Adidas Learned And Developed Their Product Marketing Essay

Generally, if we said about Adidas, what do you think. Some people might think that it is shoes, clothes, sneakers, sport wears and so on. Adidas like a symbol of athletes and sports worldwide.

On the business road, Adidas is a one of successful global brand and famous to people around the world. Adidas learned and developed their product for served the need’s customers with the best. Adidas made customers has passion and loyalty in their products. Moreover, Adidas mixed many things in their products such as technology, fashion, music and sport. These are the strength of Adidas. For me, Adidas brand is my impressive and worthy memory that I never forget it. I love music and fashion that Adidas had it. Lastly, I already become the one who dote in Adidas and believe in this tagline “Impossible is Nothing”.1

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Executive Summary

The present report provides a detailed marketing campaign designed to promote Adidas AG company which is a German sports clothing manufacturer and parent company of the Adidas Group, which consists of the Reebok sportswear company, TaylorMade-Adidas golf company (including Ashworth), and Rockport. A thorough research has been completed in order to analyze the internal and external situation of the site for marketing purposes. Adidas AG, being a parent company of the Adidas Group, possesses a very good position in the market, amazing its customers by creating memorable feelings using products such as bags, shirts, watches, eyewear, footwear etc.

An extensive visitor audit has been conducted in order to route the strengths, the weaknesses, the opportunities and the threats of the company. A PESTE analysis is also provided in order for the author to apprehend the market growth or decline, the business position, potential and direction for operations and marketing.

On the basis of situational and competitors’ analysis the plan stipulates SWOT analysis which indicates that Adidas has the major strength in brand recognition and product innovation but lack of prosperous advertisement.

Competitors and worldwide economic crisis are the two main threats In Marketing mix. The plan develops the right mix of 4Ps’ tools to appeal to target customers and increase customer yield in order to meet the objectives.

Adidas. (2012). I Love Adidas. Available: http://nusadidas.blogspot.com/p/retionale.html . Last accessed 3 May 2012.

Introduction

Backround

Adidas is originated back in 1948 by Adolf Dassler, following the split of Gebrüder Dassler Schuhfabrik between him and his brother Rudolf. Rudolf later established Puma, which was the early competitor of Adidas. Adidas was registered in 1949 and is currently based in Herzogenaurach, Germany, along with Puma. The company’s clothing and shoe designs typically feature three parallel bars, and the same motif is incorporated into Adidas’s current official logo. In 1951, the “Three Stripes” were bought from the sport company Karhu Sports in Finland. The company revenue for 2010 was listed at €11.99 billion.

Mission

Adidas’ mission is to be the leading sports brand in the world.

Vision

Adidas’ vision is to enhance social and environmental performance in the company and the supply chain, thereby improving the lives of the people making the products.

To achieve this vision, the strategy is to:

Lead the sporting goods industry with brands built on a passion for sports and a sporting lifestyle.

Provide athletes with the best possible equipment to optimize their performance.

Leveraging opportunities across their brand portfolio.2

Key Target Markets

Adidas target consumers involved in sports (ethnic groups) aged 12 – 34.

Where’s Adidas Target Now?

Adidas’ Target

Leading market positions in all markets where they meet.

Apperception of consumer buying behavior and retail landscape.

Tailoring distribution strategies to introduce the brands in the most impactful ways.

The target market of Adidas is the urban youth with the brand proposition “competition to lifestyle”. The principle consumption centers namely the metros are also a potential target market!

Adidas Group. (2008). Corporate Missions. Available: http://www.adidas-group.com/en/ser2007/b/b_1_2.asp. Last accessed 19 Aug 2012.

Competitor Analysis

The firm has a rigid competition in the Indian market. Right now, Nike is the leading player in the industry.

Multi-brand Approach: It will provide the firm with a major competitive advantage and significant additional commercial opportunities compared to a single brand.

Broader Distribution: Close cooperation with retailers can significantly improve the in-store experience for the product.

Cost Leadership: The acquisition of Reebok has created significant opportunities to reduce and optimize costs.

The DIFFERENTIATION strategy would help the firm in emulating in a competing market place.

For example: The firm has a strong “grip” only in the basketball and casual wear product line. Diversification of the products athletics, cricket and hockey would tremendously help the firm in competing in such a market as cricket is the most golden sport tin India. This would be a well-knit task since Nike is the main sponsor of the Indian national cricket team. For a further external analysis please see below the PESTE analysis Figure 2

Figure 2: PESTE Analysis

Adidas

Political

Economic

Sociocultural

Technological

Environmental

Adidas policy is to control and monitor hazardous substance to protect human health and environment.

World cup 2010 wills great success for Adidas in term of sale.

Focus in people who like sports and athletes, almost everybody can purchase adidas products.

Adidas need to be tuned in to new technology, which can speed up production, save energy or cut down labor required.

Adidas used this slogan “to become a zero-emissions company” due to decreased environmental impact of their business (Adidas 2010).

Situation Audit – Where are we now?

On continue, we will focus on the key factors influencing the current and future performance of the company using the company’s Marketing Mix elements (Bowie a&Buttle, 2009, p. 325). Four areas will be considered in the analysis, which will be the overall mission and goals of the company supported by an extensive SWOT analysis (Bowie & Buttle, 2009; McLean, 2005; Westwood, 2008)

SWOT Analysis

Strengths:

Brand recognition of the product it’s well reputed.

High quality products.

Provides a diverse range of products (shoes, bags, shirts, perfumes, toiletries etc)

Obeys environmental laws (Adidas has never been accused for pollution)

Employees’ rights are safeguarded by Adidas’ policies and management.

Weaknesses:

Online stores are offered only to the USA or some locations of Europe.

Customer centers are not totally functional (Problems are faced especially in the case of e-marketing)

Price is interwoven to high quality.

Opportunities:

Possibility of outsourcing the web development and e-commerce/marketing to a third party.

Growing market for sports apparel.

Joint Venture with fashion designer Stella McCartney increases the female participation in athletics.

Threats:

Instable economic environment

Competition in supply chain management level

Nike’s strong reputation in sports industry

Porter’s 5 Forces

Porter explains that there are five forces that determine industry alluringness and long-run industry efficiency.

Threat of new entrants: Loyal customers, required huge resources of new entrants, strong distribution channels. Impact: Low

Threat of substitutes: Adidas’ strength is product innovation and meeting customer expectations. Impact: Low

Bargaining power of buyers: More conscious buyers of their spending, buyers have access to more information, must be able to differentiate from competition. Impact: High

Bargaining power of suppliers: Suppliers are depended on Adidas, Strong supply chain management, Multiple sources of materials. Impact: Low

Competitive Rivalry: Competition has global reach (E-commerce), struggling to get a competitive edge, Aggressive sales and marketing. Impact: High

SMART Objectives – Where do we want to go?

Having conducted the situational analysis and after being informed about the key strengths, weaknesses, opportunities and threats of Adidas it is imperative to define the objectives/targets of the company, which are the statements that show the company’s mission and identify the goals regarding markets and products, sales, visitors and the marketing mix (Bowie and Buttle, 2009). In other words, the consumer experience will be translated into managerial and marketing action (Trischler and Zeher, 2012).

Company’s objectives should be Specific, Measurable, Achievable, Realistic and must be executed within a set Timetable (Bowie and Buttle, 2009) SMART objectives are divided into tactical and strategic (Middleton et al. 2009) and below there is Table 1 where the goals of the Adidas are addressed in the short run and long run respectively.

Table1

SMART Strategic Objectives

SMART Tactical Objectives

To increase personnel satisfaction over 80%

To gain market share in US

To reenergize brand.

To increase sales worldwide.

To test-market with the new concept of “Adidas Streetball Challenge”

To establish a raw competitive advantage over rivals.

Strategic: Personnel satisfaction and increase in sales will be succeeded by offering bonuses to the personnel, as well as by providing the right training to the right people. To gain an edge over the competition in US market Adidas has to tap commercial opportunities and unlock brand value trough sports which are relevant in American context. About, reenergizing brand, Adidas has to be positioned as the most inspirational and motivational sports apparel and footwear brand.

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Tactical: In order for the company to increase repeat purchases, a positive word-of-mouth will have to be generated (Bowie and Buttle, 2009). The “Adidas Streetball Challenge” will try to amaze the consumers by providing an on-strategy experience, associations and high visibility as well as the personnel in order for the concept to be well communicated and positively received by the public.

Ansoff’s Mix

The company will try to bridge the “revenue”, “profit” and “sales” gaps by using the Ansoff’s Matrix strategic options. The Ansoff’s strategies do not guarantee that the objectives will be reached (Bowie and Buttle, 2009). Organizations have to choose between the options that are available to them, and in the simplest form, organizations make the choice between for example, taking an option and not taking it. Choice is at the heart of the strategy formulation process for if there were no choices, there will be little need to think about strategy (Macmillan et al. 2000). Table 2 below shows an analysis of an Ansoff Mix.

Table2. Ansoff or Market/Product mix(Adapted from: Bowie and Buttle, 2009, p. 330).

Products

________________

Markets

Existing

New

Existing

Market Penetration

Global Brand Visibility

Advertisments/Sponsorships

Market Development

New Markets.

New Distribution Channels In Emerging Markets.

New

Product Development

New Products

Relevant Modified Products.

Diversification and Innovation

Casual Footwear

Diversification of Products/ Athletics, Cricket &Hockey.

Market Penetration

Global Brand Visibility: Adidas’s brand visibility gives it a competitive advantage over the local brands and helps it in the market penetration. The customers are appealed by the low prices of the global brands of Adidas with appreciation to their local brands. For example, in India the local sports shoe manufacturer Proton produces high priced shoes when compared to Adidas’s global brands. The fundamental concept to Adidas’s global branding visibility is its innovation.

Advertisements/Sponsorships: Another essential method of market penetration followed by Adidas is aggressive advertising. Adidas is using the aggressive advertisement strategy to gain more market share with its subsistent products in existing markets. Adidas also has a tradition of making reputed sportspersons, with a lot of fan following, their Ambassadors. It helps the company to target the sports lovers. These include Kobe Bryant, Lionel Messi, Mohammad Ali, David Beckham, etc.

Market Development

New Markets: In case of marketing strategy, Adidas has always been following the offensive marketing strategy in new markets.

New Distribution Channels In Emerging Markets: Emerging markets open new channels for Adidas as well. For example, Adidas set foot in India long time ago. As well, after the sponsorship of Beijing Olympics Adidas opened the biggest Adidas store in Beijing.

Product Development

New Products: Through continuous introduction of new products in the market, the company has been able to enrich its strong identification. Adidas group mostly launches new products in North America. It is also considered the head platform for communication strategy by the company. Accordingly, the company has replaced its focus on a single distribution channel with the focus on several distribution channels.

Relevant Modified Products: Adidas has formed brand teams to convey a research about customer needs so that products are renewed and modified according to those needs. It has consociated with Diesel to sell the jeans at its Adidas Original stores.

Diversification and Innovation

Casual Footwear: In order to minify competition and increase profits, Adidas has operated a multi-brand strategy. Adidas has also started to fabricate the casual leather shoes (Annual Report, 2009). Adidas (2009) was clear in its strategy to sell leather shoes by saying that it will submit them a significant opportunity.

Diversification of Products: The evolvement of products for athletic equipment, hockey and cricket will help Adidas to be a market leader in new markets (for example India and Pakistan) where people are more concerned about cricket and hockey instead of football and basketball.

Leadership

Herbert Hainer became CEO of Adidas in 2001. He is an influential leader and has been looking forward to implement brand new strategies from time to time. Back in 2005, Herbert Hainer outspreaded the “Beckham deal” and was the responsible one to launch the Beckham’s line when he realized Beckham’s enormous fan following. In the same year, Hainer and Fireman (CEO of Reebok) joined hands for the growth of both the companies and give a-more-than tough competition to Nike. After the merger, Hainer thought a strategy of targeting the basketball and soccer lovers individually with Reebok and Adidas brands. According to the Chief Executive Hainer:

“The brands will be kept separate because each brand has a lot of value and it would be stupid to bring them together. The companies will continue selling products under respective brand names and products.”(Hainer,2001)

Organizational Structure

According to Drummond and Ensor (2003:254), in developing a marketing strategy it is very important for an organization to invest in teams. Adidas has multifunctional teams which support the company in its offensive marketing strategy. Headquartered at Herzogenaurach, Germany, Adidas is the largest producer of sportswear in Europe. The organizational structure of the company is in congruity with its business strategy. As the business activity of Adidas includes three product lines, footwear, apparel and hardware of sports, the structure of the company is also accentuating on a sporty environment and it is in complete congruity with its products and services. After merger, Reebok targeting basketball lovers was kept separate and its previous management was preserved. The identity of the brands of both Adidas and Reebok was kept distinguishable as before even after the merger. This reflexes Adidas’s strategy based structure. The construction of “Originals Stores” was an exertion to target fashion forward people. The designs of these stores also reflect the strategy of the company.

Culture

According to Drummond and Ensor (2003:253) a strategy is most possibly to come undone if it goes against to the dominant culture.The merger between Adidas and Reebok in 2005 was a bash of Adidas to capture US markets. But the merger was not culturally fit as one of them was German and the other was American and it imposed Adidas to pay a high price. The merger was not in agreement with the cultural fit and as an offspring it is considered as an almost unsuccessful merger. Reebok sales are declining continuously and are one of the primary weaknesses of the company right now.

Innovation

In the present times of vast competition, Adidas has always created symbols which stand for its innovation and product growth. According to Palmer (2004:267), innovation not only reports to the products offered by a company but involves all marketing functions, including promotion and distribution. Adidas is highly innovative not only in the field of technology and new product development but also in the other perspectives of marketing such as creating an appropriate image of its brands. The primordial factor responsible for the faster innovations is the global influence of the company. Adidas pursues the strategy of increasing premium partnerships and appealing its customers through congruous innovations with variant marketing issues.

CSR/Ethics

Ethics and Corporate Social Responsibility is one of the most important parts of the company’s corporate strategies. The company is focused on the healthy and salutary living of people as it handles with sports equipment and sportswear. It is due to Adidas that different sports activities have become popular in all social classes specifically kids.

Adidas is also concerned with its employees in many ways. The supervisory board which comprises a total of twelve members has six members from employees. Adidas concerns very much about the employee contentment. Asian employees are more focused on the production whereas European and American employees are focused on the marketing, distribution and retailing procedures.

Positioning for Competitive Advantage

There are two ways in which a business can gain competitive advantage by establishing a favorable basis of competition:

Influence customers’ perceptions (differentiation of Adidas), expectations, and the benefits & value which they are prepared to pay for.

Establish a raw competitive advantage over rivals (present and future).

The first method is obviously about shaping the nature of market demand to originate a desired market positioning.

The second method is about using the delivery or supply side of business to establish a market positioning that is usually quite tangible.

Adidas wants to position itself as the most inspirational sports apparel and athletic footwear brand.

Impossible Is Nothing: The appeal of the message is universal in that life poses impediments and challenges regardless of profession, age, gender and status

Marketing Mix

Products:

Adidas has established itself as a strong brand for sports apparels.

Caters for different needs and wants of consumers.

The core benefit is to satisfy consumers’ needs or wills.

Constantly upgrading and improving products’ innovative futures and quality to satisfy its customers.

Pricing:

Brand value: The price should be decided in such a manner so that it harmonizes to psychology of the customers/consumers.

Suitable for the target customers

Generating the revenues quickly: Price also affects the revenues and the profits of the company. If we disputing in regard of profit maximization then marginal revenue should be equal to marginal cost, MR = MC

Place/Distribution:

The place refers to where you can expect to locate your customer and consequently, where the sale is actualized. By acquainting this place, we have to look for a distribution channel in order to reach the potential customer.

Adidas outlets.

Online purchasing through the Internet (E-commerce)

Promotion

Promotion Objective

To become the No1 sporting brand in the world.

Promotion Mix

“Impossible of Nothing” campaign.

Advertising commonly through the mass media.

Advertising through the use of internet.

Conclusions & Further Recommendations

Adidas, as a firm, wants to convey its inheritance of novelty, technology development, product development and services management by trying to distribute meanings like “There is nothing between you and success, so exceed your own expectations and limitations”.

The TV commercial is straightly esteemed as the most effective mass-market advertising format, as is mirrored by the high prices TV networks charge for commercial airtime during popular TV shows. The majorities of television commercials feature a song or jingle that listeners/viewers soon associate to the product. Adidas has a big amount of TV commercial advertisements in the world wide TV network.

Adidas is focusing at the changing concerns of the up and coming market who also use i-pods, i-pads, video games, internet, youtube, facebook and other highly technological devises as a way of living rather than conservative television or print media. By this change in media delivery, there’s also a change from it being one way to two-way communication, and with snap advances in technology, they anticipate new and variant things, and new and different footwear and sportswear is a way to reach that kind of market.