Assessment: Identify Marketing Opportunities

Week 1

ID Number:

Name: Pedro Cossetin

Kind of Organization: Retail Sportswear

Brand: Adidas
INTRODUCTION

The history of Adidas started in a wash room and conquered the world. The german
brand was created in 1949 by Adolf Dassler, most know as “Adi”. Since the late years
Adidas has been synonymous with the sporting industry. Today, the brand is a global
public company and is one of the largest sports brands in the world. It is a household
brand name with its three stripes logo recognised in markets across the world.

The company’s product portfolio is vast, ranging from state-of-the-art sports footwear
and clothing to accessories such as bags, watches, eyewear and other sports-related
goods and equipment. Employing over 46,000 people worldwide, the Adidas Group
consists of around 170 subsidiaries including Reebok, TaylorMade-adidas Golf,
Rockport and CCM-Hockey. The Group's headquarters are in Herzogenaurach,
Germany.

The brand involves creators, athletes and consumers from the earliest moment to
ensure that they deliver what is actually needed and in return receive valuable
feedback and inspiration.

1. Adidas Marketing Strategies

The Adidas Group desires to inspire and enable people to harness the power of sport in
their lives. Sport is the brand very purpose. They are focused in understand the
consumer and believe that their journey in sport is essential to achieve this goal.

Adidas strives to create a culture of innovation and creativity to anticipate and respond
to the costumers needs. With a portfolio of authentic sports brands, Adidas use the
sports culture to expand the products, services and processes worldwide.

According to the founder Adi Dassler’s principles: “No athlete left behind. In other
words: it does not matter if you are a medal-winning superstar whose face regularly
appears in the world’s newspapers or a 13-year-old kid on the other side of the world
kicking the ball after school just for the fun of it. We are here to help, to coach and to
cheer”.
Adidas is committed to the costumer’s life and through the sport’s passion the brand
can develop a powerful communication tool with the costumers in a global scale.
“Sports is everywhere and so are we”. Adidas is not only focus with their products but
with all kinds of commitment to sports.

The brand invests in support the costumers choice for sports all over the world: since
the local cricket club in New Zealand, the neighbourhood football club in Ireland, the
baseball game somewhere in Japan, the volleyball match in Brazil, until the luge canal
in Austria.

The key goals of the company are:

1. To increase the market share by 3% or entering a new market overseas.
2. To achieve these marketing objectives requires a plan that details the
actions needed.
3. To find innovative ways to inspire and engage its 14-19 year old target
audience.

2. Adidas Marketing Mix

The Adidas Marketing Mix is focused to specific markets. This is known as international
marketing as it takes cultural and social differences into account when planning
marketing activity. Sports marketing is a key focus for Adidas Marketing Mix.
The growing popularity of sports as entertainment has led to a huge increase in sports
marketing. Adidas started in 1936 and is one of the oldest footwear brands of the
world. The origin of the brand is related to the passion pro sports and young attitude.
Adi Dasseler was one of the first people to see the potential of this form of marketing.
He sponsored the FIFA World Cup in 1978 and the Olympic Games dates back to the
Games in Amsterdam in 1928 when Adidas’ running shoes were debuted.
Footwear and clothing by Adidas has been seen on athletes at every Olympic Games
since. All British medal-winning athletes at the last 8 Olympic Games wore Adidas
products. The brand is built on a passion for sports excellence and innovative design to
help athletes perform to the best of their ability.
Adidas has supported many iconic athletes to achieve great things at the Olympic
Games. In the UK, it has partnered and supplied Team GB since 1984. Rather than
simply trying to gain positive associations with particular sports, companies like Adidas
use sports marketing to drive the brand and increase sales.

2.1 Product
The Adidas group has 4 main divisions. The first is Adidas, present in clothes and
footwear. The second is Reebok which has overtaken Adidas and is one of the leading
subsidiary’s in the Adidas group. The third is Rockpot which specializes in outdoor
footwear, apparel’s and accessories. The fourth is Taylor Made which is focused on
golfing clothes and equipment. Reebok is the strongest followed by Adidas.

The focus of this Market Mix is in the Adidas brand. The major products of it are their
footwear, with a diverse design and style. The product can be used by athletes or
casual and urban costumers. The secondary product of Adidas is apparel’s and
accessories. Apparel’s like T-Shirts, jackets, sweatshirts and shorts are in great demand.

The objective of Adidas is to give the best footwear to their customers with both
technology and design. These products are not need based, wich means that the shoes
are bought by customers to satisfy their wants and desires.

2.2 Price

Adidas uses skimming prices and competitive pricing. The reason of it is its style, design
and promotions. The brand uses competitive pricing keeping in mind competitors like
Nike, Reebok and Puma. But for new products in the market and have unique design,
Adidas uses skimming price.

Adidas constantly use skimming price to apparel’s market. The target customer for
Adidas is the upper middle class as well as high end customers. Adidas don’t use
penetrative pricing because that will affect the brand equity of Adidas. The higher price
point helps in the price quality approach and psychologically, customers think that a
higher price will mean better quality as well, that is the reason why Adidas rarely drops
its prices.

2.3 Place

The retail outlets are the major areas in which Adidas is sold. The brand has its own
exclusive stores in which the material is provided directly from the company. Also, a lot
of multi brand showrooms have Adidas apparel’s and footwear on display. These multi
brand showrooms get the products from a distributor. The other mode of distribution is
online, through fashion stores lie myntra.com and the online website of Adidas.

The the distribution channel of Adidas is like this:

1) Manufacturing > Adidas outlets > End customer

2) Manufacturing > Distributor > Multi brand showrooms
3) Manufacturing > Online fashion websites / Adidas website > End customer

The operating margins keeps the distribution channel motivated and also helps with
the promotion of the company.

2.4 Promotion

The majority Adidas marketing promotion is concentrated on television and product

placements. The creative team of Adidas is known to pump adrenaline in their
customers through creative ads filled with energy. These ads attract the customers
towards the brand by sending the right marketing message to the customer. The tagline
of Adidas “Impossible is nothing” is in itself a very powerful statement for the brand.
The second line of promotion for Adidas is product placement. The popularity of the
brand is related to the top players across the world such as Lionel Messi, Ronaldinho
and Sachin Tendulkar. Adidas also sponsors top teams like Real Madrid, France, Great
Britain (in football), England and South Africa (in cricket) and many others.

The marketing of Adidas includes creative outdoor campaigns and events marketing.
Sales promotions and trade promotions are also regularly offered by Adidas to their
channel partners to promote the sales of the brand.

3. PESTLE Analysis

Political
Adidas protects and supports the rights of its employees by following all the
current employment laws. Adidas has the responsible to help countries to decrease
unemployment by increasing every year the number of employees. The labor salary is
high in Germany and France but not so expensive in China (Suzhou). This is the reason
that most of factories located in Asia.
The brand’s policy is to control and monitor hazardous substance to protect human
health and environment. Adidas focus in eliminate PVC making progress and in finding
substitutes like polyurethane, ethyl vinyl, silicones thermoplastic rubber. The company
also provide training sessions on employment standards and HR systems, health and
safety is important for the company. Establishing teams to manage and monitor SARS
in Asia factory, washing stations, disinfectant units.
Social
Adidas products declare in any raise, age, religion, and lifestyle, always in
fashion with special design in any of product. Focus in people who like sports and
athletes, witch makes the purchase accessible to everybody.

Technology
Adidas focus in technology and create the world’s first “smart shoe”. The idea is
to add a microchip inside the shoe and a wireless mp3 player. It uses also a hot melt
system of the production that is environmentally safe, using heat-activated adhesives.
The packaging is suitable for transportation over long distances, humid conditions and
extreme temperature changes and use recycled paper and other environmentally-
friendly packaging materials.

4. Industry Analysis of Adidas using Porter’s Five Forces

The world famous brand in sports wear industry adopts some creative strategies to
remain as one of the major player in the global market though there is stiff
competition. Using Porter’s Five Forces it is possible to understand the brand’s
strategies and challenges.

Degree of Rivalry of ADIDAS

Adidas competitors are the world leaders Nike, PUMA and FILA. The rivalry among
them is high in the sports and footwear industry as compared to other similar
industries.
The brand has adopted several strategic measures for their market growth such as
acquisition of an existing competitor and building partnership. ADIDAS has grown into
a world leader through several acquisitions; namely Sports Inc., Salomon AG, Reebok
etc. In 2005, the ADIDAS acquired world’s third sports brand, REEBOK and this was a
remarkable event in the history of the company, as it paved the way for the expansion
of its market share. The Company ADIDAS has also benefited from the strategy of on-
line sales.
The company growth is based on its brand-equity and brand identity. Adidas deals with
products of low product differentiation and because of this the degree of rivalry is high.
The switching costs are low and because of this the rivalry among competitors is very
high. To deal with products of competitive nature, the brand has to be highly
innovative and the technology used should be of very advanced and sophisticated.
This brings the fixed cost high and in turn increases the degree of rivalry among the
competitors. The rival firms like NIKE, PUMA are of different cultural, historical and
philosophical backgrounds and theirs strategies are changing constantly.

Threat of Substitutes

The substitutes of Adidas products such as NIKE and PUMA affects the market growth
of the company. The price of its substitute products affects the products of ADIDAS,
either in a positive or a negative way. When the price of the substitutes is low, the
demand for the Adidas product will be low, and vice versa. That is the reason that
when switching cost is low there is a higher tendency to lose its customers. In certain
circumstances buyer’s choice purely influences the buying decision and its demand.
The overall weak is low.

Bargaining Power of Buyers

Bargaining power of Buyers of Adidas products is high these nowadays. The buyers’
concentration is high, that means they buy large volumes. The ease of availability of its
substitutes is one of the major reasons of the high bargaining power. The low switching
costs to its substitutes also makes high bargaining power of customers. Price sensitivity
and Product Differentiation also affects the bargaining power of buyers.
The overall power is low.

Bargaining Power of Suppliers

The suppliers for the Adidas products are available in high quantity that is the reason
that the bargaining powers of suppliers are low. Suppliers are weak because of high
supplier concentration. The other reasons are the easy availability of close substitutes
of inputs, low switching cost from on supplier to another, backward integration of
suppliers and weak customers. The Adidas brand exerts a high power over the suppliers
and is very demanding.

Overall power is low.

Threat of New Entrants

To compete with such a established brand like Adidas the entry barriers to the
sportswear market are comparatively high. This market requires large capital and to
survive in and to gain market leadership is quite difficult. When a new firm’s products
are competing with such a huge brand name, it needed to be more cautious and have
to adopt high quality strategies to gain the market. There are some barriers like High
initial investments and fixed costs, Controlled access to the raw materials by Adidas,
Controlled distribution channels by Adidas, Economies of scale, Government Policies
and Protected Intellectual Property Rights like technical know-how.
The overall power is weak.

5. Legal and Ethical requirements

Encompassing all product health and safety matters as well as social and environmental
considerations.
• No forced labour
• No child labour
• No discrimination
• Respect for freedom of association and collective bargaining
• No harsh or inhumane treatment
• Workplace health and hygiene
• The right to remuneration
• Reasonable working hours
• Documented employment
• Production traceability
• Product health and safety
• Environmental pledge
• Information confidentiality
• Code implementation
• Ethics Committee

6. An Opportunity for Adidas

Adidas has set ambitious goals to increase sales and profitability over the next five
years because in the last few years the company lose market share to the rivals Nike
and Under Armour. The brand expects to grow its profit by 15% every year until 2020
(up from the 7%-10% increase it expects in 2015) and grow sales by almost half to
more than $US24 billion by 2020.

Adidas is investing in the use of robots to bring manufacturing back to Europe and to
the US from Asia. And also they are planning to open hundreds of new stores around
the world.

7. The Benefits and Investment Related to This Opportunity

The reason to invest in robots and in high technology is because the North American
sales have been falling for the past three years and the other competitor, Under
Armour, recently become the second largest sportswear company in the United States,
behind Nike.

It is important for the brand to invest in new stores and create a new opportunity for
the costumer, in order to achieve the first place in sales and be more powerful than
they actually are nowadays.

8. Sales figures

 Compare other competitors

 Promotion of the internet

Export Market
Selection of Target Market

 One of the target markets will be China and to open more stores in USA.
 The brand expects to grow its profit by 15% every year until 2020 (up from the
7%-10% increase it expects in 2015) and grow sales by almost half to more than
$US24 billion by 2020.
9. Segments of the market not currently penetrated

Issue:

Adidas has set ambitious goals to increase sales and profitability over the next five years
because in the last few years the company lose market share to the rivals Nike and Under
Armour.

Effect on Sales Forecast:

Action:

Increase online presence through Facebook & Twitter (Free Advertising)

Hire one more Marketing Executive @ $100k per annum

Effect on Marketing Budget:

Increase of Marketing Salaries – up $100k per annum

Consider strategic marketing approaches such as :

Marketing objectives :

1. To increase the market share by 3% or entering a new market overseas.

2. To achieve these marketing objectives requires a plan that details the
actions needed.
3. To find innovative ways to inspire and engage its 14-19 yearold target
audience.

10. Positioning

The brand Adidas wants to

“Impossible is nothing” inspire and engage the 14-19
years old target audience.

Promotional activities
 Brand communication

 Television Ads

 Internet – Social Media

 Events

 Media cooperation
BIBLIOGRAPHY

http://www.adidas-group.com/en/brands/adidas/commitment-is-not-linked-to-glory/

http://www.businessinsider.com.au/adidas-high-stakes-turnaround-plan-2015-3?
r=US&IR=T

http://pt.slideshare.net/082011341/adidas-brand-analyses-presentation

https://pt.scribd.com/doc/110057493/A-report-on-brand-personality-of-nike-and-
adidas

http://www.adidas-group.com/media/filer_public/e9/73/e973acf3-f889-43e5-b3c0-
bc870d53b964/2015_gb_en.pdf

http://businesscasestudies.co.uk/adidas/planning-effective-marketing-strategies-for-a-
target-audience/the-marketing-mix.html#axzz48aAjuEZy

https://prezi.com/tgde3qkcov1j/adidas-marketing-mix-analysis/