Global sportswear companies have finally found a reason to pull out all stops in IPL cricket. Their plan: sell, sell, sell
At Rs 400 per sq ft, the most expensive piece of Indian real estate that can be rented is not in Mumbai’s Nariman Point or Delhi’s Connaught Place. It is, instead, on a flat wooden surface. The 25 sq inch of Salix alba in Sachin Tendulkar or Virender Sehwag’s cricket kitbag is valued at least 50 times more by the likes MRF and Hero Honda.
In both cricket and business, numbers often tell the real blood-and-gore story. Even as commercial rentals continue to slide, there’s no let up in demand when it comes to grabbing a piece of the flashing blade of a top Indian cricketer. Ask marketers in the sports arena. In a desperate attempt to corner a bigger share of the Rs 1,200 crore premium sportswear market, the world’s big four, Nike, Adidas, Reebok and Puma, are fighting a pitched four-cornered battle not seen since the heydays of the Coke-Pepsi scraps of yore. Also, the Indian Premier League (IPL) could not have come at a better time for these global marketers.
In the past, when a rookie sports player burst onto the international scene, his first endorsement cheque would typically come from a cola company. Now, Reebok and Nike are scrounging around for cricketers to sign up even at the state under-19 level. Overnight, the new dynamics have enabled these companies to deploy strategies that have already worked for them in mature markets such as the US.
In IPL2, the largest of the four global sportswear brands in India, Reebok leads the way. Not only does it have more than 20 players endorsing it—from superstars such as MS Dhoni and Yuvraj Singh, to Twenty20 also-rans like Aakash Chopra and Ajit Agarkar—it is also the official kit sponsor for four of the eight participating teams.
“Reebok has been the most proactive player in the Indian sports market,” says Subhinder Singh Prem, managing director, Reebok India, “As a market leader, it is important for us to have in our portfolio not just the superstars, but also stars of the future. Don’t forget, we signed on Dhoni, Yuvraj and the Pathan brothers when they weren’t iconic players.”
Reebok is also the leader of the wider Indian market for premium sportswear, with an estimated share of close to 45 per cent, followed by Nike, Adidas and the latest entrant Puma, in that order. After Adidas acquired Reebok globally for $3.8 billion in 2005, the combined share of the two brands in India touches almost 70 per cent. Uli Becker, president and CEO of Reebok International, who was in India this month, claims that India is among the three most important markets for the company. It is also perhaps the only market in the world where the $18.5 billion giant Nike trails Reebok. For many years, Nike struggled to keep pace in India thanks to the inability of its local marketing-and-distribution partner, Sierra, to invest the vast sums required. All that changed in 2005 when Nike decided to go solo and went on to win, in a coup of sorts, the rights to be the BCCI’s and Indian cricket team’s official jersey sponsor, for which it paid what was seen back then as a ‘whopping’ Rs 200 crore.
But Reebok cleverly ambushed Nike’s expensive strategy. In 2007, more than half the victorious Indian Twenty20 World Cup squad sported loud Reebok logos on their willows and gloves, rendering Nike’s Swoosh on their everything-official-about-it sleeves invisible in comparison. Yes, it was Pepsi outsmarting Coke all over again, except that this was Reebok trouncing Nike.
In IPL2 as well, Nike hasn’t fared so well on the visibility meter. Most of the players who endorse Nike—Swapnil Asnodkar of Rajasthan Royals, Ajinkya Rahane and Abhishek Nayar of Mumbai Indians, to name a few—failed to ‘just do it’ at least on the cricket field. And the only IPL team it sponsored last year, Deccan Chargers, switched to Puma for this edition.
The two German sportswear giants Adidas and Puma were founded by the brothers Adi and Rudolf Dassler. Their headquarters in Herzogenaurach, near Nuremberg, is not only separated by the Aurach River but also decades of bitter and cut-throat rivalry. In the last few years, Puma, a $2.5 billion firm, despite being smaller than both Nike and Adidas, has started being seen as a trendy new-wave sportswear firm. However, having entered the market late, Puma is on an all-out offensive. The company bagged last year’s IPL champs Rajasthan Royals, apart from Deccan Chargers, and according to its managing director in India, Rajiv Mehta, team merchandise has been flying off the shelves faster than expected. With a tie up with online retailer eBay in place, overseas buyers account for 30 per cent of its official IPL product sales.
But why on earth does a 6 sq inch rectangular sticker on a cricket bat become so important? The simple answer is airtime. If MS Dhoni bats for even five overs of a Twenty20 game, Reebok gets guaranteed visibility of 30 minutes, and if he establishes a partnership with Yuvraj Singh, it gets even better for the company. And when Sachin Tendulkar makes a flawless Test match century, punctuated by straight drives, cover drives and picture-perfect forward defensive strokes, the cricketing cliché ‘showing the maker’s name’ acquires a whole new meaning. Wouldn’t a billboard or ground sign do the job, you ask. “If a player
uses our gear, the virtues of performance and excellence of execution get associated with the brand,” explains Prem.
If you wonder why sportswear giants make such a big brouhaha about cricket celebrity endorsements in India, it’s because the success or failure of such deals have made or broken their global fortunes. David Beckham endorsing Adidas guarantees astronomical sales across the world, from Tokyo to Rio de Janeiro.
The Italian sportswear firm Fila remained a dominant player in the 1980s so long as its sales could piggyback the sporting success of tennis champ Bjorn Borg, the brand’s ambassador at the time. After Borg’s exit from professional tennis, Fila lost its edge and was pushed to the court’s periphery by its competitors.
This explains why sports lifestyle firms spend disproportionately high sums on marketing, advertising and endorsements. While the advertising and promotional budget of a large consumer goods company such as Unilever or P&G is usually around 15 per cent of total revenues, sportswear companies like Nike and Adidas spend almost 25 per cent.
“The Reebok, Nike and Puma rivalry in India seems exaggerated simply because India is a single sport market,” says Latika Khaneja, CEO, Collage Sports, a player management firm, “As a sports brand if you need to be successful, you have to go all out on the cricket pitch.”
Sports goods marketing also depends heavily on a slightly grey ethical area of making ten-year-olds go crazy over Manchester United or Team India, just so that their team jerseys can be sold at a price mark-up of roughly 300 per cent.
Pester power, as parents will confirm, is the cornerstone of selling sports shoes. In upper middle-class urban housing colonies, it’s common to find children clad in original AC Milan ‘Kaka’ or Manchester United ‘Ronaldo’ T-shirts.
Ergo, if Gautam Gambhir becomes the highest scorer in all forms of the game this year playing in Reebok gear, that’s the bat your kid would want. The sportswear slugfest is truly on.
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