MUSTUFA ALI, XI-I

BRAND RIVALRIES

INDEX

INTRODUCTION HISTORY PRODUCTS MARKET SHARE TURNOVER

SWOT ADVERTISEMENTS CONCLUSION BIBLIOGRAPHY

INTRODUCTION: WHAT IS A BRAND RIVALRY?

• Brand Rivalry is the rivalry among brands trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion. It is the modern version of competition among traders and a superlative of competition among retailers. Unlike competition it doesn’t aim solely at selling ones products more than others. It aims at providing better commodities and services and as such, increasing the demand for the product in the market. An ideal brand rivalry is based on healthy competition.

• The aim of this project is to bring out two rival brands, go deep into its formation, history and growth; then to analyse the rivalry that exists between them and to understand the difference between the strategies and tactics adopted by each of them.

• In this project we will be comparing the rival brands ADIDAS and PUMA (though it may contain certain references to Nike and Reebok as well)

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ADIDAS VS PUMA: A BRIEF HISTORY OF A BITTER SIBLING RIVALRY

• Cain and Abel. Romulus and Remus. Adidas and Puma? The rivalry between two of the world's most recognizable brands went far beyond mere corporate competition. It was a vicious family feud that not only pitted two brothers against one another, but also divided the inhabitants of their hometown into warring factions -- and lasted 60 years.

• In the 1920s, the brothers were partners in the Dassler Brothers Sports Shoe Company, operating out of their mother's laundry room in the small German town of Herzogenaurach. Adolf (Adi) Dassler was the quiet, thoughtful craftsman who designed and made the shoes, complemented by the older Rudolph (Rudi) who was the extroverted salesman. Although the brothers joined the Nazi party when Hitler seized power in 1933, it didn't stop them getting legendary African-American track star Jesse Owens to wear their shoes as he competed and won four gold medals in the 1936 Olympics. Owens' victory gave the shoes international exposure, and sales of the Dasslers' product exploded.

• But the success created new tensions in the brothers' relationship, already strained by the fact that their families lived in the same villa despite their wives not getting along. There were several incidents that were said to have precipitated their conflict, but the most widely accepted one took place during World War II when the Allies were bombing Herzogenaurach. As Adi and his wife climbed into a bomb shelter already occupied by Rudi and his wife, he exclaimed, "The der drecksack (German swear word) are back again," referring to the Allied forces. Rudi was convinced the remark was directed at him and his family. A feud -- one of the most epic and, well, Biblical in business history -- was born.

• When Rudi got called up for service, he suspected Adi and his wife had schemed to get him sent to the front so they could have him out of the way at work. Later, Rudi was arrested first for deserting his post and then by the Allies on suspicion of working for the Gestapo. On both occasions, Rudi was convinced that Adi was the one ratting him out, his suspicions confirmed by a report filed by an American investigating officer. While Rudi languished in a prisoner of war camp, Adi rebuilt the business, selling shoes to American G.I.s.

• The conflict escalated as the brothers split the company in two in 1948, dividing the assets and the employees between themselves. Adi named his company "Adidas," a combination of his first and last names. Rudi attempted the same by first naming his company "Ruda" but eventually changed it to the more athletic sounding "Puma." The two built competing factories on opposite sides of the river Aurach and quickly became responsible for much of Herzogenaurach's economy, with nearly everyone working for one company or the other.

• As the entire town got caught up in the Dassler family feud, the rivalry reached ridiculous proportions. There were local businesses that served only Adidas or only Puma people, dating or marrying across company lines was forbidden, and Herzogenaurach became known as "the town of bent necks" since people first looked at which company's shoes you were wearing before deciding to talk to you.

• While Rudi had the sales staff and was better at moving product, Adi had the technical know-how and better relationships with athletes who could provide exposure, tipping the scales in favour of Adidas, with Puma constantly playing catch-up. However, in focusing so heavily on each other, both the companies were slow to react to the threat of Nike (NKE), which would come to dominate the athletic footwear industry, leaving them far behind.

• It wasn't until 2009 when employees of both companies symbolized the end of six decades of feuding by playing a friendly soccer match. By then, the Dassler brothers had both died, within four years of each other. Even in death, the animosity continued as the brothers were buried at opposite ends of the same cemetery, as far away from each other as possible.

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PRODUCTS MANUFACTURED

• Both companies have ascended from manufacturing sports shoes to manufacturing all sorts of sports materials. Both companies are in a healthy competition when it comes to shoes, hats, gear, balls etc.

• Adidas has managed to increase its demands in the field of football shoes and Puma has managed to secure its dominance over Adidas when it comes to running shoes. Both companies face a huge threat from Nike, which has attained a sizable sales volume in both these categories and more.

• But Adidas has managed to rise above Puma over the years. One reason may be the fact that Adidas has been in existence longer than Puma, since Rudolph Dassler had to start his own separate business later. Adi Dassler thus, took advantage of the existing brand influence of The Dassler Bros. Co.

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MARKET SHARE

• The pi-chart above clearly shows Adidas’s dominance over Puma. Adidas has managed to overcome the threat of Nike as well. Puma, unfortunately, has a very small percentage of the market share. The Nike-Puma-Adidas brand rivalry kept the three brands so preoccupied that they didn’t realise the rising threat of Reebok (rbk) because of which Reebok now dominates nearly 50% of the sports industry market. But nonetheless, Adidas and Puma have managed to come in “The Big Four” in the sports industry. One reason why Reebok has managed to dominate the market is the pricing. Unlike the other three brands in “The Big Four” Reebok is reasonably priced. Adidas, on the other hand, does overprice a few of its products. Puma takes pride in stating exorbitant rates for its sports gear and has ended up at the bottom of “The Big Four”. The best progress is seen by Nike. There was a time when Nike had 2% of the total market share, and now it has attained 11%. Perhaps it is due to Michael Jordan’s (The face of Nike) influence over the youth during the 80s-90s. Nike has also emerged as the company which extracts the highest revenue from the consumers.

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TURNOVER

THE FOLLOWING GRAPH SHOWS THE SALES VOLUME AND TOTAL TURNOVER COMPARISON OF ADIDAS AND PUMA.

• As shown in the graph, Adidas has always had a head up over Puma. In most cases, its sales volume has been more than triple of Puma’s.

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SWOT ANALYSIS

• SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieving that objective.

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

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ADVERTISEMENT CAMPAIGNS

• An advertising campaign is a series of advertisement messages that share a single idea and theme which make up an integrated marketing communication (IMC).

THE FOLLOWING ARE A FEW AD CAMPAIGNS OF ADIDAS

THE “IMPOSSIBLE IS NOTHING” CAMPAIGN, WHICH LATER BECAME THEIR TAG-LINE.

“ADIDAS IS ALL IN”

OTHER CAMPAIGNS

THE FOLLOWING CAMPAIGNS HAVE BEEN UNDERTAKEN BY PUMA

“MOBIUM ELITE”

“LOVE EQUALS FOOTBALL”

PUMA-FERRARI

OTHER CAMPAIGNS

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CONCLUSION

• Both Adidas and Puma have come a long way since the Dassler Brothers. Both have undertaken many projects other than footwear designing and both have succeeded. They have an identity on the international level and appear in the top four in the sportswear and lifestyle industry. But then again, if the company hadn’t split back then, we might be seeing “The Dassler Brothers Company” as the king in the market. It would have outmanoeuvred even Reebok, perhaps even forced it to shut down. But as the case is, both these companies are rivals. Adidas has risen way above Puma. True to the nature of the companies’ founders, Adidas still leads in quality and Puma still takes up successful advertisement and marketing motions. Perhaps in a Utopian world, Adidas and Puma would have been one and the world market would be seeing a different scenario…

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BIBLIOGRAPHY

• 1) Wikipedia- The Free Encyclopaedia

• 2) features.blogs.fortune.cnn.com

• 3) cms.outlookindia.com

• 4) Statista

• 5) mbaskool.com

• 6) Google

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