Li Ning Case Study

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Market Environment for Li Ning
•Li Ning is operating in local market, competing with International brands (viz. Adidas,Nike)
•More than 50% of active Chinese sport population is from Tier 2 & 3 cities
•Market is poised for exponential growth in next 2 years (owing to Beijing Olympic 2008)
•The household income for 70% of families of active sports teenagers (14-24 yrs) is less than RMB 4000. Li Ning is mainly operating in this segment.
•60% of Active sports population is students : 45% University and 55% school students
•70% of sportingly active females are from age group of 18-24 years

Where do Li-ning stand?
Li Ning is successful for the following reasons:
• Focused on Tier 2 & Tier 3 cities (having strong market) • Investment in R&D for product development
• Smart pricing – 30-40% lower than international brands & 50% higher than local brands
• Technologically update – viz. ERP implementation
• Developing appealing Logo
• Oriental market approach
• TV Commercials with the famous sportsman
• Customer Focus in introducing the products – Introducing customized products
• Sponsorship programmes

Suggestions to Li-Ning for growth
• Gross profit is 47%, while operating margin is only 10%. Needs to improve cost structure
• Need to improve global look out. Going international will also help in attracting youth at home
• No. of stores to be increased to compete with Adidas. Also need to focus in North-West China
• Need to focus more on Mega cities
• Use glorious achievements of Li Ning while branding
• Need to focus more on Sports apparels as they are doing well in this segment
• Develop unisex models as well as special editions for female (as 70% of active sportswoman lie in 18-24 age)

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