Decathlon China Decathlon Needs to Determine a Essay
- Length: 8 pages
- Subject: Business
- Type: Essay
- Paper: #53919191
Excerpt from Essay :
Decathlon needs to determine a social media strategy. The company has lagged in its growth since entering China, and faces intense competition. However, technological and social changes in Chinese society have provided an excellent opportunity for the company in China. Decathlon needs to determine where social media fits into its total marketing strategy, and from there it needs to determine what it needs to do to make its social media strategy a success.
The decision at hand is how to best utilize social media. There are two components to this issue, the first being to determine a strategy and the second to determine appropriate metrics. The company needs to determine what forms of social media it will use, how it will use them, and what it can expect from them.
Before making a decision about the social media marketing, Decathlon needs to understand its own situation. The company has a number of strengths that have led it to a decent amount of success in the Chinese market. The company has significant experience in business in general, having established its brand in 1976. The company has been in China since 2003, which is an eternity in Chinese business terms. There are 33 retail stores, giving Decathlon a fair amount of representation in major cities. There is no reason to believe that the company's products are in any way superior or inferior to those of the competition. Product quality does not appear to be a major concern with Chinese buyers anyway. The company has generally received favorable publicity in China and has been able to fit in with its peers in terms of the Alexa ranking on its website.
There are, however, a number of weaknesses that Decathlon must overcome. The company does not have a very well-known brand name. It is competing against major global companies like Nike and Adidas, as well as major Chinese competitors. For example, Li-Ning has 7000 stores in China compared with Decathlon's 33. The brand awareness of Decathlon must be significantly lower than that of its competition given this. This lower level of recognition can be overcome in China, but hurts the company when it must compete with larger firms in, for example, a Taobao search output. The lack of a coherent social media strategy is another weakness, perhaps combined with unrealistic expectations of social media marketing outcomes. General lack of familiar with social media on the part of senior management appears to be a problem here, and will continue to be a problem in implementing a better social media strategy going forward. The company also, because it is much smaller than its rivals, probably has a lot less money to put into social media and other forms of marketing.
Overall, Decathlon is in a generally unfavourable market position in China. Although it has some experience and some success, the growth rate in China is very high and it is hard to imagine that the company has been able to maintain pace with the growth in the overall Chinese economy given that it has only expanded to 33 stores. Its coverage is slim in the big cities (1-2 stores per city) and non-existent in many major centres. The company lacks the name of other Western firms and the saturation level of the domestic firms.
China's high growth rapid and rapid societal transformation should be important to Decathlon. With 8-10% annual GDP growth, China is rapidly being transformed into a "second world" country with a large middle class in the hundreds of millions. The pace of change in the social environment is rapid. In the time that Decathlon has been in the country, Internet use has come out of dingy cafes and into people's homes. Laptops and smartphones have made Chinese consumers much more mobile with their surfing than they ever were in 2003. Tens of millions of consumers, if not more, are entering the middle class. Cities that were unknown to the world in 2003 are now filled with millions of potential consumers. The rapid change in the social environment means one thing in particular -- opportunity. The society and its economy have transformed rapidly, and China is a world consumer power. It is also worth noting that the Beijing Olympics gave sports in the country a boost, and that should have accelerated the market for sporting goods. It is against this opportunity that Decathlon's performance must be evaluated.
The other environments are not characterized by such rapid change. The political environment has seen some opening in terms of business practices but the Internet has, if anything, become tighter. The technological environment, as noted, has brought a social revolution to China. Chinese consumers are more connected, and in more ways, than they were before. There are large, well-established social networks now, but in China there is always room for the next big thing. Any company developing an online marketing strategy needs to anticipate technological change. In this case, that means looking to Western markets, as Chinese technology and consumers tend to follow the lead of Western innovators.
The consumer that Decathlon is trying to reach is typically male and between the ages of 20-40. The male demographic is more likely to buy sportswear, and more of it. The 20-40 age bracket is the most savvy with respect to the social media. Decathlon could skew younger, but members of the 20-40 age group have jobs, and therefore the means to buy sportswear. The most direct route to a purchase goes through this group. Most Chinese are on some form of social media. The decision process is fairly quick, from identifying a need and researching alternatives, to purchase. Chinese consumers often use recommendations from friends, so there is often an information-seeking process that Decathlon may want to accommodate. The purchase of sportswear should be repetitive, as the consumer can buy many items of clothing for current wear, and then replace these items as the items age. Usually, the decision-making unit will be a single piece of clothing, although sometimes multiple units of clothing are purchased as an entire outfit or even set of outfits.
Decathlon's positioning with the consumer is a bit muddy. The company is not really a premium producer of sportswear, opting for large stores and a lack of style in its design. Nor, however, is the company a low cost producer, especially not in the Chinese market. Thus, Decathlon's brand positioning is something that it will need to resolve in order to define itself globally, let alone in the Chinese market. The Chinese social media strategy should therefore not focus strongly on brand positioning, but just brand awareness, because to do the former risks confusion should the company go in a different direction with its brand. Most Chinese consumers are probably unaware of the brand at all, due to a lack of major athlete sponsors, and due to the fact that there are only 33 stores in the country. However, the Alexa positioning indicates that there is enough brand awareness with which to work. It must be cautioned, though, that there are no switching costs. The consumer is never under any obligation to buy Decathlon goods, and can stop doing so at any point in time. The consumer can also switch to Decathlon just as easily, meaning that the company is competing for each specific, individual purchase. Typically in the athletic apparel industry, this manifests itself in a need for saturation marketing. As Decathlon does, most major firms focus strongly on traditional advertising for its reach. Few industry players rely on social media for their marketing, because they realize that social media campaigns are incapable of delivering the saturation required to maintain a high level of sales growth.
With a middle class of hundreds of millions of people, China is one of the biggest markets in the world for sportswear. Two local competitors have a combined USD 2.6 billion in sales, in addition to what Nike, Adidas and other major foreign firms are doing. China's stellar economic growth rate implies that the market should grow around 8-10% per year, sharing in the total economic growth. At the growth stage of the life cycle, there is tremendous opportunity for strong players to grow market share simply by capturing a greater share of new business.
In addition to the nation's economic growth, fashion, marketing and an interest in sports all contribute to the demand for sportswear. If athletic apparel is in fashion, and a company has effective marketing, growth should be expected given the economic climate. Endorsements are valuable for attaining growth, meaning that athletes popular in China would make good partners for Decathlon. The market should not be segmented at first, other than splitting out the female market, since the social media campaign is only going to focus on one part of the company's total target market (males, 20-40).
Decathlon distributes in its own stores. The company would also use delivery services or China Post in order to…