Dropping the price or dropping the ball
OK, so in New Zealand the Adidas brand seems to have taken a bit of a kicking for not addressing a raft of public sledging and much media handwringing over the domestic price of replica All Blacks jerseys' – compared to the price in other countries. Their key partner the NZRU also did not seemingly fare so well as they battled to contain the issue only weeks out from the start of the New Zealand hosting of the Rugby World Cup (RWC).
A few things spring to mind, namely that markets and prices are fair game where seasonal or event based demand makes a difference and that the loyalty of All Blacks fans is being severely tested, as is brand loyalty to Adidas – but the bigger picture for both parties may have been lost. As I see it, the NZRU, kiwi fans and Adidas all need to acknowledge market forces, and as the saying goes you live by them and you die by them.
Adidas found out how quickly an issue can gain momentum – when the furore over their pricing of the jerseys blew up the Adidas line of response was flawed, it was defensive, it was inconsistent. Add to that the lack of unison they showed with the New Zealand Rugby Union (NZRU) and the argument they needed to convey ‘together’ all got lost in the fray. It is an issue more about the cost and opportunity – it was an argument lost solely on price.
The debate should have covered:
1. Pricing and timing
Market forces dictate to price – the RWC in our back yard suggests all services and products will bear a premium through this time. Just look at the need for blank venues and inability to pay cash for a beer at RWC games.
2. We don’t own the team anymore
The sponsors do – be it $200 or a reputed $500 million, you have to admit it, Adidas are committed to New Zealand Rugby. That may not be that palatable for many Kiwi fans but hey that's commerce for you.
3. Nothing comes for free
A lesson fans are getting – but one the sponsors best pay close attention to. The RWC is a freak event that everybody is trying to leverage for gain in what is a concentrated burst of fervour. However in what is arguably is quite a rare commercial bubble, its the fans who will be spending that money.
4. Local brand, global market
Well they are our team, but lets face it the market for the All Blacks brand for ticket sales and merchandise is the rest of the rugby playing world.
Hold your ground
So what to do if you are an All Blacks fan, the brainy lads leading Adidas or the brand managers down at NZRU (for whom in each case the price of loyalty is being tested). Here are the things I see; define your ground, try to see the big picture, and remember we are all tied together in this.
It seems simple – if you are Adidas the 'pro’s' for holding your ground on price are simply that you have set the price for the market – the cost of accommodation is higher for the cup, why not lattes and rugby trips? The argument for not doing it is around a poor connection in the minds of the fans about what cost to them they should realistically bear for the sponsorship support of Adidas.
Why NZRU are standing by their sponsors – A nine-year contract signed in 2002 was reportedly worth $200 million. The sum involved in the 10-year deal signed last year has not been revealed, but NZRU Chief Executive Steve Tew said it was the largest in rugby history (its suggested that Adidas will fund New Zealand rugby with close to $500 million by the time 2019 rolls around).
As a fan – holding your ground may be cutting off your nose to spite your face. The domestic and international price issue suggests that a developed and loyal market vs an emerging one may require a variable pricing policy. You can vote with your feet and buy an alternate replica brand. The local market is small, and yet local support is traditionally strong – sure we’ll be vocal – we are likely to signal our dissent and not buy one. But leave behind the best brand in world rugby over this – no way. Adidas must be pretty sure of this – as they aren’t leaving NZ anytime soon.
What's the cost to the brand?
For Adidas: A bit short term, but not much really. Adidas’ NZ CEO had this to say “I think if consumers thought that suddenly they're getting a cheaper All Blacks jersey but then Adidas wouldn't invest any money into New Zealand, the question I'd ask is is that really what they want of us as a brand?" He said the sponsorship cost counted as a marketing cost that was factored into the final wholesale price of the jerseys.
The NZRU: Minimal. They have stuck by their sponsors – and again the fans may feel a bit let down – but the team they love and want to always love is brought to you by the NZRU.
The All Blacks: Nil. The real test is whether they perform for fans in the RWC and bring home the Webb Ellis Trophy this time.
The last word
The fallout here is that the Adidas brand and that of the NZRU have had a softening up (rather than having taken a hammering) short term in this market only, but I have no doubt both will rebound when both the reality of their co-dependence dawns on the locals, and the fans turn their attention to the games.
At the end of the day the fans are committed to the team, and that will bear out whether they pay the price for jerseys that are higher in local markets happily or not. In short – the NZRU can’t survive without a sponsor like Adidas. The price of a replica jersey here probably reflects that. The team can’t survive without a World Cup win – soon.
Oh, and as for the jersey itself, I think its kind of ugly – the weird little collar leaves me dead – plus I don’t have the body for it – in fact never did.
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