Is Lining Out Of Peace?

In June 30th,

During the year, the Hang Seng Index in Hongkong rose by about 11.27%, while Lining's stock price was close to the cut. This is not related to the bad news in the past six months.

First, the adjustment of the channel did not bring the expected revenue increase, and the order volume of the two consecutive quarters declined. Then the personnel shock and the most severe earthquake appeared in the company's COO and CMO's resignation. During this period, the brand remolding and the misreading and criticism of Lining's brand positioning and market presentation methods were continuously interrupted. From the stock market's performance, there appeared two downwards in a short span of six months. In 2010, the market value of Li Ning Co declined by 23%, and the evaporation rate was nearly 4 billion 500 million Hong Kong dollars.

Then, at the end of May 2011, the resignation of several executives caused Lining's share price to fall by 8%.

The brand "Lining", founded by former Olympic champion Lining, has an unusual emotional significance for the Chinese sports equipment market and a generation of Chinese.

As a Chinese company that wants to develop by brand and win respect in the international market since its establishment, the plight of Li Ning Co is not unexpected. It reflects the internal and external problems that Chinese local brand enterprises will face in the first real sense of enterprise pformation.

Anything is possible

The plight of Li Ning Co over the past year,

Zhang Zhiyong's system innovation is the focal point of Lining's work in recent years.

Specifically, there are two major problems to be solved: one is brand positioning, the other is the adjustment of business mode, and the two are interrelated, so it is urgent to innovate.

Innovation, or subversion, often leads to mixed growth.

The problems and challenges engraved by Li Ning Co can be regarded as externalization.

In June 30, 2010, Li Ning Co released the largest brand remolding campaign since the company was founded.

Let the change happen, plated from Make the change, is the new Li Ning Co slogan, replacing the phrase "everything is possible" which was put forward in 2002.

Indeed, anything is possible.

No one had expected this long planned conference, so many accidents:

Everything is concealed under the more angular Lining brand.

Outsiders throw their curiosity into Li Ning Co's bid changing story, and the brand aging problem of the company and the reshaped brand DNA.

In fact, Lining's brand remodeling in 2010 is not a temporary ad campaign. It is a company pformation campaign that has been planned for four years. Its goal is to become the first local sports brand and the internationalization after 2013, and become a truly world-class brand.

The discussion around remodeling began in May 2007.

After being surpassed by Nike and Adidas in 2003 and 2004, although the Li Ning Co has maintained rapid growth, thanks to the natural growth of the market, the company has already realized the embarrassment of Lining's brand positioning.

The high-end market is entrenched with Nike and Adidas, and a large number of Jinjiang companies are gathered in the low-end market.

In 2007, Li Ning Co hired Ziba to investigate the current situation of Lining brand. The conclusion is that the aging of the brand is serious and the age of the buying group is too large. The core consumer group is 35 years old and -45 years old.

Zhang Zhiyong said, broadly speaking, the consumption group of sports products is between 15-45 years old.

The results of the survey mean that in the next 5 years, the core consumer groups will probably reduce the consumption of sports products.

On the other hand, after 2000, Nike and Adidas gradually increased their investment in the Chinese market. They took the advertisements that were interpreted by the stars of the world's top sports and fashion circles to dream in China, and they fascinated young people.

Lining is gradually regarded as a brand that is not young enough.

As early as 2004, when Lining was interviewed by Guanghua Management Case Center of Peking University, Lining's brand aging topic was introduced into the discussion of Guanghua MBA course.

But in the following years, the natural growth of the domestic demand market concealed the brand positioning.

For a fast-growing company, brand positioning is not clear enough to evolve into a problem.

"There are some problems with Lining. What should be highlighted in 2008 is the 2008 Olympic torch run for Lining, and the sales volume surpassed Adidas in 2009."

Lining, a former employee, said this to this magazine.

After Ziba's research results come out, there is a broad consensus within the Li Ning Co to make changes and reshape them.

However, there are different views on how to change.

Lining is restless.

Rocking Lining

In the perception of external observers, Lining brand always seems to swing between professional sports and sports fashion. Zhang Zhiyong has not denied this.

At the beginning of Li Ning Co's establishment, it wanted to become a professional sports brand, but the guidance of the market made Lining's sportswear more popular.

In 2002, under the call of "anything is possible", Lining began to return to professionalism.

2004. In 2005, the Kappa of sports and fashion was rapidly rising. This led to Lining's introduction of Le Shuyu as the general manager of the brand in 2006.

Over the next few years, Lining also tried to operate different markets with multiple brands, with little effect.

Zhang Zhiyong attributed the swings and changes of Lining's advertising creativity and product design style to Lining's development, and there was no real brand sorting and DNA confirmation.

"When you have a business to do, you will not go deep into it."

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On the other hand, professional sports and sports fashions are not so clear or irreconcilable.

Mass consumers' brand awareness of Nike and Adi will tend to be "professional, fashionable, cool and globalized". Only strong brands can use their unique sports resources to make personality deductive, thereby strengthening brand memory and consumer preferences.

Zhang Zhiyong calls it the question of creative pformation.

Lining's brand remodeling process, the pformation of creativity, deviation and confusion, typical of "90 after Lining."

This is a slogan that triggering discussions, controversies and confusion in the process of reshaping.

At the stage of reinvention, the marketing department took a long time to find suitable advertising ideas to express the new personality of Lining brand. Finally, a young man filmed "Lining, you don't know the post-90s" video, because it expressed the mentality of 90's not understood and eager to communicate, and was "salvaged" in many creative works.

In an internal discussion, the advertisers tried to express Lining's openness to the "post-90s" without any understanding of the idea of "re communication".

Another implication is that the Li Ning Co was founded in 1989 and is a post-90s company.

No doubt, after the new advertisement is broadcast, most people's understanding has become: Lining is abandoning the 70 and later 80's consumption crowd.

In fact, in order to ensure the successful pformation of brand upgrading, at the end of 2009, Li Ning Co set up a new functional department under the position of CMO -- BI (brand Initiative, brand strategy planning department).

The establishment of BI can be regarded as an adjustment of organizational structure aiming at high altitude.

Li Ning Co's previous product development processes are roughly: planning, design, development and production.

In the planning stage, Lining is also willing to invest in market research, but in actual operation, most of the market research, design and development are different positions, and the employees' personal will is dominant, lacking planning and coordination.

The establishment of the BI Department aims at solving the problems of brand and product planning mentioned above. In short, the BI department should control the life cycle of the brand throughout the whole process. It should integrate the brand strategy, sports marketing strategy and product strategy of the company. In Zhang Zhiyong's words, the BI Department should draw a complete brand map.

Because of brand, sports marketing and product planning, BI Department has a cross sectoral and matrix coordination function on its birthday.

At the beginning of the establishment of the Department, there were five major business categories: basketball, running, women, sports, urban light sports, and then added badminton.

The BI department needs talents with brand system thinking or strategic design thinking. On the other hand, its natural cross functional communication attributes will require the incumbents to have considerable familiarity with Li Ning Co. However, the final result has disappointed many insiders, except the badminton product line, the other five product line directors are airborne.

The organization's initial rejection of airborne products can be seen in some product development in 2010.

After the establishment of BI, Li Ning Co has launched a product category called surfing girl, aiming at the Chinese women's surfing market.

This is a product development behavior that proved to be irrational in the aftermath. Zhang Zhiyong believes that these lack of business awareness indicates that the new BI needs to gradually achieve the desired functional functions, and the evolution of the organization can only be completed step by step.

Radical or overcorrect?

Obviously, the channel traders who always pursue profits will not have much patience to wait for Li Ning Co to realize the gradual evolution of the organization.

During the same period of brand remolding, Lining's big move, that is, the adjustment of the channel organization structure, was divided into three parts, the north and the East, which were covered by the whole country.

On the basis of regional adjustment, Lining also started to optimize the channels. Some of them had fewer stores, and smaller distributors were merged by higher dealers. This inevitably caused some distributors to have a psychological conflict and vote with their feet.

Reflected in the company's performance, it is the two consecutive quarter, Lining orders are declining.

The fashion industry consulting company, compared with blue international CEO Li Kailuo, analyzes the conflict between Lining channel and brand remolding from another angle: "some old channels have formed a kind of inertia. They have a great understanding of the original consumers. In order to prevent the loss of their inherent customers, it is difficult for them to choose the advanced style, especially after Lining's big action."

"From the results, is the reform of the channel too radical?" when we questioned Zhang Zhiyong, his answer was: "we are not radical but overcorrect."

In Zhang Zhiyong's eyes, there are three problems in Lining's Channel: first, the structure is incomplete, a mature commercial channel should be three orderly combinations of business shops, factory stores and flagship stores, while Lining lacks factory shops to handle inventory; second, communication costs are too high and inefficient.

Lining has more than 1700 single stores (there is only one shop for a distributor), so there are 1700 problems to communicate.

Third, Lining's sales have no right to speak to the channel.

Lining is a listed company with performance requirements. Sales must be the first to finish the task. Sometimes, when there is a need for channel providers, the channel will make some requests, but these requirements sometimes exceed the company's policy framework.

"There is a contradiction between distributors' maximization of interests and the maximization of market share."

Zhang Zhiyong said that in addition to these three problems, another important point is that "the growth of Chinese sporting goods brands in the past depends more on opening up speed than endogenous growth, that is, the growth achieved through the increase in sales per unit area.

When the channel is saturated, what we will inevitably face is how to improve the competition.

Indeed, Zhang Zhiyong's channel problems and future judgement are logically correct.

Only in the present time, if the channel providers fight against the water, it will not only affect their sales volume, but worse, if dealers turn to others, they may also directly increase the sales volume of their competitors.

This is only an example of a conflict between long-term development and short-term interests, and similar conflicts remain to be resolved for Li Ning Co that "let change happen".