Sports Apparel Marketing Wars
By: Dylan Campany
11/27/2012
Table of Contents
Objective
pg. 1
Introduction
pg. 1-2
Nike
pg. 2
Company Background
pg. 2-3
International Marketing
pg. 3-4
Global Success
pg. 4-5
SWOT Analysis
pg. 5
Adidas
pg. 5
Company Background
pg. 5-6
International Marketing
pg. 6-7
Global Success
pg. 7-8
SWOT Analysis
pg. 8
Under Armour
pg. 8
Company Background
pg. 8-9
International Marketing
pg. 9-10
Global Success
pg. 11
SWOT Analysis
pg.11-12
Conclusion
pg. 12
Sports Apparel Marketing Wars
Objective:
The objectives of this research paper are simple. One objective is to show
the strengths and weaknesses for Nike, Adidas, and Under Armour by
completing a SWOT analysis for each individual company. Secondly, is to
determine which one of these companies are emerging as an overseas market
leader, as well as, establish which companies are considered not up to “par” with
the leading company. Also, is there substantial evidence that points to why one
company is having more success than the others? In other words, how are each
of the different companies implementing marketing strategies in foreign markets?
Finally, the last objective is to demonstrate what amount of success these sports
apparel companies are experiencing overseas. After answering these objectives,
hopefully a conclusion can be made regarding not only the future outlook for
sports apparel companies internationally, and what adjustments must be made
by certain companies in order to gain a higher percentage of the market share.
Introduction:
The sports apparel market is a multi-billion dollar market every year with
that number growing as more countries are becoming developed, companies are
now expanding operations overseas, and sport leagues are attempting to
globalize their sports. Millions of people across the globe play sports on a daily
basis, and with new products being introduced constantly along with growing
popularity of new sports in different global regions; consumers are always looking
for the next or new product in their sport of interest to purchase, especially if it
could perhaps boost performance. Also, with a global economy that is still in
recovery, consumers want to save money wherever possible, so if a sports
apparel company can gain control of a market overseas, it will benefit them
greatly following the recovery of the global economy as consumers’ purchasing
power increases. Nike, Adidas, and Under Armour represent three of the most
popular sports apparel brands on a global scale. Each of these companies must
implement a successful marketing strategy internationally if they are to be
successful at either becoming a marketing leader, or having a substantial share
of the market.
Nike:
Background:
In 1971 the Nike brand was officially created and based its headquarters
in Portland, Oregon. A year later Nike developed its unique logo the “swoosh”,
which has become universally recognizable with all Nike products, and began
production of the company’s first footwear (Nike.com 2012). Nike’s first line of
footwear turned out to be very successful and began to be used by several
athletes, who in turn, helped Nike transition into different product categories. In
the mid 1980’s Nike began investing in developing different footwear instead of
only the running shoes they were originally producing. While Nike was
considered behind the market leader for basketball footwear this quickly changed
following the shoe contract given to Michael Jordan by Nike in 1985 (Nike.com
2012). Similarly, Nike began producing cross-training footwear several years
later roughly around the time the cross-training market exploded. As a result Nike
became the industry leader, a title that the company has not given up since the
late 1980’s (Nike 2012). As Nike continued to be successful in the footwear
market, they began to reach agreements with sport teams and leagues, which
allowed them to develop new products for the sports, but also enabled Nike to
expand into different product segments such as uniforms and sports equipment.
International Marketing:
In 2003 Nike stated that the goal of the company was to become globally
successful, and for the brand to represent the same thing throughout all the
countries that the company was involved in (Andrews 2008). For this to be true,
Nike has tried to distance itself from political, social, or cultural issues, and stay
focused on simply promoting the company’s goals and products.
In 2002 the “Secret Tournament” campaign was Nike’s first truly
integrated, global marketing effort. “Secret Tournament” incorporated advertising,
the Internet, public relations, retail and consumer events to create excitement for
Nike’s soccer products and athletes in a way no single ad could ever achieve.
This new integrated approach has become the cornerstone for Nike marketing
and communications (Nike.com 2012). This global marketing strategy was
successful because it reached out to over 30 different countries because it was
used during the World Cup soccer tournament. Furthermore, it was successful
because soccer is considered the most popular sport in the world, and the
tournament was televised to millions of people who were exposed to the different
Nike products.
In the past decade social media has become a great tool for companies
advertising departments. With millions of people across the globe registering with
different social media websites it has paved the way for sports apparel
companies to use that as a way to promote products to consumers. Also, this has
allowed companies such as Nike to spend less advertising money through
television and become more selective with their commercials. In the past couple
of years Nike has taken advantage of this growing trend and altered their
marketing strategy accordingly. For example, in 2007 Nike created the T90
Football boot campaign, which used short “teaser” commercials during England
football matches (Bernardin 2008). These commercials attempted to promote
viewers to log onto Nike’s website in order to see the rest of the commercials,
and eventually view the company’s products.
Global Success:
Nike has been a very successful company in terms of globalizing their
brand. Currently, Nike has merchandise being sold in countries all over the world
and in a variety of different retail stores. Also, last year Nike’s global profits
increased by 16 percent, which was, the highest increase in fifteen years
(NikeInc.com 2012). It currently has approximately 92 percent of the athletic
footwear market share in the United States, and roughly 28 percent of the market
share (5 percent behind Adidas the leader) in Great Britain; who possibly has the
most prosperous economy in Europe presently (Bernardin 2008, Dawes 2009).
Also, it appears that Nike is on track to become the market leader for almost all
of Asia, as more commercials of popular athletes such as LeBron James and
Kobe Bryant appear and sales for Nike products continue to increase.
S.W.O.T. Analysis:
The advantages Nike currently possesses that has allowed the company
to become the global market leader in athletic footwear comprise of its consistent
success with the company’s marketing strategies, the wide range of footwear
options, the technological advances in footwear manufacturing, and the high
quantity of different distribution networks the company has created over the past
couple of decades (Lechner and Boli 2008). While Nike is considered by many to
be the company that can’t be matched, it must still be open to new ideas and be
aware what their competitors are doing. Nike’s current weakness is its lack of
market share in performance enhancement clothing that Under Armour has a
control of. Also, Nike must attempt to repair some of its image after some
controversy in the past decade involving the manufacturing centers the company
possesses in countries that are not economically robust (Lechner and Boli 2008).
In the next couple of years Nike has an opportunity to expand its athletic
footwear market control, if they can continue promoting their products
successfully in countries that are becoming more economically prosperous,
especially Asia. They also have the potential to take some of the market share
away from Under Armour if they begin to devote some of the company’s
resources towards developing high performance athletic clothing.
Adidas:
Background:
Adi Dassler is considered the original founder of Adidas sportswear when in
the 1920’s he developed shoes for running (Runau 2011). Throughout Adidas’
history the company has made several purchases of other companies or brands
to expand their product range, and market share. The various acquisitions
Adidas has made include the addition of Reebok, which was once a very
competitive, well known company in the global market. The addition of Reebok
helped Adidas become more competitive on a worldwide platform, have welldefined and complementary brand identities, a wider range of products, and a
stronger presence across teams, athletes, events and leagues (Runau 2011).
Today adidas’ products range from footwear and apparel to equipment for
various sports, with the targeted athletes being runners, football players,
basketball players, and cross-trainers. As a result of the company globalizing and
selling different products, Adidas now ranks 71 on the list of the top 100 global
brands (Dawes 2009).
International Marketing:
Adidas is a multi-cultural company who attempts to successfully market
their products to not only countries who experience a great deal of economic
success but also, the company markets to smaller less “developed” countries.
Adidas has attempted to promote their products by using a specialized marketing
strategy that focuses on the world’s most popular sport, soccer. In 2007, Adidas
initiated a marketing plan titled 180 Amsterdam (Bernardin 2008). This marketing
plan brought some of the most popular and highest paid soccer players in the
world to local Adidas stores in smaller European markets. Following this
marketing campaign, Adidas experienced a great deal of positive feedback for
promoting a fun atmosphere for consumers that they shot videos of customers
experiences and broadcasted twelve different episodes on the company’s
football website (Bernardin 2008). Another example of an Adidas soccer
marketing strategy was the Adidas Predator Cup the company held in Germany,
which is considered one of the more developed and prosperous countries in
Europe. According to Adidas the soccer tournament was held to, “reconnect the
youth of Germany with Adidas and soccer through friendly matches between
friends” (Wohlfeil and Whelan 2006). These two different marketing campaigns
provide Adidas with possible future success in different countries by attempting
to gain a positive brand image with the younger generations in Europe.
Global Success:
Adidas has a relatively small market share in the United States and in turn
the company has concentrated a lot of its business operations on marketing in
European countries. Adidas has a great deal of money invested in soccer athletic
products because as noted above, the most popular sport in the world and
especially Europe is soccer. Notice figure 1 below; in Great Britain Adidas is
currently the market leader in part due to its successful marketing campaigns
using soccer players and teams, but also because of the high level of consumer
loyalty the company has (Dawes 2009). While adidas is not the leader in the
sports apparel global market, it is the market leader for several countries and are
considered to be the most popular brand in Europe along with Puma due to the
company’s soccer products and promotion.
Figure 1
S.W.O.T. Analysis:
Adidas is one of the most successful global brands due to the company’s
successful marketing of products, and the wide variety of products the company
currently is producing and selling. The current problem for adidas is that they are
currently behind Nike in terms of athletic footwear, and trail Under Armour by a
considerable margin in the performance enhancing clothing industry. On the
other hand, the company is very successful in Europe and appears to have a
very loyal consumer base. In the next couple of years there is an opportunity for
Adidas to try and emerge as a market leader in developing countries, and the
company still has the potential to gain more of a market share of the performance
enhancing clothing similar to what Under Armour produces since this market is
fairly new.
Under Armour:
Background:
In 1995 Kevin Plank a player for the University of Maryland wanted to
develop a new piece of clothing that would remain light and collect less sweat
during athletic games. Following graduation Kevin Plank began to develop
several prototypes for his new clothing and had the shirts tested by former
teammates who were either still playing football in college or had entered the
National Football League (N.F.L.) (UnderArmour.com 2012). After receiving
positive feedback about the proposed product and making alterations to the
prototype, Kevin started up his business at home and within the first year of
operations agreed to terms with the Georgia Tech football team to sell them the tshirts. Shortly after the contract agreement with Georgia Tech, other major
Division I football programs and about a dozen N.F.L. teams signed up with
Kevin’s business (UnderArmour.com 2012). Under Armour has since found great
success in the sports apparel industry with its headquarters now being located in
Baltimore, Maryland, and the business Kevin Plank started up changing to a
corporation with publically traded stock on Wall Street. While the company is still
focused more on performance clothing, they have begun to branch into new
product categories such as footwear.
International Marketing:
As mentioned previously, the increasing amount of people around the
globe registering with social networking websites has presented opportunities for
sports apparel companies to use them for promotional purposes. Under Armour
stated when it first entered the sports apparel industry that the goal of new
product promotions is to create a buzz with the release, and get people talking
about the releases and benefits of using these products (Kraft and Lee 2009).
The increase of social networking websites has made this marketing strategy
very successful and easy-going for Under Armour to promote their products. This
is especially true since many people who use these websites are using them to
keep up with their favorite athletes, or celebrities.
Under Armour has several popular athletes such as Anquan Boldin and
George St. Pierre who help endorse the company’s products, and are idolized by
millions of people across the globe (UnderArmour.com 2012). An athlete such as
George St. Pierre who is a fighter in the Ultimate Fighting Championship offers
domestic and international exposure for Under Armour’s products because he is
originally born in Canada and the fights he participates in are hosted in a variety
of countries, and are aired live on television in many countries. Therefore, with
Under Armour’s products and logo being exposed to millions of people across
the globe it provides a great opportunity for the company to become successful
globally.
Under Armour’s success by using a word-of-mouth marketing strategy has
allowed the company to create different marketing plans as a result. Most
recently the company has began signing agreements with different sport teams
internationally such as Aries F.C. from Greece (UnderArmour.com 2012).
Another new marketing development for Under Armour has been using different
retail companies such as Dick’s Sporting Goods and Foot Locker to help
distribute the company’s products on a global basis (Subramanian and
Gopalakrishna 2012).
Global Success:
In 2010 Under Armour sold it’s products in approximately 20,000 stores
globally according to the companies annual business report (Subramanian and
Gopalakrishna 2012). Adidas director of American apparel said; “We’re not taking
this lying down… It’s a war!” when referring to Under Armour’s rapid success in
both the United States and global markets (Kraft and Lee 2009). Under Armour is
experiencing a great deal of success in the global market since the company has
commenced globalizing its products. Currently, Under Armour is dominating the
sports performance clothing apparel global market with approximately 75 percent
of the total market share (Kraft and Lee 2009).
S.W.O.T. Analysis:
The strength of Under Armour comes from its dominant control of the
sports performance product sales. Under Armour is the leader in the sports
apparel industry in developing performance related clothing. Tests have indicated
that compared to the average competitors performance clothing, Under Armour’s
clothing released 40 percent more moisture and keeps the users body about 3.5
degrees cooler (Subramanian and Gopalakrishna 2012). However, Under
Armour does have its weakness’ especially with their footwear products.
Currently, Nike and Adidas make up a majority of the athletic footwear market
share on a global level, leaving Under Armour with very little room to enter the
market. Nevertheless, Under Armour is beginning to create athletic footwear
along with several other products in attempt to expand the company’s global
market share. In the next couple years an opportunity exists for the company to
enter more international markets following its domestic success in the Unites
States, and if they continue to develop and enhance the new products they are
creating.
Conclusion:
Nike, Adidas, and Under Armour are all very successful companies,
especially in terms of marketing their products internationally. As of right now,
Nike is the industry leader in athletic footwear, and Under Armour is the industry
leader for sports performance clothing with both companies having a very loyal
customer base. Adidas remains a middle-line competitor in the sports apparel
industry, as they are a very successful company but are trying to keep up with
both companies on different products. The next decade should be very
interesting in the sports apparel industry as new markets for these companies
are targeted and new products are developed. Also, Under Armour is one of the
newest companies in the industry, but have experienced a great deal of success
since the company’s creation and it’s competitors in the industry are already
beginning to recognize the potential threat Under Armour may become in the
near future.
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