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    Local Sports Brand Common Disease Publicity Costs Are High, R & D Costs Are Low.

    2012/5/10 12:19:00 31

    LiningPEAKAdidas

    Reporters noted that in the 6 brands, Lining put the highest advertising costs, and sales revenue ratio of 17.6%, followed by PEAK, up to 14.2%, that is to say, in 2011, Lining spent 1 billion 570 million yuan on advertising expenses, Anta also spent 1 billion 220 million yuan on advertising fees, accounting for 13.7%. Last year, except for 331 degrees, other brands spent more than 10% of their sales on advertising.


    Compared to the high cost of advertising, the major brands seem to be stingy enough to invest in R & D. PEAK, which invested the least, invested only 1% of its sales in research and development. In 2008, its investment in R & D was only 0.3%, and in 2010 it was 0.5%. Lining also invested less, only 2.6%, less than 3.7% of Anta's input ratio. Surprisingly, the investment in this aspect was higher, reaching 4%. However, the average proportion of R & D expenditure is only 2.43%, and the average advertising cost is 13.4%.


    Looking at the current situation, it is easy to see that every brand has mentioned the phenomenon of discount. Even Anta, which performs well in its comprehensive data, also said, "inventory problems and large discounts in China's sporting goods market continue." Anta even mentioned that "some brands have stepped up the pace of goods clearance and substantial discounts, and the increase in sales and operating costs has further intensified competition in the Chinese sporting goods market." XTEP also said in its annual report that "other sports brands are overstocked and offer huge discounts to customers. Data collected from the distribution resource system show that competition in the industry will become more intense."


    In fact, this situation has been reflected in the order meeting. In the annual report, 331 degrees admitted that the discount rate for the autumn order meeting in 2011 was adjusted to 60%, while the discount rate was further adjusted to 58% in spring / summer order meeting in 2012. Lining disclosed in the annual report that in the first, second, third quarter of 2012, the order volume of Lining brand order was about a low percentage increase, while the three quarter recorded a decline in the percentage of units.


    Needless to say, for sports brand, controlling retail discount rate is an important factor to maintain brand image. The industry tends to collective discount will seriously affect the brand image, and ultimately lead to a decline in overall price and gross profit margin.


      Homogenization is a serious problem in terms of price.


    Mention the domestic sports brand, there is another point that can not be ignored, that is, the 6 major sports brands in China, of which Anta, 31st degree and XTEP are all from Jinjiang, Fujian, while PEAK is located in Quanzhou, which is separated from Jinjiang. Besides, Jordan sports, Lu You, Xi de long and so on are also from Jinjiang. And these neighboring enterprises all have similar problems: inventory backlog and growth rate are falling sharply.


    In fact, looking back at the start of these brands, it is easy to see that their marketing practices are very consistent - they rely heavily on sponsoring sporting events and inviting celebrity endorsements to expand their popularity. In 1999, Anta first raised the banner of the brand. "Profits" allowed the sports star Kong Linghui to say "I choose and I like". Therefore, the important sports events and famous sports stars in Jinjiang became the goal of the "Department of the Taiwan" enterprises. Insiders said that when the "Jinjiang Department" enterprise hired star endorsement fanaticism almost comparable with the current property market, many enterprises ignored their own capital status, took bank loans, and even private financing to invest in stars. Many shoe companies often contributed profits to the stars for one year or even two years. In the CCTV sports channel, for a long time, from the title of news program to sponsorship of sports events, almost all of them have the brand of Jinjiang sports.


    However, while paying high advertising costs, these brands can only win the battle through price theory, and defend the position of the middle and low end market, which inevitably leads to low gross margin and declining profit margins.


    Based on the two or three tier cities, it is difficult to break through the first tier cities.


    It is not hard to see that in the 6 major brands, Lining, one of the main front-line tier cities, has seen a growth slowdown or even negative growth in sales revenue growth and operating profits. On the contrary, XTEP, with 234 tier cities as the focus of development, performed well. Sales growth remained at the level of 2010, rising by 26.1% and 26.1% respectively under the downturn of the industry.


    In fact, compared with the two or three and four tier cities, the first tier cities face competition with the "foreign brands" Nike and Adidas. In 2010, Lining launched the new LOGO and brand slogan - "Makethechange", and targeted the consumer group directly to the 90s. After raising the price, Lining's running shoes price reached 600 yuan, and began to be close to the price level of Nike and Adidas.


    However, after Lining's repositioning, although the product design style has added more bright colors, but this did not win the hearts of the post-90s. Miss Lining, a consumer who used to love Lining, told reporters that "the price of Lining is almost the same as that of Adidas and Adidas. It used to be bought because it is affordable, and it is a domestic brand. Now its shoes are fancy and the price is high. There is no reason to buy it." Reporter visits found that instead of taking the low price strategy of Anta, 31st degree, XTEP and other low-end brands, it has attracted many post-90 migrant workers to stop. In fact, after 90 years of better family environment, many people consume Nike and Adidas products from childhood. The price is not the most important consideration for them, but for the working class of the post-90s, the price of Lining is not very attractive to them.

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