Report Lining new brand strategy(李宁新品牌战略报告)

Report Li-Ning new brand strategy ByDec. 22, 2011AbstractThis report analyses the new brand strategy launched by LiNing Company in June 2010.The purpose of this report is to provide a direction of LiNing Company with the information through assessing the effectiveness of the new brand campaign. The results of the new brand strategy will be show after analysis .And the recommendation will be made to help establishing a new image of the company based on the assessment and analysis.Executive summaryThe report examines the market reaction to the new brand strategy of Li-Ning Company. The purpose of this report is to provide the board of directors with information necessary for assessing the effectiveness of the new brand campaign.In June 2010, Li-Ning Company unveils its new brand image and changes its slogan into “make the change”.We analyze the financial returns and performance of Li-Ning’s stock price in capital market. We arrive at a conclusion that it is a bad strategy and should be make the change.Recommendations are given for the board of directors in planning the appropriate strategy. We suggest that elaborate market research should be making to find the true attention of customer combining qualitative analysis and quantitative study.ContentsThe development of LiNing (1)Lining brand startup stage(1990~1992) (1)Domestic high speed development stage (1993 ~1996) (1)Strategic adjustment stage (1997 ~1998) (1)Renaissance stage(1999 ~2001) (2)Establish Brand System Stage (2002 ~ 2009) (2)Brand Remodeling Stage (2010 ~) (3)Introduction of the new brand strategy (4)Analysis of the new brand strategy (5)Conclusion and recommendation (8)The development of LiNingLining brand startup stage(1990~1992)Lining Company was launched in August 1990.At the same time, Lining became the only company that provided sports equipments for the Chinese delegation in 11th Asian games. In 1991, Lining sports goods company formally established in Guangdong. In the end of 1992, three branches established in Beijing, Guangdong. Because China’s sports goods market was not industrialized at that time , Lining could satisfy the public demand. A nd Li Ning ’s star effect ,all these make Lining brand succeed in the early 90s.Domestic high speed development stage (1993 ~1996)In 1993, Lining brand took the lead to establish franchise monopoly marketing system in China; In September 1994, Lining sports company set up; By the end of 1995, Lining Group was founded; In early 1996, the Group’s headquarter moved from Guangdong to Beijing. And from 1993 to 1996 , Lining brand’s sales income increased in more than 100% a year. In 1996, its total income is 670 million yuan which made a history record. Strategic adjustment stage (1997 ~1998)Li ning brand succeed in 1997 but the success ended abruptly, due to the impact of the Asian financial crisis and China's economic deflation, Lining brand also got into trouble. After several years, Lining’s sales income has been hovering around 700 million and market position alsodeclined year by year, reform is imperative. In 1998, Lining brand had built the China's largest design center of clothing and shoes product in Foshan Guangdong, and hired experts in capital operations in order to adjust business strategy timely, strengthen the system brand management .Renaissance stage(1999 ~2001)Lining brand intended to improve and perfect the various resources and management system of the enterprise, and paid high attention to the "brand internationalization". In 1999, Lining brand established strategic cooperation with the top brands in different areas, which became the first Chinese sports product enterprise to implement ERP (international); In 2000,Lining expanded the franchise dealers in Spain, Greece, France, the Czech republic, Belgium, Bulgaria, Italy and South America 99 countries and regions; In July 2001, Lining signed Italy top designers, in October, Lining’s first overseas image store opened in Spanish. A series of development strategy aimed to make Lining more professional and international).Establish Brand System Stage (2002 ~ 2009)In 2002, Li Ning brand established a stable cooperation relation with international well-known enterprises, such as dupont and 3M. Furthermore, it developed more cooperation forms with South Korea and France’s enterprises. In 2003, Li Ning was exceeded by Nike for the firsttime; it had been leading the domestic sports market before that. In 2004, it was exceeded by Adidas once again. In July 2005, Li Ning made cooperation with Algle that is the French outdoor sports brand, Li Ning Company gains 50 years brand management right of Algle brand in China. Li Ning created Z-DO brand in 2007. In November 2007, Li Ning used $300 million to purchase 57.5% of Hong Shuangxi’s stock rights. In July 2008, Li Ning get 20 years of Lotto’s exclusive franchise right in China by using no less than 934 million. In July 2009, Li Ning acquired KaiSheng with 165 million Yuan.Brand Remodeling Stage (2010 ~)Li Ning and its CEO Zhang ZhiYong officially released its brand new logo---- "人" word alternative "L" pinyin logos and "everything is possible" propaganda also turned into " Make The Change" on June 30, 2010. The new Logo’s inspiration comes from the "Li Ning cross" that Li Ning created the pommel horse action; the new slogan has more colorful of individual character. Li Ning Company hopes that this will get rid of suspect that is similar with Nike and Adidas in logo and slogan, more important is it wants to reconstruct their brand image in the new generation of consumers by this way. As if overnight, the gentle, trustworthy and actively Li Ning had gone, and the cool, fashion, internationalization and personalized became its label.Fang ShiWei, as Li Ning’s chief market officer since 2007, joined thesystem study of "replacement logo" when he take up this job at his first working day. Because sports goods’ core consumer is the people of 14 to 45 years old, h owever Li Ning brand’s actual consumption consumer is nearly 35 to 40 years old. Li Ning brand need to let the new generation of consumers enjoy its products. So it planed change its logo and slogan to reach its target.Figure: LiNing’s turnover (2001~2010)Introduction of the new brand strategyThe development of LiNing Company is introduced on the above. This report mainly examines the new brand campaign of the lining company. Unveil on June 30, there’re now new logo and slogan which replace the old. Almost overnight in cities and towns, Li-Ning’s new brand campaign has saturated the media: TV stations, the internet andretail displays.However, there is more content in this branding campaign. The company is changing its target consumer base, from cost-conscious thirty-and forty something to what’s known in China as “after-90s”.Li-Ning wants to become a smart, humorous, forthright, sincere, curious and creative young man. It want to model these image as its new brand image.As the industry of sport goods goes into its second stage, which is characterized by more mature and stable growth. The competition becomes increasingly fierce. To Li-Ning Company, this stage means great opportunities and huge risks. Li-Ning Company had a long fast growth in the past 20 year. It now has 8000 stores nationwide, which plan to increase to 10000 in 2013 and in 2010 its total revenue comes to 9479 million Yuan. However, the company has great disadvantages which have become an obstacle to its further development. The most urgent weakness is the image of its brand. When people mention Li-Ning, they tend to link it to an old and unfashionable product. To solve this problem the company planed to reshape its brand threes years ago. And in June it unveiled its boldest brand makeover since LiNing, a former gymnastics star, launched the sporting goods company in 1990.Analysis of the new brand strategyTo examine the effect of the new brand strategy of the company, weanalyze the financial statement of the company to find the result of the rebrand. We put some revenue index in the following sheet.Table: Revenue (2007 ~2011) unite: millionAs we can see from the picture in the fist half year of 2011, the revenue of the company decreased by -4.8%. The negative growth is the first time from its listed in HK 2006.Figure: First Half Year Revenue IncreaseAnd in the first half of 2011 its net margin decreased 49.5% comparedto first half of 2010.The new brand strategy didn’t bring the company with anticipated growth but lead to great declination.In the following, we want to check what the investor reaction is in the capital market. It can give us signals to estimate the effectiveness of the new brand strategy.Figure: Daily stock price of Li-Ning(2331.HK) From the day company launched the new brand strategy, the stock price of Li-Ning declines stably. From 25.8 HKD in April 30, 2010 to 7.09 HKD Nov 13, 2011, the stock price decreased 72.52%. The performance in capital market reveals what investors assess the prospect of the company. It is ease to get a conclu sion that investors don’t identify with the new brand strategy.Conclusion and recommendationAnalyzing the financial performance after its new brand strategy provided us with the information to assess the effectiveness of the new brand campaign. We can get a conclusion that the new strategy failed to upgrade the value of the company but bring about great tragedy.From the new brand strategy, we find that the target customer of the company is young people called “after-90s”. The company wants to attract the youth because they think that the young people are the most important target consumers purchasing the sport products. However, they forget that the outstanding characteristic of the youth is that they change every minute. In the end, they not only can’t a ttract new customers but also lose their initial consumers. So our recommendation to the company is reassessing the new brand campaign. Targeting the youth may give great risks to company. It should also position to wider consumer.We think that when you want to make a strategy decision, you should base on elaborative market research, which should combine the exploratory research with conclusion research. We suggest that Li-Ning Company should follow this ruler to find the truth of the market needs and upgrade the value of the company.。