Nike Adidas Mktg Fin

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Marketing and Financial Considerations

NIKE and ADIDAS

Miss Gabb

Entrepreneurship 4024-001

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Executive Summary

NIKE and ADIDAS have been traditionally designing and

marketing sportswear and shoes to athletes, young teens, and

adults for years; and each company has been successful in

building a powerful brand image in their own unique way. Named

for the Greek Goddess of Victory, NIKE has been established as

the #1 shoe and apparel company throughout the world. Based out

of Beaverton, Oregon, it has grown into a market leader, selling

products through more than 850-owned retail stores, an e-commerce

site, and to thousands of retail accounts, independent

distributors, and licensees. ADIDAS stands behind NIKE as the

2nd largest manufacturer and distributor of sportswear, training

gear, and equipment focusing on soccer, football, and running.

Based out of Germany, the company sells products through

wholesale and retail divisions throughout 170 countries and

online.

Both NIKE and ADIDAS strive to market and sell their

products in different ways; utilizing tons of market research;

thorough analysis of their individual target market demographics;

use of a strong brand image and a unique selling proposition; and

many different marketing strategies to deliver to their market

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segments, particularly individualized (one-to-one) marketing.

Each company has its own competitive advantages which distinguish

them from each other and their competition. They both employ

creative use of celebrity endorsements, social marketing, and

creative, non-traditional promotional strategies to remain market

leaders. These topics will be explored throughout this paper.

Business Concepts:

Target Market:

“The specific group of customers at whom a company aims its goods

or services; a group of customers who are most likely to buy a

company’s products or services.”

(Scarborough, N.M.. Essentials of Entrepreneurship and Small Business

Management. 7th ed. Upper Saddle River: Prentice Hall, 2014.)

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Customer Demographics:

“Important population characteristics, such as age, income,

education, race, and others.“



Competitive Advantage:

“A combination of factors that sets a small business apart from

its competitors and gives it a unique position in the market that

is superior to its rivals.”



Unique Selling Proposition:

“Key customer benefit of a product or service that sets it apart

from its competition.” (Scarborough, N.M.. Essentials of

Entrepreneurship and Small Business Management. 7th ed. Upper Saddle River:

Prentice Hall, 2014.)

Branding:

“Communicating a company’s unique selling proposition (USP) to

its target customers in a consistent and integrated manner.”



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Publicity:

“Any commercial news covered by the media that boosts sales but

for which a small company does not pay.”



Social Media:

“The use of internet and cell phone based applications, as well

as social networking websites, such as Facebook, Twitter,

YouTube, LinkedIn, and others, to enable communications with

customers in a two-way conversation.”



Individualized (one-to-one) Marketing:

“A system based on gathering data on individual customers and

developing a marketing program designed to appeal specifically to

their needs.”



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Analysis of Two Market Leaders: NIKE and ADIDAS

Target Market and Customer Demographics:

One of the top brands in the sports and footwear market

and also one of the oldest footwear brands in the world, ADIDAS

has been traditionally designing and marketing sportswear to

athletes, young teens, and adults. The company has identified

that their target market includes “the upper middle class as well

as high end customers,” (Hitesh, Pricing in the Marketing Mix

section, para. 7). Their most profitable market is a very

specific demographic known as, “Millenials,” who are “a

generation of young people aged between 17 and 34,” (Lobo, 2014,

para. 2). The company has conducted marketing research revealing,

“Most American teens want to be famous- and most of them believe

that someday they will be,” (Mahashwari, 2014, para. 1). Their

research has also revealed that high schoolers, “view brands as

means to fame among their peers,” (Mahashwari, 2014, para. 2).

This consumer demographic is strongly tied to trend-setting and

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creativity; they are those who are enticed by product innovations

and continually changing shoe designs. “Young people are a

covetable demographic, because unlike other groups, they are more

open to trying anything, so they are a great market,” (Lobo,

2014, para. 6).

Currently, NIKE is targeting a new line of athletic gear

for women in order to appeal to women’s preferences for style as

well as function. This market segment appears very promising and

according to John Kell, “the women’s business, which is worth

about $5 billion dollars, but represents just 20% of NIKE’s total

revenue, is expected to continue to outpace the men’s business in

terms of growth, as more women become active and incorporate gear

sold by NIKE into other aspects of their lifestyle,” (Kell, 2014,

para. 3).

Competitive Advantage:

In order for a business to remain successful over the long-

run, it must develop a sustainable competitive advantage and

offer distinct value to its customers, which cannot be repeated

by its competitors. NIKE’s primary competitive advantage lies in

the heart of its global brand recognition. “The group operates a

broad collection of separate divisions and produces footwear and

sportswear for just about every conceivable sport within its main

range,” (“NIKE US Profile”, 2013, Brands & Activities section,

para. 2).

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Another competitive advantage that sets this company apart

from others is the ability to continually offer products that are

innovative in functionality and style. “The company’s innovation

debut was in 1979 when it introduced air cushioning technology.

The shoes featured gas-filled plastic membranes that could be

inserted into the sole for comfort during running,” (Sanusi,

2014, p.87). This was well-received by the market and was viewed

as an innovation that set the company apart from the rest.

Individualized (one-to-one) Marketing:

As part of the company’s product development and test

marketing, NIKE employs individualized marketing to ensure that

its products will pass the test for endurance and reliability.

“NIKE has athletes test products in controlled lab settings, to

track performance,” (Feifer, J., 2015, p.54). The company designs

and creates its products based upon information gathered from

celebrity athletes groups, including those such as Lebron James,

Michael Jordan, Serena Williams, and boxing sensation Andre Ward.

As a result, they are able to form a Unique Selling Proposition

which is, “How can we make you better?” (Feifer, J., 2015, p.54).

James LeBron continually helps with the design and creation of a

signature shoe. He contributes to NIKE’s unique selling

proposition, “unveiling a new shoe that promises more agility,

more durability, and somehow, more LeBron,” (Feifer, J., 2015,

p.52). The company knows that these are the primary benefits that

build brand loyalty with their customers.

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Branding:

A company’s image and reputation continually depend upon

how positively or negatively its brand image is recognized in the

marketplace. According to the Haymarket Media Group, “NIKE has

used many memorable copy lines over the course of its history,

most famously ‘Just Do It,’ but also ‘There is no finish line’

and ‘Yesterday you said tomorrow,’” (Champions of design, 2013,

p.42). For many years, NIKE used only one logo. “The NIKE

‘Shwoosh’ has become instantly recognizable across the globe and

carries with it all of the brand’s positive, life-affirming

symbolism, as well as acknowledgement of the Greek mythological

roots of the NIKE name,” (Champions of design, 2013, p.42).

Interestingly, in 1972, an art student at the University

of Oregon, Carolyn Davidson, was paid just $35 dollars by a NIKE

executive to design a simple logo. That logo became the famous

swoosh logo from which the NIKE brand was born; a logo that

millions of people recognize everywhere throughout the world and

equate to superior sports performance. “From something ambiguous,

the swoosh has been stuffed with the most aspirational sporting

associations- skill, determination, courage, and above all else,

success,” (Champions of design, 2013, p.42).

In a similar way, ADIDAS has used branding to communicate

a strong brand image which conveys robust and athletic footwear,

with a combination of technology and design. “The tagline of

ADIDAS, ‘Impossible is nothing,’ is in itself a very powerful

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statement for the brand,” (Hitesh, 2015, p.2). Some of ADIDAS

footwear has been branded and designed to specifically appeal to

the younger generation. According to Rita Lobo, “young people are

more likely to experiment, but they also expect much more from

the brands they consume and the way these brands speak to them,”

(Lobo, 2014, p.4).

Publicity:

Companies like ADIDAS and NIKE very frequently publish

news articles in magazines, hold spotlight events with celebrity

athletes who feature their products, advertise through TV

commercials and use promotional campaigns to boost their sales

and revenue.

Central to both companies’ marketing strategy has been the

use of endorsement agreements with leading sportsmen and

sportswomen. With respect to NIKE, “The most celebrated such

arrangements have been the original precedent-setting deal with

Michael Jordan in 1985 (then worth a little more than $4m), and a

later gamble on golfer Tiger Woods which has turned into an

ongoing $105m endorsement contract, the reigning record for a

solo sportsman,” (“NIKE US Profile”, 2013, Brands & Activities

section, para. 5).

“ADIDAS markets through various marketing vehicles but the

majority of marketing is concentrated on television and product

placements. The creative team of ADIDAS is known to pump

adrenaline into their customers through ads which are very well

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made, very creative, and filled with energy,” (Hitesh, Promotions

in the Marketing Mix section, para. 1). ADIDAS regularly offers

trade promotions and sales promotions to their channel partners

in order to bolster sales of their products. “The popularity of

the brand is because it ties up with the top players across the

world such as Lionel Messi, Ronaldinho, Sachin Tendulkar, and

various others. At the same time, ADIDAS also sponsors teams and

some of the top teams include Real Madrid, France, Great Britain

(in football), England and South America (in cricket) and several

others,” (Hitesh, Promotions in the Marketing Mix section, para.

2).

ADIDAS has done a very nice job in its use of creative

marketing strategies. The company got young people involved with

its products at the London Olympics in 2012 and “young people

were invited to produce online documentaries, telling their

stories and those of their neighborhoods,” (Lobo, 2014, p.6).

They also set up a bunch of “Adizones,” which are “multisport

outdoor facilities that encourage young people to participate in

Olympic sports,” (Lobo, 2014, p.7).

NIKE is promoting a film campaign which is called “New

Possibilities.” By utilizing the latest technology and trends in

their current promotional efforts, this film, “inspires viewers

to push their limits and strive to reach new goals through a

variety of playful scenarios featuring all-star casts of athletes

and guest stars,” (“Nike Redefines Just Do It,” 2013). Viewers

are challenged to run a race, run a marathon, and/or outrun a

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movie star with different challenges and scenarios. It inspires

NIKE customers to think about how they can outperform to a higher

level.

Social Media:

ADIDAS partners with a social marketing agency, We Are

Social, and they travel across the globe gathering images and

video on many young athletes who are wearing ADIDAS sportswear

during major sporting events. The social media firm produces and

pushes out exclusive content across social and global retail

channels. According to an article published in Advertising Age,

dated July 7th, 2014, “ADIDAS was the most talked about brand on

Twitter during the World Cup, with over 1.6 million tweets,

retweets and replies mentioning the brand,” (Ruvolo, 2014, para.

8).

“One of the latest products is NIKE FuelBand, a wristband

that calculates the amount of energy spent during a day and the

approximate amount of calories burned,” (Sanusi, 2014, p.90). In

line with this new product, the company created a Facebook page

specifically for motivating customers who wear their product.

“Every week NIKE sets a new challenge for its followers. Users

can compare the NIKE fuel accumulated and comment on the

challenge, motivate each other, share their difficulties and get

suggestions on how to improve the general level of fitness,”

(Sanusi, 2014, p.91). This company continues to use very creative

strategies through its social media marketing and has gathered a

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very large following on its Facebook page. NIKE is at the top of

its game with online social media content.

Conclusion

When it comes to very large companies like NIKE and ADIDAS,

nothing has spoken louder than their brand identities. ADIDAS

has a powerful world-recognized brand that sets it apart from its

competitors. Its tagline, “Impossible is nothing,” conveys a

sense of overachievement and performance. At the same time,

NIKE’s logos and taglines, such as, “Just Do It,” have

communicated a brand identity that is tied to highly

inspirational associations, including skill, ability,

determination, courage, and success.

In terms of customer demographics, these two companies

target very similar niches within the market- upper middle class,

high end, athletes, teenagers, and adults. While they do differ

in their marketing approaches, their core competencies are also

very much the same. NIKE continues to produce and sell products

that are innovative in their design and their functionality. In

my opinion, both companies are successful in creating unique and

innovative sportswear unlike anything else out there. NIKE and

ADIDAS both target some of their products to the younger

generation of 12 to 34-year olds. I was impressed by their use of

individualized marketing to reach this segment of the market.

There is enormous potential in terms of the profits that they can

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reap from this growing segment of the market- they are the

largest consumer generation in our history.

There is never enough during this day and age for

companies to resort to traditional promotional strategies such as

TV advertisements and simple word of mouth. In order to fully

compete with the competition and understand their individual

customers’ needs and wants, companies like ADIDAS and NIKE must

make use of online marketing channels and applications, including

Facebook, Twitter, BuzzFeed, and LinkedIn; and they must utilize

social media agencies that can create two-way conversations with

customers online through websites, blogs, forums, and other

various applications. This is essential for small and large

companies to succeed in today’s business world. As world market

leaders, NIKE and ADIDAS are staying strong at their game and are

doing an excellent job of raising the competition.

Abstract

Bhasin, Hitesh. “Marketing Mix of NIKE.” Marketing91.com. Web. 22

Feb. 2015

NIKE is a corporation that has been selling a wide range of

sports shoes, apparel, accessories, athletic bags, and equipment

since 1979. They also manufacture and distribute ice skates,

skate blades, in-roller skates, and hockey sticks. As a

competitive company, they sell products to about 20,000 retail

accounts in the U.S. and 200 countries internationally. Nike uses

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advertising in newspapers and through strategic alliances, as

well as through brand ambassadors and creative sports events.

Bhasin, Hitesh. “Marketing Mix of ADIDAS.” Marketing91.com. Web.

22 Feb. 2015

ADIDAS is one of the oldest, yet strongest, footwear brands

which began operations in 1936. They have faced very tough

competition to companies such as REEBOK and NIKE. ADIDAS sells

athletic footwear, apparel, and accessories. Their products are

bought by customers due to their appeal in technology, design,

comfort, and style. Their target market is upper middle class

men, woman, and young adults. The company employs a higher price

point and customers perceive a higher quality product. ADIDAS

products are sold through retail stores, multi brand showrooms,

and also online. The majority of ADIDAS promotions are centered

around television and product placement.

“Champions of Design: NIKE.” Marketing 1 Dec. 2013: 42. Academic

OneFile. Web. 22 Feb.

2015. “NIKE (US) Profile.” Adbrands.net., Mind Advertising

Ltd., 15 Oct. 2013. Web.

22 Feb. 2015

The very simple “swoosh” logo was designed by a graphic

design student who was paid $35 by a NIKE executive in 1969. This

“swoosh” symbol is recognized throughout the globe and promotes a

strong brand identity for NIKE. It was first used by NIKE in 1971

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and registered as a trademark but has evolved considerably since

then.

Feifer, Jason. “Shoes Made for the Man.” Fast Company Mag., Jan.

2015. Web. 22 Feb. 2015

NIKE’s annual challenge is to unveil a new shoe that

promises more agility, more durability, and more of what the

basketball athlete James LeBron is looking for in a shoe. NIKE

has athletes test their products in controlled lab settings to

track performance and make sure the shoes are designed with the

right specifications. NIKE’s shoes have evolved in innovativeness

year after year. Their newest model is the LeBron12, which is

built for performance and ability.

Kell, John. “NIKE Makes a Big Push Into the Fast-Growing Women’s

Segment.” Fortune Mag., 22 Oct. 2014. Web. 22 Feb 2015

NIKE’s newest line of athletic gear is targeted towards

women and includes sports bras, tights, and other apparel,

potentially adding $2 billion to annual sales by 2017. NIKE

executives say that the women’s business is worth about $5

billion today and is expected to outpace the men’s business in

terms of growth. NIKE is facing tougher competition than ever

before as traditionally youth-focused apparel companies, Forever

21 and Urban Outfitters, have begun to enter this target market

as well.

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Lobo, Rita. “Millennials: the Perfect Consumers?” The New Economy

Mag., 27 March 2014. Web. 22 Feb. 2015

The Millenial generation- those born between the early

1980’s and the early 2000’s- are the largest generation since the

baby boomers. According to this article, this generation is

young, well-informed, and they have money to spend because they

are not bogged down by mortgages or children. They occupy 24.7%

of the current U.S. population and are highly engaged in social

media platforms. Websites like BuzzFeed combine marketing

campaigns with online content that appeals to young customers.

Over the last year, major companies, like ADIDAS, have been

employing social media marketing strategies and experimenting

with youth marketing.

Maheshwari, Sapna. “How ADIDAS Seeks to Make Teens Feel Famous

and Cool.”

Buzzfeed.com. 29 January 2014. Web. 22 Feb. 2015

ADIDAS uses a marketing strategy based upon the fact that

most American high schoolers believe they will be famous someday.

ADIDAS frequently invites teenagers to review a pair of their

shoes and then surprises them by having celebrity athletes show

up at the event. ADIDAS makes graphics for high school sports

teams and as a result, gets great results on social media

platforms, particularly Twitter.

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“NIKE Redefines Just Do It with New Campaign.” n.p., NIKE.com. 21

Aug. 2013. Web. 22 Feb. 2015

NIKE’s campaign, “New Possibilities” enables viewers to

participate in running a race or a marathon, as well as

outrunning a movie star. The film features basketball, tennis,

and boxing stars, who inspire and challenge those participating

in the application. Participants use the NIKE+ Running App by

setting a distance goal, tracking their progress and chatting

with friends. They can check a live leaderboard and see where

they rank.

Ruvolo, Julie. “Embedded with ADIDAS’ Soccer Media Team at the

World Olympics.”

Advertising Age Mag., 7 July 2014. Web. 22 Feb. 2015

ADIDAS has a real-time marketing team that gathers video

and photo content during major sporting events (such as the World

Cup matches) and presents it online. This strategy is proving

very successful for the company. ADIDAS was the most talked about

brand on Twitter during the World Cup, with over 1.6 million

Tweets, retweets, and replies mentioning the brand.

Sanusi, Michelle, et al. “The Swoosh of Creativity.” London

Business School: NIKE Case Study.

Business Today Mag., 6 July, 2014. Web. 22 Feb 2015

NIKE has become known for its use of innovation and

technology. They have created what is known as the NIKE FuelBand,

a wristband that calculates the amount of energy spent by someone

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during a day. The company has created a social media site, a

Facebook page for the FuelBand community, where NIKE sends out a

new challenge each week. Users can compare the NIKE fuel

accumulated, comment on the challenge, share difficulties with

others, and get suggestions on how to improve their fitness.

References

Bhasin, Hitesh. “Marketing Mix of NIKE.” Marketing91.com. Web. 22

Feb. 2015.

Bhasin, Hitesh. “Marketing Mix of ADIDAS.” Marketing91.com. Web.

22 Feb. 2015.

“Champions of Design: NIKE.” Marketing 1 Dec. 2013: 42. Academic OneFile.

Web. 22 Feb.

2015. “NIKE (US) Profile.” Adbrands.net., Mind Advertising

Ltd., 15 Oct. 2013. Web. 22

Feb. 2015.

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Feifer, Jason. “Shoes Made for the Man.” Fast Company Mag., Jan.

2015. Web. 22 Feb. 2015.

Kell, John. “NIKE Makes a Big Push Into the Fast-Growing Women’s

Segment.” Fortune Mag.,

22 Oct. 2014. Web. 22 Feb 2015.

Lobo, Rita. “Millennials: the Perfect Consumers?” The New Economy

Mag., 27 March 2014.

Web. 22 Feb. 2015.

Maheshwari, Sapna. “How ADIDAS Seeks to Make Teens Feel Famous

and Cool.”

Buzzfeed.com. 29 January 2014. Web. 22 Feb. 2015.

“NIKE Redefines Just Do It with New Campaign.” n.p. NIKE.com. 21

Aug. 2013. Web. 22 Feb.

2015.

Ruvolo, Julie. “Embedded with ADIDAS’ Soccer Media Team at the

World Olympics.”

Advertising Age Mag., 7 July 2014. Web. 22 Feb. 2015.

Sanusi, Michelle, et al. “The Swoosh of Creativity.” London

Business School: NIKE Case Study.

Business Today Mag., 6 July, 2014. Web. 22 Feb 2015.

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Scarborough, N.M.. Essentials of Entrepreneurship and Small Business

Management. 7th ed.

Upper Saddle River: Prentice Hall, 2014.

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