International Giant Nike Cuts Domestic Brand Without Fear

July 27th, faced with China's huge market cake, the international sports brand will not easily let go.

With the arrival of the peak season of sporting goods sales, the discount activities of international sports brands are beginning to prevail, and the sharp reduction in prices has stimulated a lot.

Guests of this session:

Chen Yu, brand director of PEAK (China) sporting goods company

Global (China) vice president of sporting goods brand, Heping

Zhang Yongheng, brand director of sporting goods Co., Ltd.

Zhang Fasong, member of the academic committee of China Advertising Association

Nike cut prices hard

Jinjiang Economic Daily: anecdotal rumour that NIKE will pry the domestic two or three line market by cutting its price by up to 200 yuan. Do you think this is a big possibility?

He Ping: under normal circumstances, the price of NIKE professional items is 800~1000 yuan. As the first international sports brand in the market share, the price of footwear sold in China is 400~1000 yuan. If the price is reduced by 200 yuan, this should be a exploratory behavior for entering the subdivided consumer market. In other words, it is through the positioning of high, medium and low end products, sinking channels to occupy a broader market share.

But in fact, NIKE is sinking into the two or three line city channel only through partial product price reduction, this is a very difficult matter.

Chen Yu: at present, the price of NIKE will be reduced by 200 yuan. What is the future of Chinese sports brand? I dare say that NIKE will not reduce the price by 200 yuan.

The reason is very simple. Once the NIKE depreciates substantially, it will lead to a series of problems such as production cost, supplier profit calculation and even reduce the profit cost of terminal agents. So how can NIKE maintain its huge brand promotion cost and terminal canal construction cost in China?

So this assumption is not valid.

NIKE will not dare to reduce the price. This is just the marketing strategy of NIKE in the two or three line city -- low price strategy.

Channel sink Nike has no advantage

Jinjiang Economic Daily: at present, the "perfect price" of footwear in the two or three tier cities is between 170~250 yuan, while NIKE sells shoes in China at a price of 400~1000 yuan, and the difference between the 150 yuan is the main reason that hinders the entry of its business into the two or three line Market.

If NIKE tries the low price strategy, how will it affect the domestic sporting goods brand?

Zhang Yongheng: assuming that NIKE considers this problem, it certainly envisages the following competitors. ADI will not be willing to passively follow the price cuts. Then, first of all, it is Lining and Adidas, which is the meaning of "second names".

Moreover, ADI's Y-3 can be regarded as a high-end brand. If ADI has cut the price, it will have a brand that has been popular among the high-end brands, and NIKE will lose its brand value directly.

Although NIKE also has golf, but one is not doing well, the two is the same is the NIKE logo and brand, after the high-income crowd are locked in ADI, then it means that NIKE has lost this part of the high-end consumer market.

He Ping: according to the operation of the domestic market, the domestic two or three line market has always been the battleground of several domestic brands, especially the local brands in Jinjiang because of its low investment and low cost.

In the long run, this kind of value proposition must be further refined, and more accurately lock consumers in a certain part of the two or three tier cities with stronger commonalities.

In this way, the domestic brands can truly establish their niche market and share their own "cake" with the international brands.

Zhang Fasong: if Nike decides to sell low priced products in China, the average high price brands such as Kappa and Lining will be most affected in the short term, because some consumers in the two or three tier cities may choose Nike instead.

Part of the brand image of the general domestic brands or will be squeezed out of the market.

The reason is very simple. These small and medium-sized brands with annual marketing budget of 350 million ~5 billion are not likely to compete with Nike, Lining and Anta over 1 billion yuan each year.

Despite a heavy blow in the short term, the domestic brands with considerable marketing budgets should be able to resist Nike, which is "killing" in the low-end market.

In addition, according to Dafu securities data, the current domestic sports brand is still "momentum like rainbow".

According to statistics, in the 4 quarter order meeting of the major sports brands that have ended in 2010, the average order growth of XTEP international increased by 23%, the Chinese trend ranked second, reached 20%, Anta ranked third, reached 19%, and Lining ranked fourth, with a growth rate of two figures.