Li-Ning Sporting Goods Company

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1 Li-Ning Sporting Goods Company Team 1: Andrea Plotts, Doug Teixeira, and Shawn Rembecky Team 2: Kristina Allegretta, Lauren Speirs, and Evan Surgan MKT440 International Marketing April 14, 2011

2 2 Agenda 1. Li-Ning, Humble Beginnings 2. Industry Structure 3. Competition 4. Company Structure 5. Case Data 6. Problems and Opportunities 7. Conclusion

3 Li Ning b. September 8, 1963 in Liuzhou, Guangxi

4 Industry Structure

5 5 Industry Structure Industry: Sporting Goods (sports footwear, sports apparel and sports equipment. Product Category Segment Sports Shoes Sportswear Fitness Equipment Other Sports Goods Bicycle Basketball Football Badminton Tennis Outdoor Sports Skiing Fishing Diving Golf

6 Industry Structure Market Share Market Share in 2008 Nike and Adidas 28.8% Li Ning 9.5% In 2010, the scale of the Chinese Sporting Goods market reached billion Market Share in 2010 Li Ning 8.3% 6

7 Industry Structure Brands Brands Li-Ning Double Happiness Lotto brand Aigle Z-Do Kason In 2009, the five brands contributed revenue to Li Ning but were still inferior to the brand Li Ning. 7

8 Industry Structure Geographical Coverage USA = $118,996M China Eastern Region = $3.3B Northern Region = $3.7B Southern Region = $1.6B Total Unit Sales = $8.73B Distinctive Brands sold in other countries: Lotto: Italy AIGLE: France 8

9 Competition

10 10 Competition Competing Firms and their respective brands Nike, Inc Adidas Group Brands Reebok Adidas Taylor Made PUMA

11 11 Competition Firms and Brands (cont.) Amer Sports Brands Salomon Wilson Suunto Atomic Precor Arcteryx Mavic Callaway Golf Company

12 Competition Firms and Brands (cont.) New Balance Brands: New Balance Aravon Brine Dunham PF-Flyers Warrior Lululemon Athletica, Inc Asics America Fila USA 12

13 13 Competition Competitor Sales Nike Adidas AmerSports Callaway Golf Company Li-Ning Sports Company Unit Sales ($$$) Billion Billion 2.51 Billion Million Million

14 Company Structure

15 15 Company Structure Segments Footwear Apparel Equipment Accessories for sport and leisure

16 16 Company Structure Industry Codes SIC code 3949: Sporting and athletic goods SIC code 3149: Footwear Sic code 3944: Games, Toys, and Children's Vehicles SIC code 2329: Men s and boys clothing SIC code 2339: Women s, juniors, and misses clothing SIC code 2389: Apparel and accessories

17 Company Structure Product Divisions BD Doom Footwear Baron Davis Limited Edition Vinyl Toy BD Beardman Varsity Jacket BD Graphic Beardman

17 17 Company Structure Product Divisions BD Doom Footwear Baron Davis Limited Edition Vinyl Toy BD Beardman Varsity Jacket BD Graphic Beardman T-Shirt Lin Dan Pro Series Badminton Racquet Badminton Men s & Women s shoe Table Tennis Men s & Women s Shirt Table Tennis Men s + Women s Footwear

18 Company Structure Brands LI-NING: core brand Double Happiness: brand through a subsidiary in which the Group has a 57.5% interest Lotto: Italian sports fashion brand that develops, manufactures, markets, distributes Z-DO: distributes sports products under its brand via hypermarket channel AIGLE: French brand that manufactures, markets, distributes and sells outdoor sports products and sells the licensed products Kason: engages in the research and development, manufacture and sale of professional badminton equipment 18

19 19 Company Structure Revenue $983 Million in 2008 Solid growth for six consecutive years

20 Case Data

21 21 Case Data The Scenario Li Ning: China s best known gymnast Won 3 gold medals at 1984 Olympics No opportunity to wear Chinese sportswear Solution: Started Li-Ning Sporting Goods Company

22 22 Case Data Company Largest sports goods company in China: turnover = 3,180 million Chinese Yuan (RMB) (US$411 million) Extensive distribution / retail network: 4,297 stores Joint venture w/ AIGLE: exclusive rights to manufacture, market & distribute in China for 50 years

23 23 Case Data Chinese Market Environment China joined the WTO, opened market to the west Competition from Nike, Adidas, Reebok 15% of Chinese age play sport Trend of obsession with leisure and sport Boom in # of fitness centers / sports clubs 50% of US age play sport

24 24 Case Data Establishing an International Strategy Li Ning exports to Europe Spain, France, Greece, etc... More sophisticated domestic product offering: Improved product design, European / South Korean designs, more innovative products Low international pricing International efforts supported by domestic sales: a plan to double prices in the short term future

25 Case Data Brand Building: Become the cool brand for sporting youngsters Chinese ad campaign: expenditure 8x previous level Sponsorship deals for Russian / French teams, Argentina National Basketball teams, Swedish Olympic delegation, Spanish national men s basketball team 2008 Beijing Olympics: 1 of 33 companies that signed on to use logo 2 year CCTV National Sports TV Channel sponsorship Endorsements: Cleveland Cavaliers guard Damon Jones and Miami Heat s center Shaquille O Neal 25

26 Problems and Opportunities

27 Problems and Opportunities Task 1: Problems for Li-Ning How to segment the local market Which segment should be targeted How to develop positioning strategy for competitive advantage Sectors already dominated Will consumers be willing to pay higher prices Without competing globally with big players Li Ning will be vulnerable in China 27

Problems and Opportunities Task 1: Environmental Influences Differences in culture regarding sports Find a niche: Decide what products to implement and where Managing contracts Both teams and

28 Problems and Opportunities Task 1: Environmental Influences Differences in culture regarding sports Find a niche: Decide what products to implement and where Managing contracts Both teams and individual athletes globally Dealing with international companies within Chinese market World Trade Organization: tariffs and trade barriers reduced Sell at premium in China but offer lower international price Avoid becoming vulnerable in own market 15% in China vs. 50% in U.S. 28

29 Problems and Opportunities Task 1: Solutions Specialize in specific sporting niche Gain expertise Develop recognition and trust in brand name à expand to varying sports Brand name beats low prices internationally American and Europe (sign of status) Learn from example of big players Not an innovator Must follow the lead of successful brands 29

30 Problems and Opportunities Task 1: Solutions 4 year contracts covering China and London Olympics Sweden, Argentina Opportunity to create brand awareness to consumers globally Chinese developed new national obsession with sports and leisure activities Fuel the fire Keeping excitement about sports Sign deal with famous athlete in China 30

Problems and Opportunities Task 2: Big Opportunity 2008 Beijing Olympics offered a great opportunity for Li-Ning to sponsor Olympic athletes and

31 Problems and Opportunities Task 2: Big Opportunity 2008 Beijing Olympics offered a great opportunity for Li-Ning to sponsor Olympic athletes and teams Having been held on Chinese soil, the company was able to Further appeal to its domestic market While attracting a broader, international audience 31

Problems and Opportunities Task 2: Basketball Basketball s popularity is growing rapidly in China Basketball is already a popular sport in North America and Europe It

32 Problems and Opportunities Task 2: Basketball Basketball s popularity is growing rapidly in China Basketball is already a popular sport in North America and Europe It may be a while until Li-Ning becomes an international competitor in basketball The company can benefit from targeting Chinese youth whose interest in the sport is growing 32

Problems and Opportunities Task 2: Tennis Tennis is another sport whose popularity is growing in China With the exception of female tennis players Li Na and Zheng Jie, China does not have any

33 Problems and Opportunities Task 2: Tennis Tennis is another sport whose popularity is growing in China With the exception of female tennis players Li Na and Zheng Jie, China does not have any international stars This has not hindered China s growing interest in closely following international play China has established numerous tennis clinics Like basketball, Li-Ning can benefit from targeting Chinese youth whose interest in tennis is growing 33

Problems and Opportunities Task 2: Ping Pong (Table Tennis) Ping Pong has strong roots in Chinese culture Many of the world s elite players have come from China Their dominance has even triggered

34 Problems and Opportunities Task 2: Ping Pong (Table Tennis) Ping Pong has strong roots in Chinese culture Many of the world s elite players have come from China Their dominance has even triggered international rule changes in order to level the playing field in international competition Considering China has had so much success in this sport, Li-Ning can take advantage of the opportunity by positioning themselves as the superior sponsor of the sport Similar to how Nike has basketball, Adidas has running, and Under Armour has football 34

35 Problems and Opportunities Task 2: Gymnastics Gymnastics is also an established popular sport in China The sport s great history is led by Mr. Li Ning Similar to Ping Pong, no one company has positioned themselves as the superior sponsor of the sport Given Mr. Li Ning s experience in the field, Li-Ning has the opportunity to be the global sponsor of Gymnastics 35

Social Mix Cultural Trading Practices Consumer Behavior Sports has historically been a major

36 Problems and Opportunities Task 3 Viewed as an exercise/leisure activity US has a huge trade deficit (USD$837 billion) Great technological advances in sporting goods industry Barriers Social Mix Cultural Trading Practices Consumer Behavior Sports has historically been a major part of US culture Moving towards a Go Green initiative; reduce carbon footprint Technological Legal 36

37 Problems and Opportunities Task 3 US looking toward exports to help their economy grow 2005: 27.5% tariff on imports from China USD$1 = CNY 6.53 Barriers Social Mix Cultural Trading Practices Consumer Behavior Purchases based on how they participate in their respective sport Tough competition: Nike, Reebok, Adidas Technological Legal 37

Technological Mix Cultural Trading Practices Legal Consumer Behavior Industry typically

38 Problems and Opportunities Task 3 Sporting equipment, athletic footwear, and athletic apparel Sporting goods stores, such as Dick s and Sports Authority Barriers Social Technological Mix Cultural Trading Practices Legal Consumer Behavior Industry typically offers expensive pricing Solo athlete and sports team sponsorships dominate advertising in the industry 38

The sporting equipment will incorporate superior technological advancements, compared to

39 Problems and Opportunities Task 3 Sponsor US athletes who feature Li-Ning s sporting equipment. The sporting equipment will incorporate superior technological advancements, compared to its competitors, as well as acknowledging how the equipment adheres to US s Go Green initiative Barriers Social Mix Cultural Trading Practices Consumer Behavior Technological Legal 39

40 Problems and Opportunities Task 4: Developing the Segment Marketing campaign using their big name athletes Establish brand name as the product Shaq and Pau wear! Superstar status for Americans to associate with Continue work with internet entrepreneurs (Danny Toe) Niche Marketing Tracking shopping habits and internet traffic to learn trends Trying to attract youngsters 40

Problems and Opportunities Task 4: Developing the Segment Continued collaboration with NBA, ATP, CUBA, and CUFL Build upon relationship with NBA: potential of market Expand to other leagues

41 Problems and Opportunities Task 4: Developing the Segment Continued collaboration with NBA, ATP, CUBA, and CUFL Build upon relationship with NBA: potential of market Expand to other leagues Capitalize on innovation of products : Li-Ning Bow.9 (shock tech), Flying Armor (basketball), and Flying feather (running) Large potential in American market with stylish innovation: Nike Shock, Reebok Zig, K-Swiss Tubes 41

42 Problems and Opportunities Task 4: Challenge Li Ning must establish themselves as a premier brand rather than one with second tier products in order to have success internationally Following leaders can be effective Must avoid being viewed as B brand Avoid shadow of Nike, Adidas, other big players 42

demand in China American superstars are international superstars Recognition of celebrity

43 Problems and Opportunities Task 4: Solution Target most popular sport in each country Start in niche expand product and consumer base with success Soccer in Europe Popular demand in China American superstars are international superstars Recognition of celebrity representing brand Exploit celebrity status to promote: will enter new niche and continue to grow 43

44 Contributions and Conclusions

45 Conclusion Li-Ning towards a Bright Future Li-Ning poised to be a major force in the sporting goods industry China s numerous achievements at the 2008 Beijing Olympics provided a

45 45 Conclusion Li-Ning towards a Bright Future Li-Ning poised to be a major force in the sporting goods industry China s numerous achievements at the 2008 Beijing Olympics provided a strong platform for Li-Ning s future success in international sports Mirroring China s growth, proper advertising and appropriate sponsorships will help Li-Ning reach international markets

46 Thank you

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