Li Ning Co'S "Embarrassing" Life

"Prince of gymnastics",

Lining, the founder of the company, likes to use the word "embarrassment" to describe the company's predicament.

This year, Li Ning Co's performance continued to deteriorate after three indicators of operating income, gross profit and net profit fell sharply compared with the same period in 2011.

According to the latest announcement, in the first half of this year, the order amount of Li Ning Co shoes products showed a double-digit decline year by year, and the annual decline of clothing products was more than 20%.

So far, Li Ning Co's net profit has dropped to the end of the five mainland sporting goods companies listed in Hong Kong.

With the help of Lining in the way of "flying trapeze" to ignite the strong marketing offensive created by the Beijing Olympic flame, Li Ning Co's products once pulled the international strong rival Adidas off the horse and sat on the top of the domestic marketing volume, but the next change made Li Ning Co suffer from the sharp pain of turning around.

After the Olympic flame extinguished in Beijing, the Li Ning Co released the strategy of "brand remolding" and "channel pformation" as the main content.

People saw that Li Ning Co slogan changed from "Anything is possible" to "Make the change".

The intention of Li Ning Co brand remolding is very obvious, that is, to greatly enhance brand value, and use the "90 after" new knowledge and new sense of consumption characteristics to directly get the brand mental status, and complete the magnificent turn from cost driven business mode to value driven business mode.

Corresponding to brand remolding, Li Ning Co's strategic thinking of channel change is also very clear, that is, by integrating smaller and less efficient distributors, we can improve the professional degree of operation and the optimal allocation of resources with scale, and realize the pformation from vertical growth to horizontal growth.

Statistics show that Li Ning Co has 129 distributors and over 2000 distributors. About 1700 of them operate on average only 1 stores. Most of the space images can not reach the display level of standard stores, and sales service level is low. It is very difficult to merge and degrade commodities in time, and the turnover speed of goods is also very poor.

According to Lining's assumption, the integration of distributors will take about 500 or 600 annually.

But the actual effect of Li Ning Co strategic adjustment since two years has changed.

Now it seems that while changing the signs and slogans, Li Ning Co repositioning the customer group and targeting the "post-90s" can be said to be a wrong decision at the wrong time.

Over the years, the visual impression of Lining products to consumers is generally conservative in style design. For domestic consumers, especially the younger generation, if they can afford foreign brand products, they are not willing to spend almost the same price on buying domestic brands.

Moreover, a market survey shows that

The mainstream consumer groups are concentrated in two or three line cities, with an average age of 35 to 40 years.

Obviously, when Lining tried to cater for the "90's" consumer market preference, he abandoned the loyal customer group.

In addition to damaging the loyalty of the original customers by brand remolding strategy, the Li Ning Co has also made a risky decision because of its eagerness to change from the price market to the value market.

Statistics show that over the past two years, Li Ning Co's footwear and clothing products have increased their prices three times, of which footwear products have been increased by 25.9%, and clothing products have risen by 36.5%.

After the price increase, the price difference between Lining brand products and foreign brands such as Nike and Adidas has been shrinking. However, because the main customer groups of Lining brand are concentrated in the two or three tier cities, and because of the product's style, experience and marketing methods, there is no synchronous follow up. The continuous price raising behavior has made the original cost performance advantage of Lining series disappear, and those consumers who are already very sensitive to the price have turned to the market.

PEAK and other high cost domestic sports brands.

Channel change strategy also failed.

No doubt, because the terminal sales ability is still the key to the success of local brand enterprises, Lining is right by pushing the powerful dealers to implement merger and reorganization and ultimately improve the management level of the retail network.

However, because some distributors who have fewer stores and smaller business areas are merged by higher dealers, this will inevitably cause some distributors to have a conflict mentality. At the same time, some old channel operators often have behavioral inertia. They are very aware of the original consumers. In order to prevent the loss of old customers, they will generally have difficulty in choosing advanced styles or holding a wait-and-see attitude.

Not only that, after Lining made such a huge channel change action, it may also lead to some channel traders' "anti water", which may not only affect sales volume, but also allow competitors to take advantage of the dealer's pfer to others.

In order to break the market embarrassment, Li Ning Co is now setting up a "breakthrough" posture, such as mass layoffs, factory and discount stores, and attracting the world's leading private-equity firm TPG.

But looking at the path of Li Ning Co's correction, it still stays on the "surgical operation" more often, instead of focusing more attention on internal reengineering.

According to the survey conducted by Gallup, a well-known global poll and business research consultancy, for Lining brand, consumers think that Lining is very familiar and familiar with a friend whose character is not distinct, but it lacks a distinctive personality.

It can be seen that in the positioning of brand personality appeal, Li Ning Co is too short of fire.

If we do not change the position of fuzzy positioning as quickly as possible, we will still be able to grasp the customers' group and even cultivate the loyal consumers.