Decathlon China

Decathlon China

Problem: Decathlon China is not utilizing Chinese social media effectively.  

Analysis: There were 420 million internet users in China as of June 2010 (pg. 2). Businesses, both foreign and domestic, have difficulties entering the Chinese online market due to government content restrictions. However, local companies are more willing to comply with government standards whereas international companies are subject to “lengthy negotiations” and often “seek concessions” from standard regulations (pg. 3). This means that even though there are 3 billion registered users of Bulletin Board Systems (96% of whom use the boards for at least an hour a day), 100 million users of Sina Weibo, and 170 million users of Tuduo, it is very difficult for Decathlon to develop an online presence (pg. 4-5). Decathlon experienced this difficulty first hand when they set up their Sina Weibo account. In spite of the fact that Sina Weibo is the largest social media platform in China, Decathlon was only able to attract 1,098 followers in their first 3 months since activation which is a mere 0.00001% of registered Sina Weibo users (pg. 7).

        Companies such as Lancome, Nike and Adidas have strong online presence via the RenRen and Kaixin001 platforms. However, there is no framework to measure the effectiveness of social media. Furthermore, there is no direct correlation between social media followers and sales (Exhibit 5).

OUR TABLE

Alternative Recommendations:

1. Decathlon should focus on one social media platform.

1. Cost – loss of potential followers on other platforms, government restrictions and regulations, no effective way to measure sales generated due to online presence.
2. Benefit – efforts can be centralized on one platform and efforts can be benchmarked to observe the effectiveness of garnering followers.
3. Return – increase brand awareness among online users.

1. Decathlon should abandon their efforts to utilize social media and focus on traditional marketing in retail and online stores.

1. Cost - loss of potential brand awareness gained from social media, lose quickest way to drive traffic to online stores.
2. Benefit – money is not being spent on efforts that cannot be quantified (sales generated via social media) and can be focused on proven methods of generating sales.
3. Return – capital allocation is more effective.

We recommend the second alternative. Given the fact that Decathlon has not been able to prove they can utilize social media effectively and cannot measure the effect social media has on sales, we believe they should remain focused on generating sales in China through traditional marketing in retail and online stores.