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A birds eye view of the e-marketing concepts incorporated by the giants of sports apparel.
Contents
1. 2. 3. 4. 5. Introduction Porters Competitive Forces SWOT Analysis of Adidas and Nike E-Business Model Effectiveness of E-Business
INTRODUCTION
A daring dream began in 1920 when Adi Dassler fashioned his first shoe in Herzogenaurach, Germany. In 1948, Adidas was founded along with its identifying trademark, the three stripes. From its inception, Adidas has faithfully adhered to three guiding principles embedded deep into its DNA: Produce the best shoe for the requirements of the sport, protect the athlete from injury, and make the product durable. As time has passed, Adidas has evolved and is now one of the premier global leaders in sporting brands offering athletic footwear, apparel and accessories. This feat has been cultivated through continuous innovation and a broad product portfolio. This led to the development of www.thestore.adidas.com, an ecommerce site focused on interactively profiling Adidas's extensive product offerings accompanied by detailed product information.
Initially, what started as Blue Ribbon Sports in 1962 became Nike Inc. in 1972, based in Beaverton, Oregon. (Nike Greek Goddess of Victory) The founders were Bill Bowerman, a track & field coach and Phil Knight, a runner under Bowerman. From their modest start, Nike has grown to be a global leader in the sporting goods industry. It is recognized as the world's leading designer, marketer and distributor of athletic footwear, apparel, and accessories for a wide variety of sports and fitness activities. For Nike, an established and growing organization, a strong Internet presence felt like a natural extension to their already globally focused strategy. Today www.niketown.com, Nike's e-commerce site offers a unique experience, products and product information for its potential and existing customers.
The rivalry among existing competitors in the footwear industry is quite high. Large firms such as Nike and Adidas have grown immensely over the last two decades. Their global reach has expanded through all continents; this is attributed to the emergences of the Internet and ecommerce. Online selling has enlarged the reach for these firms allowing them to increase sales while minimizing operating costs. Most individuals in North America have access to high speed Internet and online purchasing has become the new trend for the twenty first century.
WEAKNESSES
1. Negative image portrayed by poor working conditions in its overseas factories. 2. E-commerce is limited to USA. 3. Online customer service not helpful or easy to find. 4. The direct sale to consumers is creating conflicts with its own resellers.
OPPORTUNITIES
1. Increased demand in the industry for products available online. 2. E-commerce will reduce the cost of goods sold. 3. Expand e-commerce to global markets. 4. Possibility of outsourcing web development and e-commerce to a third party developer. 5. Expand e-commerce to global markets 6. Growing reputation in non-basketball sports will boost e-business.
THREATS
1. Increase in price of providing technological solutions (e-commerce). 2. Strong competition from some of its major challengers in all branches of the business. 3. Negative image created by the sponsored athletes (i.e. Kobe Bryant and his sexual assault case). 4. Possibility of distress from growing beyond its capabilities.
E-BUSINESS MODEL
Nike and Adidas have adopted a merchant model which has three pillars of their e-commerce strategy: 1. Pure-play e-tailer 2. Tricks and clicks 3. Their online store.
The main purpose of acquiring relationships with pure-play e-tailers is to promote and market products on an international level. Nike has landed a deal with Fogdog Sports which will sell their entire Nike product line on its web site. Adidas signed an agreement with SportsLine.com and Sports.com. Fogdog.com, Sports.com, and SportsLine.com have the initial coverage in the US, UK and eventually in Asia. Nike and Adidas will also operate their traditional o, while selling their specialty products on their e-commerce web sites. This business model is referred to as "Bricks and Clicks." The primary goals of operating a bricks and click site is to increase sales, reduce cost, increase market reach, applying competitive pressure, promoting new products, improving customer service, and progress in addressing user concerns.
EFFECTIVENESS OF E-BUSINESS
Nike's ability to realize the potential of the Internet has placed them in the e-commerce leadership position among other sporting goods companies. Through its initiative to be the first to market with its e-commerce web site launch back in 1999. By continuously relying on innovative companies to redesign the site, Nike acquired the luxury of owning a site that's every bit as inspirational as it is informational, an important milestone for a market leader. Today, Nike's store enables online consumers to design key elements of the shoes they purchase. This program is the first time a company has offered such mass customization of footwear.
Adidas's approach to e-commerce was that of a follower since Nike was first. As a result, Adidas relentlessly pursued innovation and refreshing content to differentiate itself from Nike. Adidas also realized that in order to be successful it has to be fully committed to this initiatie. That's why it included adidas.com as part of its three pillar strategy along with pure play e-tailers, bricks and clicks. The final result is a web site that successfully portrays Adidas's product portfolio in an interactive and informational manner.
Nike and Adidas seem to follow similar online strategies but Adidas experienced a greater transformation from being a minor, insignificant player back in 1998 to the number two position in the athletic footwear and apparel industry. Part of this success is due to Adidas's ability to thoroughly leverage the Internet as a marketing and e-commerce medium, most of it at the expense of Reebok. In the Nike's case the online strategy ensured its strong leadership position in the intensely competitive market. No other athletic footwear company is able to outshine these two firms when it comes to e-commerce.
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