Nike and Adidas have long been two of the biggest players in the sports apparel industry. By comparing and contrasting these two companies, valuable insights can be gained in terms of how other companies in this product category might approach promotional and advertising strategies.
At the forefront of Nike’s promotional strategy is the Nike brand image - i.e., the Swoosh. The Swoosh is a unique logo that invariably finds its way into Nike advertisements, promotions, and public relations events. Over the years, Nike has used professional sponsorships to create public associations with the Swoosh and iconic professional athletes like Michael Jordan, Tiger Woods, and Kobe Bryant. Part of Nike’s promotional strategy involves public relations events through television and social media. With the release of Kobe Bryant’s knit shoes, for example, Nike unleashed a media barrage through television commercials, Kobe’s social media announcements, and actual coverage during an NBA game with Kobe wearing the new shoes. In this way, Nike makes a news story out of the release of each new shoe design (Kalb, 2013).
Adidas uses a brand portfolio concept to support the company’s promotional strategy. The brand portfolio includes the new logo with the three diagonal parallel bars and the Adidas traditional trefoil with three stripes. The three bars logo signifies Adidas’ line of shoes and apparel for competitive sports. The trefoil with three stripes stands for Adidas’ original sports fashion designs. Each brand is responsible for the execution of its strategic focus by creating a constant stream of innovative and desirable products and generating communication strategies that connect with their target consumer in an engaging and compelling way (Adidas-Group, 2014). Adidas uses promotion partners such as federations, teams, leagues, events, and individuals as an important part of endorsing the Adidas brand (Adidas-Group, 2014). Thus, the two promotion strategies (i.e., portfolio and partners) show consumers that Adidas shoes and sports apparel work for every type of sport and active lifestyle.
As for specific similarities, Nike and Adidas try to promote their respective brands and product lines through psychological and emotional appeal to broad audiences. With Nike’s recent “Find Greatness” campaign, for example, the company produced advertisements showing athletes of all ages competing in almost every sport imaginable (New Marketing Experience, 2012). Similarly, during their sponsorship of the 2012 Olympic Games, Adidas aired a host of commercials showing athletes of all kinds wearing the company’s sports shoes and apparel. Both companies, in this respect, assume that consumers want to feel good about themselves by being affiliated with winners.
With respect to the use of social media, the two companies take different approaches. Adidas uses Facebook to create communities for specific product lines. For example, the company uses a separate Facebook account for its Adidas Originals brand and another Facebook account for its basketball brand (New Marketing Experience, 2012). Nike, on the other hand, maintains a general account for inspiring and motivating people to be active, play hard, and compete. The companies draw a similar line of distinction with respect to their use of Twitter. Nike uses a broadcast approach covering product lines with general statements. Adidas, to the contrary, uses Twitter to promote the company’s various product lines. Thus, Nike and Adidas approach social media promotional strategies in very different ways - a centralized strategy for Nike and a decentralized strategy for Adidas.
A company in the sports apparel industry can use different types of marketing information (i.e., internal or market/consumer) to differentiate itself in the marketplace. Thereby, the company can gain a potentially sustainable advantage over key competitors in the industry.
Internal marketing information can serve as a great resource for helping companies create competitive advantages. Specifically, internal marketing information includes sales data, product designs, production processes, and so forth. In many ways, internal marketing information can be understood as a data resource that contains the knowledge and expressed capabilities of the organization. Internal marketing information can, therefore, be used to create teams, promote synergy in the organization, and advance innovation and product design. As an example, the use of marketing information at Adidas has helped the company be innovative in the design and production of running shoes with an integrated energy management system that guides and drives an athlete’s foot through each stride (Adidas-Group, 2014). By using marketing information, Nike has successfully differentiated itself from other companies with the advent of high-technology “smart” running shoes. It is, therefore, recommended that companies in the sports apparel industry use marketing information in similar ways to differentiate themselves and create competitive advantages.
Companies can also use market/consumer data to support differentiation strategies. Market/consumer information refers to general market data – i.e., market size, demand projections, market segmentation, and so forth. Market/consumer information also refers to demographic data about consumers like gender, age, and sub-culture affiliation. As a specific example of how market/consumer information can be used to differentiate, Adidas uses demographic variables to create urban streetwear apparel for the urban sector hip-hop population. For example, based on marketing information about the persistent popularity of artists like Run DMC, Snoop Dogg, and Alicia Keys in America’s hip-hop culture, Adidas provides a hip-hop line of urban streetwear and apparel. As another example, Nike uses market information about the popularity of Brazil’s national soccer team to provide a specialty line of Nike soccer shoes. The shoes are, in fact, promoted through endorsement by members of Brazil’s national soccer team (Siemers, 2010). It is, therefore, recommended that companies in the sports apparel industry use marketing information in similar ways to differentiate themselves and create competitive advantages.
Consumer-oriented promotions include rebates, price markdowns, and other types of inducements for improving sales. What are some business uses of consumer-oriented promotions?
One use of consumer-oriented promotions is to add value to the purchase. Simply put, adding value to a purchase means that customers get more for their money. With this in mind, a few examples of some common types of value-adding promotions include: i) get a free t-shirt with the purchase of shoes, ii) get free tickets to a sporting event with the purchase of a tracksuit, and iii) provide consumers with purchase points for discounts on future purchases of sports apparel. Thus, the purpose of this type of consumer-oriented promotion is to motivate customers to make purchases.
Consumer-oriented promotions are also used for the specific purpose of increasing sales. Although discounts reduce profit margins, the company can expect increased revenues in the long run (Ray, 2014). If a sports apparel company offers regular discounts, for instance, it can expect to attract more customers in the short term. But even after the discount period ends, some customers will come back for more of the same differentiated shoes and/or sports apparel. Thus, not only can consumer-oriented promotions increase sales, but discounts and other attractions can lead to future higher-margin sales.
According to Nike, the company makes a strong effort to support price leadership. As the research shows, in fact, Nike uses two pricing strategies to support the company’s pricing decisions: i) skimming and ii) product line (Leli4ka, 2009).
Skimming involves the setting of a relatively high price at the beginning of a product life cycle. Over time, however, Nike drops the price. Thereby, Nike hopes that consumers will believe they are getting a great deal on an expensive shoe. All the while, however, Nike is primarily interested in one pricing objective – namely, maximizing profits by charging consumers high prices for shoes and sports apparent that provide the company with relatively high and sustainable profit margins.
Product line pricing is used by Nike in association with product quality levels. Nike offers top-end lines of shoes and sports apparel, for instance, that are relatively expensive. The company also offers lower quality lines of products that are priced accordingly. Thus, Nike really does not use cost leadership and pricing as a source of competitive advantage. Pricing strategies simply support the company’s product differentiation approach to achieving sustainable competitive advantage. Thus, the basic pricing objective for Nike, once again, is to maximize profits with high margins on sales.
Yes, Nike uses its dual pricing strategy to drive profits. But other companies in the industry would be well advised to differentiate themselves from Nike by doing just the opposite. Instead of playing games with price skimming, for example, a company in the sports apparel industry could gain the respect and loyalty of some consumers by simply pricing shoes and apparel for what they are worth.
On the other hand, Nike’s quality level pricing strategy is not unethical. Competing companies in the sports apparel industry should, therefore, consider emulating the Nike pricing strategy by offering their own quality lines of sports apparel that are priced to support objectives like increased sales and profit maximization. In this way, companies could support a sustainable differentiation strategy.
Summarily, the two recommended actions (avoiding price skimming and selling products for what they are worth) can help companies differentiate themselves in the sports apparel industry on the basis of honesty and integrity in business. In other words, it is recommended that companies in the sports apparel industry take corporate social responsibility seriously as a true source of sustainable competitive advantage.
In addressing the issue of the most effective advertising medium for a company in the sports apparel industry, the social/digital medium offers many business advantages. For one, the social/digital medium offers real-time interactive advertising. With a Nike advertisement on Facebook, for instance, users can click banners and input personal information. Thereby, Nike advertisements are tailored to the needs and interests of specific consumers. Another advantage of the social/digital medium concerns its potential as an alternative to traditional mediums like television. Adidas, for instance, was the official sponsor of the 2010 World Cup. The company placed costly promotions everywhere - television, radio, the Internet, and more. At the same time, however, Nike attached an inexpensive LED display to the side of a 30-story building. Soccer fans from all around the world were able to send messages through Twitter and/or Facebook that flashed on the giant LED screen. By doing so, Nike was able to “ambush” Adidas sponsorship advantages as a matter of pennies on the Adidas’ dollar (Minato, 2012). Clearly, the social/digital medium represents the most cost-effective way for companies in the sports apparel business to support promotion and advertisement. Thus, these two examples (personalized promotions and cost-effective interactive promotions) illustrate how and why the social/digital medium is the most effective advertising approach for a company in the sports apparel industry.
In conclusion, by comparing and contrasting Nike and Adidas, valuable insights can be gained in terms of how other companies in this product category might approach promotional and advertising strategies. As the basis of promotion and advertising, both companies assume that consumers want to feel good about themselves by being affiliated with winners. However, Nike and Adidas approach social media in very different ways - a centralized promotional strategy for Nike and a decentralized strategy for Adidas. Specifically, Adidas uses Facebook to create communities for specific product lines. Nike, on the other hand, maintains a general account for inspiring and motivating people to be active, play hard, and compete. The use of marketing information at Adidas has helped the company be innovative in the design and production of running shoes with an integrated energy management system that guides and drives an athlete’s foot through each stride. Along similar lines, based on marketing information about the persistent popularity of artists like Run DMC, Snoop Dogg, and Alicia Keys in America’s hip-hop culture, Adidas provides a hip-hop line of urban streetwear and apparel. It is, therefore, recommended that companies in the sports apparel industry use marketing information in similar ways to differentiate themselves and create competitive advantages. Ultimately, it is also recommended that companies in the sports apparel industry differentiate themselves by advancing corporate social responsibility through fair pricing strategies.
Adidas-Group. (2014). Global Brands Strategy. Retrieved from <http://www.adidas-group.com/en/investors/strategy/global-brands-strategy/
Kalb, I. (2013, 25 February). One of Nike's Core Strategies is in Danger. Retrieved from <http://www.businessinsider.com/is-nikes-hero-athlete-strategy-in-jeopardy-2013-2
Leli4ka. (2009, 23 April). Nike Marketing Policy. Retrieved from <http://www.slideshare.net/leli4ka/nikemarketing-policy
Minato, C. (2012, 14 June). Ingenious Ambush Campaigns From Nike, Samsung and BMW Make Official Sponsorships Look Like A Waste. Retrieved from <http://www.businessinsider.com/best-ambush-marketing-campaigns-2012-6?op=1
New Marketing Experience. (2012 12 August). Nike vs Adidas: who has the best social networks strategy? Retrieved from <http://newmarketingexperience.blogspot.com/2012/08/nike-vs-adidas-who-has-best-social.html
Ray, L. (2014). The Long-Term Effects of Customer-Oriented Sales Promotions. Retrieved from <http://smallbusiness.chron.com/longterm-effects-customeroriented-sales-promotions-21921.html
Siemers, E. (2010). Nike focuses on Brazil. Retrieved from <http://www.bizjournals.com/portland/stories/2010/07/05/story8.html?page=all