The Reason Behind Lining'S Bid Change

In the past 20 years, consumers have become accustomed to Lining's classic LOGO, and have heard the phrase "everything is possible" is an infinitely imaginative Lining slogan.

Li Ning Co Ltd (Li Ning Co) changed its new LOGO and changed its new slogan.

Although the first reaction of the new LOGO was "little change" after the appearance of the new LOGO, on the basis of this, a series of adjustment changes including organizational structure, product system, sales system and market system have been completed within the Li Ning Co.

This is like rebuilding Lining.

Li Ning Co now has 99% of its business in China, but it hopes that by replacing its new image, by 2018, Lining will become the world's top 5 international sports Brand Company, and the international market share will account for over 20% of the total sales.

Behind the bid change

In June 30th, Li Ning Co released a new LOGO in Beijing.

This is the first time that it has been changed for 20 years since its establishment.

In fact, based on this, it is a comprehensive reconstruction of the entire organizational system covering the supply chain, products, markets, operations and channels in the past three years in Li Ning Co.

Li Ning Co decided to start the brand remolding in 2007, they first made the consumer market research; by 2008 of March, the consumer positioning, brand positioning and product positioning were basically completed.

Li Ning Co's internal redevelopment officially started.

One of the changes is the establishment of a "strategic marketing department", which is selected by CEO personally and directly reported to it.

Their duty is to plan the long and medium term business development of each category according to the category of sports items, as well as product development, market dissemination, sales plan and so on.

"These people are highly qualified because they need both the concept of brand and the experience of business."

Zhang Zhiyong said that the establishment of the Department lasted 18 months, so far the personnel have been in place.

Echoing this is the adjustment of the internal management structure of Li Ning Co.

Before, Li Ning Co is a functional, flat organization structure. In the process of redevelopment, vertical management divides management businesses according to sports category, such as badminton, running, basketball and so on. Horizontal departments have product development, market, sales and supply.

As a result, the reshaped Li Ning Co becomes a matrix organizational structure in internal management.

The work will be basically completed by the end of 2009.

After the Spring Festival this year, Li Ning Co announced the change of sales organization: the sales organization was controlled by headquarters, and now it has become the three big area (North, East and South), and is responsible for the marketing and distribution of its region independently.

These changes took place quietly within the Li Ning Co.

External consumers will see the LOGO replacement of Lining stores, products, and the launch of an upgraded version of the new image store.

Li Ning Co COO (chief operating officer) Guo Jianxin introduced 10 new stores in the first half of the year and opened 50 new stores by the end of this year.

"Next year, we hope to form a new generation of store design based on testing, and we will gradually promote it in 2011."

attack

The most intuitive explanation for the reshaping of Lining's brand is that it hopes to enhance the positioning of Lining's brand.

Before that, China's sporting goods market has formed such a brand structure: Nike, Adidas, Lining, Anta, XTEP.

Lining is understood as a "sandwich layer" between the high end and the low end.

That is to say, Lining will compete with Nike and Adidas and compete with Anta.

Li Ning Co CEO Zhang Zhiyong said that the price of Lining's products is about 20% to 30% lower than that of the international first-line sports brands, which is about 35% to 40% higher than its domestic brands.

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Lining hoped that the situation could be changed.

Li Ning Co said publicly that after the brand was rebuilt, the Lining brand will be launched in the first tier cities and compete with Nike and other international brands.

Including the upgraded version of the new image store, will be concentrated in the first tier cities.

The reality is that whether Lining, Anta, PEAK or 361 degrees, more than 70% of their stores are distributed in the two or three line market, and Nike, Adidas and other international brands are strong in the first tier cities.

One of Lining's top initiatives is to adjust the price structure of products.

Li Ning Co COO Guo Jianxin said that in Beijing, Shanghai, Guangzhou and other first tier cities, the proportion of high-end products in Lining stores will increase, while in the four tier cities, the proportion of low-end products will be increased.

Guo Jianxin disclosed that in the fourth quarter of this year's order meeting, the average unit price of Lining's shoes increased by 7%, and clothing rose by more than 10%.

This is the change brought about by Li Ning Co's conscious upgrading of the structure of the medium and high priced products.

In the international market expansion, Li Ning Co has taken Southeast Asia, Europe and the United States as the first target market.

In Singapore and the United States, Lining has launched the flagship store.

Li Ning Co CPO (chief product officer) Xu Maochun introduced that in the Southeast Asian market, Li Ning Co will mainly promote badminton sporting goods, while in the United States, it hopes to promote basketball products.

In fact, such an internationalization means more fierce competition.

For example, in the field of basketball sports goods in the United States, Nike has become the absolute dominant market.

Sports resources (contract athletes and sports teams) are positively related to the premium of sports brands, but in the United States, Nike basically monopolizes NBA's star resources.

At present, the main sports resources of Li Ning Co are in China, and China does not have absolute advantage in sports, such as soccer, basketball, tennis and golf.

All of these make Lining's brand premium capability difficult to match with Nike and Adidas in the short run.

How can Lining persuade the channel and persuade the consumers in the overseas market?

Zhang Zhiyong did not give a positive answer. He revealed that the globalization of Li Ning Co's design was divided into three steps. Now we have completed the use of international resources and the establishment of a global system. What we want to do next is the localization of the organizational structure.

The reconstruction of Li Ning Co's internal management structure has already laid the foreshadowing for internationalization.

In the European and American market, the channel of sports brand is already dominated by sports category. Lining needs to do as the Romans do.

Defense

If Lining is at the top of his mind, what will happen if Nike, Adidas and other international first-line brands choose to sell products with lower prices in the two or three tier cities?

Nike has predicted that in the next five years, the annual revenue of its emerging markets, including the Greater China region, will grow at around 10%.

This means that after international brands occupy the leading position in China's first line market, they begin to covet the two or three line cities and three or four line cities that gradually show consumption power.

This is one of the problems that Lining has put forward in this regard.

As a result, the competition between the two or three line market and even the county-level market is bound to be more intense.

In county-level cities such as Zhangping, Fujian, Nike stores already exist.

For Li Ning Co, how to sink the channel to the three or four tier city is also a challenge.

Born in the second tier city, Fujian Jinjiang company is more familiar with the operation of China's two or three tier cities and is better at using promotional mix to attract price sensitive consumers in such markets.

Over the past three years, companies such as Anta, XTEP and PEAK have been listed. With the help of capital market, they have accelerated the pace of opening stores in two or three cities.

In the third and fourth quarter of 2009 and the first quarter of this year, Li Ning Co's product discount rate was 22%, 20%, 21%, while Anta maintained or was lower than 20%.

Zhang Zhiyong disclosed that in the past, the lowest discount Li Ning Co gave to the channel was 50 percent off, and then it would gradually increase their discount, such as 51% off and 52% off.