How Can Adidas Grab The Three Or Four Line Market Share?

For high-end sports brands, there are still many places in the wider three or four tier market in China.

However, whether they enter the three or four tier market is an opportunity or a restricted area is still a big question.

After all, local brands such as Lining, Anta, XTEP and so on, which take China's small and medium-sized cities as the core market, have been entrenched here.

At present, the income of Adidas Greater China comes mostly from 20 big cities in China.

ColinCurrie, managing director of Adidas Greater China, has revealed more than once that in 2011, the income of Adidas Greater China will grow by two digits. In order to promote performance growth, Adidas plans to open 2500 stores in China in 3 years, most of which will be distributed in China's three or four line market.

In 2011, the increase in raw materials, labor and pportation costs led to a narrowing of gross margins, while raising prices and reducing marketing expenses did not make up for the losses.

Nike executives said that the company will expand its commodity price adjustment efforts to cope with inflationary pressures.

In the case of impossible price cuts, how can Adidas grab the three or four line market share?

Covering more cities

Asked about the current Adidas's global market share, profit margin and the share of the Chinese market in the global market, Colin said: "sorry, we can not disclose these specific sales figures."

But he pointed out that China is indeed our important market, which is just as important as the US and Russian markets.

By 2015, the total sales volume of the three markets is expected to account for 50% of the total Adidas sales. "

Colin believes that in the past few years, China's sports industry and sports culture have developed rapidly.

"In 2010, China's sports industry continued to grow at around 20% growth rate, creating over 30 billion dollars in value, of which 80% came from sporting goods sales.

Obviously, with the improvement of people's income in all parts of China, they begin to look for new and more interesting ways of leisure activities. More and more people choose sports and fitness as an important part of their lives. "

To ensure a two digit growth, Adidas has formulated a 5 year strategy in the Chinese market.

"We expect strong growth in China, and the company plans to increase sales by more than 100 million euros in 2011."

Adidas's 2010 results released in March 2, 2011 showed that sales in the Greater China region reached 1 billion euros, an increase of 3% over the same period last year, excluding exchange rate factors, which decreased by 2% over the same period last year.

Sales of Adidas and other five largest markets have increased.

In 2010, Adidas achieved sales of 12 billion euros, up 15% over the same period last year, exceeding its expected sales growth of less than 10% in 2010.

The gross profit margin of Adidas in 2010 was 47.8%, an increase of 2.4% over the same period last year.

According to its official interpretation,

Colin said that by 2015, Adidas is expected to achieve annual growth rate of 15%~20% in the Chinese market.

"At that time, Adidas will cover more than 1400 cities (up to April 2011, Adidas has covered 550 cities)."

Colin said that in order to achieve this goal, in 2011, Adidas will continue to open its shop and add more than 500 stores, of which there are more than a dozen private stores.

Self owned stores occupy a very small proportion in Adidas stores.

At present, Adidas has about 5800 stores in China, of which only 109 stores own.

More than half of the 5800 stores are located in one or second tier cities.

According to Colin, new outlets will be distributed and located according to the needs of different lifestyles, shopping needs and disposable income of consumers.

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"Adidas is the world's leading sports brand, almost all categories, such as football, basketball, running and training.

We will continue to consolidate our dominant market position and do our best to tap the potential of emerging markets and rapidly expand the market share of its clover brands so as to enhance brand recognition and enhance Adidas market share.

At the same time, the NEO brand, one of the Adidas brands, NEO, is located between 14 and 19 years old. The design style is more fashionable and casual, the price is about half of the clover brand, and the price difference between the local sports brand and the local sports brand is about 100 yuan. It has been developing rapidly in brand image and sales, and its value proposition has rapidly penetrated into the three or four line city.

Tailored marketing strategy

Entering a large number of three or four line cities with a single small scale, the huge logistics cost brought by it is a big problem. But Colin thinks that logistics cost is not a unique problem of Adidas.

"The whole industry is faced with the problem of increased input costs. We are doing our best to solve these problems.

In short, logistics cost is only one of the factors. I think we should strive to provide consumers with suitable shopping locations, higher quality and more suitable products and suitable prices.

Guiding Adidas China business is the needs of Chinese consumers. When setting prices, we will carefully consider their requirements and our operating environment.

Colin believes that meeting the needs of consumers is the root of Adidas operation.

"Many of our efforts are aimed at meeting different needs of consumers.

For example, by introducing innovative products and participating in market innovation and competition, joint partners sponsor the most exciting and influential sports events, attract consumers' attention through various activities, win the favor of consumers, and enhance the image of brands in the minds of consumers.

Although it is ready to enter the three or four line market with low consumption capacity,

In addition, Adidas plans to deploy more than 2500 stores with POS machines in three or four tier cities, and appropriately "combine and split" products to meet the different needs of high-income and low-income groups.

In addition to tailor-made marketing strategies for three or four line cities, Adidas will also adjust the location and design style of the stores according to the specific circumstances of the three or four tier cities.

"For stores, we generally follow the following criteria: store mode must be globally supported; design style is responsible for Adidas brand concept design team; development beyond standards should follow certain principles.

In lower tier cities, stores will reduce standards to match local economic conditions.

Colin said.

Market insight

Adidas has made a serious study of the three or four line market that will soon enter.

Colin shares some interesting phenomena found in the market research with the new marketing reporter: "there are several conclusions that are interesting, such as the" 50 dollar theory ". If the price difference between the low-end products and international brands, such as Nike, Adidas and more high-end local brands, is about RMB 50 yuan, consumers are more inclined to buy international brands.

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In addition, we conducted a global survey of Adidas consumers and divided them from extreme sports, outdoor sports enthusiasts to seven types of otaku women.

They are our customers, from fashion to fashion.

We make corresponding sub brand positioning based on these seven types of consumers.

Generally speaking, the global consumer interest in sports is growing.

Consumers have different styles of dress at different times of the same day, such as work, play, fitness, etc. we try to satisfy this way of life with our products.

Colin believes that for all competitors in the market, including China's domestic brands and international brands, the size and growth rate of the three or four tier market obviously make the Chinese market more attractive.

In response, Colin made a very interesting statement: "today's rural areas will become tomorrow's cities."

He acknowledges that these regions have great potential for development. In 3 to 5 years, these areas are likely to become valuable and important markets with high purchasing power.

We hope to bring convenience and benefits to consumers through the Adidas brand, expand and deepen the three or four line market.

"Adidas has always been a dominant brand in the field of sports and sports in China. We will continue to focus on further innovation, developing new products and holding very influential marketing activities to maintain our leading position in this important market.

We are very confident that the strategic measures to enter the three or four tier cities will effectively lay the foundation for our long-term healthy growth in the Chinese market.

Survey data show that consumers in the three or four tier cities have strong consumer preferences for international brands.

Colin said: "although for the past three or four years, the competition in the Chinese market has become more and more intense for Adidas, but we believe that in the long run, some local competitors will find it increasingly difficult for them to pose a threat to Adidas.

Moreover, international brands are often seen as highly desirable, convenient and affordable luxuries, which will also provide an additional growth opportunity for Adidas. "