adidas VS nike

A birds eye view of the e-marketing concepts incorporated by the

giants of sports apparel.
Deepak Krishnamurthi
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%ontents
&. 'ntroduction
". (orters %ompetitive )orces
*. S+,- Analysis of Adidas and .ike
/. 0-1usiness 2odel
3. 04ectiveness of 0-1usiness
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A daring dream began in &7"# when Adi Dassler fashioned his
8rst shoe in Herzogenaurach, Germany. 'n &7/9 Adidas was founded
along with its identifying trademark9 the three stripes. )rom its inception9
Adidas has faithfully adhered to three guiding principles embedded deep into
its D.A: (roduce the best shoe for the re;uirements of the sport9 protect the
athlete from in<ury9 and make the product durable. As time has passed9
Adidas has evolved and is now one of the premier global leaders in sporting
brands o4ering athletic footwear9 apparel and accessories. -his feat has
been cultivated through continuous innovation and a broad product portfolio.
-his led to the development of www.thestore.adidas.com, an e-commerce
site focused on interactively pro8ling Adidas=s e>tensive product o4erings
accompanied by detailed product information.
'nitially9 what started as Blue Ribbon Sports in &7?" became
Nie !nc. in &7$"9 based in Bea"erton, #regon. $Nie % Gree Goddess
o& 'ictory( -he founders were Bill Bowerman9 a track @ 8eld coach and
)hil *night9 a runner under 1owerman. )rom their modest start9 .ike has
grown to be a global leader in the sporting goods industry. 't is recogniAed as
the world=s leading designer9 marketer and distributor of athletic footwear9
apparel9 and accessories for a wide variety of sports and 8tness activities.
)or .ike9 an established and growing organiAation9 a strong 'nternet presence
felt like a natural e>tension to their already globally focused strategy. -oday
www.nietown.com, .ike=s e-commerce site o4ers a uni;ue e>perience9
products and product information for its potential and e>isting customers.
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2ichael (orter has identi8ed 8ve forces that determine the intrinsic long-run
attractiveness of a market or market segment : industry competitors9
potential entrants9 substitutes9 buyers and suppliers.
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-he rivalry among e>isting competitors in the footwear industry is ;uite high.
Carge 8rms such as .ike and Adidas have grown immensely over the last two
decades. -heir global reach has e>panded through all continentsD this is
attributed to the emergences of the 'nternet and e-commerce. ,nline selling
has enlarged the reach for these 8rms allowing them to increase sales while
minimiAing operating costs. 2ost individuals in .orth America have access to
high speed 'nternet and online purchasing has become the new trend for the
twenty 8rst century.
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Due to the large scale of both .ike and Adidas9 these 8rms are able to
control their costs to retain performance advantage over emerging
competitors in the industry. -heir web sites are more sophisticated and
enticing to browse. -he capital in<ection into web site development is high
and must be updated fre;uently with new promotions and added features to
attract online shoppers. Selling footwear online is highly competitiveD
however9 barriers to enter into this e-commerce industry are ;uite low. -he
capital re;uirement for setting up an online shop is comparatively lower than
setting up a traditional bricks and mortar establishment. -herefore9 the
online footwear industry is highly abundant with hundreds of online
merchants.
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%onsumer substitutes for athletic footwear products are low because there
are little alternatives to switch9 some substitutes for athlete footwear could
be boots9 sandals9 dress shoes or bear feet. %onsumers are not likely to
substitute due to the performance speci8cation of the product. )or instance9
a basketball player would not wear boots to play basketball. -herefore9 there
are no real substitutes for athletic footwear.
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-here are a large number of buyers relative to the number of 8rms in this
industry. -herefore9 companies like .ike and Adidas must continuously
market their product and di4erentiate their brands against competitors9 in
order to increase sales and market share. -he use of online tools has helped
to enhance the accessibility of users. )or e>ample9 .ike=s Enikeid.comE link
allows consumers to customiAe and design their own footwear by permitting
customers to specify the desired colours and the option to personaliAe the
footwear with their name.
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-here are many suppliers in this industry. -here is very little di4erentiation
among the suppliers9 which eliminates suppliers= bargaining power. Ceather9
rubber9 and cotton are commodities available abundantly in the market.
%ompanies such as .ike and Adidas have a de8nite advantage and power
over their suppliers. -hese suppliers become dependent on these 8rms for
survival. 2oreover9 .ike and Adidas have standardiAed their input procedures
pertaining to the materials used9 their labor force9 supplies9 services9 and
logistics. )irms are able to switch between suppliers ;uickly and cheaply9 due
to the globalised networks of cheap labour.
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AD'DAS
G+ith respect to e-commerceH
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&. )irst movers advantage in e-
commerce.
". 1rand recognition and
reputation.
*. Diversity in products o4ered on
the web. Gfootwear9 apparel9
sporting e;uipment etcH.
/. Strong control over its own
distribution channel.
3. 'nnovative designs in footwear
enabling consumers to design
their own shoes online.
?. Secondary websites Geg.9
soccerevolution.comH
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&. .egative image portrayed by
poor working conditions in its
overseas factories.
". 0-commerce is limited to 6SA.
*. ,nline customer service not
IhelpfulJ or easy to 8nd.
/. -he direct sale to consumers is
creating conKicts with its own
resellers.
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&. 'ncreased demand in the
industry for products available
online.
". 0-commerce will reduce the
cost of goods sold.
*. 0>pand e-commerce to global
markets.
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&. 'ncrease in price of providing
technological solutions Ge-
commerceH.
". Strong competition from some
of its ma<or challengers in all
branches of the business.
*. .egative image created by the
/. (ossibility of outsourcing web
development and e-commerce
to a third party developer.
3. 0>pand e-commerce to global
markets
?. Lrowing reputation in non-
basketball sports will boost e-
business.
sponsored athletes Gi.e. Kobe
1ryant and his se>ual assault
caseH.
/. (ossibility of distress from
growing beyond its capabilities.
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.ike and Adidas have adopted a merchant model which has three pillars of
their e-commerce strategy:
&. (ure-play e-tailer
". -ricks and clicks
*. -heir online store.
-he main purpose of ac;uiring relationships with pure-play e-tailers is to
promote and market products on an international level. .ike has landed a
deal with )ogdog Sports which will sell their entire .ike product line on its
web site. Adidas signed an agreement with SportsCine.com and Sports.com.
)ogdog.com9 Sports.com9 and SportsCine.com have the initial coverage in the
6S9 6K and eventually in Asia. .ike and Adidas will also operate their
traditional o9 while selling their specialty products on their e-commerce web
sites. -his business model is referred to as 5Brics and 3lics.5 -he
primary goals of operating a bricks and click site is to increase sales9 reduce
cost9 increase market reach9 applying competitive pressure9 promoting new
products9 improving customer service9 and progress in addressing user
concerns.
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.ike=s ability to realiAe the potential of the 'nternet has placed them in the e-
commerce leadership position among other sporting goods companies.
-hrough its initiative to be the 8rst to market with its e-commerce web site
launch back in &777. 1y continuously relying on innovative companies to
redesign the site9 .ike ac;uired the lu>ury of owning a site that=s every bit
as inspirational as it is informational9 an important milestone for a market
leader. -oday9 .ike=s store enables online consumers to design key elements
of the shoes they purchase. -his program is the 8rst time a company has
o4ered such mass customiAation of footwear.
Adidas=s approach to e-commerce was that of a follower since .ike was 8rst.
As a result9 Adidas relentlessly pursued innovation and refreshing content to
di4erentiate itself from .ike. Adidas also realiAed that in order to be
successful it has to be fully committed to this initiatie. -hat=s why it included
adidas.com as part of its three pillar strategy along with pure play e-tailers9
bricks and clicks. -he 8nal result is a web site that successfully portrays
Adidas=s product portfolio in an interactive and informational manner.

.ike and Adidas seem to follow similar online strategies but Adidas
e>perienced a greater transformation from being a minor9 insigni8cant
player back in &77 to the number two position in the athletic footwear and
apparel industry. (art of this success is due to Adidas=s ability to thoroughly
leverage the 'nternet as a marketing and e-commerce medium9 most of it at
the e>pense of 5eebok. 'n the .ike=s case the online strategy ensured its
strong leadership position in the intensely competitive market. .o other
athletic footwear company is able to outshine these two 8rms when it comes
to e-commerce.
VS