David Hugget (Adidas' NZ manager) and Greg Kerr (Pacific Managing Director) have been fronting up to the New Zealand media to explain Adidas's point of view. While this would have been a good idea their approach seems to have been under-researched. They even misunderstood some of the responses they had made to the issue over the previous week.
This all began with the idea that New Zealanders had an issue with the local retail price of the world cup jersey. To be fair, in the strictest sense, this is true as this is the price that effects consumers. That being said the retail price isn't what made the news though. The difference in the New Zealand retail price and the equivalent retail price from overseas outlets is what made the news. Importantly this difference took place after months of the media going on about price gouging around the rugby world cup in a number of other sectors. As there were differences in pricing between the local and global market the jersey became associated with price gouging. Price gougers are villains and this meant that Adidas and their retailers became perceived as villains.
Phase 2 saw the rise of the heroes; local retailers who either matched the price of offshore outlets and told the public that they would now be making a loss, approached Adidas about reducing wholesale prices, or did both. Whether they are making a true loss (selling the jerseys for less than they paid for them) or a relative loss (selling the jerseys for more than they paid for them but less than they intended to pay for them) has not been clearly stated and probably never will be as the figures will be commercially sensitive. Importantly though in the court of public opinion this does not matter. The retailers were now seen to be on the side of the public which left only one villain standing; Adidas.
Unfortunately for Adidas the actions they chose to take after meeting with New Zealand retailers villified themselves further in the eyes of the New Zealand public. By chatting to offshore retailers and asking them to take New Zealand off the list of countries that they would deliver product to they seemed to be trying to force New Zealanders to pay a higher price for the same product than non-New Zealanders. This served to strengthen the idea that Adidas were indulging in price gouging. It also gave the impression that they were trying to control the market place by blocking competition. This is a point that became incredibly important when they did front to the media.
In reality I suspect that this move was intended to support local retailers. At an absolute guess I would say that, after meeting with local retailers, Adidas felt that the retailers had approached them as local retailers were unable to compete with offshore retailers i.e. offshore retailers had an advantage. By requesting offshore retailers not sell to New Zealand this offshore advantage is removed as, effectively, the offshore competition no longer exists. As such it is possible that Adidas saw themselves as heroes for the local retailers at this point. While that may have been true Adidas had a problem. The local retailers weren't villifying offshore competitors when they spoke to the public; they were villifying Adidas.
With significant damage done to Adidas' brand they eventually caved to public pressure and fronted to Close-up, Campbell Live, Radio Live, and News Talk ZB in a single 24 hour period. While this was probably intended to be some kind of damage control ultimately it amounted to 4 spots of Adidas punching themselves in the face.
This all began with the close-up interview on Wednesday the 10th of August which, iteself, began with the obvious question.
-Will you drop prices?
Cue 2 minutes and 9 seconds of dodging and 3 swaps of the person speaking before finally (after prodding from Mark Sainsbury) providing a clear answer:
No.
Why are they there then? Apparently to explain that the price reflects their investment in New Zealand Rugby and retailers while blaming the price difference on exchange rates while encouraging New Zealanders to shop at any store they wish including online retailers as they support a competitive market place.
Those final points make absolutely no sense. Why?
- Some have suggested that fluctuations in the exchange rate have no clear relationship to the jersey price
- If New Zealanders shop for an All Blacks jersey online apparently they won't be supporting New Zealand rugby despite the fact that they will be purchasing a product that is intrinsically linked to New Zealand rugby. If this is true it would seem to be an issue worth addressing.
- Adidas do not support a competitive market place as they had a hand in stopping some online retailers delivering jerseys to New Zealand.
"this is a whole retailing issue... I've got friends of mine who are buying stuff online, whether it be cosmetics, whether it be electronics"
"We encourage and support a competitive market place"
"We welcome the ability for people to buy wherever they would like to buy from"
From there they talk a wee walk to the base of the sky tower where they had a chat to John Campbell. While they manage to make some valid points the tide is still against them
- We haven't changed our price for the last 2 years
- Bizarrely, when asked about the amount they are contributing to the game Greg Kerr says "The consumer is not going to understand it" This is bizarre because, just minutes ago on Close Up, they did expect the consumer ot understand the impact of the price of their committment.
http://www.newstalkzb.co.nz/podcasts/audio/11072904.mp3
Mike Hosking (while asking about what they would do differently if they had their time again) "you'd stop digging?"
David Huggett "Umm.... I wouldn't say stop digging"
BEAUTIFUL!
http://tvnz.co.nz/close-up/adidas-presents-its-side-story-7-09-video-4346954
http://www.3news.co.nz/Adidas-bosses-front-over-All-Blacks-jersey/tabid/367/articleID/221742/Default.aspx
http://www.radiolive.co.nz/Adidas-management-finally-front-up-on-the-All-Blacks-jersey-controversy/tabid/506/articleID/22365/Default.aspx
Issues like the differences in price in New Zealand and overseas would never have been known if it wasnt for the internet. More power to the net!!
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