6/02/2014 @ 1:41下午
Nike, the largest sportswear company in the world, is banking on the FIFA World Cup to make Brazil its third largest market, behind only the United States and China. According to estimates by FIFA, the governing body of global soccer, 300 million play the sport and about 1 billion watch it. Together with Adidas, Nike holds 70% share of the market for soccer gear. In 2013, Nike generated $1.9 billion from its soccer business, while, according to Peter Ohlmann, a sports marketing consultant based in Germany, Adidas brought in $2.4 billion in soccer revenue. These revenues are expected to rise sharply in 2014, given that it is a cup year. But Nike plans to use this opportunity to make Brazil its third largest market through to the Summer Olympics, also to be held in Brazil, in 2016.
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Stiff Competition From Adidas
Even though Adidas is the official sponsor of FIFA, which means that it will sponsor the tournament, the match balls and have ad slots during games, Nike is well equipped to generate high sales on the back of the event. Its recently released ad falls squarely within the tradition of Nike ads that hint at an event and use it to promote their product without having to pay for the event sponsorship. Starting from the “I Love LA” campaign during the 1984 Los Angeles Olympics, which was sponsored by Converse, and extending to the “Write The Future” campaign during the 2010 FIFA World Cup, Nike has experience in leveraging high profile events for high sales without ever having to pay for it. However, the company will be paying a considerable portion of the $400 million expected corporate spend on team sponsorships. Nike will sponsor 10 teams at the tournament, its highest ever number and one more than Adidas. To this end, the company has been talking to local retailers to get a sense of the market and the needs of its retail clients.
Supply Chain Gains
To ensure the success of its operations in Brazil, Nike teamed up with DHL Supply Chain thirteen years ago. Through supply chain integration, that ensures high level of customer service and comprehensive market knowledge, Nike is now in a good position to capitalize on the opportunities of the 2014 World Cup and the 2016 Summer Olympics. In order to continue its growth in Brazil, the company has been introducing new lines of products every three months, creating peak volumes on specific dates. To meet the challenges posed by this strategy, DHL made a number improvements to Nike’s supply chain, including the implementation of radio-based monitoring of products during warehousing and distribution, and providing real time delivery information. As a result of these measures, Nike has been able to cut costs, improve service and introduce a new warehousing system without disrupting service.
Though deliveries of apparel and footwear are expected to rise in the next 5 to 6 months, this will also increase the company’s expenses.
- Marketing expenditure is expected to grow ahead of the World Cup.
- The trend of falling cost of raw materials might reverse as the costs of leather and chemicals have been rising.
- Additionally, gains made by the dollar against currencies such as the Brazilian real and the Mexican peso could reduce the value of overseas sales, once they are repatriated.