Assessment Of The Marketing Strategy Of Adidas Company

Executive Summary

On 18 August 1920 Adolf Dassler built a group based in Herzogenaurach (Germany). In 1954, after Germany won the world football championship, the brand and products celebrating its first worldwide success. The family company had to open up for investors following some business disappointments in the mid-eighties. The initial public offering on the exchange market in Frankfurt followed in 1995. The company took over Reebok in 2006 in order to remain competitive with Nike on the US market.

In addition, the company has 169 affiliates worldwide with total sales of 11.990 million Euros. The company sponsors numerous sports events, including football championships, Olympic Games or Paralympics, using the image of its brand and the capital available. Adidas is to be the official Olympic and Paralympic sportswear partner in 2012 in London. Adidas is also made a competent manufacturer of sports goods by highly qualified experts and an international network of suppliers.

Adidas has always improved marketing strategy by introducing new products to increase the market share of the Brand, as the biggest sportswear manufacturer in Europe and the second largest manufacturer in the world. Adidas has successfully performed in sports worlds at all levels through the provision of sports footwear, clothing and accessory over a period of 80 years and maintains a simple strategy, strengthening brand performance, commercial performance and competitive conditions. Adidas has recently developed a body washing machine for both men and women. In December 2016, the product will be launched. Adidas 3-in‐1 Head to Toe Splash, which consists of a body soap, a shampoo and all packaging into a bottle, is the new product created for these consumers. Recently, Adidas has launched a new product which is protein shake. Which will be a new challenge for its competitors as it is a very unique products launched by the biggest sportswear manufacturer.

Introduction

Adidas is a multinational company founded in 1948. The companies specialize in sportswear and accessories design and manufacturing. Adidas is one of the best known sports product’s manufacturers. This report discusses its marketing strategies and analyzes Adidas' and market competitors' performance data. Adidas AG group is comprised of Reebok Sportswear Company, TaylorMade-Adidas Golf Company (including Ashworth), Rockport and 9.1% of the FC Bayern Munich. The company is based in Herzogenaurach, Bavaria, Germany. The company also manufactures bags, shirts, watches and other articles related to sports and clothing. It is regarded as the first sportswear manufacturer in Germany and in Europe.

Adolf Dessler, using his nickname Adi and initials of his surname, founded the company. The report aims, with a severe analysis conducted (PEST, SWOT, Porters Five Forces-Marketing Mix Analysis, CSA and Competitors Analysis) to assess the marketing strategy of the company and to provide its recommendation based on the findings of this project. The first part of the present report is about Adidas and presents the analysis of SWOT, PESTLE and USP. A brief overview of the company and its operations is provided by these methods. In the second part of the report, contemporary marketing methods and techniques such as STP, the SMART and 4P are used to analyze the proposed strategies.

Industry Background

The word 'Adidas' is the anagram of the sentence 'all day I dream about sports'. The sportswear company gets its name from its founder, Adolph 'Adi' Dassler. Although the urban legend says 'Adidas'. He and his brother founded the brand, but their history as members of the Nazis is not so well-known. Adidas is a multinational corporation that designs and makes shoes, clothing and accessories, based in Herzogenaurach, Germany. Reebok, TaylorMade and Runtastic are the members of the Adidas group.

Adidas is a member of the global footwear industry in sports footwear. While the global soccer industry suffered from the ongoing economic shocks of the 2008 financial collapse in its five years to 2014, the projected global need reaches 195 billion dollars by 2015, and 111.5 billion dollars by 2018. The global footwear industry has suffered a healthy one. Adidas reduces supply costs through technological developments like CO2 injected waterless dyes, a 50% reduction in color requirements, and the virtual sending of electronic samples, reducing samples sent by 600 000. Nike leads the market, even after the purchase of British-owned Reebok in Adidas in 2006, although the purchase of Reebok positioned Adidas to compete globally with Nike. External factors that influence industrial development include increased populations, increased availability of incomes, increased awareness of health and active lifestyles and an increase in retail culture. Promotions of fashion and trends spur innovations in styles and designs as external factors influence growth. In-service shopping (Internet) increases will stimulate overall growth in the industry.

Marketing Environment

Microenvironment

Micro factors are the actors close to the company that affect its ability to serve its customers – the company, suppliers, marketing intermediaries, customer markets, competitors and public. In this scenario, micro factors affecting Adidas are as following:

Company:

• The previous goal of company was growth which led to company’s success.
• Operations handled all maintenance and support services.
• Finance handled all finance related group matters.
• Managing director covered all expansion & development strategies.

Top 10 Competitors of Adidas are:

1. Nike, Inc.
2. Callaway Golf Company
3. PUMS SE
4. Fila
5. Converse
6. New Balance
7. K-Swiss
8. Asics
9. Li Ning
10. Air Jordan

Customers: The customers of Adidas include social groups in the upper & lower middle class. Adidas has recognized that a strategy of mass production or mass marketing is no longer sufficient to succeed in all consumer segments. Adidas’ primary target audience is about 13-30, who participate in any particular sport or discipline. It makes high ends.

Macroenvironment

Microenvironments can be classified as political, economic, social-culture, technological and legal factors, leading to “PESTEL Analysis” as a tool for this report. I will concentrate on Germany, the Country where “ADIDAS” headquarter is based.

1. Political.Adidas is a global company and is therefore bound by various government regulations. Aspects such as work schedules, trade unions, noise and emissions levels, tariffs and other trade barriers such as taxes, prices and exchange checks are affected. New legislation or changes to existing legislation are other political risks. Government Investment/ Cuts in Schools and Universities sports programs and equipment.
2. Economic.Recession caused by Adidas premium prices. Germany is an EU member, and its largest economy attracts millions of immigrants. Germany attracts thousands of immigrants. In terms of nominal GDP, the country is the fourth largest economy in the world, with purchasing power being fifth. It reached $3.316 trillion in gross domestic product and in 2010 had an unemployment rate of approximately 7.4 percent.
3. Social. Since Adidas is a global operating firm with high professionals with a diverse cultural background, it has all social aspects, religions, ethical issues and various cultures to be taken into account. Adidas must adopt these criteria for every country it wants to sell its products in order to develop a perfect marketing strategy. Events such as World Cup are good opportunity to advertise brands and logo.
4. Technologicial. Latest technology can both speed up and cut labor costs. Germany's industry is one of the world's most powerful industries, that is why it needs high investment in research and development. EU statistics show that Germany is one of the leading European countries in expenditure on research and development.
5. Environmental. A natural disaster in any of its operating countries could damage their factories or the warehouses. The current climate change and nuclear phase-out discussions influence the Adidas Group to reduce CO2 emissions at its manufacturing plants and production processes. In addition to their use and disposal, products need to be eco-friendly. The manufacturing processes should pollute as little as possible the environment, but without affecting product quality.
6. Legal Factors. Exposed to possible claims or lawsuits for infringement of 3rd party trademark etc. All new technologies and designs must be studied carefully.

Segmentation, Targeting and Positioning

The perception of mass marketing and the way all customers behave have led to an understanding of consumer groups ' unique needs, which have to be segmented in order to achieve great sales opportunities. All sports fans in particular distinguish. For example, a sports company such as Adidas was unable to market the elderly's extreme sports equipment.

Segmentation

There are six interactive market segmentation bases that are customarily demographic, psychographic, behavioral, geographic, socio-economic, and benefiting variables.

Adidas segmentation is based on:

1. Demographic Segmentation: Demographic segmentation refers to dividing the market into groups based on demographic variables, such as sex and age, which this method has long been used in clothing market. It divides into target groups based on location, sex and age. The most widely used Adidas technique for demographic segments is its characteristics easily identified and measured, available from a variety of sources, such as the government's population count, and linked to sports attitudes such as gambling or watching sports. Adidas targets people by their gender, age and life cycle phase based on their demographic segmentation. First and foremost, Nike targets 11-45 years old customers with a higher weight for teenagers to build loyal consumers on a long-term footing. For instance, Adidas created a promotional campaign in 2014 before the World Cup, which glorified great football athletes playing soccer with adolescents who inspired them to be like idols.
2. Psychographic Segmentation It divides into targets groups based on social class, lifestyle, and personality traits. In order to target clients based on lifestyle, personality, activities and interests, Adidas uses psychographic segmentation. Specifically, Adidas wants active people to enjoy a sport, a gym on a regular basis, sports enthusiasts and sport enthusiast.

Adidas, Reebok and TaylorMade are all aimed at different customer groups. Each aims their products according to the attitudes, lifestyle and interests of the customer.

Targeting

The company must determine its targeting strategy after segmentation. Companies must select and develop their future business strategy in the market segments that they wish to focus on. A number of important decisions are faced by the marketer:

1. Which market assessment criteria should be used?
2. How many markets are entered?
3. What are the most valuable market segments?

Below are three factors essential for the assessment of a potential segment of the market.

1. Attractiveness of the structural segment
2. Growth and size of the segment
3. The main goals and objectives of the company

Adidas uses differentiated targeting strategy to target young adults, adults as well as children who have passion for fitness & sports. Although it targets customers in the age group of 13-40 years but majority of its customers are of 15-30 years of age who hail from upper middle class or the luxury class of customers.

Positioning

The final approach in the S-T-P planning approach is positioning. Positioning is the strategy Adidas uses to give the prospective consumer a distinctive picture. Adidas can maintain its brand essence by underlining the value of high-quality products from a trustworthy brand. This is how the portfolio is divided. They perform Adidas in competitive sports, Reebok & Reebok in active and casual sports, and Adidas in original sports, Adidas Fun and Rockport in sports fashion. Adidas position statement is based on Speed, city and open source. A core framework for development of marketing plans and targets The marketer's next step is to design also known as the marketing mix is a marketing program that will respond to the target market or markets when finalizing the market segments the company intends to target.

1. Speed: It offers customer with fresh and desired products where and whenever they want. Adidas is positioned on the basis of three strategic decisions.
2. Speed Cities: It targeted the cities that shape global trends, the perceptions, perspectives and purchasing decisions of customers.
3. Collaborate and innovate: It Open the doors of our brands inviting athletes, consumers and partners to contribute towards the future of sport and sport cultures. Open the doors to our sports industry.

Marketing Mix

Adidas has seen its share of ups and downs, one of the top brands in the sports and footwear market. The firm began in 1936 and is one of the world's oldest footwear companies. Even if the company comes from old times, it has a young heart. Adidas confronted Nike in the 1980s with a tough competition, but quickly conquered this competition with both young and sport-oriented competitors.

Products

The main goal of Adidas is to supply customers who have the best technology, comfort and design in their clothing and footwear.

Price

Adidas group uses two types of pricing models:

• Competitive Pricing: Regular, daily products to keep up with the likes of Nike, Puma and Reebok.
• Skimming Pricing: New products that are designed introduced exclusive to the markets.

Place

Online fashion sites and Adidas own online stores can buy products. It is also available in multi-brand sports stores worldwide together with Adidas own retail stores.

Promotion

All around the world, Adidas markets its products. Most groups advertise via Television and product placement. The marketing team produces creative and energetic ads to attract costly customers to the brand.

Conclusion

The Adidas Group has committed itself to its staff, the environment, its communities and partnerships. As a global company, Adidas Group is responsible for preserving the world for today's people and tomorrow's future. To this effect, the Adidas Group seeks, via the manufacturing and retailers, to integrate sustainability in its businesses. Although with a few downturns, Adidas achieved its sustainability model through CSV with its four pillars of sustainability strategy focused on ESG issues.

Sustainability as a key vision is integral to Adidas ' business model and will guarantee active performance in future through its operations. Adidas reports on their social and environmental performance by publishing its annual sustainability reports in accordance with the principles of the GRI in order to demonstrate their continuous sustainability efforts. In 2013 Adidas met in its sustainability report six of the ten GRI guidelines. This enables the company to focus on its overall performance and to measure its economic, social, environmental and governance performance side by side throughout the year.

Although Adidas had a large level of community involvement, it could still be done by having many resources at its disposal as a global company. For instance, Adidas ' should not in future convey any form of' greenwashing.' They should always operate in an environmentally friendly process as a growing multinational sustainable enterprise. They have identified three categories of environmental effects, which can be improved: sustainable use of resources, emissions and dangers. Improving these environmental impacts will have a direct effect on the supply chain and the sustainability potential the company can reach.

Adidas has proven to be one of the most profitable companies on the market for athletic footwear and clothing. Adidas was able to increase its profits while maintaining and, in some cases even reducing the company's expenditure and liabilities, as shown by the company's income statement, balance sheet, cash flow and ratios. Due to Adidas’ ability to keep up with continuous changes in technology as well as in fashion, as demonstrated in the pictures below, the company has been able to continuously increase its popularity and establish itself as one of the most recognizable and reliable sports brands in the world.

References

1. Adidas Analysis - Marketing Environment. (2018). Retrieved from WordPress.com: URL: https://dsmada.files.wordpress.com/2017/04/adidas-market-environment-evaluation.pdf
2. Basin, H. (n.d.). Marketing Analysis Environment. Retrieved from Marketing91.com: https://www.marketing91.com/marketing-strategy-of-adidas/
3. Borowsavi, A. (2018). Adidas. Retrieved from Adidas marketing strategies - an overview: https://www.grin.com/document/180809
4. Flippo, H. (2017). Adidas background. Retrieved from A brief history of adidas: https://www.thoughtco.com/quick-history-of-adidas-1444319