A book titled, Sneaker Wars, tells the tale of the great Puma Adidas schism. The book tells the story of the family feud that led to the creation of Adidas and Puma. Rudi and Adi Dassler were the brothers behind the shoe factory, Gebrüder
Dassler, located in Germany. The company was owned and operated by the family who made the country's best sports shoes. They profited from the Nazi's love for sports. The company reached maximum success after Jesse Owens wore their shoes in the 1936 Berlin Olympics.
Despite the success, the brothers could not get along. They have different personalities and would constantly disagree with each other. They disagreed about everything from the future of the company, politics to one another's choice in wives. Both were associated with the nazi party and when the party fell and they got caught they tried to place the blame on each other. In the late 1940's Rudolf left and set up a rival shop across the river, while Adi remained at the initial company. Adi renamed his company Adidas and in 1948 Rudolf registered his company and named it Puma.
Today Puma and Adidas, as well as many other sport shoe brands such as Nike and reebok, are very popular. These competing athletic shoe brands are a good example of a loose oligopoly. The products are somewhat standardized in the sense that what is sold is athletic shoes as well as athletic wear however the products themselves are differentiated. The shoes have different designs, colors, patterns, and each shoe is made with a different purpose. Both companies might sell basketball shoes but their basketball shoes different. One might be purple and have extra ankle support while the other is pink and has more arch support. The market is also super hard to enter because it is already dominated by a few brands. Game theory can also be applied to the market because companies are constantly coming out with new styles and others are having to respond and predict what the companies are going to do.
The athletic shoe market is a very competitive and difficult industry to be in and it will be interesting to see which brands dominate in the future.
https://www.newsweek.com/history-adidas-and-puma-86373
These shoe brands have an interesting and unexpected history. I am a little bit surprised that the brands were able to maintain their success even though their founders were both Nazis. It seems like after the war, the US would try and promote their domestic brands as a show of patriotism rather than buying German goods.
ReplyDeleteI think what makes such closely competing markets successful is the individuality within their products. Because each company's product can be differentiated from the other company's product, they are able to keep competition. That is why there are so many companies that are very similar, but their products are ultimately different in subtle ways. This is a marketing technique.
ReplyDeleteOne thing that is seen in this type of oligopoly is the practice of matching business practices. I believe Nike started this practice first, of having athletes promote their shoes in advertisements and by wearing their gear. But after Nike started this, all of the other companies followed suit, putting them into the "Nash equilibrium," where all had to lower their profit since they paid large amounts of money to athletes in order to get their products promoted so that they would not lose more money. This pattern happened again when Adidas paid the hip hop group Run DMC to wear their shoes and perform a song called "My Adidas" in Madison Square Garden. Afterwards, other companies followed suit, and the pattern continues today.
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