Interpretation Of Li Ning Co's Strategic Mistakes

One of the things that Li Ning Co executive chairman, founder and former gymnast champion Lining is unlikely to do is dress up for the costumes of his competitors. He will only wear Lining clothing. But at the 60th anniversary National Day celebration, the Olympic floats passed through Tiananmen square. Everyone saw Lining wearing a red and white sports jacket marked with Anta logo. At that time, Lining's smile was stiff.

At the 2008 Beijing Olympic Games, Lining lit the Olympic flame at the bird's nest wearing his company's costumes. This year, the Li Ning Co set up a business development plan to achieve 20 billion yuan in 2013. "Everyone was very inflated at that time. We all think what Nike and Adidas are like. Lining is the real king." A Li Ning Co resignation executive told Chinese civil and commercial reporters.

But now the sporting goods industry is no longer Lining, but Ding Shizhong's Anta. Compared with the scenery of Anta, Li Ning Co shows its bleak and continuous loss of reality makes the company bogged down. According to Lining's earnings report over the years, its 2012 annual performance loss of 1 billion 979 million yuan, which is Lining's first loss since its inception. Then, in the 2013 fiscal year, Lining lost 390 million yuan. Li Ning Co reported a loss of 586 million yuan in the first half of 2014. We had to close the store to stop the loss. For example, in the first half of 2014, Li Ning Co shut down 244 stores and abolished 3 dealers.

Moreover, Lining's strategic cooperation with the national gymnastic team for 23 years was also grabbed by Anta. In August 4th, Anta and the State Sports General Administration gymnastic movement management center collaborate in the gymnasium of the State Sports General Administration Training Bureau. Anta's sponsorship of the Gymnastics Center from 2014 to 2017 amounted to 50 million yuan.

This cooperation has lasted more than eight months from contact to landing. I wonder if it is coincidence. On the day of signing the contract, Ding Shizhong sat opposite the wall of the world champion list in the gym, with a large picture of Lining. For Lining himself, Ding Shizhong wanted to visit in 2008 but was refused to meet by Lining. No one knew the mood of Ting Zhong Zhong at that time. Over time, a detail may explain the complexity of the heart after the replacement of a competitor: Ding Shizhong has always been serious in signing the contract, and has not said a word in the whole process.

Lining, who lost the sponsorship of the Chinese gymnastics team, is said to have closed the door on the same day and told the people around him that he felt pain and pressure.

This is not the first time Anta has taken away important sponsors from the Li Ning Co. As early as 2004, Anta sponsored the domestic basketball tournament CBA. In 2009, Anta signed the Chinese Olympic Committee to become the "2009-2012 year Chinese Olympic Committee's sportswear partner" and "the 2009-2012 year Chinese sports delegation partner", both of which were once the Li Ning Co sites.

Li Ning Co sponsored events are currently only popular events such as badminton. Behind the move is a different business strategy between Anta and Li Ning Co.

Li Ning Co's first market mistake is a strategic mistake. In 2010, Li Ning Co launched the brand remolding campaign. The specific content is to change the brand of Lining, while positioning the consumer group as "post-90s" young people. The brand positioning is "fashion, cool, global vision". The advertisement of 90's Lining has been overwhelming.

According to market strategy, Li Ning Co began selling products for sale. In those days, Li Ning Co announced three times to raise the price range from 7% to 17.9% for footwear and clothing products respectively. According to the shoes, for example, the price of Lining's shoes was two hundred or three hundred yuan before the brand was rebuilt, and its price was adjusted to four hundred or five hundred yuan. The subsequent result was a decline in sales and a decrease in operating income, with Li Ning Co's inventory reaching 805 million yuan. The subsequent high inventory made Li Ning Co completely passive, and the annual report 2011 showed that the inventory was 1 billion 133 million yuan. In 2012, Li Ning Co had to publish its performance warning many times. In June 2012, at the fourth quarter of June 2012, the order volume hit a high double-digit decline.

Zhang Changyu said that Li Ning Co repositioning the market strategy, the 90's as the main consumer group in the market, in fact, the former consumer group before Li Ning Co 70, 80 after the division, but the latter is precisely the main consumer groups Li Ning Co. At the same time, after the Lining brand was rebuilt, the price increase of the product also made the original cost performance advantage lose, and the market strategy went wrong.

In contrast, Anta, also in 2010, put forward the slogan of Ding Shizhong, abandoning the high-end and playing the main role in the mass market. For example, the NBA stars Garnett and Rondo signed by Anta signed only 399 yuan for the exclusive sneakers of the stars, while the price of Lining's exclusive sneakers is at least more than that of Anta.

Anta's market and consumer groups were precisely abandoned by Lining. In those days, the number of Anta stores in the three or four tier cities was increasing, while the number of Lining stores was decreasing. Anta's sales rose sharply.

The immediate success of the market strategy, Ding Shizhong further put forward the three step Anta's market strategy: first, the implementation of brand upgrading. Two, the implementation of internal management systematization and product strategy refinement. Three, clear the market positioning of Anta: mass consumption.

Anta's emphasis on mass consumption is opposite to that of Li Ning Co. When Lining rises in price, Anta cuts prices, and does not hesitate to use price cuts to gain market share, and gives a timetable. Ding Shizhong said, "I hope to be a leader in the mass market of Chinese sporting goods in three to four years."

The difference between Anta and Li Ning Co's market strategy position is reflected in the 2011 Annual Report. Anta's operating income was 8 billion 905 million yuan, an increase of 20.2% over the same period last year, a gross profit of 3 billion 762 million yuan, an increase of 18.7% over the same period last year, a net profit of 1 billion 730 million yuan, an increase of 11.5% over the previous year, and a basic earnings per share of 0.69 yuan. Zhang Changyu said that Anta's mass consumption strategy did not reduce profits, but instead gained growth, indicating the market. Strategic positioning Accurate.

And Lining 2011 achievement The report shows a decline in revenues and profits. For example, the company realized total revenue of 8 billion 929 million yuan, down 5.8% compared to the same period last year, net profit 386 million yuan, down 65.19% compared with the same period last year, gross profit 4 billion 111 million yuan, fell 8.2% compared to the same period, and the basic earnings per share 36.7 points, a year-on-year decline of 65.3%.

Lining has reflected on the reasons for the decline in company sales. The first reason he wants to understand is also a strategic mistake. "What is important to Lining now is a change in strategy," he said. In the past, the industry model was basically wholesale and retail, and now it has to change consumer demand. Another change is that in the past we focused on sporting goods, but the core business was not specific enough to become a turning point in the decline of Li Ning Co sales.

Li Jin, executive director of the China Enterprise Research Institute, told the reporter that Li Ning Co did not adjust its business strategy and market positioning after the change of external environment. At the same time, the strategic positioning is wavering, the product innovation is insufficient, from the professional brand of sports goods field, more to sports and leisure clothing brand, and even the field of children's wear, so a large number of customers are lost. He said, "in this period, Lining's brand is vague and lacks clear positioning, which is a serious mistake in strategy."

The second mistake of Li Ning Co is to stick to the development mode. In fact, Li Ning Co has been insisting on the development mode of two light companies, which is the development mode of Nike. Li Jin said that in this mode, Li Ning Co relied on the traditional wholesale mode, that is, distributors and wholesalers across the country did not directly face consumers.

　　 Lining The product design idea is based on the feedback of dealers, lack of understanding of the market and slow reaction to the market. He said, "the most important strategic positioning and development mode of the company has led to problems such as poor sales, high inventory and runaway supply chain. The performance requirements of listed companies, which also led to the eventual Li Ning Co personnel shock, executives successively resign and other chain reaction. It should be said that the Li Ning Co's failure and strategic positioning are not suitable for the current development, and the decline of performance is the result.