Li Ning the leading sports brand china company
Chapter 1 - Introduction to Li ning
What is the world's top ten sports brand chart at the moment? Which of these sports brands is most respected by consumers? Which countries do these world's top ten sports brands originate from? In recent years, Chinese local sports brand has achieved great significant development. However, the international sports brand still has unique advantages as in compared to the Chinese local sports brands. This report is focusing on the marketing strategy of Li-Ning – a Chinese sporting goods retail company by a careful examination of the case-study.
Li-Ning released a series of new initiatives which brought in the reduction of the amount of orders and shortened the life of Lotto Brand agency. Also, a five-year cooperation agreement with the Chinese Basketball Association League (CBA) was signed on June 11, 2012 concerning the sponsorship of related equipments. Li-Ning did not disclosed the specific amount of sponsorship, but the figure was estimated to be near about 9 digits. For this, it was remarked that Li-Ning has reduced the expenses and decreased the stock intention. Also, it kept its focus on the customers of “90’s generations”, which means the young people who were born after the year of 1990s. Since the sports basketball enormously influence the young generation pulling in the overall sales for the related category of products.
The financial data of Li-Ning generated in the fourth quarter of the year 2012 stated that the order for products faced a significant loss from 20 percent to 15 percent. Commenting on this, the Li-Ning’s manager embarked that its Lotto agency period has been reduced from 20 to 10 years in order to have control over the company’s expenses. Also, at the same time focus need to be concentrated more towards the service area and products of the operating company.
The schema of this research project is organized by the research in a way that relevant findings can be articulated. Initially, a brief introduction and background of Li-Ning company has been presented in Chapter 1, further second chapter – literature review will outline several theories including the concept of marketing strategy and also the strategies adopted by LNC Company. The methodology of the research conducted and results derived are followed in subsequent chapters therein. Lastly, the findings of the research trailing with discussion and conclusion section are being discussed which will highlight the issues for future research.
Background of the study
The company LNC was incorporated by the famous Chinese athlete named Li Ning, established in 1990. It is now changing to one of the leading sports brand local business in China. The Company was the first making its entry its marketing of sports products. It involved the Chinese Olympic Committee and Chinese sport developments such as Olympic Games. It is also accredited to promote the development of sports in China and making people of generation Y aware of the same
Li-Ning chose a good time to enter the new undeveloped market in Chinese sport products with producing the Sporting Goods business after 1990s. Since they were first in this industry so it was good to predict first 15 years success, also they out in their maximum efforts to sponsor various events in Chinese Sport area. With In 1995, Li Ning Company became a leader business of the sporting goods industry in China. Until the year of 2005, LNC Company continued to maintain an industry leadership in the Chinese sport market. Their sales had hit a record with high achievement which encouraged LNC to plan towards the goal of world-class brands.
In the year of 2010, Li Ning announced a new theory and plan of high profile rebranding strategy. It planed about the change of releasing a new brand logo and slogan, and brand background meanings, target potential customers. Product positioning has been adjusted from this year. It aimed to create Li Ning 90s products which mean the targeting customers are younger than before as the young group who were born after 1990s. And also, Li Ning's new slogan of the business was changed to "Make The Change", the brand new logo abstract the original Li Ning business label to a new image which means the period of product positioning began to change.
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Hypothesis of the study
On 30 June 2010, LNC, who had changed their image, started to emphasize their functionality, professional and individuation. They make a more accurately target customer, and announced that “90’s Li Ning”. Nevertheless, all of that swift change seemed not as successfully as they had expected, and was not accepted by customer as well.
An underperformance after rebranding: the company reported slowing sales growth. Following a period of six months since rebranding, the company’s profit was 294 million Yuan. Compared with the same time last year it was 582 million Yuan, which demonstrated a decline of 49.5%. Lots of dealers have different opinions about the brand position after rebranding, to the new brand there are large numbers of comments and criticism. Brand image broken: the value of brand was falling down 11% since Interbrand company reported its “2011 rank of Chinese brand value”.
Based on the real market data, scientific research method and the marketing theory, this paper analyzes the branding and marketing strategy of LNC. It hopes that by applying the research result to help LNC out of its undesired situation, solidify its brand position and regain its competitive advantage and also to provide valuable advices for other sports good company.
The details of hypothesis are as following: The director of Li Ning is adopting the wrong marketing strategy and at a result, Li Ning is experiencing:
- A lost market share
- Share price reduction is at an all time low
- Lowest profit in its history
Aim and objectives
Aim: the marketing strategy of Li Ning, a Chinese sporting goods retail company - A case study analysis
- To research what kind of previous market strategy did Li Ning Ltd use during its peak business succuss.
- After the peak business succuss period, to develop what kind of new marketing strategy is adopted by Li Ning which made it from succuss to a big loss.
- To evaluate why and how the new marketing strategy made Li Ning a huge market loss.
- To investigate how could Li Ning adjust its current market strategy to make profit instead of losing more market.
This study is been designed as: The content of first chapter describes the background of the study and the reason to do this research. In Chapter Two, it is to provide the literature review of the research. And then, Chapter Three is describing the methodology section which is the research method using in this study. The next chapter is about the finding and analysis of those gathered data in questionnaire feedbacks. In Chapter five, it is about the conclusion of the study and the author also mentioned some suggestions and recommendations to LNC Company.
Chapter 2 - Literature Review
In this chapter, the author concentrateson the previous literature review from different authors who under took the relevant topics about marketing strategy research. Firstly, he is talking about the definition of marketing strategy, which includes three different elements: decision making, globalisation of business external environment and marketing strategy leaderships.
The definition and development of Marketing Strategy
Firstly the author is going to talk about the definition of marketing. Marketing is the social process by which individuals and organizations obtain what they need and want through creating and exchanging value with others. (Kotler et. Al, 2010)
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. (AMA, 2007)
It is about meeting the needs and wants of customers in the highest customer satisfaction. It is a business wide range function. And also, Marketing is about understanding target - existing and potential customers and finding different ways to provide the best products or services which is under customers demand and requirements. (Riley, 2012)
Marketing strategy is a process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage. (Baker 2008)
The marketing strategy is the company marketing department planning with the strategic plan, based on considering the external market opportunities and internal resource conditions and other factors to determine the target market. it is about selecting the appropriate marketing strategies combination and effective implementation and control of the process.
- Decision making of marketing strategy : Benson ï¼ˆ2003ï¼‰stated there is a mental model for decision making that is focused on discovery and coordination within businesses. He divides the model consists to six different components which included: self-awareness, development orientation, systems perspective, emotional orientation, complexity dynamics, and generative conversation.
- Globalisation and the challenge of responsible business : Lemoine et al (2003) mentioned about dealing with the development of internationalisation and globalisation of some logistics international service providers such as DHL.Errasti et al (2007) also said, nowadays’ business globalisation and the productive partners to work with apart from working partners from their home country. More and more business outsource their production line of different departments to foreign countries’ as business partners. Some large size organisations change and develope their business strategy about their international growth and expanding to overseas.
- Marketing strategy leadership : Friedman (2005) “There is one and only one responsibility of Business - to use its resources and engage in activities designed to increase its profits, so long as it stays within the rules of the game”. For the definitions of responsible leadership, “it is a distinct kind of work. According to the challenges provided by different conditions within the business, a leader has in particular qualities which can flexibility solve and change the negative position of business to an effective way.” (Kakabadse et al 1999) And also Parry et al (2006) claimed their opinion about the responsible leadership theories. As he said, there are five Stages of Leadership Theory & Research: Trait Approach, Style Approach, Contingency Approach or Situational Approach, New Leadership Approach, Post-charismatic & Post-transformational. These five theories analyse the stages of leadership theories and research development from 1940s to 1990s.
The review of Marketing Strategy in Li Ning Ltd Company
- Background of Li Ning Ltd Company : Li Ning, one of the popular Chinese Olympic Game players is indeed a genius. He is also the first Chinese player to win three gold medals in the Olympics. In 1984ï¼Œthe Olympic Games in Los Angeles, he won three gold medals on his own in the competition of the men's floor exercise, pommel horse and rings. Media said he was one of the greatest gymnastics, some broadcasted him as a tower of strength and some as "Prince of Gymnastics", "gymnastics genius.
- The Marketing strategy development of LNC : During early 1990s, China's sports goods market was almost covered by foreign sports brand such as Nike and Adidas, LNC depends on the reputation and lofty status of Li Ning himself in the sports words and in 1990 sponsored the Asian games. It is the designated clothing sponsor for the China Olympics delegation in 1992, because of which Li Ning build a good market position in a short time (Tsui, 2002). In the 21st century, the LNC which has gained excellent achievements did not indulge itself in the joy from the achievements.
- Summary of Literature Review : During the development of the past 20 years, LNC has grown upto a well-established company in the consumer market of Chinese sporty business market. Moreover, it has become a countervailing power to the international company in the Chinese market. However, within the development of LNC, it always wants to compete with retail giants Nike and Adidas for a good share in the sports retail market. Meanwhile to the sales number, there are some companies like ANTA who are growing up quickly. LNC had a good brand building and management in the past several years. Thus, with the market share going down, LNC has to work out and this underpins the whole reason for the rebranding.
- Conclusion : In conclusion, this research analyses the details and find out the problems of its branding strategy and finally give advices on how to modify it. After analyzing all the development of LNC, the Chapter 2 is about the relevant literature reviews about the previous authors. And in the next chapter, the researcher will analyse the methodology about this report.
Chapter 3 – Methodology
In this chapter, the researcher is going to illustrate his research method of the whole article. Methodology is concerned with the logic of scientific enquiry; in particular techniques or procedures (Blaikie 2000). Based on his statement, Saunders also stated that methodology can be explained as “the theory of how research should be undertaken, which contains the theoretical and philosophical assumptions upon which research is based and the implications of these for the method or methods adopted.” (Saunders et al. 2007)
The author is going to illustrate the methodology chapter with a discussion of how a particular piece of research should be undertaken so that it can best be understood as the critical study of research method. Generally, this chapter begins with the demonstration of research paradigms followed by discussion of research design and definition. And also, the research discusses the content about the research approaches and method which he uses in the study and the relevancy of research method chosen as per his personal understanding. Finally, some limitations and ethics of the methodology are also been discussed within this chapter as well.
Research paradigms background
- Paradigms : Patton (1990) stated a paradigmthat is from a world view, a general perspective, and a way of breaking down the complexity of the real world. Within a research, paradigm is a framework that is guided by a set of beliefs and feelings of the world and how it should be understood and studied by human beings (Guba, 1990).This similar view is supported by Carlson (1992) who stated the empirical studies were positivist in research approach. Positivism also had a particularly successful relationship with the natural sciences and physical. Denzin and Lincoln (2001) listed Positivism has a very long historical tradition. It is so embedded that knowledge claims not grounded in positivist thought are simply dismissed as a scientific and therefore are invalid.
- Interpretivism : According to phenomenology, it is another research approach which can be defined as “socially constructed and concerned with generating meanings and gaining insights into those phenomena” (Saunders et al., 2007).Interpretivism means only the use of the interpretation and intervention in reality which can be fully understood (Abbott, 2010). It takes the view, which human beings think and reflect, scientific methods are inappropriate for the study of society. Unlike objects in nature, human beings can change their behaviour if they know they are being observed. A positivist would argue that researchers can simply measure crime using quantitative methods and identify patterns and correlations.
Definition of research design
There are a lot of differences in categorization, concepts and terminology between academic researches. Saunder (2003) stated the main research strategies are experiment, survey, case study, grounded theory, ethnography and action research. These strategies are not discrete entities. And also, according to Maylor and Blackmon (2005) which use terms like "scientific" and "ethnographic" to contrast the two main research methods.
Based on them, Kumar (2005) also said these are as quantitative or structured approach, and qualitative or unstructured approach. Scientific or quantitative and ethnographic or qualitative, all these approaches have different characteristics and usages in research methodology.
Research approaches and methods
First of all, the researcher compares two research approaches between deductive and inductive methods. There are two general approaches to reasoning which may result in the acquisition of new knowledge, namely inductive approach and deductive approach. (Horn, 2004)
Deductive approach begins from a general idea such as theory, laws, principles and based on more details (Burney, 2006). It creates from the more general to the more specific (Trochim, 2006). However, inductive approach begins with specific observations of individual cases. Based on the accumulation of such observation, Inductive approach works the opposite way from deductive, moving from specific observations to broader generalizations and theories (Paulson, 2007)
In other words, the conclusion of the above discussion is about different types of research methods and analysis of the advantage and disadvantage of each method. The author is going to use the method of questionnaires to complete this study.
In this research, the author uses a designed questionnaire to get the findings of the study. It is going to send to the participants which are from different background with different age and belong to different cities in China.
Validity & Reliability
From research method of the questionnaires in this study, the researcher would get the completed and latest feedback from the different people group. During all the feedback collection in this study, the author also offers or reflects back what he had collected. This way of working creates empathy, deepens and ensures the meaning which has been understood and improves the reliability of the questionnaire feedback.
Chapter 4 - Finding and Analysis
This chapter will concentrate on the findings figured out of the questionnaires and discuss the results. After the questionnaire collected from the participants, the researcher’s own understanding analysis will be illustrated to analyse all these findings. The author will explain each question and discuss based on each participant’s answer.
This research aims to find out the marketing strategy of Li-Ning, a Chinese sporting goods retail company. The research questionnaires have been sent to the sample of 30 people. Further, without any biasness the questionnaire was filled and feedbacks were gathered. The participants who had filled the questionnaires were composed from different age groups with the same number of male and female participants. In this research, there are 15 male and 15 female that are from the different age group.
This chapter analyses the result of questionnaire feedbacks and explain and compare those gathered data together. Based on the aims and objective of the dissertation, it has got four objectives. The author uses the feedback results of designed questionnaire to conclude his own understanding to this topic. The next chapter will provide a conclusion for this project and will be the last chapter of the work.
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Chapter 5 – Conclusion
The previous chapter described about the analysis of feedbacks gathered from questionnaires. This chapter will discuss the finding which is depending on the feedback of questionnaires and further the results will be analyzed. It will explain the hypothesis of this research in comparison with the results of the research. Keeping in consideration the main objectives of the project, introduction and literature review, the research here is going to embark his personal understanding to this report.
Analysis of hypothesis
Going back to the hypothesis of this research, it is about the director of Li-Ning who adopted the wrong marketing strategy and as a result experienced experiencing a loss of market share as share price is at an all time low and also making lowest profit. Based on the previous chapter’s analysis, here the hypothetical results of the project shall be discussed. All the three elements of hypothesis is been approved by the following three parts of analysis and discussion.
This part of chapter concentrates on the current external environment and knowing more things about the customers’ requirements. Also, LNC should think about how to make the products more specific which will help them to attract more potential customers.
The researcher is going to explain the details in hypothesis and explain the views from the director and customers of LNC. He aims to research the customers’ understanding and shopping experiences with Li-Ning sporty brand. More than half people chose that they are familiar with Li-Ning and have purchased from their sporty products. From the feedback, they would like to share their experiences with LNC’s products to their family and friends which was good.
There are several suggestions which might help LNC to update its marketing strategy and try to use different efforts to bring better performance.
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