1 Fila Way
Sparks, Maryland 21152-3000
Telephone: (410) 773-3000
Fax: (410) 773-3000
Web site: www.fila.com
GRANT HILL 4 CAMPAIGN
Between 1994 and 1996 Fila USA climbed from seventh place in the athletic-footwear category to an impressive third place. Although the company made shoes and attire for a variety of sports, basketball-shoe sales proved Fila's biggest success. An endorsement deal with Detroit Pistons' player Grant Hill played a clear role in this achievement. After introducing Hill's signature shoe in 1995, Fila's basketball shoe sales shot up 52 percent in one year, putting it right behind the industry leader Nike. Image problems, however, continued to nag Fila. In the United States athletic-shoe sales were driven by both technology and style. Fila was struggling to transform its image from that of fashionable shoes to functional shoes. By 1997 Fila had still not found a solid niche among young consumers, the lifeblood for athletic-shoe sales. During the first half of the year retail orders were weaker than expected and sales were stalled, forcing Fila to do heavy discounting. Even Hill's endorsement seemed less meaningful to teens than it had been a few years earlier. A young player in a New Jersey basketball league was asked by Bloomberg News about Fila shoes. He summed up the problem: "Look around—nobody's wearing them."
Despite the waning effectiveness of Hill's endorsement, Fila renewed his contract in 1997 and created a new advertising campaign to promote the Grant Hill 4 basketball shoe. It was reported that Hill's new seven-year endorsement agreement with Fila was valued at $80 million. The campaign began in early November to tie in with the start of the National Basketball Association's new season. Four initial television spots focused on Hill's personality rather than the shoe's new high-performance technology and featured the tagline "Change the game." Subsequent print ads followed the same theme as the television spots.
The campaign failed to achieve its goal of driving sales. Based on 1997 sales, in 1998 Fila had dropped to number four in the U.S. market, behind competitors adidas, Nike, and Reebok. Further, in the first quarter of 1998 Fila's U.S. sales plummeted 52 percent. Leo Burnett USA was hired as the agency of record for Fila in July 1998 and was charged with creating a new campaign to support the launch of the Grant Hill 5 shoe.
Fila was founded in Italy in 1926 as a knitwear company and introduced its first line of athletic sportswear in 1973. During the 1980s and early 1990s Fila's U.S. footwear was produced by another company under a licensing agreement. In 1991 Fila made the strategic decision to regain direct control of its footwear line and bought back the license to make its own shoes. Over the years Fila had positioned itself as a source for fashionable athletic footwear and apparel. The fashion niche had helped distinguish Fila from its more technically oriented competitors, but it marred Fila's image as a maker of functional shoes.
In 1993 Fila began remedying its lackluster sports image by signing a number of marquee athletes to endorse the shoes. In the basketball market the roster included players Jerry Stackhouse, Jamal Mashburn, and Hersey Hawkins. Bringing Detroit Pistons basketball player Grant Hill into the fold in 1994 helped the company climb from seventh place in the athletic-footwear category to third. Fila senior vice president of advertising and communications Howe Burch credited Hill's alliance with taking the company to a new level. He told the Washington Post that Hill "bridged the two markets for us, urban and suburban." Hill's endorsement meant a lot to footwear buyers for sporting-good stores as well as to the kids who bought the shoes. A buyer for City Sports in North Reading, Massachusetts, told Footwear News that he considered Hill's selling power second only to Chicago Bulls' basketball great Michael Jordan.
The endorsement strategy worked well initially. In the athletic-shoe category Fila moved into the number three slot, behind Nike and Reebok. For basketball shoes the company's sales were second only to Nike. The original Grant Hill basketball shoes, introduced in 1995, were unique and sold out quickly. But young consumers proved fickle about their athletic shoes. Many were unimpressed with the design of the second and third version of the Grant Hill shoes. Pairs were sitting on retailer's shelves and being discounted. "Sell-through" (the percentage of inventory sold by retailers per week) on the Grant Hill model introduced in October 1996 was just 10 to 15 percent. By contrast, the first version had sold through at as high as 70 percent. In 1997 Bloomberg News asked players on the New Jersey basketball league what they thought of Fila. One 17-year-old said, "They look ugly, with those big Fila words."
Part of the problem was that basketball shoes as a category were in a slump. Fila also acknowledged that releasing the shoes prior to the start of the basketball season might have been a mistake. Alan Sisson, owner of Slam Dunk, New York, told Footwear News in September 1997, "Fila was one of my best vendors a year ago. They've definitely slipped, but I feel they'll come back."
Others were more critical of Fila for continuing to play up the style of its shoes rather than emphasizing technological innovation. Young consumers who had grown up in the age of technology expected to hear about a shoe's technical features. Company president Bob Liewald justified Fila's positioning in Sporting Goods Business, saying, "Our mission is to create a unique blend of creativity and function. We're not ashamed of who we are. The name works against us and for us."
Several years after Fila began producing its own athletic shoes, the company held a pivotal focus group with 12-to 18-year-olds that altered the direction of the company's marketing efforts. The youths said that they could not relate to Fila at all. Fila shoes seemed more like fashion statements than something to wear for playing sports. According to American Demographics, most athletic shoes were actually worn in nonathletic situations where style was more important than performance. For most wearers, what mattered was looking cool in school. Nonetheless, even the least athletic kids were looking to inner-city basketball courts for cues to what shoes to wear, and they did not see Filas there.
Capturing young buyers' interest was crucial for Fila and other athletic-sportswear companies. According to the Athletic Footwear Association, most athletic-footwear firms actively targeted consumers in the 12- to 24-year-old range. Not only did this group make up 28 percent of the total sales market, but they also tended to spend more per pair and stick with a brand as they grew older.
TOP 10 ENDORSERS OF 1997
NBA players held the top two spots on the list of most coveted sports spokesmen of 1997. The ranking took into account money earned from endorsements and a subjective evaluation of demand that Brian Murphy of the Sports Marketing Letter called the "heat index."
Athlete and annual endorsement income in millions: (1) Michael Jordan: $40.0, (2) Grant Hill: $26.9, (3) Tiger Woods: $25.0, (4) Shaquille O'Neal: $23.0, (5) Arnold Palmer: $19.2, (6) Andre Agassi: $17.0, (7) Jack Nicklaus: $16.0, (8) Joe Montana: $12.0, (9) Ken Griffey, Jr.: $6.0, (10) Deion Sanders: $6.0.
Few retail categories had as formidable a leader as athletic footwear did in the mid-1900s. In 1996 Nike dominated the market with 44 percent of U.S. athletic-footwear sales. Reebok held 16 percent of the market, Fila 7 percent, adidas 5 percent, and New Balance 3 percent. By 1998 Nike was running its "I Can" campaign, a successor to the wildly successful "Just Do It" campaign. Nike's new ads, however, had not resonated with the youth market as its previous ads had. Consumers were apparently growing tired of Nike's win-or-else attitude and its glorification of athletes. In addition, by becoming the industry leader, the shoes had lost some of their trendiness. Evan Cameron, a partner and head of planning at Berlin, Cameron & Partners, which handled part of the Reebok account, said that teens in his focus groups referred to the Nike symbol as a "swooshstika."
During the 1990s Reebok followed in Nike's footsteps, making heavy use of athlete endorsements to impart the message that it too was a performance brand. Although the strategy had paid off by earning the company the number two sales spot, Reebok was also facing poor sales in the late 1990s. In fact, athletic-shoe sales had cooled for the entire industry. Companies were realizing that imitating Nike would no longer earn them easy sales. "Nike created a vocabulary ten years ago, and everybody's been using that same kind of imagery and vocabulary ever since," Bill Heater of Heater Advertising, the lead agency for Reebok, told Advertising Age. "The same athletes, the same photographers. There's a suffocating sameness in the category."
The athletic-footwear companies that showed any substantial growth in 1997 were those with offbeat approaches to marketing. Adidas's advertising, for instance, relied less on athlete endorsements and more on regular Joes. One series of TV commercials for adidas that was successful in courting new customers actually portrayed a group of fat Yankee fans. The "brown shoe" phenomenon was another factor in declining sales of athletic shoes. Kids were taking off their basketball shoes and putting on hiking boots and lug-soled shoes made by smaller labels, such as Wolverine's, Hush Puppies, and Caterpillar. To complicate the matter, they were also flocking to designer-label sneakers from such companies as DKNY and Tommy Hilfiger.
In September 1997 Fila renewed its contract with basketball star Grant Hill, signing him to an $80 million, seven-year endorsement deal. Analysts had speculated earlier that losing the endorsement would have been a crippling blow to Fila. There were other indications, however, that buyers did not necessarily want any more sports celebrity endorsements. In years past, a celebrity endorsement was a surefire way to sell athletic shoes, but many insiders believed that the trend had outlived its usefulness. Executive director Gregg Hartley of the Sporting Goods Manufacturers Association told the Boston Globe, "There are only about four athletes in the whole world who can actually sell product." According to Hartley, the athletes that were worth their fees included basketball star Michael Jordan and golfers Tiger Woods and Greg Norman. Other athletes did not necessarily earn "a bang for their marketing buck," noted editor Sean Brenner of Team Marketing Report, an industry newsletter.
Fila was banking on Hill's cachet to lend credibility to its footwear line. They had good reason to think it would; more than $100 million had already been generated from Hill's signature shoes. But with the NBA season about to get under way, Fila still faced a considerable roadblock. "They don't have the shoes that kids want to buy," Peter Russ, an analyst with Shelby, Cullom Davis & Co., bluntly told Bloomberg News in mid-1997. Kids wanted shoes that blended the latest street looks with the hottest technology. Fila's reputation as a company that sacrificed performance for fashion continued to hurt sales. The new Grant Hill 4 basketball shoe had the potential to overcome that image problem. It was built on the company's proprietary 2A technology, which consisted of a matrix of high-performance, thermoplastic cylinders that provided cushioning and stability.
Arnell Brand Consulting Group, New York, created the advertising campaign for the Grant Hill 4 shoe. The campaign's debut tied into the beginning of the NBA season in November. For most marquee basketball shoes, footwear companies could count on a window of four to six weeks in which to sell their brands. "After a week," says Mark Westerman, director of advertising at Fila, "you know if the campaign is working." The four 30-second television commercials for the Grant Hill 4 shoe played up Hill's personality and image, which Westerman described as "a champion, a winner, a good guy." The spots, which employed the tagline "Change the game," communicated what it took to win, using a more low-key, introspective style than past campaigns. For instance, "Anthem" interspersed images of Hill playing basketball with close-ups of him as he listened to the national anthem before a game. "4 on the Floor" used rap lyrics to draw attention to the Fila shoe. In both "Tunnel" and "Shower," viewers saw Hill quietly getting himself psyched up for a game. Print ads that complemented the television spots appeared in Slam, Source, and Sports Illustrated, and a mural of Hill on a wall in downtown Detroit carried the theme as well.
The campaign did not spark the sales that Fila needed. In 1998 Fila announced that its overall sales were worse than expected in the United States. "We had an exceptionally high level of close-out sales which killed the market," Fila spokesman Andrea Nacmias told Footwear News. $480 million in 1997 U.S. sales gave the brand a share of about 6 percent, which meant that it trailed adidas as well as Nike and Reebok. Fila's 1998 first-quarter U.S. footwear sales figures were also grim, dropping 52 percent to $78.8 million. "[Fila] essentially [has] no shelf space left. It can only go up from here, I suspect," said Flavio Cereda, an analyst with the London office of ABN Amro. "They've got to do something about their presence in the U.S." Fila did not need an industry analyst to state the obvious. By that time it had already hired companies to study branding and logistics and brought on board a new advertising agency to release the Grant Hill 5 shoe.
Fila was not alone in posting poor sales for basketball shoes. The Athletic Footwear Association reported that basketball shoes accounted for only 20.2 percent of total athletic-shoe sales in 1997, compared to 28 percent in 1998. Other styles, such as running shoes, were on the rise, perhaps in a backlash response to bulky basketball shoes. Even with rising sales in certain categories, however, the entire athletic-footwear industry—including Nike—suffered that year. Consumers seemed to be moving away from big brands and toward smaller, more individualistic labels. Many companies were reevaluating their marketing strategies, particularly their use of endorsements by athletes. Jim Andrews, editor of IEG Endorsement Insider, a newsletter that tracked endorsements, said he thought that shoe companies had "over-saturated the market. So many players had signature footwear, it was no longer unique." Although Grant Hill's endorsement had undeniably helped put Fila on the map, even Howe Burch acknowledged that "kids just aren't as inspired by athletes because a) there are too many of them and b) because of their behavior. It's contributed to the overall cynicism and distrust of sports personalities." Reebok was a visible example of a company that chose not to renew its contract with its star athlete, basketball player Shaquille O'Neal.
Sporting Goods Business reported that Fila was shifting its focus more toward performance sports. "We put the needs of the street ahead of the performance needs of the athletes," said John Eberle, vice president of communications at Fila. "We'll return to making innovative products." Sources indicated to Advertising Age that the next brand push, released in 1999 by newly hired ad agency Leo Burnett, would position Fila around performance and technology and might also leverage the company's Italian heritage. The first ads promoted the newest Grant Hill shoe, the Grant Hill 5, and they were followed by additional work to promote the Fila brand. And while Fila was committed to its contract with Hill through 2004, ankle injuries had the basketball star sidelined for much of the 2000–01 season. Frank Fudo, a partner at the sports-marketing firm 16W Marketing, told ESPN that Hill excelled on the basketball court, "but him not playing doesn't help Fila too much."
In 2000 Fila began its first consolidated global campaign with BDDP/TBWA of Paris and Merkley Newman Harty of New York serving as the creatives. The new tagline that enhanced the various ad images, "Sport Life Fila," was designed to send the message that there was more to life than sports. Television spots featured Hill, Chicago Cubs star Sammy Sosa, and U.S. women's soccer team captain Carla Overbeck. The new campaign portrayed the athletes actively participating in their specific sports but also showed their human side outside of the sports arena.
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"Fila Grant Hill 5 Advertising Campaign Links to Proprietary Website." PR Newswire, November 12, 1998.
"Fila Tries to Put Spring Back in Its Step." Chicago Tribune, August 17, 1997.
Fisher, Eric. "Fila Hopes Restructuring Can Put a Bounce Back in Step." Washington (DC) Times, November 23, 1998.
Gorant, Jim. "Slam-Dunking Hoop Shoes." Popular Mechanics, December 1, 1997.
"International News." Advertising Age, April 10, 2000.
Jensen, Jeff. "Fila Names Burnett to $20 Mil Account: New Shoe Intro First Task for Former Reebok Agency." Advertising Age, July 6, 1998.
"Retailers See Green in Fila's New $80M Grant Hill Deal." Footwear News, September 29, 1997.
Tedeschi, Mark. "Fila Plans '98 Retreat." Sporting Goods Business, February 25, 1998.
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