Lining'S "Pformation" Dilemma: The Brand Has Retired And No Retreat Can Be Made.

From September 2010, about HK $25 to HK $13 per share, Li Ning Co Ltd's share price has shrunk by half in six months.

In this regard, Li Ning Co CEO Zhang Zhiyong looks different from before: practice tennis time doubled from 3 hours a week, trying not to drag the legs in the company's doubles; in March 2011, Hongkong Li Ning Co earnings conference, faced with questions from analysts and reporters, he maintained a consistent honesty.

Zhang Zhiyong succeeded Chen Yihong, the former general manager of Li Ning Co in 2001, and raised Li Ning Co's annual sales volume less than 1 billion yuan to nearly ten billion yuan in 10 years.

Now Zhang Zhiyong is facing the most serious challenge of taking up CEO in ten years.

Offense and defense

Earnings data show that the growth rate of Li Ning Co in 2010 is only about the same as that of the industry, with an increase of about 25.4% of that in 2009.

Just a year ago, Li Ning Co was still attacking.

Lining, chairman of the board of directors of the 2008 Beijing Olympic Games, lit the "residual heat" of the main torch tower.

This of course excited Lining.

Historically, since 1994, Li Ning Co has maintained the largest share of China's sporting goods market.

But in 2003, Lining was first surpassed by Nike China company. In 2004, it fell behind the Adidas China company.

Of course, the growth rate is slowing, and stocks are also experiencing a sell-off, not a Li Ning Co.

In February 14, 2011, the filing of the Berkshire Hathaway by Buffett, the Berkhire Hathaway Inc of the stock market, submitted to the US Securities Commission (SEC) that by the end of 2010, the company had cleared all holdings such as Bank of America and Nike.

Buffett said Nike is encountering a strong challenge of "product homogenization".

Adidas's fourth quarter earnings in 2010 were equally poor: Although the company's revenue rose to 2 billion 930 million euros in the four quarter, its profit was only 7 million euros.

In March 17th, Li Ning Co shares also fell 9.5% on the day of the Li Ning Co earnings conference.

Nike executives said that the increase in cotton, labor and pportation costs made the gross margin of products narrowed, while raising prices and reducing marketing costs were not enough to offset this loss.

"Brand remodeling generally takes two or three years.

Lining abandoned the extensive pattern of sell-in growth in the shop, and pferred to store performance evaluation (sell-through) assessment index, which will cause pressure on sales in the short term.

Zhang Zhiyong frankly said, "opening shop growth mode, the actual sales and initial volume ratio is 1:4, it seems that sales are large, but the market share (actual sales) is not so large.

But in turn, if the store efficiency increases, the order volume will naturally rise.

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Marketing "Misreading": entanglement after 90

Although Zhang Zhiyong was very calm, the outside world questioned Li Ning Co's brand remodeling at the end of June 2010.

This brand remolding, Li Ning Co like the L LOGO of the long squirrel tail changes into the crossover "human" shape, "everything is possible" brand SLOGAN has become "make the change".

Even Li Ning Co has broadcast an advertisement for "post-90s Lining".

In many of Lining's dealers, Li Ning Co hopes to get more young consumers' favorite practices, but the pace is too big, leaving the mature consumers who love Lining's brand to abandon Lining.

All the unsatisfactory evidence confirms Zhang Zhiyong's initial concern that Li Ning Co's internal advertising creativity and product design had a different understanding of brand remolding and external interpretation.

In order to find a topic of communication with young consumers, Li Ning Co, founded in 1990, has become the "post-90s".

The problem is that the most familiar sports icon after 90 is Lebron James wearing Nike shoes.

Such an accident is also related to the poor performance of the new Li Ning Co spokesperson.

Zhang Zhiyong once attributed the key to sports brand marketing to two categories: sports resources and media resources.

Since 2006, Lining has signed NBA players such as Damon Jones, O'neal and Baron Davis as spokesmen. In August 2010, NBA signed Evan Turner to sign Lining.

But in the NBA official March 24th rookie rankings, Turner didn't even enter the top ten.

The "70 after" Lin Chiling of Lining's women's body-building dress is ridiculed outside, and the pressure on Zhang Zhiyong's shoulder can be imagined.

Born after 90, serving the goal of 90 is correct, but to be recognized after 90, Li Ning Co currently for sports and media combination of two resources strategy seems to need to consider.

Lining himself declared this: "today Lining has begun to change, and these changes have also brought about a great response from the market and the media. This may be that the market can not fully understand our strategic adjustment value.

I want to tell our employees and partners that today Li Ningzheng actively took out the hand stretched out, then clenched his fist and made a powerful attack toward bigger goals.

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Channel integration: lock 36%

What Zhang Zhiyong calls the "must not lose" market is the second tier and above cities. What Lining calls the "bigger goal" is the "world-class Chinese sports brand".

According to the two dimensions of per capita income and sports population, the domestic market is divided into two main categories: more than 650 three line cities above the market, corresponding to the county level listing, and more than 1640 counties based mainly on the rural population.

The growth of these two categories of markets is quite different.

According to Zhang Zhiyong, Li Ning Co conducts a market research at least once a quarter. According to the data he has grasped, the annual growth rate of domestic sporting goods market is over 30% before 2008, and has slowed to about 15% in 2010.

"China's first tier cities and super large cities have more than 60, the number of consumers is down, but the final sales are rising, that is, the unit price is rising.

The more than 1640 counties are increasing in number. "

Zhang Zhiyong said that since Lining is determined to become a world brand, the price increase is inevitable. Therefore, abandoning the "basic market consumer" and winning more "value consumers" is the top priority.

There is no doubt that the more than 1640 County markets which are extremely sensitive to the price of the products belong to the basic market.

As for the more than 650 super large and second tier markets, due to the rise of human cost and store rentals, the upgrading of store efficiency has become a road for Huashan when the layout of retail stores is basically over and the number of new stores is minimal.

The most fundamental elements of retail are location, store size, product display, logistics distribution and information flow. Distributors are too small to manage these elements.

At the first level of Lining's distribution system, there are more than 1700 distributors, averaging only one store per household.

This situation must be changed. "

Zhang Zhiyong said.

In September 2010, Li Ning Co began to integrate its distributors, and small dealers could be merged into larger dealers.

As of March 2011, 119 companies have been integrated, and Li Ning Co aims to integrate 400 by the end of 2011.

And this kind of "bone breaking" channel integration has become the main reason for the increase of Lining's order amount besides the brand positioning change.

According to figures released by Zhang Zhiyong, Lining's market share at the first tier is about 36%.

A simple box of 400 corresponding 1700 first tier distributors will account for 8.47% of the total sales of Lining orders due to the integration of retail terminals.

It really takes courage.

But Zhang Zhiyong felt he had to do it.

"In 2003 and 2004, the defeat of Lining, first of all, the super large cities and the first tier cities failed to defend. Now, with the improvement of the income of the second tier cities, the opponent has sinking tendency, and Lining can not retreat."

Zhang Zhiyong said that the basic market is targeted at price consumers; the brand market is targeted at value consumers.

In this regard, Lining himself strongly supports Zhang Zhiyong.

At the company's annual meeting in late 2010, Lining said: "summarizing our company's past two years, we can see that we are bound by our own inertia.

Tying up our inertia comes from the successful experience of business in the past, the temptation of the rapid growth of low level consumer demand, and the financial expectations and requirements of the capital market.

Therefore, we have accumulated and developed business in the past, but we have not constructed the core competitiveness of a business model that we have always expected to be copied and copied by others.