Kennedy Osterman
There is a rough estimate of 262 different sporting brands, out of that rough estimate we come across three brands that are very competitive with one another. Nike, a consumer products company, engages in the design, development, and marketing of footwear, equipment, and accessory worldwide. Adidas focuses on design, distribution, and marketing of athletic and sporting lifestyle products. Under Armour, deals with development, marketing, and distribution of branded performance apparel, footwear, and accessories for men, women, and youth. When closely looking at each brand individually we can decide which competitive sporting brand is truly better.
Nike has become the most popular brands of sports apparel in the US, and across the world. Nike took over the global market, making most of their money off their shoes. However, Nike started to decrease in popularity, and the stock began to decrease. This decrease didn’t last long due to deals with athletes to wear their apparel, along with increases in buyer sales as the decade progressed. In 2012, Nike reported, “that due to the slumping economy, over 1400 jobs were to be cut, out of the whooping 35000 jobs that Nike consists of nationwide.” (NKE Key Statistics - Nike Inc. Cl B Financial Ratios). Cutting these jobs was a reorganization of the company, to create a better outlook for Nike’s future. Nike executives stated, “that these cuts are not just because of the economic issues, yet a big part is due to complete reorganization of the company.” These cuts affect the economy of individual jobs and income too. However, being the powerhouse that Nike is, the reorganization should be effective and create more jobs. According to seekingalpha.com, “Nike's revenue increased over sixteen percent to 5.8 billion from 2011. Nike's revenue had risen in every geographical region except for Japan, making 2012 look like a very enticing and effective year for the veteran company.” For many years, Nike has helped the economy due to the amount of revenue they produce yearly.
We all know Adidas as a famous company that develops sports equipment, shoes of high quality and sports apparel too. This experienced and successful company faced many economic challenges but still survived, and found out which external factors affect Adidas. According to marketingdawn.com “Adidas has faced many economic downturns til 2005. The economic factors like per capita income, inflation, unemployment, and taxation effects on the profit or generated revenue of [the] company. [The] stock market will face instability only if the interest rate fluctuates or growth rate is affected.” These factors do affect the potential customers and decrease purchasing power as well as firm capital cost. Adidas has been hit tremendously by the economic downfall around 2005, Adidas completely revived their company and put them right at the top again. With celebrity and athlete endorsements, with the creation of Ultra Boosts and also Kanye West’s Yeezys turned around the company. Because of Yeezys, the demand of Adidas products skyrocketed almost the same as Nike. They went from just being a soccer company to now being the closest competitor with Nike and a lifestyle brand.
Under Armour was founded in 1996, Georgia Tech was the first buyer, buying $17,000 worth of apparel for their athletes. Within a couple of years, Under Armour sales topped $1 million. Since then, their growth has continued as it has formed partnerships with athletes and sponsored college athletic teams. According to Forbes, “Under Armour is currently growing its sales at a healthy double-digit clip. The company is expected to grow sales by 8.6% in 2017, and another 14% in 2018.” Under Armour has had over 29,000 products on Amazon. Also has earned $0.45 per share in 2016. In 2017, that number was expected to lower to $0.38. Yet in 2018, analysts are expecting a rebound back to the $0.45 level. When looking at the price to sale ratio, Under Armour has a market cap of $7.25 billion. Compared with the projected sales of $5.25 billion, the company trades at around 1.4 times sales. Under Armour used to be a lower tier company but since sponsoring with athletes like Cam Newton, Stephen Curry, Tom Brady, etc put Under Armour atop of the overcrowded market for sports apparel and shoes. And the demand for Under Armour continues to grow rapidly every year.
When comparing these 3 competitive brands it’s your decision to decide which brand is the best. Keeping in mind these facts from CNNMoney, Nike generates more than 50% of its sales from shoes. At Adidas, 80% of sales are footwear. Under Armour that number is only 21%. Compared with Nike ($34 billion sales) and Adidas ($21 billion sales), Under Armour is the smallest out of the other two competitors. Last year, the company generated $4.83 billion in sales. All these companies can take advantage of favorable trends in the industry. Trends that will support growth for many years and probably decades also. Global population growth, economic expansion in emerging markets, increasing diffusion of sporty lifestyles, increasing diffusion of sportswear as a choice of style are all trends that will support sales for these three companies.
Works Cited
Streetinsider.com, www.streetinsider.com/stock_summary.php?q=nke.
“ADDYY.” CNNMoney, Cable News Network, money.cnn.com/quote/profile/profile.html?symb=ADDYY.
MoneyShow. “Why Sports Brands Still Have Room To Run.” Forbes, Forbes Magazine, 6 Sept. 2017, www.forbes.com/sites/moneyshow/2017/09/06/why-sports-brands-still-have-room-to-run/#6496e77a5b62.
“NKE Key Statistics - Nike Inc. Cl B Financial Ratios - MarketWatch.” MarketWatch, www.marketwatch.com/investing/stock/nke/profile.
“PESTLE ANALYSIS OF ADIDAS.” Marketing Dawn, 24 Jan. 2017, marketingdawn.com/pestle-analysis-of-adidas/.
“Under Armour Inc (UA) Company Profile.” Reuters, Thomson Reuters, www.reuters.com/finance/stocks/company-profile/UA.
Nike is by far the best footwear and sporting company for many reasons. A) They sell their shoes for roughly the same price as Under Armour and Adidas. B) Their shoes are far more stylish and better looking that both Under Armour and Adidas combined. C) Most people prefer Nike, so why shouldn’t I? Essentially, if consumers believe that Nike is the best because they sell the most apparel and make the most money, they would be correct.
ReplyDeleteIt is very true Nike is the dominant brand of the three but I personally believe it is solely based on simply getting certain athletes and those athletes peaking. Now when I say this I mean for Nike it all started with Michael Jordan and having his own brand within Nike. Having the face of sports is huge, but as you go up the scale Adidas stayed somewhat close because of soccer, then grew even larger when they got Derrick Rose, sadly his injury caused a significant loss in value and hype surrounding his shoe. When you look at Under Armour they struggle to compete as they only have a few top athletes and colleges compared to Nike and Adidas overpowering with colleges.
ReplyDeleteI would like to point out that out of these three companies, Adidas is not only the one that isn't based in the US but is also the only one that makes more than 60% of their revenue outside of the United States. Nike is a close second with just over half of their revenue coming from outside the US but Under Armour makes almost 80% of their sales within the United States. This may be important due to the specialization fo the different companies. On the Under Armor website, they sell 8 different types of soccer cleats which seems pretty impressive until you realize it's 1/7 of Nike's 57 available cleats and indoor shoes, which is still even less than the impressive 78 types of soccer cleats and indoor shoes sold by Adidas. Now this seems a bit odd that I'd bring this us up but almost every soccer cleat I've seen anyone, pros, high school students, etc. has either been Nike or Adidas, even within the US. Now, this is a bit unfair since UA does mostly specialize in clothing rather than footwear but it accentuates an important message to the world: that Nike and Adidas understand what people play. Soccer is the most played sport in the world and they produce a wide range of a product that is literally necessary to play the sport. Under Armour however, makes most of their revenue in the US for a rather specific reason: our culturally developed hatred for discomfort. Under Armour produces some of the best compression and heat-capturing sportswear in the world and given the general hatred for discomfort in the US and our relative affluence, anyone that plays an outdoor sport in the northern parts of the country likely has or has had one of Under Armour's shirts or leggings for retaining warmth. Each of them has their special area and that's what allows them to dominate the market like this. TL;DR: Adidas and Nike are really good at soccer stuff, Under Armour takes advantage of american culture for profit and by specializing in different things, they manage to quite literally split up the market.
ReplyDeleteI found it extremely interesting to compare all three of these companies because they are the big 3 of the sportswear market. It's also extremely interesting to see that at some point all of these companies went through some sort of economic difficulty. Whether be Nike, Under Armour or Adidas they were all able to find there way out of this economic hardship. And I will not knock any of these companies because they do all have their benefits in different ways but you can see one of the biggest ways they got out of economic hardship was through celebrity endorsements. Having celebrities back your brand, it gives consumers something to latch onto, a reason to buy your products. And all of these companies do an extremely good job of that, it increases popularity, which ultimately increases sales and the economic well being of their companies. I believe they're all phenomenal brands in their own manner and all are successful companies even though they've had some economic hardships.
ReplyDeleteI believe that when it comes to sports brands, they all have very similar and extremely high quality, but what really separates them is popularity. Because of that, Nike blows the other two major brands out of water. In the US and through the rest of the world, Nike somehow manages to successfully sign the athletes who carry a big fan base. Cristiano Ronaldo, LeBron James, Neymar, Kevin Durant are part of team swoosh, and are also arguably the most popular athletes on Earth. The only other sports figure that comes even close to bringing Nike is Stephen Curry, both other than that, Nike is the most popularity dominant.
ReplyDeleteI don't think one brand is necessarily better than another but I think that there are certain aspects of each company that stand out. Nike has been the most influential of the three because of their early start with Michael Jordan. Jordan revolutionized the way people look at shoes and was one of the first big endorsement deals of a pro athlete that really made a large affect on consumers. Nike is known for having controversial sweat shops in other countries in order for them to save money, so while they have been the most influential company by far, it is hard to straight up consider them the best. You have to look at different aspects of the companies instead of just saying Nike is better than Adidas.
ReplyDeleteIn this post you talk about how Nike has been declining in it's revenue lately. I believe this is because they believed they had a strong grip on their consumers and even if they raised their prices people would still buy their products. At the same time this is happening however Adidas has been killing the game and producing new shoes that most people are turning towards. Not only are some of them less expensive but with better technology like boost along with new and more outstanding looks they are slowly pulling ahead of Nike as they raise their prices. This post is a good example of an oligopoly because there are 3 or 4 brands that are controlling the market and it is very hard for new brands to make there way in. Almost everyone around us wears these brands and it will be rare to see others wearing anything else because of how well known the brands are and how locked down they have the market.
ReplyDeleteWith comparing these three companies, I am glad that you decided to include details rather than just a specific item; the inclusion of merchandise sales, job opportunities, and income and growth really exemplify how the companies either have similarities or differ from one another. While these factors do bring up good points, it truly is hard to decipher which brand is the best; every consumer has opinions, and will voice why they feel one brand is better than the other. One big factor that obviously can’t be ignored is popularity; Nike by far is one of the most well-known brands, and is seen everywhere from socks and shoes to hats and gloves. They are just so widely known, even outside of the United States, that their empire continues to grow more and more each day. While Under Armour and Adidas do a good job of advertising and meeting the same needs consumers have, Nike really comes on top with their brand recognition.
ReplyDeleteWhen it comes to branding and sports branding in general it is an extremely similar product, this is because they all are very high quality goods, the only difference is that when it comes to preference and what is "cool" that is where the brands pull away from one another. Nike by far is the best and most popular brand and is way bigger than any other brand within it's market because it has brand recognition and is "cool". Another thing that Nike does extremely better than any other is bringing in the faces of the most populous athletes in their profession. Nike is blowing every other brand out of every athletes decision within brand deals. Why would it not be the same case now?
ReplyDeleteI agree with Thales with his comparison to brand popularity and sponsorships. When he named those big name players like Christiano Ronaldo and Lebron James, half of their income comes from sponsorships alone, and of course Nike is among the top sponsorships. And of course by having these popular athletes and celebrities back up your brand like that, that is why Nike has grown as big as it has.
ReplyDeleteSporting brands are highly competitive, however I'm not quite sure that it even comes down to the brand quality when consumers are deciding what brand to purchase. I feel as though it is about brand loyalty and consumer bandwagoning, as many shoppers today just buy what everyone else seems to dictate as 'cool.' This is why the companies you have identified as the top three sporting brands are considered the best, not just because of the quality, but because everyone has this image in their head that these brands are the best. The highest demand by consumer out of these companies would probably have to be for Nike products, as you see many influencers around the world representing Nike which then persuades consumers to buy more of Nike's products so they can be just like their favorite athletes. As more and more people buy products from Nike, Adidas, and Under Armor, the more impossible it gets for other sporting brands to enter the industry, as the barriers of entry are very high since in this case they are similar to an oligopoly market structure.
ReplyDeleteI don’t have a preference from these brands, although lots of people due. This must make the market very competitive. Something I thought was interesting was that New Balance is really popular in Europe and is as common as Nike is in the US, but they don’t make the top companies. The demand in the US must be much greater in the US than in Europe.
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