Marketing Communication Comparison of Shoe Companies

Introduction:

This report is presented with the aim of facilitating a comparative analysis of the marketing communication strategies and mix adopted by the athletic shoe brands Adidas and New Balance. This research entails a high magnitude of relevance as the two brands i.e Adidas and New Balance are operating simultaneously in the international market which is defined as being competitive.

For illustrative purposes:

Competitors of the Shoe Brands:

Adidas

New Balance

Nike

Puma

New Balance

Reebok

Asics

Woodlands

Red Tape

NIKE, Inc.

Adidas-Salomon AG

Ariat International

AZ3

DC Shoes

Fechheimer Brothers Company

OshKosh B’Gosh

Saucony

Woolrich

Combating completion as such is required for substance and growth.. Organizations such as Adidas, New Balance and many more are in continuity into market research to cater to consumers whose tastes and fashions are changing in rapidity necessitating variation in products by modifications, modes of advertising, sales and promotional approaches and appealing pricing strategy to attract consumers who are not only quality conscious but price conscious.

To render an in-depth analysis, I propose the following:

Primary Research: Consumer Poll

Secondary Research: Books, Journals, Websites

Analysis of Compiled data Primary and Secondary Research data employing the following business tools:

S.W.O.T Analysis

Marketing Mix

Market and Literature Review:

Origin:

New Balance Shoes:

New Balance Athletic Shoe was created by an orthopaedic shoe manufacturer in 1906. The individual who is credited for the birth of this reputed shoe brand is William Riley and the organization came to be known as the New Balance Arch Company. In the 1900s, New Balance Arch manufactured custom-made arch supports to rectify orthopaedic foot problems and help in relief of pain.

In the year 1930, the very first handmade running spike was created by New Balance Arch. Paul Kidd acquired new Balance Arch in 1956. The Organization manufactured first running shoe employing a rippled rubber sole, which was produced with a multitude of widths in 1961.

James S Davis, in 1972 bought New Balance and then it was christened as New Balance Athletic Shoe.

New Balance Athletic Shoe bought the rights from Iron Age of the Dunham brand names.

In 2000 the organization created the RC1001, which happened to be the primary shoe to present the N-ergy SC.

System comprised of a technological superiority in the New Balance bringing about high-performance suspension system. New Balance Athletic Shoe also gained successfully the rights to the PF Flyers brand in the year 2000.

New Balance Athletic Shoe commenced its first width centralized concept unit at Harrods with a merger with Sweatshop in 2001.

The organization signed on the dotted line a license agreement along with the Franco Apparel Group for sale of kid’s apparel in 2003. It also opened its stores in Santa Barbara and Ontario in the same year. In 2003 New Balance Athletic Shoe stepped with intent to diversify into the market of China.

In 2004, New Balance Athletic Shoe entered into agreement alongside New Era Cap to add in their product line performance headwear in its product line categories, a business agreement with Eyewear Designs to initiate sales of highly innovative performance sun wear and eyewear, and a mutually beneficial agreement with Moretz Sports to produce high quality performance socks.

New Balance Athletic Shoe successfully acquired Warrior Lacrosse in Warren, Michigan in 2004 and also commenced its concept outlet in US and Canada at the same year. A totally-new comfort performance

Shoe brand, Aravon, was by this organisation introduced at retail outlets in 2004.

In 2005, Innovative Hockey was bought by the organization to function as a new section named Warrior Hockey. In August 2006, New Balance Athletic Shoe bought Brine, a reputed industry world leader in soccer, lacrosse, field hockey and volleyball, based in Milford, Massachusetts.

Adidas:

Adolf Dassler, a German National residing in a relatively unknown German Village created Adidas, the phenomenon in athletic shoe brand who named the shoe by utilising his nickname Adi and adding it on to the first syllable of his last name. In the very beginning Adidas hired reputed athletics to promote their product line. Jesse Owens, in the Olympic Games of 1936 wore Adidas shoes while performing at the games and later on as the brand gained popularity many sports personalities commenced sponsoring the brand. Towards the end of Seventies, Adidas gained phenomenal popularity and was dominating the global market in sportswear.

Kaka, Zinedine Zidane, David Beckham and many celebrity soccer players such as e are being sponsored by Adidas. For nearly eight decades Adidas has been very much an integral part of the sports world providing state-of-the-art sports footwear, accessories and apparel. Currently, the organization takes pride in holding a global position in the sports goods sector. Adidas products especially shoes are available in almost every nation of the world proving the fact that the organization has carved a distinctive niche for itself.

Adidas has emerged into a large multinational corporation. It possesses a distinctive logo and the catchy advertising slogan “Impossible is Nothing” further cement the brand image and popularity. The business organization with intent to have sustenance of the image it has created in the minds of the global consumers allocates huge sums in advertising and promotion of the brand. The brand employs sports stars to project its corporate philosophy of passion, grit, determination and perseverance through its “Impossible is Nothing” Campaign especially at the current recessional phase which is predominant in the current economic world scenario. (Borderick 2005)

Methodology:

Primary Research:

Initially primary research method was employed. Consumers were interviewed about the two brands i.e. Adidas and New Balance Shoes. Data was compiled and a theoretical approach was devised to compare the brands. The questionnaire utilized had 10 vital questions which helped in gaining required responses for the analysis

Secondary Research:

While the function was carried out for the secondary research, books and websites and learning modules were referred to.

On the basis on the primary and secondary research data compilation, analysis was carried out and inferences drawn.

Analysis and Discussion:

http://www.wikinvest.com/images/thumb/e/e7/Footwear_market_shares.PNG/400px-Footwear_market_shares.PNGPie Chart

The above figure statically indicates the fact that New Balance has a large share in comparison to Adidas. Nike stands at 6% while Adidas at 16% which is almost half of Nike.

Marketing Mix:

http://www.soopertutorials.com/wp-content/uploads/2009/01/4ps.gif

New Balance

Adidas

Product

New Balance Athletic Shoe has created the RC1001, which stands out to be the first shoe to feature the N-ergy SC System, a technological strategy innovation in the high-performance suspension shoes

The shoes are known to offer comfort and style and are light in weight. They have great value for money. The grip which the sole provides is on account of good design and is useful especially in hiking. They go with ease on the legs and prevent any kind of twist or sprain.

Price

Commences from a pricing range of USD 59

The basic pricing range is USD 65 onwards

Place

New Balance Athletic Shoe are marketed in more than 120 countries on six continents. New Balance is in possession of wholly-owned subsidiaries in the Sweden, Hong Kong, Singapore, Australia, UK, France, Germany, New Zealand, Mexico, Canada, South Africa, and Brazil.

Adidas is sold in all the developed and developing economies of the world.

Adidas follow one level channel or an indirect channel to make their product reach out to the final consumer. The products are manufactured by the producer and it then reaches the retailer who in turn sells it to the final consumer.

Promotion

The company fails to have endorsements in huge sporting events, retarding its ability to gain international brand-recognition.

Adidas now just does not advertise innovatively but makes the much required impact with executions which are brilliant. Television and other forms of advertising are in regularity employed and the organization successfully conveys their characteristics of innovation and technology coupled with huge success stories with personalities such as Emil Zatopek and Mohammad Ali to name a few.

S.W.O.T Analysis: (Kotler 2001)

A S.W.O.T Analysis in context of a business organization assists us in comprehending the strengths of the organization, the weaknesses it possesses, the opportunities the organization could explore and the threats which could harm its growth and existence.

New Balance Shoes:

Strengths

Innovations

New Balance Athletic Shoe focuses on continuous research and development work. New Balance

Athletic Shoe has brought into various new products over the years. The business house was the first to produce handmade running spikes. It also created the first running shoe having a rippled rubber sole that was produced in multiple widths. The firm’s continuous innovations have helped it to remain competitive and improve market share.

Global reach

The firm possesses a number of licensees, joint ventures and distributors all over the world. International operations help the brand to use advantage of a range of market opportunities while refraining from overexposure to any specific market.

Unique approach to athletic products

The Company’s aim is to provide the elite and daily athlete with footwear, apparel and accessories that assure superior performance, fit, quality and comfort. Understanding that the size of feet varies among people, New Balance sells shoes in up to six different widths from a narrow 2A to an expansive 6E.The company has created 18 different foot models (lasts) to design its footwear around. Each last takes into account the users i.e. men, women and kids and the use. All in all, they create a complete fit and size profile to design a superior shoe called 360 Fit. This new approach provides the organization a competitive better advantage.

Weaknesses

Lacking celebrity endorsements

New Balance Athletic Shoe has focused on an “Endorsed by no one” belief or philosophy. The company fails to undertake celebrity endorsements like its competitors Nike, Adidas and Reebok. Its brand building process are hence at a position which is disadvantaged resulting in brand unawareness up to some extent by this.

Opportunities

Growth in the fitness equipment market

The fitness equipment market in the US and UK is expected to grow at steady rate in the near future.

Fitness equipment manufacturers have now started to offer high quality equipment at lower prices.

This has helped increase the penetration of these products in the home fitness market, as opposed to the earlier trend, when such products were only found in fitness and training clubs. Treadmills, elliptical machines and other types of equipment that are used for cardiovascular workout are now available to consumers at reasonable rates. This is increasing the demand for such products and New Balance is well positioned in this market through its home exercise equipment product range.

Threats

Rising raw material costs

The principal materials used in manufacturing footwear products are natural and synthetic rubber, plastic compounds, foam cushioning materials, nylon, leather, canvas, and polyurethane films used to make Air-Sole cushioning components. As a result of rising oil prices, the prices of synthetic rubber and plastic based products has increased. Rising oil prices will further increase the prices for petroleum based products.

Increasing raw material costs would increase the company’s production costs and may affect its profitability.

Intense competition

The business is subjected to high competition with many large companies such as Nike, Adidas and Reebok. The market launch of technologically better and improved products by competitors such as Adidas and Reebok, could lead to decline in the firm’s market share. Further, these competitors have greater resources and strong brand names. The competition from these big brands is very high and propels the company to invest large amounts in marketing and brand maintenance strategies.

Adidas:

Strength:

The prime strength of the organization is its 8 decades of existence in the global market. The employment of high end technology in the production process improves quality, precision and durability which are the most desired aspects by athletes. The organization has the largest international portfolio of celebrity sports ambassadors. The business as a part of promotion sponsors football teams and has a high consumer brand loyalty mainly in U.S.A and India. Statistics and surveys indicate that Adidas has the maximum level of popularity and brand image in India.

Adidas possesses the largest international portfolio of sports ambassadors.

The organization in continuity sponsors football teams and has a high fan following particularly in U.S.A and India.

Statistics and surveys reveal that Adidas has the maximum level of popularity and brand image in India.

Weakness:

The pricing strategy of Adidas for all its products including athletic footwear lacks flexibility and is highly rigid and this proves to be a weakness in a general price conscious economy. Adidas is hovered over with a close competitor in the form of Nike, Puma and many more in the global market. The Indian subcontinent, which in now identified as a potentially growing market with high potential of revenue, the brand has not been showing good revenue results.

In a global price conscious economy, the high level of rigidity in pricing poses a weakness.

Adidas is plagued with a close competitor in the form of Nike in the global market.

The Indian subcontinent, which in now recognized as an emerging market with high potential of revenue, the brand has not performed well.

Opportunities:

Adidas should avail the opportunity to explore new world markets in the global arena. Health consciousness among the people in general is creating a good need for athletic shoes which should be skillfully tapped by Adidas. Creative advertising employed in continuity could open up opportunities of market growth and sustenance.

The brand has tremendous opportunity to explore new avenues and markets in the global market.

Health consciousness among the world populace in general is creating a good demand for athletic shoes

Effective advertising employed in continuity could present the opportunity of market growth and sustenance.

Threats:

Statistics show that Reebok, a competitor of Adidas has a good market share and employs a higher sum for market communication strategies. This presents a threat which is growing for Adidas. New entrant brands such as GAP, CAT prove to be a threat as they are eating in on the market share of Adidas which it has created over a period of time

Statistic reveals that Nike, a competitor of Adidas has a large market share and allocates a much larger sum for market communication strategies. This proves to be a threat which is growing for Adidas.

Relatively new brands such as GAP, CAT prove to be a threat as they are cutting in on the market share of Adidas.

Conclusion:

Statistics state that Adidas rules over New Balance shoes in the Global Market. Without an element of doubt both the brands fulfill the quality criteria. Their marketing approach differs creating a certain amount of limitations especially in the case of New Balance Shoes. Adidas is undoubtedly performing better and will continue to do so

Recommendations:

It is recommended that New Balance Shoes commence celebrity endorsement for their product and even sponsor sports events like Adidas does. The excessive competition creates this need. With a change in the promotional activities the company might not improve market share.

Adidas has to focus on moving ahead of Nike which is the only close serious competitor dominating the market.

Bill Carlson

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