Group Assignment 1
Li Ning – Anything is Possible
Submitted by (Group 18):
PGP-11-091 Abhigyan Mundhra
PGP-11-097 Aditya Narang
PGP-11-102 Anant Damle
PGP-11-133 Parag Aggarwal
PGP-11-141 Prerna Lotlikar
PGP-11-148 Ramya V. Supraja
Is this company successful?
Yes, the company is successful. And it is well envisioned and positioned to convert its opportunities into strengths. For Li Ning, its USP is the target segment based on geographical dimensions. So far, its penetration into the second-tier and third-tier cities has been the chief reason driving its success. Li Ning also provides a good value proposition, thereby providing a fine balance between quality and price.
The major challenge that Li Ning faces today is to increase its brand perception and appeal. Even though CEO Zhang Zhiyong attributes brand reputation as one of the major competitive advantage, they have a long road ahead to capture the ‘cool’ image that their competitors provide. Global giants such as Nike and Adidas are so far the strongest competitors for Li Ning and have an edge over it mostly because of the wide and exclusive range of product portfolio maintained by the two companies.
Further, the SWOT analysis for Li Ning is presented:
* Scalable geographical presence * Extensive distribution channel with good ERP systems; well-skilled and trained labour * Strongest presence in the maximum growing markets of Tier-II and Tier-III cities * The “Made in China” positioning using oriental design attributes in brand imagery| * The image of Li Ning products being not so ‘cool’ as compared to competitors * Low focus on sports-wise segmentation in product lines for basketball and soccer * Non-aggressive sponsorship of sporting events in China; allowing competitors to take advantage * Low focus on high school students| Opportunities| Threats|
* To promote (mutually) and partner with established international brands that demand visibility * Time to rise above the status quo in Tier-I cities * Chinese customers’ growing purchasing power * Sponsorship of reputed global sports events to increase brand as well as product line visibility| * Multinational companies namely Nike and Adidas with global marketing campaigns that provide strong brand value * Other local companies such as Speedo, Anta and Double Star with alarming growth rates(> 50%) in sports apparel, which has higher % of product mix compared to footwear|
Li Ning is focussing on the growing market in the tier-II and tier-III cities where the sporting goods market is expected to grow by more than 50% year-on-year. The competitors, on the other hand are well positioned as far as the product lines are concerned. They have a ‘cooler’ image, but with Li Ning focussing on oriental designs with an international feel, they are positioning themselves well for the future.
Li Ning has comparable market share (about 16%) as compared to its major competitors Nike and Adidas, but it has a low annual growth rate of about 33% compared to its competitors growing at 50%. This is attributed to two fundamental reasons. Nike and Adidas have been able to maintain high brand perception with their global marketing campaigns, and they have been able to seize sponsorship opportunities to gain more brand awareness lately.
What are your recommendations to the company going forward?
1. Targeting: The age group of 25-34, as per Exhibit 5, has the maximum number of people having high individual and monthly income levels, and are also interested in sports. Li Ning should concentrate on this age group segment, which is not being targeted as most of the companies are focussing on university and high school students alone.
2. Positioning: The extensive surveys and interviews suggested a need to position the brand as friendly, energetic and...