The Business Of Sportswear: NIKE Vs. ADIDAS

Sports or Activewear industry, as we call it, is a tough market to compete in. You need to be functional and at the same time stylish - to get an edge over your competitors. And functional not only means using 'smart textiles', it is much more than that, it is incorporating hi-technology in the garment, whilst keeping it comfortable and breathable. It is about the garment almost being your gadget!

There are, nowadays, many influential brands that have captured the market. Some of them like Athleta, Anta, Converse, Lululemon Athletica, La Passione, Li-Ning, Moncler, North Sails, Marina Yachting, The North Face and so on. But, these, although, competing in diverse market segments with diverse core-businesses, are all composed under the single umbrella of Sports and Active Fashion. 

And while we speak of this enormously growing sector, how can we not mention two of the most influential sportswear giants in the world - Nike and Adidas. The two - always the first names on the minds of the people, the brands funding many sport games and stars throughout the year. For instance, in the year 2014, NBA and World Cup were two main sport events. And, of course, the brands wouldn't have missed a chance on promoting themselves, as an excuse. Going further, this analysis will shed light on the same to find out who was the winner, who was able to spread more awareness and gain higher positive perceptions that, in turn, accelerated their revenues.

The Influence Measure

As can be seen in the chart below, in the trend line of this year, between Jan to March 2014, Nike had relatively low business intelligence index as compared to Adidas. Business Intelligence Index® (or brand index) is an algorithm defined by Fashionbi experts for the brands, taking into account their market sector performance, financial, digital marketing, influencers, their impact on the social media, their local awareness and perceptions country-by-country, e-commerce returns, retail distributions and more such success factor, that really defines where a brand stands in the business of Fashion, as well as it's positioning amongst the most direct competitors and benchmarks in its specific market segment.

In the second week of Jan 2014, Adidas started to see an increase in the index trend, with the highest score of 362.51. On the contrary, Nike's brand index decreased by around 50. This big gap was filled until the forth week of March 2014, the sharp increase in Nike's score, from 58.36 to 193.78. And then, Nike’s excellent performance lasted 3 months, from April to July 2014, mostly because of the NBA Playoffs, many NBA stars signed by Nike were in focus, during the competition season. However, not only Nike supported the game, Adidas also supported NBA and some of NBA stars signed with Adidas. 

Nevertheless, if we take a look at the trend line, we may find that Adidas was also quite active during the period of NBA Playoffs, but still cannot compete with Nike, as seen in the trend-line shown in the period of Jan, Feb and March.Therefore, we may know that Nike has much more influence given by NBA stars than Adidas. But Adidas’s brand index still positively increased in this period.

As can be seen in the trend line comparison, Nike has been more 'valuable' than Adidas during the World Cup. Adidas brand index even decreased in this period. All in all, the conclusion is that: Nike has been more influential than Adidas on sport events, at least this year. On the other hand, regarding the period of world cup, Nike and Adidas funded many national football team and influential football stars, a peek at the same shown below the list:

National Football Team Main Football Star
Nike                Australia,Brazil,Croatia,England,France,Greece,Netherland,Portugal,Korea,USA                        Cristiano Ronaldo
Adidas Germany,Spain,Columbia,Bosnia and Herzegovina,Argentina,Japan,Russia,Mexico,Nigeria Lionel Messi                             


As the result shown by brand index trend line, the latest financial data of Nike and Adidas are different as well. Because of the world cup, Nike’s stock price increased 7.36%, with the highest price of $85.60. The entire group’s net revenue was $962 million, with an increase of 23.6% over last year (last year’s revenue is $779 million). The total revenue was $7.98 Billion, with an increase of 14.5% over last year. The gross profit ratio, hence, was 46.6%, respectively. In general, the business in all of the local markets increased a lot, including China, North America, Europe, Japan and other emerging markets. So far, Nike’s total order increased 14%. On the contrary, even though Adidas invested a lot in the NBA and World Cup, the market's feedback was not up to the mark. Adidas couldn't achieve sales target, and released Profit warning. According to our Brand index, Adidas’s was seeing a low since the period of World Cup itself!

Key Communication Strategies During the Special Sports Events

Both Nike's & Adidas's performances can also be related to the communication strategies that they applied online and offline, and the results on the same. Let's focus here on a crucial aspect - Social Media:

FACEBOOK

Their Facebook's likes growth performance was divided by country. Brazil was the host of World Cup this year, hence, for Nike, most of that fans in that period came from Brazil. In addition, Mexico and India were as well the markets most interested and engaging, with as well USA not so far behind.Therefore, Nike’s promotion strategy on social media precisely reached its main target markets, with positive effects. How about Adidas? As can be seen, the number of “likes” growth is much lower than Nike, and the promotion was not precise.

The detailed action of Nike Facebook account: Top 4 actions are all related to Nike’s advertisement, which are always about Sports Spirit with incentive and emotional tone-of-voice. Meanwhile, they promoted it well, on social media during the World Cup. But Adidas was also showing good performance. The impact, in total, was more than Nike in this period. But, Adidas’s most actively-engaged posts were both related to the products, rather than the sentiments. 

In a situation and opportunity as the World Cup, the best choice is to promote the brand’s Spirit with creative and emotional tone-of-voices, relative to that particular sport event. The sports audiences are more likely to be influenced by the brand's value as shown during the event, with a very smart incorporation of the brand's products. Because sports is all about passion, about sentiments and loyalty - and if you hit the right note, you are certainly going up the impact and hence the revenue ladder!

TWITTER

Both NikeAdidas did a lot of actions on their official Twitter channels, regarding the world cup, as well.

However, as can be seen, Nike’s impact was higher than Adidas on Twitter as well, thanks to the large number of audience. But both played it strategically correct by promoting their brand slogan all this while, and that too, as hashtags (example: Nike's #justdoit) - thereby showing the sense of 'owning' those specific trending topics. What else these brands did right was tagging the ongoing event, example: #Worldcup or #Worldcup2014 etc. Both these activities, had significant impact on the social media fans. It is undeniable that Germany's football team improved a lot Adidas’s impact during this period. How about Nike? Even though “Nike’s team”, the team funded by Nike, could not enter the final game, Nike still constantly promoted their ads, in the meantime, the elimination of “Nike’s Team” somehow matched Nike’s new topic - “risk everything”. No matter what, Nike’s communication was always linked to the reality and hence, the brand still kept gaining high engagement and positive sentiments towards it.

Hence, what can sports industry learn from this series of events and from the winner - Nike, is to be more focused on the spirit you would like to deliver, rather than pushing your products with no soul. Even though “adidas’s teams” both enter the final game, Nike still constantly promoted the sports spirit. Anyway, in general, on Nike's social media account, it is very rare to find the general promotion of their products. In Nike’s social media, it is very hard to find the promotion of product. As a sport brand, the most important thing is to link the sports with the brand itself via passion and encouragement. And what better time to 'steal the deal' than doing so during the world's most important events themselves!

Are you a sports brand and need an effective social media strategy or would like to hold a creative campaign? We know the game! CONTACT US