A case study focusing on world’s two biggest names in the sports brands today - Nike and Adidas. Gives a good viewpoint to the marketing strategy of both.

1. adidas VS nike
A bird’s eye view of the e-marketing concepts incorporated by the giants of
sports apparel.
Deepak Krishnamurthi
8/20/2007

2. Contents
1. Introduction
2. Porter’s Competitive Forces
3. SWOT Analysis of Adidas and Nike
4. E-Business Model
5. Effectiveness of E-Business

3. 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 e-
commerce site focused on interactively profiling Adidas's extensive product offerings
accompanied by detailed product information.

4. 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.
MICHAEL PORTER'S FIVE
COMPETITIVE FORCES
Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of
a market or market segment : industry competitors, potential entrants, substitutes, buyers and
suppliers.
INTENSE SEGMENT RIVALRY
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 e-
commerce. Online selling has enlarged the reach for these firms allowing them to increase sales

5. 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.
THREAT OF NEW ENTRANTS
Due to the large scale of both Nike and Adidas, these firms are able to control their costs to
retain performance advantage over emerging competitors in the industry. Their web sites are
more sophisticated and enticing to browse. The capital injection into web site development is
high and must be updated frequently with new promotions and added features to attract
online shoppers. Selling footwear online is highly competitive; however, barriers to enter into
this e-commerce industry are quite low. The capital requirement for setting up an online shop is
comparatively lower than setting up a traditional bricks and mortar establishment. Therefore,
the online footwear industry is highly abundant with hundreds of online merchants.
THREAT OF SUBSTITUTE PRODUCTS
Consumer substitutes for athletic footwear products are low because there are little
alternatives to switch, some substitutes for athlete footwear could be boots, sandals, dress
shoes or bear feet. Consumers are not likely to substitute due to the performance specification
of the product. For instance, a basketball player would not wear boots to play basketball.
Therefore, there are no real substitutes for athletic footwear.
THREAT OF BUYER’S GROWING BARGAINING POWER
There are a large number of buyers relative to the number of firms in this industry. Therefore,
companies like Nike and Adidas must continuously market their product and differentiate their
brands against competitors, in order to increase sales and market share. The use of online tools
has helped to enhance the accessibility of users. For example, Nike's "nikeid.com" link allows
consumers to customize and design their own footwear by permitting customers to specify the
desired colours and the option to personalize the footwear with their name.

6. THREAT OF SELLER’S GROWING BARGAINING POWER
There are many suppliers in this industry. There is very little differentiation among the
suppliers, which eliminates suppliers' bargaining power. Leather, rubber, and cotton are
commodities available abundantly in the market. Companies such as Nike and Adidas have a
definite advantage and power over their suppliers. These suppliers become dependent on
these firms for survival. Moreover, Nike and Adidas have standardized their input procedures
pertaining to the materials used, their labor force, supplies, services, and logistics. Firms are
able to switch between suppliers quickly and cheaply, due to the globalised networks of cheap
labour.
SWOT ANALYSIS OF NIKE AND
ADIDAS
(With respect to e-commerce)
STRENGTHS WEAKNESSES
1. First movers advantage in e- 1. Negative image portrayed by poor
commerce. working conditions in its overseas
2. Brand recognition and reputation. factories.
3. Diversity in products offered on the 2. E-commerce is limited to USA.
web. (footwear, apparel, sporting 3. Online customer service not “helpful”
equipment etc). or easy to find.
4. Strong control over its own distribution 4. The direct sale to consumers is creating
channel. conflicts with its own resellers.
5. Innovative designs in footwear

7. enabling consumers to design their
own shoes online.
6. Secondary websites (eg.,
soccerevolution.com)
OPPORTUNITIES THREATS
1. Increased demand in the industry for 1. Increase in price of providing
products available online. technological solutions (e-commerce).
2. E-commerce will reduce the cost of 2. Strong competition from some of its
goods sold. major challengers in all branches of the
3. Expand e-commerce to global markets. business.
4. Possibility of outsourcing web 3. Negative image created by the
development and e-commerce to a sponsored athletes (i.e. Kobe Bryant
third party developer. and his sexual assault case).
5. Expand e-commerce to global markets 4. Possibility of distress from growing
6. Growing reputation in non-basketball beyond its capabilities.
sports will boost e-business.
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.

8. 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.

9. 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.
VS