The Athletic Footwear Industry Jacob Angell Robert Carrozzo Kendrick Coq Jeremy Freeman
Agenda Industry Structure Background Competition + Organization Advertising Strategies Brand Case Study (FIFA WORLD CUP 2014) Analysis (Raw Data) Recommendations
Athletic Footwear Industry Why the Athletic Footwear Industry? One of the strongest global markets Highly competitive market Success is closely related to the effectiveness of advertising strategies Industry at a Glance (Nov. 2014)
Industry Timeline : Plimsolls Created 1895: First Running Shoe 1950s: Leisure Opportunities Expanded 1970s: Exercise Becomes Increasingly Popular Today
Quick Figures: Industry at a Glance
Industry Production and Supply Chain
Distribution Manufacturer Retailer Customers
Understanding the Recession
Competition & Entry For every dollar spent on the labor industry spends only 8 cents on capital Level of technology change low Difficult to enter
*Note: Reebok is owned by Adidas and therefore is not shown
Competition of the Industry Larger companies rely on vertical integration—Nike Smaller companies try to find niche markets—Under Armour High concentration
The industry is fairly concentrated Fairly concentrated HHI, high CR4 Lots of companies with smaller market shares
Advertising Strategies Sponsorships/Events Celebrity Endorsements Social Media
Sponsorships & Events
Celebrity Endorsement
Celebrity Endorsements Today
Social Media New definition of “word-of-mouth” advertising Incorporation of campaigns into hashtags Use consumers to sell the products Instagram and Twitter
Nike January 1964 Bill Bowerman and Phil Knight Nike Swoosh Brand Value - $19 Billion Market Cap - $83.6 Billion
Just Do It Heroism Find Your Greatness Endless Possibilities Never Not Running Make it Count
Nike + Apple Nike + iPod Sports Kit Nike + Sportband Kit Nike Sportwatch Application that uses accelerometer built in phone Created a Social Networking for athletes Decrease advertising cost, increase efficiency
Adidas Germany shoe manufacturer, 1925 Running/Training Adolf “Adi” + Rudolf Dassler Launched in U.S. in ‘68 and soon became leader in the industry Three stripes brand recognition 1972 Olympic Games, Munich, Germany Brand Value - $5.8 Billion Market Cap - $16.8 Billion
All Day I Dream About Sports “Play to Win” “Impossible is Nothing” “Adidas is all in” (more than sports) Brand built on passion and sporting lifestyle
Adidas & Android Adidas miCoach World’s first web-based personalized training service
Case Study: FIFA World Cup 2014 Risk Everything All In or Nothing
Risk Everything Targeted more players Targeted host country of Brazil 12 million views 30:1 like to dislike ratio All In or Nothing Official sponsor of World Cup Targeted more teams instead of individuals 30 Million views 5:1 like to dislike ratio
Results Adidas = World Cup Nike = Global Market
Hero, Hub, Hygiene Hero - Accelerates growth Hub - Retains current subscribers Hygiene - Attracts new subscribers
Raw Data Analysis
TV Ad-to-Sales Low Ad to Sales Ratio Reasons Great brand loyality Just TV ads for 2011 Advertise through other mediums Hard break down the data for just atheltic footwear
The Ad Time Placement Majority of Ads in the Afternoon (Noon-7PM) Reason After school and house moms Second Highest is the Overnight Reason Late night shows Younger audience
The Daily Ad Placement Weekend Highest ad counts Kids home for school More time spent in front of the TV
The Ad Seasonality Spring Increase Spring sports and outdoor activities Back to School Increase Fall sports and outdoor activities Holiday Increase Christmas presents
Ad Program Placement Sports Center and Highlight Express Target athletic audience SpongeBob Younger audience
Top Advertising Major companies Skechers top advertiser, but not top spender Quantity over quality Reebok top spender, but not top advertiser Quality over quantity
Cost per Ad Time Slot Nike Has more 60 and 90 second ads Targets prime ad slots Skecher low cost per Ad Adidas values the 30 Second Ads
Most Expensive Programs Sports games are the most expensive times to advertise The most targeted viewship
Recommendation: Global Global Focus Emerging markets in China and Brazil The global athletic footwear market was valued at $74.7 billion in 2011 and is forecast to grow at a CAGR of 1.8% to reach $84.4 billion in 2018
Recommendation: Women Opportunity in women’s athletic footwear 2013 – women’s apparel, footwear, equipment and other products made up < 25% of Nike’s revenue Plans for additional $3B grown in division by 2017 Exclusive women’s stores – Newport Beach, CA and Shanghai
Keep It Up! Continue with technological advancements and partnerships Continue event and celebrity sponsorships