Marketing channel strategies nike vs adidas
Backgrounds of Nike and Adidas 3 2. Company overview of Nike 3 2. Company overview of Adidas 3 3. Changing trends in the industry 4 4. Comparison of the strategies for the two companies 5 4. In order to choose the best marketing channel strategy, one needs to consider several things, for instance, the type of customer, the type of product, the players in the industry as well as channel conflicts. To dissect this topic, two leading companies in the footwear segment will be used: Adidas and Nike. Backgrounds of Nike and Adidas 2. Company overview of Nike Nike Inc. was founded in 1964 by University of Oregon track athlete, Phil Knight and his coach Bill Bowerman. The company has since grown tremendously over the years to become the second largest sportswear manufacturer in the world, behind Nike.
The company, like Nike, designs, manufactures and distributes footwear, clothing, and accessories. It is the holding company for Adidas Group which comprises of companies such as TaylorMade, Reebok, Adidas Golf Company and Rockport (Flippo, 2018). In 2017, Adidas generated revenue of €21. billion and had around 57,000 employees globally (Statista, 2018). The changing consumer preferences regarding comfort and style have led to an increase in demand for customized shoes. In addition to that, there is also an increased demand among consumers for premium products. There is a tendency by the consumers to perceive that the higher the price of a given product, the higher the quality as well as the comfort and the performance of the product. With the demand for such premium products expected to keep increasing, footwear vendors such as Nike and Adidas need to align their strategies with the new trends (Businesswire, 2016).
The other change regarding customer demand is the increased demand for the nonathletic product segment. There is also a rise in eco fashion with styles such as ethical and recycled footwear on the rise. Presently, the leading footwear player, geographically, is North America. As of 2016, it held around 35. of the total market as a result of improved participation in athletic activities as well as the changing lifestyles. That notwithstanding, there is a remarkable growth in the Asian footwear market which is attributable to the increased number of consumers as well as increased levels of disposable income. The remaining 5% of its goods are sold via global brand divisions and converse sales. Nike maintains the channel power as it wields power and control over new product designs and product availability (PAlmatier, Stern, & El-Ansary, 2015).
There are however channel conflicts that may arise. In the case for Nike, the fact that it mainly offers premium products may result in disputes with wholesale distributors. An example is when it stopped shipping some of its favorite sneakers to Foot Locker as a way to protest the wholesaler’s decision to allocate more shelf space to more affordable shoes (selling at less than $120) (Soni, 2014). The use of robots and automation of its plants will also do away with the need to manufacture its products offshore and a result; there will be a faster supply chain. Partnerships with tech companies such as Apple also enhance their consumer experience and hence meet their demands (TheBossMagazine, 2018). Strategies for Adidas Currently, Adidas outsources a majority of its production to several independent factories across the world.
In 2017, for instance, Adidas was working with approximately 800 independent factories in more than 55 countries. The company’s supply chain is global and multilayered and involves working with many business partners. In the same way, it also depends on online retailers such as Amazon and Foot Locker (Joseph, 2018). The most notable change in Adidas’ supply chain, however, is its SpeedFactory which aims to take a shoe from idea to store shelf in 45 days. The use of technology will help Adidas to react much more quickly to the consumer’s demands. The use of technology, such as the 3D technology will lead to shorter lead time, smaller batch size, lower production costs as well as mass customization. It will also lead to local production even in high wage countries such as the US and Germany (Choi, 2017).
For Adidas, it distributes its products through controlled spaces such as its retail stores, shop-in-shops, joint ventures with retailers, e-commerce, etc. A notable trend in both companies is that they are both embracing digitization to be able to react much quicker to consumer demands. Technology will also help meet the trends without being barred by cost issues. Direct to consumer sales will enhance premium customer purchasing experience as well as reduce channel conflict. References AddidasGroup. Retrieved December 13, 2018, from https://www. businesswire. com/news/home/20160823005099/en/Top-3-Trends-Impacting-Athletic-Footwear-Market Choi, H. November 13). Adidas: Revolutionizing the Supply Chain with SPEEDFACTORY. thoughtco. com/quick-history-of-adidas-1444319 Joseph, S. March 15). How Adidas is using apps to fuel its e-commerce ambitions. Retrieved December 14, 2018, from https://digiday. W. Stern, L. W. El-Ansary, A.
I. com/2014/12/nikes-distribution-channels-products-reach-customers Statista. Global revenue of Adidas, Nike and Puma from 2006 to 2017 (in billion euros)*. Retrieved December 13, 2018, from https://www. statista. com/statistics/269599/net-sales-of-adidas-and-puma-worldwide/ TheBossMagazine.
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