Li Ning - Anything is Possible(哈佛、清华经管MBA英文教学案例).pdf

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1、Do Not Copy or PostCopying or posting is an infringement of copyright.Permissionshbsp.harvard.edu or 617-783-7860.9-507-024REV:MARCH 19,2007 _ Professor Luc Wathieu,Professor Gao Wang,Tsinghua University School of Economics&Management,and Research Associate Medha Samant prepared this case with the a

2、ssistance of HBS Asia-Pacific Research Center Director Michael Chen.HBS cases are developed solely as the basis for class discussion.Cases are not intended to serve as endorsements,sources of primary data,or illustrations of effective or ineffective management.Copyright 2007 President and Fellows of

3、 Harvard College.To order copies or request permission to reproduce materials,call 1-800-545-7685,write Harvard Business School Publishing,Boston,MA 02163,or go to http:/www.hbsp.harvard.edu.No part of this publication may be reproduced,stored in a retrieval system,used in a spreadsheet,or transmitt

4、ed in any form or by any meanselectronic,mechanical,photocopying,recording,or otherwisewithout the permission of Harvard Business School.LUC WATHIEU GAO WANG MEDHA SAMANT Li Ning-Anything is Possible In January 2006,CEO Zhang Zhiyong reflected on how he was about to characterize the most recent inco

5、me statement of Li Ning,a leading sporting goods company in the Peoples Republic of China(PRC).A quick look at the companys financials(Exhibit 1),which revealed performance consistent with its original goal of becoming the premier national sports good brand in the PRC,would have corroborated his pre

6、ferred expression:“reasonably outstanding results.”1 Zhang attributed Li Nings performance to a number of competitive advantages related to brand reputation,unique“value”positioning(balance of quality and price),extensive and efficient distribution,and dynamic corporate culture.Zhang wanted to add t

7、he qualifier“reasonably”to suggest that Li Ning,in keeping with its motto“Anything Is Possible,”ought to become even more outstanding.Fueled by Chinese consumers growing affluence and mounting interest in sports on the eve of the 2008 Beijing Olympics,the sporting goods category was poised for growt

8、h.Li Nings 33%sales growth,strong relative to other local brands,paled in comparison to the formidable growth rates global giants Nike(56%)and Adidas(46%)had achieved in the PRC.The gap was most dramatic in the“performance”categories(e.g.,sports shoes as opposed to apparel;see Exhibit 2).Sharing Zha

9、ngs belief that a superior level of category leadership was within reach if the Li Ning brand could somehow acquire elements of brand strength equivalent to those associated with the Nike and Adidas names,vice president of marketing Abel Wu was pursuing a marketing strategy aimed at establishing in

10、peoples minds,just in time for the Olympics,a uniquely differentiated position for the Li Ning brand.Chief among Zhangs concerns at this point was how to integrate Li Nings decision-making to ensure that new opportunities could be seized while making the most of the companys current competitive adva

11、ntages.1 Li Ning 2005 Annual Report,p.18.Do Not Copy or PostCopying or posting is an infringement of copyright.Permissionshbsp.harvard.edu or 617-783-7860.507-024 Li Ning-Anything is Possible 2 Company Background The Prince of Gymnastics Li Ning was named for its founder and chairman of the board.Bo

12、rn in 1963,icon gymnast Li Ning,in his 19-year international sports career,won 106 gold medals and became a two-time World Cup champion in gymnastics.He made history and was dubbed the“Prince of Gymnastics”after winning six out of seven gold medals in artistic gymnastics at the 6th World Cup in 1982

13、.At the 1984 Los Angeles Olympics,Li won three gold and two silver medals and a bronze medal.He was voted one of the top 25 athletes of the 20th century by the World Sports Correspondent Association.Li changed careers in 1989,establishing the Li Ning company in 1990 in Guangdong province with the vi

14、sion of creating the first national sporting goods brand in the PRC.Brand awareness,reputation,and extensive retailing throughout the country were the cornerstones of the companys proposed strategy.Even before the first formal product line was launched,Li Ning established itself as a brand by sponso

15、ring the PRC team for the 1990 Asian Games.The company continued to sponsor the Chinese Olympic Team(in 1992,1994,2000,2004,and beyond)even as its own stores began to offer broad product lines that included sportswear,leisurewear,and footwear.Milestones The foundation period was followed by one of h

16、igh-speed development from 1995 to 1997,during which Li Ning became the dominant domestic sports brand.Over time,the product mix was consolidated and distinct organizations were established around the major product categories of sportswear,leisurewear,and sports footwear.Company headquarters was mov

17、ed from Guangdong to Beijing.Sports sponsorship remained the main vehicle of marketing communications,and distribution was expanded continuously throughout the PRC via the companys system of franchised outlets.The 1997 Asian financial crisis precipitated a two-year downturn for Li Ning.The company r

18、e-organized its operations and human resources.Among the many employees laid off were members of Lis family.The marketing budget was contracted and a choice made to more tightly link products and marketing campaigns to performance in sports.A shoe-manufacturing center was established in the Fujian p

19、rovince and,early in 1998,the company adopted the formal name Beijing Li-Ning Sports Goods Company.One outgrowth of a period of ambitious new development between 1999 and 2004 was the prioritization of performance measurement,which led to the introduction of an enterprise resource planning(ERP)syste

20、m and brand tracking indexes.In 2001,the company announced a conscious decision to become more customer focused,and increased the resources allocated to consumer research and marketing.In June 2004,in preparation for its initial public offering on the Hong Kong stock exchange,Li Ning intensified its

21、 efforts to achieve transparency and adopt a coherent vision and system of company values.Brand internationalization was incorporated in the business strategy.Company growth was driven by overall growth in the domestic economy and supported by investments in R&D and a stream of new product launches.

22、With significant improvements in design,especially in footwear,it became possible to extract a price premium,and footwear gained increasing importance in Li Nings product mix(Exhibit 3).Do Not Copy or PostCopying or posting is an infringement of copyright.Permissionshbsp.harvard.edu or 617-783-7860.

23、Li Ning-Anything is Possible 507-024 3 Market Environment Channels of Distribution In early 2006,Li Ning products were distributed through a network of 3,005 franchised retail stores,111 directly managed retail stores,and 257 concession counters in department stores(Exhibit 4).Among the companys dem

24、onstrable competitive advantages was its ability to grow simultaneously in all major cities of the PRC beyond the affluent coastal areas.Li Nings sales organization numbered fewer than 300 employees,but more than 4,000 people were employed in direct channel operations.The indirect channel was organi

25、zed into eight regions.Provincial distributors handled franchisees orders.Better planning of seasonal promotions reduced inventory from 112 days in 2004 to 86 days(consistent with the industry average)in 2005.Support and incentives provided to franchisees included both hardware(e.g.,store elements,i

26、nformation technology)and training(in management,merchandising,and so forth).With respect to the distribution network,the plan for first-tier cities was to maintain the status quo,the plan for second-and third-tier cities,in which competitors Nike and Adidas were still fairly weak,to allocate resour

27、ces so as to ensure that new franchised stores could be opened and existing stores maintained.One way to exploit the competitive advantage that derived from its extensive distribution channel was for Li Ning to ally itself with established international brands that it could help to successfully ente

28、r the Chinese market.A recent example was an equal share joint venture established in 2006 with Aigle that accorded Li Ning exclusive rights for 50 years to manufacture and sell the French iconic brand of rubber boots and outdoor equipment in China.Competition The sporting goods industry had always

29、been quite open in the PRC.Widely recognized by association with its near universally known slogan,“Just do it,”Nike held the largest market share.Adidas,which had adopted in 2004 the slogan“Impossible is Nothing,”followed.Both firms had entered the country in the early 1980s.Their global marketing

30、campaigns were largely responsible for Chinese consumers increasing awareness of sporting goods.By the end of the twentieth century,the still relatively small category(but highly fragmented,with more than six hundred active local brands)was experiencing moderate growth.But over the past decade Chine

31、se consumers growing purchasing power had driven the average annual industry growth rate to 25%.Observed Zhang:Chinese competitors are active but very fragmented,and the biggest threat to Li Ning comes from multinational companies.The rapid growth in the Chinese economy brought additional competitio

32、n into the market.Nike and Adidas have always been the top two players in this sector,and we believe that their brands have more value than any other players brand.However,we also need to track the likes of Speedo,New Balance,and Arena.Li Ning had relied primarily on the depth of its local market ex

33、perience to respond to international competitors.“Li Nings strongest market is in second-and third-tier cities where we lead with a market share of 20%,”explained Zhang.“Our emphasis in these markets is on value for the money,with prices 30%-40%lower than the multinational brand,but 50%higher than o

34、ther local brands such as Doublestar and Anta.”Nike had approximately 1,200 stores throughout the PRC,and was opening new stores at the rate of approximately 500 per year.Adidas,with 1,400 stores in 250 cities,had announced its intention to Do Not Copy or PostCopying or posting is an infringement of

35、 copyright.Permissionshbsp.harvard.edu or 617-783-7860.507-024 Li Ning-Anything is Possible 4 open 4,000 stores in 400 cities by 2008.Li Ning responded with the announcement that it would open 1,500 more stores within this time frame.2 Consumer Segments Industry segmentation was usually defined in t

36、erms of such common elements as geography,demography,and type of sport(see Exhibit 5).A sporting goods market on the order of 55-80 billion RMB was anticipated by 2008,more than half(a predicted 47 billion RMB)expected to originate in second-and third-tier cities.Although mid-and low-end products pr

37、edominated in these markets,a 30%,30%,40%split among high-,mid-,and low-end products was expected.Students,who represented nearly 60%of those active in sports,were the core target consumers of all major industry players.University students accounted for 45%,middle and high school students for 55%,of

38、 the students active in sports.Remarked vice-president of marketing Abel Wu:Currently we focus on university students.We have a mid-tier priced brand that offers good value.College students have a limited budget;they have to be value conscious.The same is not true of high school students,who ask for

39、 money from their parents and are not quite as price sensitive.We first want to win in the university students,and we have done a good job with them so far.Later on we are going to penetrate heavily the middle school and high school market.When we penetrate those segments,we will compete neck to nec

40、k with Nike and Adidas.Li Ning did not compete particularly strongly in the Nike-and Adidas-dominated mega-cities of Shenzhen,Shanghai,Guangzhou,and Beijing,although the latter was a strong market for the Chinese company.Local sporting goods companies competed mainly in third-tier cities,in which wi

41、nning market share was comparatively easy for Li Ning,given its ability to open additional franchise stores.Some had compared Li Nings circumstances to Mao Zedong historical conquest of power,both having pursued strategies that built strength in Chinas provinces.3 New Strategic Initiatives Positioni

42、ng The first order of business was to convey an image of professionalism in footwear and stimulate the perception that the brand was relevant and fashionable.Wu and his team believed that this would entail more than ensuring competitiveness through product quality,design,and innovation,that the bran

43、ds deserved identity and strength relied as well on making the right conceptual choices.Extensive interviews and survey research revealed an opportunity to portray Li Ning as“young,”“friendly,”“energetic,”“dynamic,”and“Made in China.”Some of these traits were captured in the logoan“L”meant to repres

44、ent a squirrels tail and evoke a sense of movement and balancethat had been designed by a school teacher in response to a contest sponsored by the company during its earliest days.2“Chinas Real Sports Contest,”by Stanley Holmes,Business Week Online.3 Idem.Do Not Copy or PostCopying or posting is an

45、infringement of copyright.Permissionshbsp.harvard.edu or 617-783-7860.Li Ning-Anything is Possible 507-024 5 Source:Company documents.To leverage the“Made in China”aspect,the company gradually emphasized oriental elements in all communications,with the goal of establishing the oriental theme as a ke

46、y brand association.Explained Wu:When talking about brand building,we have to talk about brand differentiation versus our major competitors.Since we are a Chinese brand,if we build our brand with an oriental image,it can be very strong and different from Nike and Adidas.So from last year we started

47、to design the products by including some oriental elements(see Exhibit 6).In communication with consumers we also use some oriental elements to develop our TV commercials and our point of purchase elements,etc.One TV commercial is for running shoes.We used the Chinese painting art form of water and

48、ink and the runners movements have that“flying”quality that is so characteristic of physical performances in Chinese movies.Another TV commercial is for basketball shoes.Basketball playing is depicted there in reference to Chinese Kung Fu.These elements are also featured in our print ads(see Exhibit

49、 7).We just shot a very oriental-looking TV commercial featuring our sponsored NBA basketball player Damon Jones.Li Nings top executives believed that the brands long-term sustainable development needed to be rooted in the acquisition of deep,differentiated meanings that could render it“cool”and att

50、ractive to increasingly self-confident Chinese consumers.Wu continued:In terms of positioning,the oriental theme itself doesnt guarantee success.But oriental with international design and international feeling will bring us success.None of our local competitors has done it before in the sports goods