External Environment Sportswear Market
External Environment 1. Markets Structure and evolution of the sports market In France, the sports market is estimated about 9,1 billion euros in 2009. Currently, it experiences difficulties to revive with growth. The market is made up of sportswear, sports footwear and various accessories in order to use sports equipment. The purchases in sports items are realized at 70% for leisure activities. In this way, our customers have the choice between two divisions: sport performance and sport style.
The sport performance division develops sports products, focused on running, football, basketball, tennis and training and the sport style division is focused on fashion-conscious consumers and includes collections like the ‘Y-3’ designed by Yohji Yamamoto, a Japanese fashion designer based in Tokyo and Paris. On the market, the customers are increasingly looking for the brand and the style of the product, which are strong factors in the purchasing act. They expect novelty: in the design of the product but also in the using materials.
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The number of sport members is in a slight increase, they are about 17 million in 2009, according to INSEE data. Those last years, new trends are rising; such as the identification process to sport celebrities that can also influence the purchasing act. Target Sportswear purchases are realized by 40% of women who are looking for clothes adapted to their expectations, their morphology and the activity who are practicing, according to a NPD group study. Their purchases in sportswear represent 7,1% of the total sales of women’s outwear in 2008 and it is quite regular since 2003.
These women have a precise profile: they are city dwellers, living in majority in big cities; working girls at least 25 years old and practicing sport 2 or 3 times per week. Most of the time, they practice sport to keep fit and leisure activities. They want to keep style in doing that, contrary to men who practice sport for the competition spirit and the will to surpass themselves. 2. Competitive environment Expanded competition The substitute products of the Adidas feminine apparel are all feminine apparels that are not sportswear present on the market.
Indeed, if we consider that women buy sportswear for their leisure activities, the expanded competition takes into account all the other clothes used in these moments. Those substitutes are casual clothes, which are comfortable but not sportswear. Adidas counts in its indirect competitors Zara or H&M, which offer casual clothes for leisure activities. In this way, the brand experiences more and more competition. Some brands such as Gap, Esprit, Roxy, Comptoir des Cotonniers or Abercrombie and Fitch (soon available in France) develop their collection in a sportswear range.
Those brands propose real “fashion-products” which are meeting customer’s needs in style and comfort. Direct competition We are working in an oligopoly situation where our main competitors are Nike and Puma, especially the first one whose we are focusing on. Nike has a strong brand image in customers’ spirit and it is our former main competitor. It is present over all the different sectors of sport: its products are various and numerous, designed for all targets in the market.
Nike offers sports apparel and accessories for athletic activities such as running, training, basketball, soccer, golf, baseball, football and bicycling and also swimming, fitness or yoga, intended to women. Nike’s apparel product line includes sports-inspired lifestyle apparel, athletic bags and other accessory items. The company is centred on technologic innovation, performance, design and a variety of choices. The brand has opened the first Nikewomen store, a space entirely dedicated to women’s sport accessories, in Paris in 2007.
Nike pays a lot of attention to its communication with women. In 2009, the brand realised an advertising campaign called “Here I am” in order to encourage women to surpass themselves. The advertisements directed high-level sportswomen who had to take up challenges. Simona La Mantia, Maria Sharapova or Delphine Delsalle were represented in the spots. In this way, we can expect that Nike will try to strengthen its leader position on the sport market, especially on the women who are appearing like customers with a strong potential of purchasing.
Store Brand The direct competition is also made up with store brands; the most famous are Decathlon, Intersport or Go sport. These companies have a strong impact insofar as they possess their own brand, often appreciated by customers. They make and sell quite similar products to those offered by specialized brands, directed towards the same targets. However, they take benefits from the distribution of those products. Indeed, Decathlon or Intersport for example, point up their own products in their retail stores, thanks to focused advice of salesmen.
The advice given in the stores have a strong impact on the final purchasing act. The store brands do not have a strong positive brand image such as specialised brands but it is evolving thanks to the expansion of the ranges offered. The store brands are able to adapt their offer to the new segments on the market, especially with women. To seduce them, they propose a wide range of colours more feminine. We can expect they will continue in this way to reach as many targets as possible. 3. Economic environment
According to a global assessment, France is currently experienced difficulties with the recent crisis. The GDP dropped about 2% in 2009 and the unemployment rate is growing to 9,3% in the end of 2010. The exchange rate is in slight decline. The inflation is quite controlled but the recession impact is quite strong in France, especially in the textile sector. Indeed, consumption of clothing articles dropped 2,9% in value in 2008. It should not be interpreted such as a rejection of fashion but in fact, the success of the sales periods shows that the sales drop is mainly due to purchase power constraints.
Average retail prices dropped off in 2008 by 1% and 5,6% in 2009 after a slight rise in 2007. All subsectors were affected by the decline. However, the highest drop was for women’s outerwear with -2. 6% in volume and -3. 4% in value. The women’s segment accounted for 49% of total ready to wear sales in 2008 and therefore had a strong impact on the overall market. Women’s average clothing budget reaches €547. Nevertheless, the IFM forecasts a growth in the sector over the five next years. 4. Demographic environment
Socio demographic distribution of Adidas users in the United States [pic] Sample: In the United States, we can see that Adidas is “Mainly used” in 22. 3% of the cases, and “Used” by 53% of the entire population. 58,5% have Adidas in their “Relevant Set” and 67,7% have “Affinities” for the brand. The brand awareness is more than 98% of the population. Gender: 48,1% of users are men, 51,9% are women. In Adidas’ target groups “Main user” (56,8%), “User” (54,4%), and “Relevant set” (50,9%) males are above average compared to the population.
Nevertheless, it is evident that there should be a decreasing tendency from “Main user” to “Awareness” for men and in return an increasing tendency for women. We can assume that Adidas is more used by men while it has a higher awareness with women. Age groups: Compared to the entire population in the age group between 14 and 29 (19,8%), as well as in the age group between 30 and 49 (34,8%), Adidas is above average represented in all of its five target groups whereas the strongest representation is found in the target group “Main user”.
The other target groups are above average represented too, but the figures decrease from 26% respectively 43% (“Main user”) to 20% respectively 35% (“Awareness”). In return, the age group 50+ (45,4%) is the lowest average represented compared to the entire population whereas the lowest representation is found in the target group “Main user” (31%). The other target groups are below average represented as well, but the figures increase from 35,3% (“Users”) to 44,9% (“Awareness”). We can assume that the use of the brand Adidas decreases with the aging while the awareness and affinity increases as one gets older.
Education: Considering the entire population, all five target groups of Adidas are dominated by individuals with a General-Education Secondary School degree. However, in the United States, 47,9% graduated with such a degree while 35,2% graduated with a Junior High degree and 16,9% graduated with a High School diploma degree. A clear tendency is just conspicuous with Junior High graduates. Here, Adidas is above average represented, but there is a decreasing tendency from “Main User” (37,6%) to “Awareness” (35,2%).
In return, graduates with a General-Education Secondary School degree are below average represented compared to the population. Further, persons with a High School diploma are a little bit above average represented. Although Adidas’ five target groups are dominated by people with a lower school degree, the brand is popular and used by people with a higher educational level, because both Junior High and High School Diploma graduates are above average represented compared to the entire population. 5. Social and cultural environment
If the sports market affects both items for the exclusive practice of sports and leisure goods, the market has been changing over the past twenty years. We can see a massive increase of sports practicing, especially from women. The strong growth of the French sports market (it concerns 34 million people aged 15 and over) can be explained by several facts: children and adults are more likely to play sports, and women of all ages feel much more concerned by sports. In any case, sports activities increase with the social level.
Women are indeed more and more present among athletes. Their practice is different from men’s. First, women are more autonomous (without necessarily joining a federation or a club), and their participation concerns more often the maintenance of fitness rather than the intensive practice of a sport. The sports they take part in are generally individual sports, however they are also likely to join with their friends. The most popular sports among women are dancing, swimming, walking, cycling, gymnastics and horse riding, according to INSEE.
Paradoxically, although women are more likely to practice walking (57% of women), they are less likely to be licensed in a walking club (only 37% of licensees are women), which illustrates the desire of autonomy of women in a sport (INSEP study). If we segment the female market in terms of age, we can note that swimming and gymnastics are practiced by women of all ages, while badminton and dancing are more often reserved to young women; and water aerobics, hiking and yoga to older women. This notion of independence will be highlighted in our marketing proposal.
As we mentioned earlier, women are essentially looking for physical fitness. They play sports thinking of their body, playing sports must make them more beautiful. The product should be presented as an essential complement to this pursuit of shape and welfare as if it were a condition for the success of the positive elements they associate to sports. [pic] 6. Technological environment The sports market is estimated 9. 1 billion euros in 2009 in France. In the market structure, we can distinguish the clothes and sneakers for recreational use from sports facilities.
The orientation textile/fashion is already important for customers, we can assume that this trend will intensify in the future. In fact, 70% of sports goods purchases are made for a recreational use: the “urban wear” becomes more and more important. Customers are becoming more and more careful to the brand and the general appearance of the product, which are now “buying triggers”, as sportswear dethroned traditional clothing. New trends such as identification to sports stars may also influence customers’ decision to buy.
When French people are asked about their forecasts regarding fashion trends, they mostly think about new materials and an increasing number of designers. These trends are also to take into account in sportswear. The trends of the market would therefore be an increase or stagnation in the number of people practising sports, but they concern mostly brands and the design of sports products, as well as technological innovations. According to Cetelem, French people spend on average 380 euros per year for the purchase of sports goods in 2009 and this figure is increasing.
We must take into account “the immaterial force of the products” (so-called by specialists) which means personality, fashion design and the brand. Women have a buying behaviour more oriented towards fashion design than men. Studies conducted by Adidas on the behaviour of consumers identify five consumer segments, which correspond to the main technological domains in the creation of a sports product: -“Pure Function” (20% of consumers): product functionality, functionality, brand name products. -“Fashionista” (13% of consumers): design, brands, and recreational use. “Athletic Stylites” (15% of consumers): style and performance of the products. -“Contemporary Classic” (33% of consumers): classic products (not fashion) for sports and leisure. -“Value Addict” (19% of consumers) sensitive to the price and the intrinsic value of the products. Following this study we can distinguish various technological domains, of almost equal importance (only “Contemporary Classic” dominate with 33%, but their behaviour can vary because they buy both for sport and recreation), on which concentrate the technological efforts.