Marketing Analysis of Adidas

MARKETING ANALYSIS OF
ADIDAS
BY

INTRODUCTION OF ADIDAS
• ADIDAS AG IS ONE OF THE MAJOR MULTINATIONAL ORGANISATION IN THE
SPORTS INDUSTRY HAVING ITS HEADQUARTERS IN HERZOGENAURACH,
GERMANY (ADIDAS-GROUP.COM).
• THE COMPANY DESIGNS SHOES, ACCESSORIES AND CLOTHING.
• IT IS THE SECOND LARGEST SPORTSWEAR COMPANY AFTER NIKE AND IS THE
LARGEST COMPANY IN EUROPE (ADIDAS-GROUP.COM).
• ADOLF DASSLER STARTED THE COMPANY AT HIS MOTHER’S HOUSE WHERE
HIS BROTHER RUDOLF JOINED HIM IN THE YEAR OF 1924 (ADIDAS-
GROUP.COM).

ADIDAS LOGO
• THE DISTINCTIVE LOOK OF THE COMPANY LOGO HAS ALWAYS WORKED FOR THEM AND
CONSUMERS CAN EASILY RECOGNISE THE BRAND FROM THE LOGOS.
• THE UNIQUE AND SIMPLISTIC STYLE CREATED BY THE COMPANY HAS LED TO THE
ACCOMPLISHMENTS OF THE COMPANY (ROGOZA).
• THE LOGO THREE BARS DEPICT A MOUNTAIN AND CHALLENGING THE CONSUMERS TO
PUSH THEMSELVES TO THEIR LIMITS.
• THEREFORE, THE LOGO IS AN INSPIRATION TO ALL ATHLETES WHO FACE CHALLENGES
TO OVERCOME STEEP OBSTACLES AND THE COMPANY WANTS TO CONTRIBUTE TO THE
WELL-BEING OF ATHLETES BY SUPPORTING TO ACHIEVE SUCCESS (ROGOZA).

HOFSTEDE’ FORCES

CUSTOMER PROFILING
• IN TERMS OF CONSUMER PROFILING, ADIDAS HAS TARGETED TWO CONSUMER SEGMENTS
IN THE GLOBAL MARKET WHICH MAINLY COMPRISES OF THE MILLENNIALS AND THE
GENERATION Z.
• THEREFORE, ADIDAS MAINLY FOCUSES ON DEMOGRAPHIC AND PSYCHOGRAPHIC
SEGMENTATION OF THE GLOBAL POPULATION TO SELECT THEIR TARGET CONSUMERS
(CAMILLERI).
• .EVEN THOUGH, THE COMPANY OFFERS THEIR PRODUCTS TO DIVERSE RANGE OF
CONSUMERS IN THE MARKET BUT RECENTLY THEY FOCUS ON ATHLETES BETWEEN THE AGE
GROUP OF 20-29 AND 14-19 AS THESE CONSUMERS ARE STRONGEST SEGMENT FOR
IMPROVING THEIR MARKET SHARE.

INTERNAL ENVIRONMENT
• THEY FOCUS ON RECOGNISING THE VALUE OF THEIR EMPLOYEES SO THAT THESE EMPLOYEES
CAN ACHIEVE THEIR ORGANISATIONAL OBJECTIVES. THEREFORE, THEY HAVE SIGNIFICANTLY
FOCUSED ON EMPLOYEE ENGAGEMENT AND TALENT MANAGEMENT.
• THE FINANCIAL RESOURCES OF THE COMPANY ARE THE PRODUCT SALES AND THE LICENSE
SALES WHICH CAN BE CONSIDERED AS THE REVENUE STREAMS FOR THE COMPANY.
• THE COMPANY FOCUSES ON USING SUSTAINABLE MATERIALS SUCH AS RECYCLED POLYESTER,
“BETTER COTTON”, RECYCLED RUBBER, RECYCLED NYLON, TENCEL, ALGAE-BASED EVA,
RECYCLED THERMOPLASTIC POLYURETHANE (TPU), AND WATER-BASED POLYURETHANE (PU)
FOR DEVELOPING THEIR PRODUCTS (ADIDAS-GROUP.COM).
• ROLE MODEL LEADERSHIP WAS USED TO DEVELOP AN EXTENDED LEADERSHIP GROUP FOR
SUPPORTING THE ACTIVITIES IN DIFFERENT COUNTRIES AND THE COMPANY ALSO DEVELOPED
TRAINING AND DEVELOPMENT PROGRAMS FOR MANAGEMENT IN THE GLOBAL COUNTRIES.

EXTERNAL ENVIRONMENT
• NIKE AND ANTA SPORTS ARE THE BIGGEST COMPETITORS OF ADIDAS WHERE NIKE IS THE
MARKET LEADER AND ANTA SPORTS IS IN THE THIRD POSITION (ISPO.COM).
• NIKE AND ADIDAS ARE DOMINATING THE MARKET IN CHINA BUT THERE ARE OTHER LOCAL
COMPANIES JOINING THE COMPETITION SUCH AS ANTA SPORTS, X-TEP, 361 AND LI NING
(ISPO.COM).
• THESE LOCAL BRANDS BELONG TO THE MEDIUM SIZED CITIES AS THE PREMIUM BRANDS ARE
STRONG AND IT IS NOT POSSIBLE FOR CHINESE COMPANIES TO ENTER THE PREMIUM SEGMENT
WITH THEIR OWN BRAND.
• GLOBALISATION HAS CHANGED THE WAY COMPANIES OPERATE IN CHINAS AS IT ONE OF THE
FASTEST GROWING AND LUCRATIVE MARKETS IN THE WORLD.
• THE TECHNOLOGICAL SUPREMACY IN CHINA OFFERS ADIDAS THE OPPORTUNITY TO REDUCE
THEIR PRODUCTION COST SIGNIFICANTLY AND USE SUSTAINABLE SOURCING TO BE A SOCIALLY
RESPONSIBLE COMPANY.

CONTD.
• CHINA HAS A FREE TRADE ENVIRONMENT WHICH IS OPEN TO FOREIGN
DIRECT INVESTMENT AND THE GOVERNMENT HAS DEVELOPED NORMS TO
PROMOTE THE ARRIVAL FOR MULTINATIONAL COMPANIES TO IMPROVE THE
GROWTH OF THE ECONOMY AND PROVIDE BETTER JOB OPPORTUNITIES TO
PEOPLE IN THE COUNTRY.

SUPPLY CHAIN

PORTER’S FIVE FORCES
• ADIDAS IS THE SECOND LARGEST AND POPULAR BRAND IN THE SPORTS MARKET WHICH IMPLIES THAT THE BARGAINING
POWER OF THE CONSUMERS ARE LOW TO MODERATE.
• THE BARGAINING POWER OF THE SUPPLIERS IS RELATIVELY LOW AS ADIDAS CONSISTS OF LARGE NUMBER OF SUPPLIERS
AND IN ASIA THE COMPANY HAS 79% SUPPLIERS.
• THE LEVEL OF COMPETITIVE RIVALRY IN THE INDUSTRY IS HIGH DUE TO THE PRESENCE OF LARGE NUMBER OF BRANDS
IN THE MARKET.
• CHINESE MARKET INCLUDES BOTH LOCAL AND INTERNATIONAL BRANDS WHICH MAKES THE COMPETITION TOUGH FOR
ADIDAS AND AS SMALLER COMPANIES ARE PILING UP IN THE INDUSTRY, IT IS EXPECTED TO LEAD TO SATURATION WHICH
MAY AFFECT THE BUSINESS.
• THE THREAT OF SUBSTITUTION IN THE MARKET IS LOW AS THE NUMBER OF SUBSTITUTES ARE MINIMUM IN THE MARKET.
• THE THREAT OF NEW ENTRANT IN THE MARKET IS RELATIVELY LOW AS ALL THE MAJOR BRANDS ARE ALREADY PRESENT
IN THE CHINESE MARKET AND ALSO INCLUDES THE LOCAL POPULAR BRANDS. THE THREAT OF NEW ENTRANT IN THE
MARKET IS RELATIVELY LOW AS ALL THE MAJOR BRANDS ARE ALREADY PRESENT IN THE CHINESE MARKET AND ALSO
INCLUDES THE LOCAL POPULAR BRANDS.

SWOT
Strengths Weaknesses
 Brand value of the company is very high and it is second largest
company in China
 The brand is iconic and prestige is associated with it
 New product innovation
 Diversified product portfolio
 Effective supply chain management
 Strong financial position
 Strong distribution network
 Effective marketing strategy
 Supply chain shortage due to overdependence on foreign
suppliers
 Expensive products which alienates the low and middle income
group
 Limited brands which has restricted the company
Opportunities Threats
 Ecommerce is one of the biggest opportunity for Adidas
 Growing demand of sportswear in the global market
 Investing in smart materials
 Diversification into sports equipment

 Threat from smaller companies due to globalisation as they can
easily penetrate through online medium
 Loss of trademark
 Trade tensions between United States and China will affect the
operation of foreign companies in China where tariff and
currency war are major concerns.
 Global slowdown in economy

MARKETING MIX
Product In terms of products offered, the company has divided their product ranges into Adidas, Reebok,
Rockpot and Taylor made. Adidas focused on sports clothing and footwear, Reebok focused on
clothing and footwear, Rockpot specialises in accessories, apparels and outdoor footwear and finally
Taylor made focuses on golfing equipment and clothes (adidas-group.com).
Price Adidas uses competitive pricing and skimming pricing techniques to cater their products to the
consumers. Adidas uses competitive pricing to compete with companies such as Nike and Puma.
However, in cases of the products that are newly introduced in the market, the company prefers
using a skimming strategy (adidas-group.com). Skimming price is used as the brand equity of the
company is very high which implies that the target consumers include higher middle class.
Moreover, the consumers perceive that higher price means that the products are superior quality in
comparison to others available in the market.
Promotion The company mainly uses product placement and broadcasting for marketing their products. They
inspire the consumers through well-made and creative advertisements (adidas-group.com).
Place Adidas has developed numerous retail outlets and franchises in China where they sell their
exclusive products. Moreover, they use distributors to sell their products in other sports stores to
keep their competitive advantage in the market (adidas-group.com).

CUSTOMER EXPERIENCE
• IN TERMS OF THE CUSTOMER CURVE, ADIDAS HAS BEEN ABLE TO UNDERSTAND THE NEEDS OF THE CONSUMERS AND
PURCHASING MOTIVATION BEHIND IT. THE COMPANY WISHES TO HELP CONSUMERS TO ACHIEVE SUCCESS AND PUSH THEIR
LIMITS BY DEVELOPING ENERGETIC AND INSPIRING ADVERTISEMENTS.
• THE MAJOR PAIN POINTS FOR THE LOCAL CONSUMERS INCLUDE FACTORS SUCH AS LACK OF DIGITISATION FROM THE
COMPANY DUE TO THE GENERATION OF A NEW CONSUMER SEGMENT THAT PREFERS PURCHASING PRODUCTS ON THE ONLINE
PLATFORM. MOREOVER, CUSTOMISATION OF PRODUCTS IS ANOTHER PAIN POINT WHICH THE COMPANY NEEDS TO ADDRESS
AS CONSUMER ARE LOOKING FOR TAILORED MADE PRODUCTS. MOREOVER, THESE CONSUMERS ARE LOOKING FAST AND
CONVENIENT SERVICES. THE HAPPY POINTS OF THE CONSUMERS IS THAT THE COMPANY IS OFFERING GOOD QUALITY NEW
AND INNOVATIVE PRODUCTS AT REGULAR INTERVALS IN EACH OF THE SEGMENTS TO KEEP THE CONSUMERS HOOKED.
• IN TERMS OF CONSUMER EXPERIENCE, CONVENIENCE, PRICE AND VARIETY HAS BEEN KEY FACTORS AFFECTING THE BUSINESS
OF THE ORGANISATION. THE COMPANY OFFERS PRODUCTS TO THE UPPER MIDDLE CLASS SEGMENT BUT REDUCING THE
PRICES IS NECESSARY AS MAJORITY OF THE CONSUMERS IN CHINA BELONG TO THE MIDDLE CLASS SEGMENT.

ISSUES AND RECOMMENDATIONS
• THE OUTBREAK OF THE CORONA VIRUS HAS SIGNIFICANT AFFECTED THE SALES OF ADIDAS IN CHINA WHERE THEY HAVE
EXPERIENCED 6.3% DECLINE IN THEIR SHARES (TAYLOR).
• THE STOCKS OF ADIDAS REACH THEIR LOWEST FOR THE FIRST TIME IN THE YEAR AND THE COMPANY EXPERIENCED A
LOSS OF 1 BILLION EUROS AND OPERATING PROFIT IS EXPECTED TO DECREASE BY 500 MILLION (TAYLOR).
• MOREOVER, THE COMPANY ALSO FACES ISSUES FROM THE LOCAL COMPANIES WHICH ARE RAPIDLY EXPANDING THEIR
BUSINESS AND GAINING POPULARITY IN THE MARKET.
THEREFORE, BASED ON ISSUES IDENTIFIED IN THE MARKET, FOLLOWING RECOMMENDATION HAVE BEEN PROVIDED:
• THE ORGANISATION NEEDS TO STOP THEIR OPERATIONS IN CHINA FOR THE TIME BEING TO AVOID CAUSALITIES DUE TO
THE CORONA VIRUS.
• ADIDAS NEEDS TO CHANGE THEIR PRICING STRATEGY AS THE LOCAL COMPANIES ARE GAINING ON THE MARKET
• MOREOVER, THE COMPANY NEEDS TO DEVELOP A BRAND FOR THE MIDDLE CLASS SEGMENT SO THAT A WIDER
POPULATION SEGMENT CAN BE ADDRESSED.

REFERENCES
• ADIDAS-GROUP.COM. 2020, HTTPS://WWW.ADIDAS-GROUP.COM/EN/GROUP/HISTORY/. ACCESSED 20 MAR 2020.
• ADIDAS-GROUP.COM. 2020, HTTPS://WWW.ADIDAS-GROUP.COM/EN/GROUP/PROFILE/. ACCESSED 20 MAR 2020.
• ADIDAS-GROUP.COM. 2020, HTTPS://WWW.ADIDAS-GROUP.COM/EN/SUSTAINABILITY/PRODUCTS/MATERIALS/.
ACCESSED 20 MAR 2020.
• CAMILLERI, MARK ANTHONY. "MARKET SEGMENTATION, TARGETING AND POSITIONING." TRAVEL MARKETING,
TOURISM ECONOMICS AND THE AIRLINE PRODUCT. SPRINGER, CHAM, 2018. 69-83.
• FOSTER, BROCK. "HOW CULTURE MAKES A DIFFERENCE IN MANAGEMENT: APPLYING GEERT HOFSTEDE'S
CULTURAL DIMENSIONS TO MANAGEMENT IN GERMANY AND CHINA." (2015).
• GALEA-PACE, SEAN. "INSIDE ADIDAS' SUPPLY CHAIN". SUPPLYCHAINDIGITAL.COM, 2019,
HTTPS://WWW.SUPPLYCHAINDIGITAL.COM/SUPPLY-CHAIN-MANAGEMENT/INSIDE-ADIDAS-SUPPLY-CHAIN.

CONTD.
• HOFSTEDE-INSIGHTS.COM. "COUNTRY COMPARISON - HOFSTEDE INSIGHTS". HOFSTEDE INSIGHTS, 2020, HTTPS://WWW.HOFSTEDE-
INSIGHTS.COM/COUNTRY-COMPARISON/CHINA,GERMANY/.
• ISPO.COM. "CHINA’S NUMBER ONE SPORTS BRAND". ISPO.COM, 2019, HTTPS://WWW.ISPO.COM/EN/COMPANIES/ANTA-CHINAS-LARGEST-
SPORTS-BRAND-ANTA-SPORTS.
• MEYER, CHRIS, AND DAVID GORDON COHEN. "PORTER’S FIVE FORCES IN THE POST-INDUSTRIAL AGE." ACADEMY OF MANAGEMENT
PROCEEDINGS. VOL. 2018. NO. 1. BRIARCLIFF MANOR, NY 10510: ACADEMY OF MANAGEMENT, 2018.
• ROGOZA, ROMAN. "THE ADIDAS LOGO". LOGASTER BLOG, 2020, HTTPS://WWW.LOGASTER.COM/BLOG/ADIDAS-LOGO/.
• SORBELLO, ANGELO. "ADIDAS MISSION STATEMENT AND VISION ANALYSIS - ASTROGROWTH". ASTROGROWTH, 2020,
HTTPS://WWW.ASTROGROWTH.COM/BLOG/ADIDAS-MISSION-STATEMENT/.
• TAYLOR, CHLOE. "ADIDAS SEES $1 BILLION CORONAVIRUS HIT TO CHINA SALES, PUMA WARNS ON PROFIT". CNBC, 2020,
HTTPS://WWW.CNBC.COM/2020/03/11/ADIDAS-SEES-1-BILLION-CORONAVIRUS-HIT-TO-SALES-PUMA-WARNS-ON-PROFIT.HTML.
• UNGER, ALEXANDER, ET AL. "THE RELATIONSHIP BETWEEN THE ZIMBARDO TIME PERSPECTIVE INVENTORY (ZTPI) AND THE HOFSTEDE-
DIMENSIONS: PRELIMINARY EMPIRICAL EVIDENCE FROM GERMANY, MOROCCO, AND CHINA." OPEN JOURNAL OF SOCIAL SCIENCES 2.5
(2014): 100-105.