Shoe Enterprises Battle Low End Market

In July 12th, people in the industry analyzed that under the background of the financial crisis, the sports industry market in China can still maintain a healthy and upward trend. The most important reason is that the Chinese market has a strong purchasing power.

"City encircling the countryside"

According to media reports, international brands Nike and Adidas are considering lowering the price of goods into China's low-end market.

Nike plans to expand sales to $40% to $27 billion by 2015, and Adidas plans to sell more stores in two or three tier cities at lower prices.

If Nike ADI can really make the price more competitive, even in the luxuriant two or three line market of domestic brands, it will still go all the way.

According to the UBS report, if Nike decides to sell products with lower price in China, the average high priced domestic brands, such as Kappa (China trend holding brand) and Lining, will be most affected in the short term, because some consumers in the two or three tier cities may choose Nike instead.

In the long run, some brands of Chinese brands will be squeezed out of the market.

"We believe that small and medium-sized brands with annual marketing budget of 350 million -5 billion are unlikely to compete with Nike, Lining and Anta all over the country.

This seems to be a very destructive tactic. Will Nike do it?

In 1998, Mr. Shao, who was still in high school, bought a pair of Nike's NBA player "penny Hardaway" exclusive sneakers with the savings of the entire summer job, which was priced at 1280 yuan.

"In those days, having a pair of Nike basketball shoes was a great honor among classmates."

After 12 years, the same thing happened to his nephew.

Mr. Shao's nephew is reading sophomore this year. His pair of Kobe Bryant's exclusive sneakers make his classmates very envious.

Shao and his nephew objected to Nike's lowering of its selling price. "So the sense of superiority in wearing Nike will disappear."

But it can not be ignored that in any industry, price is not the only factor determining consumer choice.

Good brands often retain more consumers because of high prices, which naturally means more profits.

Changing prices to market is not necessarily a wise choice.

However, if we do not consider the price reduction, Nike wants to enter the two or three line market, which is almost impossible, because it will be faced with the constant strengthening of domestic brands.

At present, the main selling brand of domestic brands, represented by Anta and XTEP, is still in the two or three line market. "In some small cities in China, you only see a Nike store, and there will be 2-3 Anta and XTEP around."

Hua Jie consulting clothing industry analyst Liang Venlo believes that the two or three line city is the main battlefield of domestic brands, and is the cornerstone of enterprises.

If you feel that the international brand has the meaning of channel sinking, the price and marketing resistance of domestic brands will be quite fierce.

International brands may not be cheap enough to compete.

"Rural encircling the city"

Since the reform and opening up, international sports brands have entered the Chinese market. They have taken advantage of strong brand influence and appeal to occupy the first tier cities.

At the same time, the Chinese sports brand represented by Lining and Anta skillfully applied the strategy of "encircling the city by the countryside", and adopted the route of differentiation with the international brand in the channel development and brand positioning, so that the enterprises could develop rapidly.

After more than 10 years of painstaking efforts, they have taken a firm foothold in the Chinese market and initially have the strength to challenge the international brand in the Chinese market.

Now, in the two or three tier cities successfully encircling Nike, Adidas and other international brands, firmly occupy the market share, Lining, Anta, 361 degrees and other domestic sporting goods brands in the first tier cities to attack the city and seize the market share, and the effect is obvious. Nike and Adidas "good for nothing" good days are gone forever.

Last year, sales revenue of Nike and Adidas in China declined. Nike's revenue was $1 billion 277 million (February 28, 2009 to February 28, 2010), which was equivalent to about 8 billion 680 million yuan, down 4%. Adidas was less reliable. Sales in the Greater China region fell 10%, while sales in China were about 7 billion 638 million, up 25.4% over the same period last year, and Lining, whose sales volume reached 8 billion 386 million yuan, exceeded that of Anta, and Anta had nearly 6 billion yuan of sales.

In addition, the domestic sports brand is still "momentum like rainbow" at this stage.

According to statistics, in the 4 quarter order meeting of the major sports brands that have ended in 2010, the average order growth of XTEP international increased by 23%, the Chinese trend ranked second, reached 20%, Anta ranked third, reached 19%, Lining ranked fourth, and the growth rate also had two figures.

But will the first tier cities really be a paradise for Chinese sports brands?

Not necessarily at present.

First, the operation cost of the first tier city stores is high, and the rent alone is far too expensive.

In fact, many domestic brands in the first tier cities are just breaking even or even losing money.

Second, consumers are not easily recognized. The mainstream consumers in the first tier cities value brands. Brands do not have excellent influence, popularity and cultural connotation. They will not easily buy it.

Third, the saturated and heated market.

Then, how should we deal with the domestic sports brand of "encircling the cities in the countryside"?

If we only look at the budget of brand marketing, besides the marketing budget of two domestic high-end sports brands, such as Lining and Anta, the budget of other domestic brands is only 350 million -5 billion yuan.

This means that the latter will be at a disadvantage for a long time in terms of brand exposure and popularity.

Therefore, for these brands, how to use their early understanding of the two or three line market to accumulate the understanding of the local market to make the limited brand marketing budget really on the cutting edge has become the key to their two or three line cities.

It is worth noting that compared with consumers in the first tier cities, consumers in the two or three tier market follow a completely different logic to the recognition of a brand.

The main consumer of sports apparel industry is about 16-35 years old young people.

In the first tier cities, people of this age group not only have more abundant and mature brand cognitive ability, but most of them are eager to highlight their distinct personality in the vast crowd.

Therefore, in the positioning of brand appeal, it is more necessary for businessmen to give a slogan of independence and even extreme slogans to attract their attention and popularity.

But in the two or three tier cities, young people of this age group will still be more influenced by the people around them. Their pursuit of individuality will still leave the impression of traditional consumption concept.

At the same time, because of the relatively limited consumption ability, how to get them to pursue their own personality and a better life at a lower cost will be the main direction of efforts to win the brands recognized by some consumers.

It is also for this reason that Anta, "PEAK," and "bravery", such as "PEAK" and "bravery", are likely to become more and more sophisticated in online shopping, while the international brand sales channels continue to sink.

In the long run, the value proposition of this kind must be further refined and more accurate to lock out a part of the two or three line city with more common consumers.

In this way, the domestic brands can truly establish their niche market and share their own "cake" with the international brands.