ReportLi-NingnewbrandstrategyByReportLi-NingnewbrandstrategyByDec.22,2011AbstractThisreportanalysesthenewbrandstrategylaunchedbyLiNingCompanyinJune2010.ThepurposeofthisreportistoprovideadirectionofLiNingCompanywiththeinformationthroughassessingtheeffectivenessofthenewbrandcampaign.Theresultsofthenewbrandstrategywillbeshowafteranalysis.Andtherecommendationwillbemadetohelpestablishinganewimageofthecompanybasedontheassessmentandanalysis.ExecutivesummaryThereportexaminesthemarketreactiontothenewbrandstrategyofLi-NingCompany.Thepurposeofthisreportistoprovidetheboardofdirectorswithinformationnecessaryforassessingtheeffectivenessofthenewbrandcampaign.InJune2010,Li-NingCompanyunveilsitsnewbrandimageandchangesitssloganinto“makethechange”.WeanalyzethefinancialreturnsandperformanceofLi-Ning’sstockpriceincapitalmarket.Wearriveataconclusionthatitisabadstrategyandshouldbemakethechange.Recommendationsaregivenfortheboardofdirectorsinplanningtheappropriatestrategy.Wesuggestthatelaboratemarketresearchshouldbemakingtofindthetrueattentionofcustomercombiningqualitativeanalysisandquantitativestudy.ContentsThedevelopmentofLiNing 1Liningbrandstartupstage(1990~1992) 1Domestichighspeeddevelopmentstage(1993~1996) 1Strategicadjustmentstage(1997~1998) 1Renaissancestage(1999~2001) 2EstablishBrandSystemStage(2002~2009) 2BrandRemodelingStage(2010~) 3Introductionofthenewbrandstrategy 4Analysisofthenewbrandstrategy 5Conclusionandrecommendation 8ThedevelopmentofLiNingLiningbrandstartupstage(1990~1992)LiningCompanywaslaunchedinAugust1990.Atthesametime,LiningbecametheonlycompanythatprovidedsportsequipmentsfortheChinesedelegationin11thAsiangames.In1991,LiningsportsgoodscompanyformallyestablishedinGuangdong.Intheendof1992,threebranchesestablishedinBeijing,Guangdong.BecauseDomestichighspeeddevelopmentstage(1993~1996)In1993,LiningbrandtooktheleadtoestablishfranchisemonopolymarketingsysteminChina;InSeptember1994,Liningsportscompanysetup;Bytheendof1995,LiningGroupwasfounded;Inearly1996,theGroup’sheadquartermovedfromGuangdongtoBeijing.Andfrom1993to1996,Liningbrand’ssalesincomeincreasedinmorethan100%ayear.In1996,itstotalincomeis670millionyuanwhichmadeahistoryrecord.Strategicadjustmentstage(1997~1998)Liningbrandsucceedin1997butthesuccessendedabruptly,duetotheimpactoftheAsianfinancialcrisisandChina'seconomicdeflation,Liningbrandalsogotintotrouble.Afterseveralyears,Lining’ssalesincomehasbeenhoveringaround700millionandmarketpositionalsodeclinedyearbyyear,reformisimperative.In1998,LiningbrandhadbuilttheChina'slargestdesigncenterofclothingandshoesproductinFoshanGuangdong,andhiredexpertsincapitaloperationsinordertoadjustbusinessstrategytimely,strengthenthesystembrandmanagement.Renaissancestage(1999~2001)Liningbrandintendedtoimproveandperfectthevariousresourcesandmanagementsystemoftheenterprise,andpaidhighattentiontothe"brandinternationalization".In1999,Liningbrandestablishedstrategiccooperationwiththetopbrandsindifferentareas,whichbecamethefirstChinesesportsproductenterprisetoimplementERP(international);In2000,LiningexpandedthefranchisedealersinSpain,Greece,France,theCzechrepublic,Belgium,Bulgaria,ItalyandSouthAmerica99countriesandregions;InJuly2001,LiningsignedItalytopdesigners,inOctober,Lining’sfirstoverseasimagestoreopenedinSpanish.AseriesofdevelopmentstrategyaimedtomakeLiningmoreprofessionalandinternational).EstablishBrandSystemStage(2002~2009)In2002,LiNingbrandestablishedastablecooperationrelationwithinternationalwell-knownenterprises,suchasdupontand3M.Furthermore,itdevelopedmorecooperationformswithSouthKoreaandFrance’senterprises.In2003,LiNingwasexceededbyNikeforthefirsttime;ithadbeenleadingthedomesticsportsmarketbeforethat.In2004,itwasexceededbyAdidasonceagain.InJuly2005,LiNingmadecooperationwithAlglethatistheFrenchoutdoorsportsbrand,LiNingCompanygains50yearsbrandmanagementrightofAlglebrandinChina.LiNingcreatedZ-DObrandin2007.InNovember2007,LiNingused$300milliontopurchase57.5%ofHongShuangxi’sstockrights.InJuly2008,LiNingget20yearsofLotto’sexclusivefranchiserightinChinabyusingnolessthan934million.InJuly2009,LiNingacquiredKaiShengwith165millionYuan.BrandRemodelingStage(2010~)LiNinganditsCEOZhangZhiYongofficiallyreleaseditsbrandnewlogo"人"wordalternative"L"pinyinlogosand"everythingispossible"propagandaalsoturnedinto"MakeTheChange"onJune30,2010.ThenewLogo’sinspirationcomesfromthe"LiNingcross"thatLiNingcreatedthepommelhorseaction;thenewsloganhasmorecolorfulofindividualcharacter.LiNingCompanyhopesthatthiswillgetridofsuspectthatissimilarwithNikeandAdidasinlogoandslogan,moreimportantisitwantstoreconstructtheirbrandimageinthenewgenerationofconsumersbythisway.Asifovernight,thegentle,trustworthyandactivelyLiNinghadgone,andthecool,fashion,internationalizationandpersonalizedbecameitslabel.FangShiWei,asLiNing’schiefmarketofficersince2007,joinedthesystemstudyof"replacementlogo"whenhetakeupthisjobathisfirstworkingday.Becausesportsgoods’coreconsumeristhepeopleof14to45yearsold,howeverLiNingbrand’sactualconsumptionconsumerisnearly35to40yearsold.LiNingbrandneedtoletthenewgenerationofconsumersenjoyitsproducts.Soitplanedchangeitslogoandslogantoreachitstarget.Figure:LiNing’sturnover(2001~2010)IntroductionofthenewbrandstrategyThedevelopmentofLiNingCompanyisintroducedontheabove.Thisreportmainlyexaminesthenewbrandcampaignoftheliningcompany.UnveilonJune30,there’renownewlogoandsloganwhichreplacetheold.Almostovernightincitiesandtowns,Li-Ning’snewbrandcampaignhassaturatedthemedia:TVstations,theinternetandretaildisplays.However,thereismorecontentinthisbrandingcampaign.Thecompanyischangingitstargetconsumerbase,fromcost-consciousthirty-andfortysomethingtowhat’sknowninChinaas“after-90s”.Li-Ningwantstobecomeasmart,humorous,forthright,sincere,curiousandcreativeyoungman.Itwanttomodeltheseimageasitsnewbrandimage.Astheindustryofsportgoodsgoesintoitssecondstage,whichischaracterizedbymorematureandstablegrowth.Thecompetitionbecomesincreasinglyfierce.ToLi-NingCompany,thisstagemeansgreatopportunitiesandhugerisks.Li-NingCompanyhadalongfastgrowthinthepast20year.Itnowhas8000storesnationwide,whichplantoincreaseto10000in2013andin2010itstotalrevenuecomesto9479millionYuan.However,thecompanyhasgreatdisadvantageswhichhavebecomeanobstacletoitsfurtherdevelopment.Themosturgentweaknessistheimageofitsbrand.WhenpeoplementionLi-Ning,theytendtolinkittoanoldandunfashionableproduct.Tosolvethisproblemthecompanyplanedtoreshapeitsbrandthreesyearsago.AndinJuneitunveileditsboldestbrandmakeoversinceLiNing,aformergymnasticsstar,launchedthesportinggoodscompanyin1990.AnalysisofthenewbrandstrategyToexaminetheeffectofthenewbrandstrategyofthecompany,weanalyzethefinancialstatementofthecompanytofindtheresultoftherebrand.Weputsomerevenueindexinthefollowingsheet.Table:Revenue(2007~2011)unite:millionyearfirsthalfyearrevenueIncrease(%)secondhalfyearrevenueyearrevenue200719092440434920083061362966902009405243358387201045054974947920114289Aswecanseefromthepictureinthefisthalfyearof2011,therevenueofthecompanydecreasedby-4.8%.ThenegativegrowthisthefirsttimefromitslistedinHK2006.Figure:FirstHalfYearRevenueIncreaseAndinthefirsthalfof2011itsnetmargindecreased49.5%comparedtofirsthalfof2010.Thenewbrandstrategydidn’tbringthecompanywithanticipatedgrowthbutleadtogreatdeclination.Inthefollowing,wewanttocheckwhattheinvestorreactionisinthecapitalmarket.Itcangiveussignalstoestimatetheeffectivenessofthenewbrandstrategy.Figure:DailystockpriceofLi-Ning(2331.HK)Fromthedaycompanylaunchedthenewbrandstrategy,thestockpriceofLi-Ningdeclinesstably.From25.8HKDinApril30,2010to7.09HKDNov13,2011,thestockpricedecreased72.52%.Theperformanceincapitalmarketrevealswhatinvestorsassesstheprospectofthecompany.Itiseasetogetaconclusionthatinvestorsdon’tidentifywiththenewbrandstrategy.ConclusionandrecommendationAnalyzingthefinancialperformanceafteritsnewbrandstrategyprovideduswiththeinformationtoassesstheeffectiv