Marketing Strategy for Adidas vs. Nike
Nike and Adidas are the two most popular companies that deal with sporting equipments in the world. They share one thing in common, which is being used by people who are involved in sports. Nike and Adidas are the largest sellers of sports and athletic footwear in the world (Aaker & Joachimsthaler, 2000). Adidas is the second largest sporting goods manufacturer after Nike all over the world. Adidas has a market share of twenty two percent, while Nike has thirty three percent. Both companies have different target audience in the world; Adidas targets people in sports and who are aged between twelve and thirty four years (Hollister, 2008). Adidas targets sports such as football, gym and basketball. Meanwhile, Nike targets people aged from eighteen to thirty five years.
Nike is more popular as compared to Adidas because of its numerous celebrity sponsorships, with main target being basketball players. Thus, their main market is in the United States of America, but it has recently expanded on the international level. Adidas targets people involved in soccer and tennis. They have a major market in Europe, while being represented internationally (Aaker & Joachimsthaler, 2000).
Using the five forces by Porter’s, barriers to entry in the industry are quite low. The bargaining power of the buyers is high due to many brands that are available in the market. The bargaining power of the suppliers is low or non-existent. Threats of substitutes are low as there are no real substitutes for most sporting equipments. Finally, the competition between the two companies is high. In addition, there are other competitors in the market such as Puma and Reebok (Fisk, 2010).
Difference between Adidas and Nike
The target audience of Nike is people, who are involved in running and basketball as their sporting activities. Adidas, on the other hand, concentrates on establishing its market dominance among those, who are involved in tennis and soccer. Adidas headquarters are situted in Germany, while those of Nike are in Beaverton, the United States of America (Hollister, 2008).
Adidas mainly focuses its activities in Europe, while Nike has its domestic market in the United States. The products of Adidas are outsourced in Asia, whereas those of Nike are from Korea and Taiwan. It is evident that the two companies have some differences, based on market locations and developments in distinct locations.
Over a period of several years, Nike has shifted its focus to soccer with the aim of gaining the international recognition, just as Adidas dominates the world soccer market. The soccer market is usually considered to be the “World Sport”. Nike has continued to change the design of its shoes in order to remain ahead of other competitors, whereas Adidas is making efforts to cut down the production cost and time with the purpose of being more efficient. Nike also leads the market in advertising and marketing strategies, whereas Adidas is making efforts to expand its market appeal in terms of sports shoes and equipments.
Nike Marketing Strategies
Nike was founded in 1964; with time, it has become the leader in distribution, marketing and designing of athletic footwear. Nike has developed more advanced shoe models that are supported by innovative advertisements, endorsements by celebrities and sponsoring events. The reason as to why Nike continues to experience the rapid growth is because of its marketing tactics that are aggressive. Despite all this, Nike faces challenges because of the changing fashion trends, increased competition and their high-priced shoes that result to low sales.
The products of both Adidas and Nike are divided in categories. Adidas sports products are divided into three categories, with the first involving Adidas performance shoes, eye wear and perfume. The next category includes Adidas original superstar sneakers, Adicolor Trainers and Vintage clothing. The third category has bags, belts, hand gloves and style caps (Hollister, 2008).
On the other hand, Nike products have the first category that includes sport shoes and sunglasses by Nike. The second category includes products for body care, clothes, caps, bags, perfumes, sneakers and hoodies.
Prices of products of both Nike and Adidas are high, with Nike products’ price being higher as compared to Adidas. Pricing strategy used by Adidas is that of market skimming strategy. Adidas products’ prices are dependent on looks and color. An example is where a pair of Adidas white color shoes is more expensive in comparison with another pair of shoes of the same quality, but in a different color (Hollister, 2008).
The price of Nike products is relatively higher, when compared to Adidas ones. It uses the value based pricing and price leadership strategies, where the price of the product is based on the value that is placed on that particular product by the consumer. In order to remain relevant in the market, Nike uses the competitive and different pricing strategy from those of Adidas. Pricing strategies of Nike are based on premium segments as their target customers (Aaker & Joachimsthaler, 2000). Brand of Nike has high premiums, and this explains why their prices are higher, when compared to Adidas.
The distribution strategy that is used by Adidas is that of concentrating most of its products and resources in places, where there are many customers. This explains the reason as to why it has opened many of its shops in different parts of the world. A trend developed by Adidas is where its products can be purchased online. The company is concerned with offering the customer a satisfying service at a place, where the customer cans buy the product (Aaker & Joachimsthaler, 2000).
Nike, on the other hand, employs pricing strategies similar to those of Adidas. It explores new and developing markets around the world and sets up its shops in different parts of the world. Distributors of the company are independent, as well as subsidiaries and licenses. It also offers online shopping for its products.
Promotional strategies used by the two companies are aimed at promoting their products as there is adoption of endorsement, use of magazines and billboards. Both Adidas and Nike have unique brand promotions. Customers have in their minds that if they want to wear light sporting shoes, they need to go for Adidas. This explains the reason why most basketball shoes are manufactured by Adidas. Generally, basketball players wear shoes that are of unique design and also light (Hollister, 2008).
Customers view Nike as being creative, since the company comes up with new innovations and designs of new shoes styles. Therefore, the major target audience is the football players and athletes, who are instilled with the competitive idea to improve their performance.
Manufacturing of sports equipments has substantially evolved; and, currently, there are numerous companies that manufacture the sporting equipments. They include Converse, New Balance, Puma and Reebok, where each of the company has its own structure of manufacturing that contributes towards enhancing of the dominance of the industry. The reason as to why some companies will dominate the industry is dependent on their ability to perform better than their rivals (Aaker& Joachimsthaler, 2000). When the competition is stiff, manufacturing firms are required to invest in labor and develop strategies with the purpose of increasing their profit margins.
Despite the stiff competition, Adidas and Nike have continued to experience a substantial growth over the last two decades. However, the growth of these two companies is being attributed to the e-commerce and Internet. Online sales have boosted the performance of these firms, resulting in the increased sales and at the same time reducing the operational cost.
For the companies to curb the entry of new competitors in the market, they are able to control the cost of their products; therefore, they can have a competitive advantage over the potential rivals emerging in the industry. They use enticing promotional tactics such as making their online websites attractive for online shoppers. Both companies offer a wide range of products, including footwear, sporting equipment and apparel. They also have strong distributional channels that they control. Furthermore, both companies are innovative in the design of their products.
Sometimes, the customer service in terms of online shopping may be easy to get and can prove not to be helpful. There is also the portrayal of a negative image of the companies, especially when their overseas companies subject their employees to poor working conditions (Aaker & Joachimsthaler, 2000). Sometimes, the two companies charge high prices associated with the provision of technological services. Strong competition is another challenge that the companies are forced to bear (Fisk, 2010). Nike and Adidas use celebrity advertisement, which can sometimes lead to the creation of negative images, especially when the celebrity indulges in unethical behaviors. It may also lead to distress, when the company grows beyond expectations and capabilities.
Nike and Adidas brand images are immense and outstanding, but Nike has a slightly higher competitive advantage as compared to Adidas. The competitive advantage enjoyed by Nike is attributed to its innovation and reputation for quality. When it comes to footwear, both companies promise their customers products that will provide them with the durability and comfort. Nonetheless, the difference is that the products created by Nike cost more, while those of Adidas go for lower prices (Fisk, 2010).
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