THE NIKE WORLD CUP?
By Lee Rutter
The FIFA World cup is the single biggest sporting event
in the world. Soccer nations from all over the world
compete for the title of being “The World Champions”.
Every nation has a uniform and badge that are symbolic in
representing the culture in their countries. The one thing
that all of the competing nations have in common is that
they are sponsored by one of the big name sporting
brands; such as Nike, Adidas or Puma. For the purpose of
this article I will be looking at the rivalry between Nike
and Adidas and see if Nike has what it takes to become the
biggest brand associated with the sport. With the Brazil
2014 world cup just around the corner I will be looking at
Nike’s marketing strategies, how innovative and
integrated their supply chain is and finally, what they are
doing to become the leaders in global sustainability.
The German brand Adidas has always been the big name associated with soccer and it
has been dominating in Europe for years, sponsoring the big clubs and big tournaments.
With David Beckham being the face of Adidas for years, their soccer products have
always been the ‘go to’ choice. The American brand Nike didn’t get involved with soccer
until 1994 as the sport has never really been a part of American culture. However the
strides they have made in the soccer world have been huge, and over the years they have
become Adidas’s biggest competitor.
When we think of soccer the two brands that come to mind are Adidas and Nike. These
two rivals have been going back and forth over the years to try and become the ‘top dog’
in the soccer world. With the summer 2014 world cup fast approaching, Nike hopes to
blow its biggest competitor out of the water.
2010 World Cup
Looking back on the 2010 world cup in South Africa, it is interesting to see how Nike
became the leaders in global sustainability. Nike has previously used a reverse supply
chain method in using their recycled products in order to create new ones. For the 2010
world cup they took a very innovative approach; they equipped the national teams with
products that were 100% recycled PET (spell out) bottles. Nike became the first brand to
give all of its national teams these recycled products. The bottles Nike used came from
landfills in Taiwanese and Japan. They were processed in Taiwan and then shipped as
polyester thread to manufacturing facilities. Nike claimed to have removed over 1.3
million plastic bottles (approximately 558,000 lbs.) during their production phases for the
2010 world cup. This process not only had great economic and health benefits for those
countries but also saved Nike a lot of money as the process required 30% less energy than
manufacturing from virgin materials. (Miner)
The recycling process was not just implemented in the national team’s equipment but
also in the replica jerseys. Nike wanted the jerseys to be created in the same way to give
the fans the feeling that they were wearing the exact same product that their favorite
player was.
The 2010 world cup saw approximately 2.6 billion people worldwide following the
beautiful game. Adidas was the official sponsor of the competition again which meant
that all the referees wore Adidas equipment, all of the soccer balls were Adidas and all of
ads that were televised across the globe were Adidas. For Nike to even begin to compete
with what seemed an impossible challenge they had to do something big to grab the
attention of the soccer world. With the ever creative minds behind Nike thinking away,
they came up with an ad called “Write the Future”. The ad saw the big named players
successfully making or failing a certain play in a game and then changed the path of their
future. This ad was an interactive one, fans had the chance to edit these decisions and
post their videos online to compete for votes from their peers. This advertising move did
exactly what Nike wanted it do it, it created a lot of excitement amongst fans and a lot of
activity on social media networks such as Facebook and twitter. Everyone was talking
about the new Nike commercial.
Below is a table of how this ad affected Nikes ranking in the ‘Pre-World Cup Buzz’.
"This study shows that compelling, savvy marketing can
establish this sort of connection in the eyes of consumers
without having to write that expensive sponsorship
check," (Pete Blackshaw, exec VP-digital strategy at
Nielsen)
The “Write the Future” ad was viewed by over 22 million
fans worldwide and helped Nike become the brand that
generated the most buzz. Although Adidas were probably
bitter that they were in second, they still had the upper
hand as they were the tournaments sponsor, and after all
this was only pre-World Cup.
As Nike outsources all of their products, their supply chain needs to
be as lean as possible in order to maximize their customer needs. As
of 2011 Nike had 777 factories in 43 countries, Brazil having 7% of
them. Nike currently has stores in over 50 countries and they have
forecasted that after the 2014 World cup and leading up to the 2016
Olympics, Brazil will be their third largest market. This goes to show
how much of an impact they are expecting their brand to have on the
2014 world cup and the heights they are expecting to reach in
sustainability. Adidas is sponsoring 12 of the big soccer nations
whereas Nike is only sponsoring 8, but the key for Nike is that they
are sponsoring the host nation, Brazil which is the reason for these
forecasts.
The World Cup for the fan is not just about the beautiful game, it is
about the experience and learning more about the culture of the host nation. Fans who are
preparing to make the trip to South America next summer will already be looking to buy
their nations’ jerseys. Nike knows that the Brazil jerseys and products with the Brazilian
colors are, and will be, in extremely high demand which is why they have begun to bring
special edition world cup products out for sale. These products include sneakers,
sweatshirts, shorts, flags, soccer balls, you name it they are launching them.
Logistics
Logistics play a huge part in a company’s supply chain. How swift and even do the
products flow along the chain from the manufacturers to consumer? What strategies are
in place to account for things going wrong? It is vital that a company has a wellintegrated and strong supply chain, as well as establishing good relationships with other
companies that are involved in the chain.
DHL have been partners with Nike for 13 years and they have been key assets due to
their high level of customer service. Local DHL branches in Brazil are currently helping
Nike better understand the market and needs of its retail clients.
As Nike’s business is continuing to grow in Brazil one of the strategies they are
implementing is the launch a line of new products every three months creating peak
volumes at key times.
DHL Supply Chain said it introduced a slate of improvements to Nike’s supply chain,
including implementing radio-based monitoring of products during warehousing and
distribution, and providing real-time delivery information. (DHL)
As a result of integrating the supply chain, the costs were cut, service was improved and a
new warehouse management system was introduced without disrupting service. The
collaborative relationship Nike has with DHL will tremendously help them in being able
to get their products out in the Brazilian market just the way they want and when they
want. DHL will be instrumental in the supply chain of Nike’s products and they will play
a crucial role in the forecasted success of Nike.
“We receive products from hundreds of factories worldwide and deliver them to
thousands of stores across Brazil. That being said, we have a very complex supply chain.
The only way to succeed is to work closely with reliable supply chain partners —whether
they are suppliers or retail clients. That is the only way we will be able to reach every
athlete worldwide to ensure their complete satisfaction,” (Leonardo Silvério, national
logistics manager for Nike.) http://www.scribd.com/doc/131254181/CaseStudySupplyChainIntegration-Nike-Retail-Brazil-DHL
“Trying to optimize the supply chain in pieces is an exercise in futility. Full integration is
the path to strategic business growth.” (Leonardo Silvério, national logistics manager
for Nike.)
Adidas has set the bar for the world cup stages time and time again; will this competition
be the one that separates the two rival brands? Nike seems to have everything in
preparation and the upper hand being the host nation’s sponsor, but as we know, things
do not always go as planned. Can Nike fix problems in the supply chain in an efficient
way or will they fall to the mercy of the German giants again? Will Nike become the
number one brand associated with soccer? Can Nike “Just do it”? Only time will tell.
References
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Minor, Thomas. "Nike World Cup Uniforms Made From 100% Recycled PET."
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Faranoff, Harris. "Adidas vs. Nike in Europe." : Impact of Nike in Brazil World Cup.
N.p., 6 Feb. 2013.
"Supply Chain E LogÃstica Brasil Summit." Supply Chain E LogÃstica Brasil Summit.
N.p., n.d.
Unknown Author "Supply Chain Management Strategy Saves Millions." Supply Chain.
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Jones, Dow. "Nike Profit Up 22% on Stronger Sales, Margins." NASDAQ.com. N.p., 27
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http://www.usanfranonline.com/supply-chain-management-strategy-saves-millions/
D'Altorio, Tony. "Nike "Just Does It" at the World Cup." Investment U RSS. N.p., 16
June 2010. Web. 31 July 2013.
"2014 FIFA World Cup Brazil™ Matches and Results - FIFA.com." FIFA.com.
Author Biography:
Lee Rutter is an MBA candidate who came to the United States from England on a soccer
scholarship. He received his undergraduate degree from Appalachian State University in
Criminal Justice. He played four years for the men’s varsity soccer team and now hopes
to pursue a career in the States. He is a High Country soccer coach that helps develop
and mentor the youth in the community. He is interested in taking his leadership and
teamwork skills into the business world.