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Strategic Brand ManagementStrategic Brand Management

Exeter MBA and MSc Exeter MBA and MSc –– Day 1Day 1

Lecture 3Lecture 3

Consumer Groups and Consumer Consumer Groups and Consumer

UnderstandingUnderstanding

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Global sports brands and Global sports brands and

consumer changesconsumer changes

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Three brands – approximately 60% global share

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NikeNike

�� Founded by Phil KnightFounded by Phil Knight

�� Based in Portland, OregonBased in Portland, Oregon

�� Tradition in running, basketballTradition in running, basketball

�� Just Do ItJust Do It

�� Centralized structure, US driven, tight brand Centralized structure, US driven, tight brand

controlcontrol

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adidasadidas

�� Founded by Founded by Adi DasslerAdi Dassler

�� Based in Based in HerzogenaurachHerzogenaurach, Germany, Germany

�� Traditions in football and OlympicsTraditions in football and Olympics

�� Horst Horst Dassler Dassler founded sports marketingfounded sports marketing

�� Became a great brand before brandingBecame a great brand before branding

�� Turn around in the 90Turn around in the 90’’ss

�� Business Unit structure for Business Unit structure for globalisationglobalisation

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ReebokReebok

�� Founded by the Foster familyFounded by the Foster family

�� Sold to US distributorSold to US distributor

�� Based near Boston, USBased near Boston, US

�� Tradition in aerobics and runningTradition in aerobics and running

�� Duelled Duelled Nike through the 80Nike through the 80’’ss

�� Struggled with brand identityStruggled with brand identity

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Market Share Data 1997Market Share Data 1997

6610311031FilaFila

22375375PumaPuma

33555555New BalanceNew Balance

131323272327ReebokReebok

11.511.520322032adidasadidas

363664376437NikeNike

% share% share$ US millions$ US millionsCompanyCompany

Source: SGI

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The adidas problemThe adidas problem

�� adidas growing everywhere outside the USadidas growing everywhere outside the US

�� Brand equity at an all time highBrand equity at an all time high

�� Brand also relevant to youth (onBrand also relevant to youth (on--going going

attitudinal study)attitudinal study)

�� Frustration from the global office in Frustration from the global office in

GermanyGermany

�� US forward orders showed continuing US forward orders showed continuing

declinedecline

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The traditional marketing processThe traditional marketing process

Elite Athletes

Casual Athletes

Mass Market

Influence

The Sports Pyramid

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The evolving strategy debateThe evolving strategy debate

�� Build for sportBuild for sport……

�� Market to kidsMarket to kids……

�� Similar target market Similar target market –– 1212––20 /1420 /14--1818

�� A product marketing approach based upon A product marketing approach based upon

sportsport

�� A consumer marketing approach to kidsA consumer marketing approach to kids

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The f wordThe f word

Function Fashion

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The emerging competitionThe emerging competition

�� DKNY, Sketchers DKNY, Sketchers -- the fashion brands fight the fashion brands fight

backback

�� EtniesEtnies, DC , DC -- the non the non ““alternativealternative”” brandsbrands

�� ““BrownBrown”” shoe market shoe market -- more fashionablemore fashionable

�� Niche sports brands expansion Niche sports brands expansion -- New New

Balance, AsicsBalance, Asics

�� Outdoor brands Outdoor brands -- the new intrudersthe new intruders

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The problem (continued)The problem (continued)

�� Existing market research did not explain the Existing market research did not explain the

reasons for declinereasons for decline

�� Product leadProduct lead--times times –– 18 months18 months

�� Frustration with retailers and internal Frustration with retailers and internal

pressure for change pressure for change –– especially in especially in

basketballbasketball

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Brand

Product / Service

Consumers

Strategic Brand Management

Sales Force

Head office in Germany

Retailer pressure

Investor pressure

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The Consumer planThe Consumer plan

�� ReRe--focus on the consumerfocus on the consumer

�� Expert analysisExpert analysis

�� Analysed more predictive / trend dataAnalysed more predictive / trend data

�� Allied to research across the USAllied to research across the US

�� Tested by focus groupsTested by focus groups

�� Aim to increase consumer understanding Aim to increase consumer understanding

and brand / product enhancementand brand / product enhancement

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Consumer groups Consumer groups –– the resultsthe results

�� The Letterman / JockThe Letterman / Jock

�� The AficionadoThe Aficionado

�� The The AtheneAthene

�� The ValueThe Value--addictaddict

�� The GearThe Gear--head / Geekhead / Geek

�� The Style leaderThe Style leader

�� The AdrenalizerThe Adrenalizer

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Yesterday..

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Today….

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The LettermanThe Letterman

�� Was faster than we thoughtWas faster than we thought

�� More influenced by urban cultureMore influenced by urban culture

�� HipHip--hop hop –– fusion of style and fashionfusion of style and fashion

�� Adidas was too slow and too traditionalAdidas was too slow and too traditional

�� High School and College SportHigh School and College Sport

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The Aficionado

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The AficionadoThe Aficionado

�� Core urban consumerCore urban consumer

�� adidas was not communicating either as a adidas was not communicating either as a brand or through productbrand or through product

�� New advertising agency with urban briefNew advertising agency with urban brief

�� Increased marketing in core urban areasIncreased marketing in core urban areas

�� NonNon--traditional marketing techniquestraditional marketing techniques

�� Briefed integrating marketing / product Briefed integrating marketing / product brand campaignbrand campaign

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The Athene

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The The AtheneAthene

�� A big opportunity for adidasA big opportunity for adidas

�� Success in College and team sports Success in College and team sports

(Women(Women’’s World Cup) gave adidas equity s World Cup) gave adidas equity

herehere

�� But under threat from New Balance and But under threat from New Balance and

NikeNike

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The Value Addict

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The ValueThe Value--AddictAddict

�� The most frightening consumer The most frightening consumer development in branding?development in branding?

�� OffOff--price is price is ““coolcool””

�� Explosion of Mass merchandisers (90% Explosion of Mass merchandisers (90% shop once per month)shop once per month)

�� Brands in the consideration set Brands in the consideration set –– then a then a fight for valuefight for value

�� adidas matched brand but not product adidas matched brand but not product expectationsexpectations

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The Gear head / Geek / Specialist

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The SpecialistThe Specialist

�� Exists in all marketsExists in all markets

�� High brand and product knowledge and High brand and product knowledge and

demandsdemands

�� For a brand like adidas how specialist did For a brand like adidas how specialist did

we need to be?we need to be?

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The Style Leader

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The Style LeaderThe Style Leader

�� Less influential in US than the AficionadoLess influential in US than the Aficionado

�� In Europe more pivotal than US sportIn Europe more pivotal than US sport

�� Trickle down effect relatively slowTrickle down effect relatively slow

�� adidas has greater credibility here than the adidas has greater credibility here than the

Aficionado Aficionado

�� Target Trefoil brand?Target Trefoil brand?

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The Adrenalizer

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The AdrenalizerThe Adrenalizer

�� Growing very fast alongside Outdoor Growing very fast alongside Outdoor

experiencesexperiences

�� Naturally suspicious of big brandsNaturally suspicious of big brands

�� AntiAnti--Nike, adidas had greater credibilityNike, adidas had greater credibility

�� Own brands Own brands –– skate and surf brandsskate and surf brands

�� Salomon huge opportunitySalomon huge opportunity

�� SubSub--brand strategybrand strategy

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And finally…the Veterans

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Conclusions on ConsumersConclusions on Consumers

�� Consumer groups Consumer groups –– diversifyingdiversifying

�� Complex mix of needs Complex mix of needs

�� Difficulty of maintaining appeal with one Difficulty of maintaining appeal with one

brand, one product range, one marketing brand, one product range, one marketing

strategystrategy

�� How far can the core brand stretch?How far can the core brand stretch?

�� But But –– several alternatives to the sports several alternatives to the sports

pyramidpyramid

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After the breakAfter the break……....