As the pandemic got over, the business war in the Indian sports industry is heating up very very quickly. And the legends at war are the likes of Nike, Puma, and Adidas. But what’s more fascinating is that in spite of Nike and Adidas being global leaders in the industry, in India the rise of Puma.
Has been nothing short of extraordinary. In 2006, while Puma was the last to enter the Indian market, and began with a modest revenue of just Rs 22 crores, during the same time, Nike was at Rs 99 crores, Adidas was at Rs 186 crores and Reebok was a giant with Rs 354 crores in revenue. But you know what guys, fast forward to 2020, in the next 13 years, the big cat has raised way ahead of his giant competitors.
As of 2020 while Reebok was at Rs 407 crores, Adidas was at Rs 1250 crores, Nike was at Rs 831 crores whereas Puma was at an insane mark of Rs 1413 crores in revenue. And not just that, Puma has also been consistently profitable over the years in India. So the question is, how did Puma beat the likes of Nike, Adidas, and Reebok? What was your strategy to become a market leader in spite of the late entry? And what are the lessons that we need to learn from the Puma strategy in India?
This is a story that dates back to 2006 when Puma entered the Indian market. During that time, both Nike and Adidas had been very aggressive with their marketing campaigns.
While Adidas had Sachin Tendulkar as its brand ambassador, Nike was the official kit sponsor of the Indian cricket team. And in the next five years, Puma struggled to capture the Indian sports market. But the reason for this was not because Nike and Adidas were dominating. But because the Indian sports industry itself was too small, too complex, and too price sensitive.
In fact, even after sponsoring the Indian cricket team, Nike’s revenue had shot up by almost 100% to 186 crores between 2006 to 2010. And yet they were not at all profitable. But you know what, guys? Surprisingly, there was one brand that was killing it in the market and was miles ahead of both Nike and Adidas with a revenue of Rs 783 crores in 2010.
And this brand was none other than Reebok. The question is, how is it possible that in spite of being associated with the cricketing fever, in spite of sponsoring Sachin Tendulkar, Nike and Adidas were struggling, but Reebok was killing it in the market. Well, that was because Reebok very intelligently positioned itself not as a performance brand, but as a fashion brand in the Indian market.
More specifically, Reebok put all of its focus into selling shoes, because footwear brought in a large majority of its sales revenue. And I don’t know how many of you remember this but a classy example of a Reebok style statement was the Reebok Zig Tech commercial. Now, I did not buy the Reebok Zig tech shoe. And I’m sure that most of us didn’t either. But even today, I very clearly remember the.
Bright colors, and the quirky, eight insanely cool looks of the Reebok Zig tech shoes. And instead of being associated with Sachin, they picked youth icons like Dhoni and Yuvraj to promote their brand. And even in those commercials, Reebok was not presented as the key to their performance, but the key to their style statement with the position the Reebok brand as a culmination.
Of both sports and fashion in the industry. Now the question is, what is the advantage of being a fashion brand and not just a sports brand? Well, there are three advantages. Number one, when you buy shoes for sports in India, most of us buy only one shoe and use it for all sports. And we do that for two reasons. Number one, we do not play many sports.
And number two, we do not play sports as seriously as the Americans. For example, when you play cricket, it’s mostly gully cricket, for which most of us wear slippers and sandals. And even if we play the sport seriously, like if you play football every day, you cannot wear studs all the time, because we do not have as many turfs to play.
So you have to stick to the same jogging shoes. But when it comes to buying casual sneakers, it is a style statement. And many of us want multiple shoes for multiple attires that we wear. The best part is that even if you have a hush puppies sneaker, you could still buy a Puma sneaker. So the space for sneakers in the life of a person.
Was way more as compared to the sports shoes. Secondly, because the utility value of the shoe is so generic, hardly any of us focus on the intricacies of their functionality. For example, jogging shoes have different padding as compared to tennis shoes, because the movement of the player is completely different. But again, we do not pay attention because playing tennis is a rare occasion.
So again, we go for a ‘sasta-tikau’ jogging shoe, or in English, an affordable long-lasting shoe is all that we care about. Therefore, the alligation of cost for sports shoes is very, very less. But at the same time if you look at casual shoes, by default casual shoes are cheap because they’re almost a commodity with very less functionality and only aesthetics.
So in Rs 1000, you will get a terrible sports shoe but an amazing casual sneaker. Therefore, the entry barrier for a casual sneaker is way less. And lastly, back in 2010 while you had Adidas and Nike fighting in the sports segment, we had very few shoe specialist brands in the fashion segment. For example, we had Nike and Adidas for sports but for fashion, we had Levi’s the.
Jeans specialist, United Colors of Benetton that is almost an exotic brand in India, and then we had Fila and Lee Cooper, which had very less to none celebrity endorsements. Now, over here, if you place a brand like Reebok, it by default becomes the most recognizable and the most stylish brand in the category. This was one of the primary reasons why Reebok became a success in India.
But but but this is what happened to Reebok when the brand was at its peak in India. “Do you smell an accounting fraud in this Reebok? The country’s accounting regulator ICAI or the Institute of Chartered Accountants has sprung into action to explore possible violations by CA professionals” “Reebok India has alleged Rs 8700 Crore fraud. Second biggest corporate scandal after Satyam.”.
“Adidas and Reebok have already shut about 600 stores across the country and 30,000 jobs are really at stake here.” Long story short, after the scandal broke out, Reebok was in shatters and Adidas’ merger strategy never really paid off. But guess what? This is where Puma became an opportunist, and it almost walked in the same footsteps as Reebok.
To be positioned as a fashion brand in India. And even today, it is still doing the same to remain a market leader in India. And they did not do this right away, but to gradual steps to carefully expand their presence, according to the price sensitivity of the Indians. And here’s how they did it. First of all, Puma steadily built its network of 340 stores across 115 cities without ever.
Opening multiple stores in the same location. On top of that, out of the 340 stores, 320 stores were operated under a franchise model. This eventually prevented over distribution because of which Puma reported a 13% same-store sales growth in 2014 as compared to 2013. In addition to maintaining tight control over its distribution network, Puma adopted a clever vendor engagement.
For example, when Reebok closed 300 of its 900 stores, retailers were completely handicapped with a huge lacuna in the market. But Puma leverage this opportunity to gradually grew its partnership with vendors like Rishabh Sportsnation, who was Reebok’s biggest vendor. And slowly, Puma started filling in the gap that was left by Reebok both in the b2b and the b2c space.
Secondly, Puma carefully developed its products after identifying the needs of the customers. For example, they launched flip flops and sandals exclusively for the Indian market that provided the consumers with very less entry barrier, and then it slowly induced brand loyalty because of both marketing and the quality of the products. And even today, if you go to Myntra, you will see that Puma starts at a price point of Rs.
1100, Adidas starts at a price point of Rs 1600 and Nike starts way ahead at a price point of Rs 2000 and lastly, they started laying the foundation as a lifestyle brand by hiring fashion ambassadors like Jacqueline Fernandez, Lisa Hayden, and Chitrangada Singh. And Puma gradually built its image as a fashion inspirational brand, with dynamic designs and stylish products.To take it one level forward,.
Puma even invested in a food drinks, and entertainment venue called the Puma Social Club. This club was located in the poshest area of Bangalore, and within no time, it was a big hit among the local millennials.In addition to that Puma even put together a compilation of music and concert series under a campaign called Puma Loves Vinyl campaign to connect with consumers at a personal level.
And while Nike was pouring in hundreds of crores into sponsoring the Indian cricket team, Puma started hiring celebrities like Jacqueline Fernandez to endorse its products. In fact, this is the reason why Puma so heavily invested into the Gully Boy wave by launching a video with Divine that got 5.7 million views on YouTube. And eventually, all of these factors.
Strengthened Puma’s position as an iconic fashion brand for the Indian youth. Apart from that, they even roped in Bani J and Disha Patani to appeal to the woman segment of the audience. And the cherry on the cake was Virat Kohli, who was and still is the perfect youth icon for Puma, just like Yuvraj and Dhoni were for Reebok. And this contract sealed the position of Puma.
As a culmination of fashion and sports in India. And now it’s been taken ahead by the likes of K.L Rahul and Sara Ali Khan. This is how Puma strategically positioned itself over the blueprint of Reebok and when bad with strategic expansion, and customer-centric product placement like a flip flop, it gave Puma the perfect market recipe to become a market leader in India.
This is the reason why, while Reeboks revenue declined from Rs 616.9 crores to Rs 324.2 crores Puma India’s revenue started growing at an unprecedented pace, going from just Rs 523.4 crores in 2011 to Rs 766.7 crores in 2013 and rose to Rs 1413 crores in 2019. And at the same time, Nike and Adidas are still struggling in India. But what’s interesting to note is that even.
Adidas has started presenting itself as a fashion brand by roping in Deepika and Ranveer as its ambassadors, so keep an eye on what Adidas does to challenge the position of Puma in India. And this brings me to the most important part of the episode and that is considering the rise of Puma as a market leader in India what are the lessons that we need to learn from Puma? Before we move on, I want to thank our partners.
For today’s episode, and that is geeks for geeks, which is one of the most trusted platforms for tech-driven interview preparations. Did you know tech giants like Puma, Adobe, BookMyShow, TATA 1mg, and many more legendary companies find the employees who match the criteria from the GeeksforGeeks’ ‘Get hired’ jobs platform? In case you’re looking for tech talent or someone who can build a sustainable product.
For your organization get your company listed in their ‘Get Hired’ platform. Companies can open their profiles free of cost at GeeksforGeeks, and 1000s of potential candidates can apply for jobs. You can simply click on the ‘hire with us’ link mentioned in the description box, fill in your details there, and the team will get in touch with you to list the job on the portal. Meanwhile, for candidates looking out for.
Jobs, you can submit your applications on the Get Hired platform and get a chance to work at your dream company. You can also check out their LinkedIn page at GeeksforGeeks and your youtube channel at ‘Get hired with GeeksforGeeks’. I’ve put the link to the job portal and a portal where companies can list their profiles for free in the description.
So do check out GeeksforGeeks from the link given below. Moving on, there are three business lessons that you need to learn from Puma India. Number one in India, the audience interest alone does not translate into sales, because interest alone does not determine our purchase power. In this case, just because you get associated with cricket just because the.
The audience loves cricket does not mean that sports goods will sell well in India. And at the same time ironically, just because you have nothing to do with sports does not mean unrelated products cannot sell. A classic example of the same is Coca-Cola. Do you see that we are extremely passionate about cricket? But the allocation of costs.
For cricket is very, very less. In most cases, it’s less than Rs 1000. Therefore, it’s very interesting to note that anything about Rs 1000 in spite of it being vital for the sport like Rs 1000 sports shoes does not sell easily at all. And even something like Coke sells well because it is an affordable luxury. This is the reason why Nike failed.
And Coke succeeded in India. And this extreme price sensitivity is something that every company needs to consider if it wants to appeal to the Indian audience. Lesson number two once a legend said “Intelligence is about learning from your mistakes, but wisdom is about learning from other people’s mistakes.” In this case, Puma was wise enough to position itself in a way that could stand.
Out from the crowd and become a market leader by following in the footsteps of Reebok. And lastly, the entry barrier. My dear friends, it’s an extremely underrated factor that can startle the growth of your company. In this case, while Nike and Adidas sell their bars very high, Puma India prioritizes adoption of its products over profits, and through marketing and quality, it slowly induced brand.
Loyalty became an integral part of our lives. So always ask yourself when you’ve got too many buyers in the market, what are you doing to make it easier for people to access your product? Because this factor alone can turn the tables in your business war. That’s all from my side for today. Guys, if you learned something valuable, please make sure to share my blog with your friends on social media.