Smart marketing & prudent attitude took Puma to the top of the sports shoe heap
By Rajiv Singh, ET Bureau | 10 Jun, 2015, 05.16AM IST
In 2012, time was running out for Puma India. The German sportswear maker entered the country in 2006 but struggled to catch up with its famed global rivals. Nike had a four year lead, Reebok had launched 13 years before and its German sibling Adidas had already been in the market for 11 years. The sibling rivalry between Adidas and Puma is incidentally both very real and the stuff of legend. The brands were started by brothers turned competitors Adi Dassler and Rudi Dassler. In revenues, Puma trailed Adidas by a staggering Rs 300 crore and Reebok by a little under Rs 100 crore.
It had two options: either fall back on discounting to push sales or continue with its strategy of slow and sustained growth. It chose the latter. And it seems to be paying off if you look at the latest numbers, which indicate that not only is Puma ahead on a topline basis, it is also the only one amongst the three that isn't saddled with piled-up losses (see chart; a caveat here; Puma's numbers are for the year ended December 2014, whilst those for Nike and Adidas are for the year ended March 2014; whilst these may not be strictly comparable, they are the latest available numbers).
"When Puma started in India in 2006, I used to fret about how difficult it would be to compete with established players. But in eight years we are No 1," says Abhishek Ganguly, managing director, Puma India. The brand focused on offering desirable products that deliver on the price-value proposition, adds Ganguly, who has been with Puma since 2006 and was recently elevated to head the country's operations. Former managing director Rajiv Mehta in an earlier interview with Brand Equity had said the brand initially positioned itself more on the lifestyle plank than pure performance, the domain of its rivals. On his watch, the brand began Puma Loves Vinyl, a concert and music compilation series showcasing Indian indie acts and the Puma Social Club in Bengaluru, which features a cafe and a bar.
Puma's success in India, say marketing experts, lies in smart rather than aggressive marketing, prudent expansion and sticking to the basics of shunning discounts. "Most of the sportswear brands have been using price-discounting as a tactic for increasing sales. This affects the margins and hits profitability," says Ashita Aggarwal Sharma, professor of marketing at SP Jain Institute of Management & Research. The Indian units of Nike and Adidas declined to comment on the story.
What also helped Puma in becoming profitable was a sensible expansion strategy. That it is still not the most widely distributed brand in the country may perhaps be a reason it doesn't find itself in a sea of red; it has 430 stores across India whereas for the Adidas-Reebok combo the number is over 750; Nike says it sells through 3,000 touch points, including exclusive outlets and multibrand outlets. "We didn't over-expand and over-distribute in markets. This helped our profitability as we didn't open stores just for the sake of doing so," says Ganguly. He adds that till date Puma has had to shut down just six stores. (Adidas, Reebok and Nike declined to share numbers of stores added or closed over the last three years.)
Puma insists it did not benefit from the alleged financial irregularities that rival Reebok was hit by in 2012, and which led to shutting down of hundreds of its outlets. "Strong and sustainable brands and businesses do not get built on others' losses," says Ganguly. Puma has built its foundation in India on the back of a desirable product mix and engaging marketing, he adds. "We ensure that we reach out to our consumers with talk-worthy experiences like getting runner Usain Bolt down to India last year," says Ganguly, who declined to share Puma's marketing expense but added that digital accounts for up about 70 per cent of their marketing spend in India.
Puma's apparent handicap of being the last one to enter the Indian market turned out to be its biggest strength, brand experts point out. "Puma came last, so it learnt from the mistakes of everyone," says brand strategist Harish Bijoor. It entered a category that was already created and a market that was already explored to death. "Pioneers in categories tend to spend a lot, and often bleed a lot."
Still, Puma is ahead of Adidas and Nike in sales by the narrowest of margins, and the 1-2-3 positions could well change soon. Ganguly plays it cool. "We take each year like a session of Test cricket." A marathon may be another metaphor Ganguly may have in mind although Bolt, a Puma ambassador who's widely regarded as the fastest man ever, may think a bit differently.
