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Marketing Assignment.pptx
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- 3. INDUSTRY OVERVIEW Consumption Rate Size ofthe Market Growth Rate Major Competitors Trends in the Market Barriers to Entry
- 4. Consumption Rate In 2021Asia’s consumption accounted for more than half (56.1%) of the worldwide total, consolidating its position. North America and Europe followed with 14.9% and 13.3% shares, respectively. 20.5% 12.2% 11.3% INDONESIA BRAZIL CHINA 3.8% 3.4% USA INDIA
- 5. Market Size The globalfootwear market size was estimated at USD 381.92 billion in 2022. Athletic 60% Non Athletic 40%
- 6. Growth Rate The global footwear marketis predicted to witness a revenue of US$398.40bn in 2023, with an annual growth rate of 3.47% (CAGR 2023- 2028)
- 7. Major Competitors NIKE ADIDASPUMA SKECHERS TIMBERLAND
- 8. Trends in theMarket The footwear industry is undergoing a number of trends that are shaping the market. These trends include: ATHLEISURE: The athleisure trend is driving demand for footwear that can be worn for both athletic activities and everyday wear. This trend is being fueled by the growing popularity of fitness and wellness, as well as the increasing casualization of workplaces. SUSTAINABILITY: Consumers are increasingly demanding sustainable products, and footwear brands are responding by using recycled materials, reducing their environmental impact, and promoting ethical manufacturing practices.
- 9. Trends in theMarket E-COMMERCE: E-commerce is a growing channel for footwear sales, and brands are investing heavily in their online platforms. E-commerce offers consumers convenience, a wider selection of products, and competitive pricing. PERSONALISATION: Consumers are increasingly looking for personalized experiences, and footwear brands are using data analytics and artificial intelligence to create customized products and recommendations. HEALTH AND FITNESS CONSCIOUSNESS: There is a growing enthusiasm and awareness regarding the health benefits of sports and fitness activities among consumers, which increases the demand for sports footwear.
- 10. Barriers to Entry INSUFFICIENTINITIAL CAPITAL- Prior to launching a footwear business, it's essential for a retailer to secure ample funding for acquiring inventory, managing day-to-day operations, and ensuring the business's sustainability. Moreover, footwear businesses entail substantial expenses, including rent for retail space, permits, and licenses. TECHNOLOGY AND KNOWLEDGE DEFICIENCY- At times, startup footwear retailers falter due to inadequate research on patents or industry insights crucial for a thriving footwear business. The presence of exclusive licenses within the footwear industry can pose a formidable barrier to market entry, limiting certain companies from engaging in trade.
- 11. Barriers to Entry ABSENCEOF BUSINESS CONNECTIONS- In the case of products like footwear, convincing customers to switch from their existing sellers can be challenging, often driven by concerns about counterfeit products. If a retailer lacks effective persuasion skills to attract new and loyal customers, it may deter them from initiating or building a competitive business network. GOVERNMENT REGULATIONS- The processes involved in launching a new footwear business, obtaining contracts, and securing permits can be protracted and costly due to government policies. These regulatory hurdles in certain jurisdictions serve as constraints, impeding the entry of new retailers into the market.
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- 13. DEMOGRAPHIC FACTORS RISING POPULATION:The global population is projected to reach 9.7 billion by 2050, This presents a growth opportunity for the footwear industry as it will drive demand for footwear for various occasions and activities. AGING POPULATION: There is a global trend toward an aging population. In 1950, there were only 131 million people 65 and older; in 1995, their number had almost tripled to 371 million. By 2050, one in 10 people worldwide will be 65 or older. Therefore, it is leading to an increase in demand for footwear that are designed for older adults. RISING URBANISATION: The global population is becoming increasingly urbanized, which is leading to a change in lifestyles and footwear preferences. Urban dwellers are demanding footwear that are stylish, comfortable, and durable.
- 14. SOCIO-CULTURAL FACTORS HEALTH ANDFITNESS CONSCIOUSNESS: Increasing health and fitness awareness among consumers is boosting demand for footwear that promotes comfort, support, and performance, particularly in the athletic footwear segment. RISING INFLUENCE OF SOCIAL MEDIA: Social media is playing a growing role in influencing consumer purchasing decisions, including footwear choices. Increasing diversity and inclusivity: There is a growing demand for footwear that are designed for people of all shapes, sizes, and backgrounds. FASHION TRENDS AND PERSONAL EXPRESSION: Footwear plays a crucial role in personal expression and fashion trends. The industry must stay abreast of evolving fashion trends and consumer preferences to remain competitive.
- 15. RISING POPULARITY OFATHLEISUREWEAR: Athleisurewear is becoming increasingly popular, and this is leading to a demand for footwear that can be worn both for everyday activities and for exercise. Footwear companies are responding to this trend by developing products that are stylish and versatile. According to the research report, “Global Athletic Footwear Market Outlook, 2028”, published by Bonafide Research the market is anticipated to reach USD 179.19 Billion by 2028 with a significant CAGR of 5.04% from USD 134.16 Billion in 2022.
- 16. TRADE POLICIES: Tradepolicies can affect the cost of raw materials and the cost of shipping finished products. These policies can also affect the competitive landscape of the Footwear industry. GOVERNMENT REGULATIONS: Governments may impose regulations on the footwear industry, such as those related to product safety, labour practices, and environmental sustainability. POLITICAL INSTABILITY: Political instability in certain countries can disrupt supply chains and make it difficult to do business in those regions. POLITICAL-LEGAL FACTORS
- 17. INTELLECTUAL PROPERTY RIGHTS:Footwear companies must protect their intellectual property rights in order to prevent competitors from copying their designs. This can be a complex and costly process, especially in countries with weak intellectual property laws. LABOUR LAWS: Labor laws and environmental regulations influence labor practices and production processes, impacting costs and sustainability practices.
- 18. ECONOMIC FACTORS ECONOMIC GROWTHAND CONSUMER SPENDING: Economic growth and consumer spending patterns play a significant role in the demand for footwear. Economic downturns can lead to reduced spending on discretionary items like footwear. INCREASING DISPOSABLE INCOME: Rising disposable incomes in developing countries are creating new opportunities for footwear companies. Consumers in these markets are more willing to spend money on footwear, and they are demanding high-quality products from international brands. INFLATION: Inflation is a major factor as it affects the cost of production. As the price of raw materials and labour increases, it can make it more difficult for businesses to remain competitive.
- 19. EXCHANGE RATES canalso have an impact on the footwear industry as they can affect the cost of imports and exports. For example, if the value of a foreign currency decreases relative to the US dollar, it can make it more expensive to purchase materials or labor from foreign countries. INTEREST RATES are also very important as they can affect the cost of borrowing money. Higher interest rates can make it more difficult for businesses to access capital, which can affect their ability to invest in new technologies or expand their operations.
- 20. NATURAL FACTORS DEFORESTATION &HABITAT DESTRUCTION: The footwear industry relies on various natural resources, such as leather and rubber. Scarcity and environmental concerns surrounding these resources can impact production and sustainability initiatives. CLIMATE CHANGE: Climate change and extreme weather events can disrupt supply chains, affect material availability, and influence consumer preferences for footwear. SUSTAINABLE ALTERNATIVES: Consumers are becoming increasingly interested in sustainable products, and this is leading to a demand for footwear that are made from recycled materials and that are produced in a socially responsible manner.
- 21. ENVIRONMENTAL REGULATIONS: Governmentsmay impose environmental regulations on the footwear industry, such as those related to waste disposal and water usage. These regulations can be complex and costly to comply with. WASTE GENERATION: The footwear industry generates a substantial amount of waste, including scraps of materials, packaging, and discarded products. The improper disposal of these waste materials can lead to pollution of land and water bodies.
- 22. TECHNOLOGICAL FACTORS GROWTH OFE-COMMERCE: E-commerce is providing consumers with more convenient ways to purchase footwear. E-commerce is expected to account for 31.1% of global footwear sales by 2025, indicating a growing preference for online shopping. AI & DATA ANALYSIS: Artificial intelligence and data analytics are being used to personalize product recommendations, optimize supply chains, and gain deeper insights into consumer behavior. USE OF DIGITAL TECHNOLOGIES IN R&D: Digital technologies are being used to design, develop, and market footwear in new and innovative ways.
- 23. 3D PRINTING: 3Dprinting is being used to develop custom-made footwear that are designed to fit the individual wearer perfectly. This technology is still in its early stages of development, but it has the potential to revolutionize the footwear industry. ADVANCEMENTS IN MATERIAL SCIENCE: Advancements in materials science are leading to the development of new materials that are lighter, stronger, and more durable. These materials are being used to develop new and innovative footwear designs. Technological advancements in manufacturing are making it possible to produce footwear more efficiently and at a lower cost.
- 24. SWOT ANALYSIS OFNIKE (MARKET LEADER) STRENGTHS WEAKNESSES OPPORTUNITIES THREATS S W O T
- 25. STRENGTHS GLOBAL REACH: Nikehas a global customer base of millions who are actively engaged with the brand following the trends, attending its events, and overall supporting Nike’s brand vision and therefore driving Nike’s impressive market capitalization. BRAND AWARENESS: Nike is considered to be the most recognizable brand in the world as its brand name and its logo “Swoosh” are memorable to everyone irrespective of whether them being consumers of Nike or not.
- 26. STRENGTHS DIVERSIFIED PRODUCT PORTFOLIO:Nike offers a wide range of products, including footwear, apparel, equipment, and accessories. Alongside its flagship brand, Nike's strategic development and management of subsidiary brands like Converse and Hurley have significantly contributed to Nike's unmatched dominance over a multi-decade period. ICONIC PARTNERSHIP: Nike’s long-term relationship with Michael Jordan has proved to be one of the key factors for its success which has also attracted Black community support for the brand. Additionally, Nike partnered with the famous basketball player to design Air Jordan 1 Shoes which increases their likability among sports enthusiasts.
- 27. STRENGTHS SUPERIOR MARKETING CAPABILITIES:The brand invests heavily in demand-creation initiatives, including advertising, promotions, celebrity endorsements, media print, and complimentary products. Nike has dedicated $3.7 billion, $3.6 billion, $3.1 billion, and $3.8 billion to these efforts in the fiscal years of 2019, 2020, 2021, and 2022, respectively. Nike has also leveraged social media platforms and targeted marketing campaigns to successfully expand its customer base.
- 28. WEAKNESSES POOR LABOUR PRACTISES:Nike has constantly been in the news for its poor labour conditions in foreign countries. These conditions include forced labour, child labour and low wages. DEPLETING EMPLOYEE CONDITIONS: The New York Times conducted interviews that established that Nike has a toxic working environment, where sexual misconduct, pay disparity, and racism are rampant. Numerous lawsuits have been filed by former employees. DOMINANCE OF RETAILERS: Nike’s retail sector makes Nike weak due to its sensitivity to pricing. 65% of Nike products are sold directly to wholesalers or retailers. With retailers serving as their core customers, Nike does not put up a fight against their pricing structures whatsoever.
- 29. WEAKNESSES OVER DEPENDENCY ONU.S. MARKET: Nike’s market is spread over 120 countries but it still relies on the U.S. market in terms of sales and revenue. In the fiscal year 2022, about 41% of Nike’s sales came from North America, while the rest of 59% came globally. FINANCIAL INSTABILITY: Even though Nike’s income statement shows an increase, according to several reports, Nike is facing financial debts. As of FY22, Nike’s total long-term debt is reported to be $8.9 billion.
- 30. OPPORTUNITIES EMERGING MARKET: WhileNike has established itself internationally the possibility for expansion still persists in emerging economies such as India and Brazil. ADVANCING PRODUCTS: In spite of Nike's extensive product portfolio, there remains ample room for innovation. Nike has actively expanded its technological footprint, particularly in the realms of fitness and health. Pioneering products like wearable technology mark the beginning of its technological advances. AI ADVANCEMENTS: With ample financial strength, Nike strategically acquires start-ups. A notable instance is the recent purchase of Celect, a predictive analytics platform. This move enhances online sales capabilities and enables the prediction of customer shopping behavior.
- 31. OPPORTUNITIES EXITING WHOLESALE DISTRIBUTION:Nike recently revealed its decision to withdraw from the U.S. wholesale distribution market. The company is now exclusively focusing on marketing its products through Nike stores, the app, and websites. In fiscal year 2022, 42% of its Nike revenue comes from online sales. VENTURING INTO METAVERSE: Nike is capitalizing on the chance to promote their digital shoes within the Metaverse, allowing players to utilize their Metamask wallets for acquiring diverse in-game merchandise. 58% (WHOLESALE) 42% (Direct) NIKE REVENUE
- 32. THREATS BATTLING KNOCKOFFS: Nikefaces a threat to its revenue and reputation from counterfeit products that are made of cheap quality but have Nike’s label. A number of merchandisers and retailers offer counterfeit Nike products at lower prices. INCREASED COMPETITION: Despite Nike's dominance in the athletic industry, the presence of competition and emerging brands poses ongoing threats. Intensified competition necessitates increased spending on marketing and advertising for Nike. Nike spent $3.8 Billion specifically on marketing and demand generation in fiscal year 2022. KANGAROO POPULATION IN JEOPARDY: Nike faces allegations of endangering the Australian kangaroo population by utilizing their skin in the production of leather football shoes. Animal rights activists and advocates are calling on Nike to reconsider its approach and explore plant-based
- 33. THREATS TRADE TENSIONS: Nikerelies on diverse global markets, as reflected in its recent stock surge driven by heightened sales in China. Given that China and the US constitute its largest markets, the company faces potential jeopardy to a significant portion of its sales should trade tensions between these two economic giants intensify. PATENT DISPUTES: Whether a company is deemed right or wrong, patent disputes are vigorously contested in the public eye, often revealing undisclosed details about the involved parties. Nike and Adidas find themselves embroiled in intense patent disputes concerning Primeknit and Flyknit shoes, with legal battles unfolding in U.S. and German courts.
- 34. SWOT ANALYSIS OFADIDAS (CHALLENGER) STRENGTHS WEAKNESSES OPPORTUNITIES THREATS S W O T
- 35. STRENGTHS POWERFUL BRAND RECOGNITION:Adidas, a premier sportswear brand with 70+ years of history, boasts global recognition and a positive image. According to Forbes, it is ranked at 2nd position with a brand value of $12.9 Billion. In 2020, Adidas was ranked the 51st most valuable brand in the world. Known for high-quality products and cutting-edge designs, Adidas dominates luxury sportswear sales with its fashionable and reputable items. GLOBAL DISTRIBUTION NETWORK & STRATEGIC PARTNERSHIPS: It offers diverse purchase options, including brick-and-mortar stores, eCommerce platforms like Amazon, and its own site. With a presence in over 160 countries, Adidas reaches customers through owned stores, e-commerce, and retail partnerships, ensuring a broad and accessible market presence. Adidas has also established partnerships with major sports teams,
- 36. STRENGTHS DIVERSIFIED PRODUCT PORTFOLIO: Adidashas connected with a wider customer base thanks to its diverse product range spanning sports, lifestyle, and activities, reducing reliance on a single category. From athletic gear to leisurewear, the broad portfolio appeals to both seasoned athletes and newcomers. Footwear represents 53%, Apparel represents 41%, and Accessories and Gear represent 6% of Adidas' annual sales of € 21.2 Million ADIDAS Annual Report 2021 Footwear 53% Apparel 41% Accessories and Gear 6% NET SALES BY PRODUCT CATEGORY
- 37. STRENGTHS FINANCIAL PERFORMANCE: Adidas,financially robust, safeguards market share and sustainability. In 2021, Adidas’s currency- neutral revenue grew by 16% from EUR 18.4 Billion to EUR 21.3 Billion. SUSTAINABILITY AND SOCIAL RESPONSIBILITY: Adidas prioritizes sustainability and corporate social responsibility. By 2024, they aim to use only recycled polyester in their products, reducing environmental impact. The company is committed to becoming carbon-neutral by 2050. Adidas is also investing in solar and wind energy to reduce reliance on fossil fuels.
- 38. WEAKNESSES OUTSOURCED MANUFACTURING ANDCOMPLEX SUPPLY CHAIN: Adidas heavily depends on Asian third-party manufacturers for production. This reliance poses risks like labor disputes and supply chain issues, affecting product availability and quality. Adidas operates a complex global supply chain involving numerous suppliers, manufacturers, and distributors. Any disruption can cause shortages, affecting production, output, and costs, and impacting Adidas's profitability. NARROW PRODUCT LINE AND FEWER ENDORSEMENTS: Adidas Group has only the Adidas brand and Reebok brand under its portfolio, which has restricted the company to sports shoes, sports apparel, and accessories. Therefore, a decline in demand for sports-related products can be disastrous to Adidas. Adidas falls behind Nike in growth because it invests less in celebrity endorsements. Endorsements not only increase brand
- 39. WEAKNESSES LEGAL BATTLES: InJune 2020, Adidas lost a long-running legal battle with Nike over their respective knitted shoes. Adidas has lost the right to produce or sell it and the confidence of customers who love that specific footwear. There were allegations against Karen Parkin, the head of human resources, mishandled cases of racism at the company. She was forced to step down to pave the way for an investigation. INTENSE COMPETITION: The sports apparel and shoe market is highly competitive, with solid rivals like Nike, Puma, and Under Armor. This fierce competition can lead to pricing pressures and challenges in maintaining market share.
- 40. WEAKNESSES COUNTERFEIT PRODUCTS: Adidas,along with other prominent brands, confronts the issue of counterfeit products. These fake items harm the brand's reputation and can result in lost sales. Counterfeits dilute the authenticity and quality associated with the Adidas brand, posing a significant challenge for the company.
- 41. OPPORTUNITIES EXPANSION IN EMERGINGMARKETS: Emerging markets like India, Brazil, and Africa present significant growth opportunities for Adidas. The company can expand its presence in these markets by tailoring its products and marketing strategies to local preferences. E-COMMERCE AND DIGITAL TRANSFORMATION: The growth of e- commerce and digital technologies presents a significant opportunity for Adidas. The company can further enhance its e- commerce platform, leverage digital marketing channels, and develop data-driven strategies to reach new customers and drive sales.
- 42. OPPORTUNITIES SUSTAINABILITY: Consumers areincreasingly demanding sustainable products and practices. Adidas can leverage its commitment to sustainability principles to attract eco- conscious consumers and enhance its brand reputation. PRODUCT DIVERSIFICATION: Adidas can expand its product portfolio beyond sportswear to include more lifestyle and fashion apparel. This diversification could attract new customer segments and reduce reliance on the cyclical nature of the sportswear EXPAND THROUGH STRATEGIC PARTNERSHIPS: Adidas recently partnered with the Ivy Park brand. This strategic partnership provides a perfect opportunity for Adidas to attract more female customers and try to catch up with Nike and Puma who have more female customers.
- 43. THREATS INTENSE COMPETITION: Adidasfaces intense competition from other sportswear brands, particularly Nike, Under Armour, and Puma. These competitors all have strong brand recognition, innovative products, and effective marketing strategies, making it challenging for Adidas to maintain its market share. DIRECT TO CONSUMER (DTC) MODEL: The growing popularity of DTC models, where brands sell directly to consumers through their own online stores, is disrupting traditional retail channels. This trend could pose a threat to Adidas's reliance on partnerships with brick-and-mortar retailers.
- 44. THREATS EMERGING MARKET BRANDS:Emerging market brands are gaining traction in their respective markets, posing a challenge to Adidas's global dominance. These brands offer competitive prices and products tailored to local preferences. ECONOMIC DOWNTURNS: Economic downturns can significantly impact consumer spending on sportswear, as discretionary purchases are often reduced during times of economic uncertainty. This could lead to decreased sales and profits for Adidas. GEOPOLITICAL TENSIONS: Geopolitical tensions and trade wars can lead to tariffs, supply chain disruptions, and increased costs, negatively impacting Adidas's global operations and profitability.
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