of the year 2010 was attributed to high sales in the wholesale and retail segments. In the wholesale section the revenues increased by 8 percent and this was driven by higher Reebok and Adidas sales. The retail segment saw a 16 percent increase in its revenue and this was a result of double growth of the Adidas and Reebok sales (Adidas Group 1). Major changes in the distribution channel include the inclusion of other distribution channels to meet the consumer needs. TaylorMade-adidas Golf, Reebok-CCM Hockey, Rockport and Other centrally managed brands are some of the segments that have been introduced in the distribution channel. The Group has abolished the regional headquarters and aggregated its seventeen markets into six geographies and they are: European Emerging Markets, Western Europe, Greater China, North America, Latin America and Other Asian Markets (Adidas Group 1) Promotion Strategies Nike has dominated the retail industry for a long time. The company ensures that they sell quality products, create good customer loyalty. The most important aspect of its success depends on its marketing strategies. There are a number of famous athletes and sports people being used by Nike to create a good deal of attention to its products (Deng 102). The top sports people being used by Nike to advertise its products include the Brazilian Soccer team, particularly Ronaldino, Ronaldo and Roberto Carlos. Other great players include Lebron James and Jermane O’Neal in the basketball sport, Lance Armstrong for cycling and Tiger Woods for Golf. In addition, Nike gets involved in the sponsoring of events as a strategy of promotion; this brings great attention to its products. Further, Nike’s web sites are a great promotional tool as they cover several promotion events at the company. Events such as “Hoop It Up” and “the Golden West Invitational” are covered in their web sites. Personalized web sites are used exclusively for sports such as nikebasketball.com, nikefootbal.com and nikegolf.com. Nike uses advertising as one of its promotional tools. The company relied almost exclusively on print advertising from 1972 to 1982; highly vertical publications including Track and Field news were used. In its early years of advertising, Nike’s main focus was on the release of new shoes by outlining the benefits of the running, basketball or tennis shoe (Deng 102). Print advert with a tag line “there is no finish line” featured a lone runner on a rural road and the advert became an instant classic. Similar to Nike, Adidas also uses advertising as one of its promotional tools. In the process of advertising, Adidas has used television, magazines and the internet; these are the best channels in which the company is able to show customer’s their products. Other commercial advertising media used by Adidas include wall paintings, street furniture components, printed flyers, rack cards, radio, cinema, and television adverts (Kiley 43). Web banners, mobile telephone screens, billboards and celebrities such as David Bekham are also used. Adidas and Nike companies have used same theoretical systems to create their brand building programs. The two companies always assess the success of each other. Several similarities in the advertising strategies can be seen. The difference is that, Adidas focuses in sponsoring teams and global events, while Nike has their attention on the world’s stars/celebrities in various sports. Both Nike and Adidas uses pull strategy of promotion. The pull selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product. Social networks such as Facebook and Twitter are not new to the market place. The social media has become widespread that the world of enterprise can no longer ignore. These social networks and the awareness generated on them, is more important than the traditional advertising effect. Further, the social networks are allowing Nike and Adidas companies to reach a wider and greater number of potential customers. Conclusion Both Nike and Adidas are well known in the world of sports apparel and footwear. This industry has been dominated by stiff competition from the two companies since their inception. Almost each day is met with new strategies in order to win the ever emerging market of the young people and middle-aged people. Their success in the market is immeasurable. However, Adidas Group seems to have a brighter future than Nike. Though Nike has dominated the market for quite a long time, the warmth enjoyed by the company might not be for so long. Adidas has utilized every strategy possible to get its share of the market. This includes merging with the Reebok Company in order to expand its market around the world. Adidas Group has undergone major structural and management changes to make it flexible in the sports apparel and footwear market. A remarkable achievement of Adidas is the use of social networking and media to sell its products and advertise them. The social networks are becoming a popular trend in the current world and majority of the young people are active users of these platforms. Virtual shopping is also common among them. Adidas Group is already using the virtual market to advertise and sell its products. Such a move is likely to make Adidas Group the dominant player in the market in the near future. For the Adidas Group to succeed, it must take note of the Nike’s strong competitive stance in the past. Otherwise it would be a pipe dream for the Adidas Group to become the dominant player in the sports apparel and footwear industry. Works Cited Adidas Group. Adidas Strategy. Adidas Group. 2009. Web. 13 Dec. 2010. Adidas Group. Income Statement. Adidas Group. 2009. Web. 13 Dec. 2010. Centre for Applied Research. “Nike’s “Just Do It” Advertising Campaign.” nd. Web. 13 Dec. 2010. Deng, Tianbai. ““Just Done It” - - - Nike’s New Advertising Plan Facing Global Economic Crisis.” International Journal of Business and Management 4.3 (2009): 102-105. Print. Greco, A. J., Mazze, E. M. & Michman, R. D. Lifestyle marketing: reaching the new American consumer. Westport, CT: Greenwood Publishing Group, 2003. Print. Kiley, David. “Reebok and Adidas: A Good Fit.” Bloomerberg Businessweek. 4th Aug, 2005. Print. Tuten, Tracy, L. Advertising 2.0: Social Media Marketing in a Web 2.0 World. Westport, CT: Greenwood Publishing Group, 2008. Print. Read More