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The products belonging to this category have always been perceived as high
price-high value. In order to truly engage with all the possible consumers it is
imperative for these brands to position their products which subscribe to the
Dzsame for lessdz strategy. In order to effect a change in its value proposition, these
companies need to effect a change in their product positioning strategy. The
products in these firmsǯ new product line must be positioned as value-for-money
where little or no compromise has been made in terms of product quality.
This can be done in two ways- reducing price of the current offerings or
maintaining the price levels but increasing the benefits for the customers. The first
should not really be an option for these companies and they must pursue the
second option. Thus, these firms must stress on innovative product development
through the use of innovative production technologies and processes in order to
create products that have an enticing value proposition for the customer base. They
have to achieve this by increasing brand equity which is the extra monetary value
the consumers are willing to pay to own a particular brand. This is a function of
brand awareness, brand association, perceived quality and brand loyalty. Thus all
steps must be followed to increase the aforementioned attributes.


 

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 significant component of industry membersǯ strategy to increase market share is the
strengthening of brand image and customer loyalty through marketing. Companies
expend considerable effort and resources attempting to convince their customers that
sneakers made by other companies are imperfect substitutes. Currently, Nike appears to
have been the most successful in this endeavor, followed closely by the newly joined
didas-Reebok entity with its two flagship brands. Nikeǯs shoes are considered to be
quality and stylish. Reebokǯs are comfortable and casual, and the didas brand boasts
superior performance and is Dzperceived as a professional, technically orientated brand
with strong European rootsdz. Smaller companies like Vans and DC shoes have succeeded
in creating a strong brand image in the eyes of young skateboarders and extreme sports
followers. Puma in the past was seen as Dzthe brand that mixes the influence of sport,
lifestyle and fashiondz. The methods by which they accomplish this include various forms
of advertising, social networking and associations with major events.

  

These firms spend more than 10% of their sales in advertising. The figure shows the
importance of advertising to these companies. dvertising is done both on traditional
channels such as TV, print, hoardings, etc, as well as contemporary media such as the
internet. dvertising leads to greater brand awareness as well as association of the
advertising campaign with the brand.
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Celebrity marketing campaigns are a key way in which athletic shoe makers seek to
differentiate their brands and associate their shoes with professional athletes and other
celebrities. The most successful examples are the signature lines and endorsement
contracts that firms, particularly Nike, didas, Reebok, and Puma have with professional
sportsmen. The most famous of these company-player relationships is between Nike
and Michael Jordan. Despite Jordanǯs retirement several years ago, the ir Jordan line
continues to be a huge source of profit and brand support for Nike. The success of the
Jordan and other signature lines has been and continues to be instrumental in Nikeǯs
image as a stylish performance brand. This image has allowed Nike to differentiate its
products from those of its competitors, particularly didas, whose image has thus far
failed to break out of the realm of basic technical performance. While Nike has had the
most success with basketball endorsements, other firms have also utilized this
technique. For example, Reebok has an endorsement deal with Chinese NB player Yao
Ming. This Dzstardz marketing extends beyond the U.S. and into international borders. In
late 2005, Nike spent over Rs 200 crore on endorsing an Indian cricket team, and made
the team the Dzworldǯs most valued brand in team sponsorshipdz.
These firms can look at targeting celebrities in other domains which appeal to the target
group. Thus having musicians as celebrities can also be an option so is having a person
who is the role model in the current conditions. Thus having a Vijay Mallya or a Rahul
Gandhi as an endorser in India is an option
„

„

The companies can appeal to a large audience t once by getting associated with a
major event such as the FIF World Cup or the Olympics. This leads to your brand
getting greater visibility among a large number of viewers and also creates a brand
association with that particular event. Thus two of the components of brand equity are
enhanced through this activity.
The World Cup for example has a viewership of over 2.5 billion and didas played itǯs
tried and tested strategy of being the official FIF sponsor for the World Cup games.
This means the referees wear didas uniforms, the footballs are didas-branded and
televised ads for football apparel and equipment during matches can only be, you
guessed it, for didas. Moreover, didas is the official sponsor for 12 of the 32 teams
playing in the World Cup Ȅ so the uniforms of teams such as Germany, rgentina, and
Spain (all of which advanced to the quarter finals) were emblazoned with the didas
logo. ll this lead to a greater buzz for didas and the company which had flat (and
almost declining) sales over the last three years is expected to have moderate growth in
its topline and bottomline. ccording to a Nielsen survey, this created a buzz of 14.4%.

Social Networking
Social networking is the up and coming communication media which more and more
players in all kinds of industries are getting into. Facebook.com and myspace.com both
have over 50 million subscribers and most of them belong to the target segment. Thus it
would be an ideal opportunity for the company to efficiently reach the people it actually
wants to sell its product to. nother medium is youtube.com which has over 150 million
users. In fact Nike has been using this medium effectively over the years with campaigns
such as Joga Bonito and Write the Future. These were both started in conjunction with
the FIF World Cup which had didas as its official sponsor. Nike not wanting to be left
behind started these campaigns which were immensely successful and created greater
buzz (30% as per C Nielsen) than didas over the period. Through social networking
you can reach your customers cheaper and the CPM (cost per mils) is significantly
lower. In addition to this you reach the consumers you want to reach. Having online
presence and having well designed websites also gives a feeling of cutting edge
technology. Thus there are people who believe that social networking is probably more
effective in this segment than the traditional advertising mechanism. The absence on
this medium of any of the firms would essentially be a handicap for them.

The CSR card

These companies can improve their brand image further by simply showing themselves
to be socially responsible. For these companies this can quite easily achieved by having
recycled packaging and have a green product line. This would be beneficial not only to
the top line but would also add to the brand equity of the company. Examples of
companies who have used the same strategy include Coke, Ikea, etc. These companies
are at the top of the Interbrand listings in terms of value of brand name. t the same
time the companies also have to show themselves to be maximizing shareholder value
thus coming across as attractive investment options and thus improving the financial
standing for the company. It therefore makes sense for a Nike or an didas to showcase
them to be a carbon neutral company or a company having immense transparency.

  

Retail
Firms also make decisions regarding the distribution of their shoes in line with the
brand image they wish to maintain. Nike refuses to sell its flagship brand to low cost
retailers. In October 2005, Nike stopped selling to Sears in response to its merger with
Kmart. Sears will continue to carry products from didas, New Balance, Reebok, and
Sketchers. Though Nike does not sell products under the Nike brand to discount
retailers, it does target some of its other brands toward that market.
There are companies such as Brooks and Spira who choose to market their products
almost exclusively to specialty running stores. Brooks Sports, which is a subsidiary of
the Russell Corporation, focuses on Dzhigh-performance running shoesdz and considers
itself Dzthe brand of choice among discerning runners of all abilitiesdz
(www.brooksrunning.com). Spira Footwear, a young company that makes running
shoes with springs in the bottom, also plans to use this type of distribution decision to
market its shoes. Despite that their shoes are revolutionary, they lack aesthetic appeal.
The companyǯs CEO, ndy Krafsur, has suggested that the company needs to establish
itself Dzin the small stores where people explain the technologydz.
The companies have to ensure that they have proper retail space management
mechanisms to drive efficiency. This could include usage of mono brand franchises and
programs such as NOOS(Never out of stock.)

Online Model-Personalization
One unique distribution tactic that has entered the market place in the last few years is
allowing customers to design their own shoes. Nike pioneered this venue with the
introduction of the NikeID service in the spring of 2005 which allows customers to
personalize their shoes. Nike ID allows buyers to choose their own colors, materials,
and in some cases, add a wide variety of logos and images to the shoes (NikeID.com).
didas has also begun using this method in its soccer cleats. The new +F50 Tunit line
allows the customer to customize the weight of the shoe chassis, the weight of the
cleats, and the overall fit of the shoe. This has tremendous scope and could be the way
next gen customers purchase their sports shoes. This will not only lead to greater
customer satisfaction but also a chance to charge a premium to customers.

Grassroots Marketing
Companies also seek to attract new customers and cultivate customer loyalty by
introducing young athletes to products that fit their particular needs. The firms believe
the products will market themselves on the basis of their quality and suitability to the
wearer. The companies can target rookies and give them free shoes and this will
undoubtedly get their loyalty once they become Pros and could help build a companyǯs
brand image. This is one of the major reason companies become official kit suppliers to
local club teams, etc. This not only creates usage for their product but also leads to
positive word of mouth from the users and eventually lead to greater sales for that
company. Of the major shoe competitors, New Balance made the most use of this
technique. They used this strategy in their 2004 acquisition of Warrior Lacrosse. The
companyǯs founding chairman, Jim Davis, notes that the objective of the acquisition is
Dzto work with coaches to get kids in the right shoes, and after we hope that they become
loyal customersdz. This dynamic is also part of Nikeǯs justification for its World Cup ad
campaign and determination to take the soccer market from didas. Soccer is
considered Dzan important gateway to brand loyalty with children worldwidedz.



 

   
The companies have to realize that innovation is a must in certain saturated markets
such as North merica and Europe. ccording to a Commerzbank report it is estimated
that 90% of the European youth buy a new athletic wear product every year. It is
imperative for these companies to develop products that will induce buying behaviour
from the existing users. The companies through Global Brands are determined to
address every consumer in a specific and unique way Ȃ with product initiatives that
generate trade and consumer interest.
The general belief is that technological innovation is essential to sustainable leadership
in this industry. By leveraging the extensive R&D expertise within their companies, the
incumbent players continuously challenge the boundaries of functionality and
performance. In addition, innovation plays a significant role in differentiating their
product offerings in the minds of consumers. For example at didas, personalisation is
one of the brandǯs lead innovation concepts, and it is an didas goal to be the most
personal sports brand by 2015. t Reebok, innovation focus is on fitness and training,
where a current priority is creating products that provide a material benefit to the
consumer in terms of muscle toning and conditioning.
By creating inspiring product and brand experiences, these players strive to enhance
their positions as premium brands. This, in turn, is an important catalyst to sustaining
and improving the brandsǯ gross margins, therefore making continuous innovation an
important enabler for future profitability improvements.

Keeping up with Competition

For many performance brands, it is important to sell products based on the latest
technology in order to have a competitive product in the top Ȃof-the-line market. These
new technologies can then be introduced into lower priced footwear and other types of
sneakers to help companies maintain their presence in different market segments or
break into new ones. The companies have to constantly come up with new products to
keep up with the competition or they end up giving a competitor a free rein.

New Products and Brand Image

New products can also enhance the image of a brand. The Nike Free, which lets runners
feel as if they are running barefoot, is an important product because it indicates a shift
in the way Nike views the interaction between their products and their consumers. The
Free is meant to be used as a training tool to strengthen runnersǯ feet. nother example
is the didas 1 which had a built in microchip and was priced at $250 at launch, a full
$100 premium over its competitor Nike Max ir 360. This hi-tech shoe will likely
reinforce didas image as a firm at the forefront of athletic technology.

thletico-Fashion
The companies have to come up with products which are lie in the intersection of the
athletics and the fashion category to have a greater say in the parallel market of fashion.
Fashion companies are one substitute that can easily be countered through this strategy
and these companies could possibly come up with shoes with tie-ups with up and
coming designers.

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Larger incumbents can control entry by acquiring smaller companies. The athletic shoe
industry has seen considerable consolidation of late, with aforementioned acquisitions
of Umbro and Converse by Nike, Reebok by didas, and so on. The entering firms which
are successful and gain significant market share pose a threat to the larger players. To
prevent such a scenario, the bigger players preemptively acquire smaller sneaker
companies before these grow too big and become competitors with similar footing in
the industry. The incumbents have large enough budgets so that they can simply buy
these smaller firms, rather than risking a subsequent loss in market share. The bigger
firms essentially make it almost impossible for new entrants to grow too much without
investing huge sums of money. The acquisitions allow the buying firms to reap benefits
through both increased scope and also association with the latest trends in footwear.
Some potential entrants notice this tendency and want to remain independent and
simply choose to look at alternative business opportunities.

ÿ

 
  
 strategy that has so far only been utilized by Nike has been the player inspired
brand lines. This offers tremendous potential as the firm gets greater sales and
greater brand equity through enhanced brand association, perceived quality and
awareness. The ir-Jordan brand of shoes from Nike is marketed with the image
of Michael Jordan at the fore. s much as Nike may promote the superstar and the
product he represents, Jordan himself is responsible for the propagation of the
brand endorsed by him. The more Jordan plays in front of a packed audience, the
greater the spurt in sales of the ir-Jordan brand. He is like a walking, talking
billboard that happens to be a spokesman for Nike. To the target market, Jordan
is everything they hope to be and by buying the product endorsed by him, the
consumers feel that they can come that much closer to their icon.
nother outcome of this strategy could be the cost premium that one would extract
due to these. The consumers would be willing to pay a greater amount for the same
product if the product belongs to a particular product line. Thus other companies
can take a leaf out of Nikeǯs book and create product lines in the same way.


 
Going forward, these companies must realize that the future is a global game
with booming economies such as the BRIC nations with growing purchasing power
parities. While the appeal of sportsmen of the class of Jordan and Woods are
universal, the company needs to look at other potential ambassadors Ȃ such as
upcoming NB superstar Yao Ming, with a fan following which spans not just the
United States, but also the whole of China and other sian nations. In addition, it
needs to come out of the cocoon of high end product image which it has built for
its brand, and cater to the lower income groups which can open up new vistas of
business opportunity for the organization. s stated earlier this can be achieved by
creating a perception of higher value. The companies have to ensure that in these
countries the focus is on expanding the pie rather than fighting for the existing
market. Thus the firms have to build the market and lead it to its true potential.
Thus we can summarize as follows:
sia: To expand the business in the most important markets China, Japan,
South East sia and India.
L ti A ri Ex usi ss i th st i rt t r ts r i
Ar ti xi hi

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