Li-Ning is a leading sportswear brand in the Mainland China and they aspire to be a world's established brand in the sports goods industry. The company has been successful in maintaining and increasing its market share in China while facing strong competition from Nike and Adidas. Direct resources to branding and product research and development for long term well being of the company.
The competitive edge of the company is maintained by its strengths such as; strong distribution channel, R&D, endorsements from major athletes and sponsoring sports events. Their biggest strength is brand loyalty and recognition in the Chinese market. These strengths have enabled the company to achieve a prominent and successful position in the sports wear industry in Mainland China.
The company uses 16 to 17% of its financial resources on Aadvertising and promotion in order to build brand loyalty (Lining.com). According to Li Ning’s annual report 2010, Ttheir domestic and international sports sponsorship resources are grounded on its strengths in product design as well as innovative research and development, thus strengthening Li-Ning’s position as a leading brand in terms of professionalism and sports competitions (Lining.com). This initiative will help the company strengthen its brand image which is an integral part of its differentiation strategy.
The company aims at channeling its resources to four main areas, branding, channel, human resources and product, in order to enhance the overall value of the enterprise (Lining.com).
They have a rich and extensive product line which focuses on running and badminton. One of the main things that the company uses to maintain its competitiveness is it pricing strategy. Their quality is as good as Nike and Adidas but the prices are less which attracts customers. Their pricing and distribution strategy allows them to avoid severe competition with Nike and Adidas because their prices are lower and their primary presence is in second and third tier Chinese cities. The current pricing strategy of Li-Ning has been successful in attracting their primary target customers; the youngsters. Youngsters are often looking for value for money products due to lack of funds and find Li-Ning’s products attractive. Li-Ning has successfully attracted this segment of the market because it appeals to them as value for money product as well as meets their needs.
As mentioned in company's mission statement they strive to be an international brand. They have made several attempts to capture international market share. Some of the company’s other efforts to increase their competitive nest in the international and domestic market are export activities, international marketing efforts, the establishment of R&D centers in Portland, Oregon and distribution agreements with foreign sport fashion brands. They also hired Alan Hardy, who was a senior designer at Nike and design director at Converse, in order to support their R&D efforts. Alan Hardy is a valuable resource for Li Ning. To support their mission statement, the company has opened several flagship stores in Netherlands, Singapore and several other Asian cities.
Li Ning has made numerous efforts to establish itself as an international brand but at the same time they do not lose want to lose their foothold in the Chinese market. It is one of the fastest growing markets in the world and Li Ning’s share of international revenue was only 1.4% in 2010 (Lining.com) The company should use its resources for brand and product innovation. The main resources that they can use to achieve these goals are strong distribution channel and unique image in the Chinese market along with brand loyalty. They should also try to strike the delicate balance between distributing their focus on domestic and international expansion. According to the case study, many board members had the opinion that the company must focus on international expansion where as others believed that expanding domestically the best way to go was. They should get on the same page and work towards achieving a common goal.
As mentioned above, Li-Ning faces tough international and local competition from sports giants such as Nike and Adidas especially in the first tier cities. In terms of brand positioning, Li-Ning had started to focus on going global. They strive to build their image as a prestigious international sport’s brand. Li-Ning’s success is based on its value for money, quality and also that Li-Ning stands for a Chinese product and natives of Mainland China can relate to it as their “own” brand which creates brand loyalty with Chinese customers. The company uses this image to their advantage both in domestic and international market. This can also help them build a distinct brand image from their competitors such as Nike and Adidas.
The brand image of the company is an important resource to them because it helps natives of Mainland China relate with the company as their own. The company was initially a family owned business which reemphasized Chinese culture family values. This is an important resource to the company because it helps them differentiate themselves strong foreign players such as Nike and Adidas. This is also one of their strongest selling points in the domestic market.
The primary objective of the company is to increase its overall international presence and also maintain its first place in China sportswear market against multinational strong players such as Nike and Adidas. Li-Ning has used the legacy of its founder, who was an Olympic Gold Medal gymnast, to build the image of this company and to land important assignments such as torch rally of the 1990’s Asian games. It is obvious by company’s efforts that endorsing is a key ingredient of their marketing strategy. They have sponsored Olympic Games, many NBA players and other international level sports players to build their brand image. They had partnered with NBA and sponsored NBA players and as indicated by the company’s legacy, Li-Ning’s success comes from an oriental theme combined with international marketing.
Li-Ning’s low pricing strategy, well spread distribution channel, endorsements and brand loyalty has provided beneficial in maintaining their domestic market share and it might even help them increase their market share in first tier cities. Maintaining their position in second and third tier cities and trying to gain a foothold in first tier cities and international market is the key a larger domestic and international market share for this company.
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Reference list
Krug, A. (2007). A Grand Entrance? Li Ning's Emergence as a Global, Chinese Brand.
'Insight: Brand Health Check - Li Ning slump calls for strategy rethink' 2011, Campaign Asia-Pacific, p. 21, Business Source Premier, EBSCOhost, viewed 8 March 2012.
Flannery, R 2012, 'Shares In Chinese Sportswear Retailer Li Ning Vault 11.7% On TPG Stake', Forbes.Com, p. 32, Business Source Premier, EBSCOhost, viewed 8 March 2012. Ir Asia [online]. (2012) [Accessed 8 March 2012]. Available from: <http://www.irasia.com/listco/hk/lining/annual/ar71068-ew02331.pdf>.
