An In-Depth Analysis of Adidas's Marketing and Business Strategies

This essay provides a comprehensive analysis of Adidas's marketing strategies and business development. It begins with an overview of the company, its vision, and the importance of its limited distribution strategies. The essay then delves into a SWOT analysis, examining Adidas's strengths, such as its established brand and sponsorships, and weaknesses, including less focus on small economies and cash flow concerns. Opportunities like expanding into new markets and threats from competitors are also discussed. The essay further explores Adidas's global marketing strategy, including its product lines, pricing strategies, distribution channels, and promotional activities. It highlights Adidas's marketing mix, encompassing product, place, price, and promotion, and how these elements contribute to its success. The essay also examines Adidas's target market, segmentation, and strategies for brand awareness and market development. Finally, it discusses the company's global marketing approach, including its retail expansion and focus on quality and innovation. The analysis covers Adidas's core competencies and unique identity, global marketing, target audience, and overall marketing approach.

Essay Adidas

TABLE OF CONTENTS
TITLE – ESSAY ADIDAS..............................................................................................................1
REFERENCES................................................................................................................................8

TITLE – ESSAY ADIDAS
Adidas is the German multinational corporation, majorly focused on designing clothing,
shoes and accessories. The organization is the largest sportswear manufacturer in Europe and
second largest in the entire world. The company was registered on 18 August 1949 after second
world war. The total revenue generated by Adidas in 2016 was €19.29 billion (Turner, 2015).
The aim of the company is to become the leader in the sporting good industry with their products
majorly built up on passion people are having for sports and the life style. The vision of Adidas
is to become the most successful and respectful organization and fulfilling the needs of the
consumers by their wide range of products and services which are based on the latest technology
and by using the skills of the best people.
According to the heritage of sports, the strategies which are focused on limited
distribution can play an important role in the success of the organization, because it will help
them in launching a whole new product in context with the current life style of the sports market
strategy (Heeg, 2015). To understand the marketing strategies in a better way, SWOT analysis of
Adidas has been done. It will be helpful in finding out the strengths and weaknesses of the
company, so that the strategy could be developed according to that. There may be few
opportunities as well which can be used by Adidas to increase their sales rate.
First, the discussion will be on the strengths of the company and the major strength is that
Adidas is well established brand of sports which is having quite stable and high financial
condition. The company is giving sponsorship to international games so that their brand image
can be improved all around the world (Seitz, 2014). The focus of Adidas is on those games
which are played in most of the countries like football, tennis, running etc. They are also
manufacturing the products for the particular players so that their brand image can be increased.
Despite having all these, the company is having some weaknesses as well and one of them is less
concentration on the countries having small economies. The sport goods which are transported to
other countries are having high transport charges, so it is reducing the overall profit for them.
The current cash flow of the company is not satisfactory.
Though, the company is having the opportunity to tap in some other international
economies, so that their business can be increased. Adidas must focus on big cities, so that their
customer base can be increased. One more thing the management have to keep in mind that they
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should open their manufacturing plants in those countries where the economic condition is good,
than they will be able to produce goods at cheaper rates. The major threat for the company is
coming from its competitors in sports industries. The local brands are also creating problems by
providing the sports good on lower rates, so consumers gets more attracted towards those
products. Sometimes the rules and regulations of the countries are also affecting the performance
of the company.
They are having their business globally, so they have adopted global marketing strategy
by fulfilling all the domestic marketing strategies. But one concern is that domestic marketing is
very much limited, that is why the prime focus is on international market. Adidas is providing
bulk of their products to other countries (Aubert and et.al., 2016). The organization is also
having their concentration on the international events like Fifa world cups and other tennis
tournaments, so that they can increase their customer's base by attracting more number of people.
Even though, Adidas is one of the largest brand in terms of footwear, the company has
seen major ups and downs in their marketing strategy and the best way of analysing this is
through the marketing mix of Adidas. This will include product, place, price and promotion. The
first focal point is the products of the company. They are having four subsidiaries which are
focusing on the four different segments of footwear. First is their own brand name- Adidas,
which is focused on clothing and footwear. Second is Reebok, which is for causal shoes, third is
Rockpot, which looks after outdoor footwear and the final one is Taylor made, focused on
golfing shoes and clothes (McDowell, 2015). The aim of Adidas is to deliver quality products for
their consumers which is the combination of both technology and design.
The shoes bought by the consumers are to fulfil their wants and desires. The clothing is
targeted mainly for sports comfort but youngsters are using it more as their style statement. The
pricing of Adidas is sometimes skimming and competitive because of their design, style and
promotions. The pricing of the company is done by keeping the competitors pricing in mind, so
that they will be able to attract more number of consumers. In the past couple of years they are
using skimming pricing for their new products so that their sales can be increased (Choi and
et.al., 2015). The main target customers are upper middle class and high class, that is why they
never used penetrative pricing. Otherwise, it will have direct impact on the brand equity of
Adidas. Majority of the consumers believes that their products are of the best quality so they
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never hesitate in giving those prices for their products and services, and it helped them in
increasing their sales rate in past 3 years.
The products of Adidas are sold through their outlets. The company is having their own
stores, so the products are provided directly by them. There are various multi-brand showrooms,
they are also selling the products of Adidas. The last mode of selling is through online. They are
having their official website (Baena, 2016). It helped them in increasing their sales rate because
the organization is offering high discounts on the products, so the customer can get benefit from
this. It will be beneficial for the company as well in increasing their sales rate. Adidas is having
their brand equity very high and due to this the operating margins are very high. Their
distribution channel is very healthy which is helpful in promoting the products.
The promotion of the products is done through television and social networking medium,
so that more number of consumers can be attracted towards the products of the company which
will increase their sales rate. The company is having highly skilled advertising team and they are
making the ad in such a creative manner and filled with passion, so that the customers will
automatically get attracted towards the products (Jensen and et.al., 2016). After television, the
second line of promotion is the placement of the products. The company is having collaboration
with the top players of the world in their respective fields and they are sponsoring some top
teams in the world like Real Madrid. The fan base of the team is very high, and it will make it
very easy for the company to attract majority of the consumers. This increased their sales rate.
In past 3 years, the prime focus of the company was to gain the attention of the
consumers through the quality of the products, design and looks. The company is manufacturing
the products by keeping the values and beliefs of the consumers satisfied, so that the products
can be promoted and sold in the most effective way. They are also providing the finance rewards
for their employees so that it will keep them motivated. It helped them in increasing their sales
rate over the past year or two. In 2015, they have announced their new marketing strategy by
reducing their range of product 25% (Wang, 2017). It was more focused on the needs of the
consumers and the design was according to the likes of 21st century consumers. The main reason
for this is to sustain in this fast paced word and keeping all the consumers happy and satisfy.
The organization has used this particular strategy to increase their sales rate. They have
reduced their product range by 25%, and now more focused on improving the quality of the
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remaining products. They are also offering more discounts to the consumers, so that it will
increase the sales rates. Adidas has made more collaboration with the athletes in last 3 years or
so than any other sport's company (Jovanović, 2014). They want to increase their consumers
base, and by allowing the top players from their respective sport, the company has increased
their sales rate. Another focus was to gain female attention more, so they have used more female
focused marketing so that they can influence the purchasing decision. They have also increased
their marketing Spence, which is done by using fewer channels. It is the best way to recapture
the market and increase the sales rate.
The aim of the company is described earlier also, which is to become the leading brand in
the sport's industry and increase the sales rate of the products. To achieve this aim, various
strategies have been used by them. The core marketing strategy is to generate the brand
awareness. The firm has created brand awareness and brand visibility among their consumers.
They have offered discounts and sales time to time, so that the sales in increased. This is
followed by the market development (Perrone and Wodonga, 2015). The company has addressed
new consumers by expanding into new markets. The multi-brand strategy is followed by the
company. Adidas believes that most of the consumers need choices while purchasing the
products. They have understood that sales can only be increased by this, because it will provide
most options for the consumer to buy so they will not get confused.
Based on this perspective, they are able to focus more on the core competencies and
created their unique identity. At the same time they are offering wide range of products, so it
helped them in increasing their product sale in last three years. Global marketing is very crucial
in terms of enhancing sales and profitability. The brand name is already very famous, so they
have increased the distribution channel by increasing more retail stores (Blery and Kakokefalos,
2014). It makes easier for the consumer to access the stores and buy the product. This investment
has certainly increased the profitability of the company and makes more opportunities for
growth. The quality target of the organization is competitive sports. The company is able to gain
attention of the consumer by involving themselves in the sports. It also helped in increasing the
sales.
They are having over 53,731 employees in 160 countries and they are producing more
than 660 million unit of products every year which helped them in generating €14.5 billion
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(Asare and Lei, 2017). These number itself tells the story that Adidas is one of the biggest
organization in the world and quite complex as well. The company is segmented on the factors of
demographic, psycho-graphic and behaviour of different people. Their four brands means that
they are targetting four different segments of the consumers. Their targetting strategy is also
different by which they are able to target adults, young adults and children. The majority of
targets are those who are having their passion in sports and fitness. The company has mentioned
the target consumer's age which is ranging from 13-40 years. But majority of those are of the age
of 15-30 years. They are also ranging from upper middle class to luxury class.
They are able to create some distinctive image in the mind of the consumers by using
their position based targetting. The consumers also feel that brand can be trusted and the
products will be having high quality. They are having Adidas performance, this is for the
competitive sports and they are also having Adidas originals and Adidas fun in sports fashion.
One more segments is of Reebok and Reebok classic which is for active and casual sports
(Kaiser and Breuer, 2015). The famous tag line is “Impossible is nothing”. This shows the
importance of fitness and working hard towards achieving the goal set by the individual. Major
advantage of Adidas is their high distribution network and their brand quality and equity. The
company is having 2400 stores which is accounting $4.3 billion (Byun, 2015). They are also
having very strong relationship with some international organization like Internation finance
corporation and international labour organization. It helped them in gaining competitive
advantage over its competitors.
To know the impact of market competition and the position of the company in the
industry, porter's five force analysis is done which will make it very easy to understand the
present position of the company in the market. The first element is the bargaining power of the
suppliers which is very low (Chang and et.al., 2016). They are having very small supplies in the
industry and the investment made on them is through very sustainable technology. The demand
in the clothing is reduced, so the company is facing some problems in overcoming those
financial situations. Even then they are making profit because the bargaining power is very low.
But the power of bargaining through consumers is very high. The final consumers are very
sensitive towards their price.
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They can easily switch from one company to another because of the high competition.
The prices of the same product offered by the other company can be very low, so it will be easy
for them to switch. The company have to ensure that they retain their consumers by giving them
the most cost effective products. The wholesalers are also having high bargain which is in
between the retailers and the company. Online shopping is also available by which the customers
can easily compare the price of the product offered by other company to Adidas. The threat of
competitive substitute is very low, because most of the new brands are not trustworthy. People
only prefer those brands who are having high brand image and the quality of the product is also
very high. Thus, people prefer to use Adidas products more which gives them competitive
advantage in the market over other companies.
The rivalry among the competitors is very high and Nike is the biggest threat in terms of
footwear and apparel. They are the current leader having the sales of $11.8 billion. The market
shares are also very high. The new entrants threat is somewhat moderate, because it will be very
difficult for any firm to replace Adidas in terms of sports shoes and wear. It requires very high
capital amount and high quality product with the low price to give competition to Adidas. The
product of the company are having the highest quality and people are having faith in those
products, so threat from new entrants is very low (Sharma, 2016). The influence of stakeholders
is also low or moderate. The organization has involved themselves in many of the sponsoring
deals, so it makes their financial condition very strong. By this analysis, it is very easy to say that
Adidas is currently having very good brand image with low threats from the new entrants. The
faith of the consumers is very high which helped them in increasing their sales rate in last three
financial years.
Pricing strategy is very essential in targeting the right segment of the market and improve
the sales rate. Adidas is having very basic and particular set of their consumers, and the company
want to give the best quality products and services. Juts because of the innovation and new
improvement in the manufacturing of the products, the company is performing on the top most
level and because of this the price of the products of Adidas are premium. This strategy is
focused on the quality of the product as well as competitors pricing (Hitesh, 2017). The prime
reason for such high pricing is that either the products are being customized by the consumers or
because of the quality of the material used in manufacturing those products which is very high. It
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will make the product very less affordable to the consumers, but Adidas is developing their 93%
products in Asia because of the cheap labour.
The pricing for that particular merchandise is always justified, because they never
compromised with the standard and quality of the product. Due to this, the target segment of
Adidas is always upper middle class or luxury class. There is another method called high low
pricing which is used by the company. In this method they are always keeping the price of their
product high to their competitors (Li and et.al., 2016). The company will give coupons and other
techniques, so that the consumer will buy those products. The lower promotion pricing is done to
attract the consumers. The consumer will never able to know the actual price of the products. But
these type of consumers will never complain about the price of the products because they are
loyal to the brand. Adidas will always follow this strategy so that they can remain competitive in
the market.
The company is maintaining the quality of the commodity and by considering those
situations the targeted market will be adult people and urban youth. The major objective of the
establishment is to focus on those consumers who are eager to buy the product of the Adidas but
they are finding it difficult to reach to the retail stores. Adidas is making sure that their product
looks original and of premium quality, so that they will be able to retain their consumer's.
Customer's always want that the product they are purchasing looks standard, so that they will
remain committed to the company (Ülkü and Hsuan, 2017). Organization wanted to increase
their market share, so they want to market their products by which the sales can be increased.
Adidas is having very dominant market share in the sport's industry and they want to maintain it,
so that the competition in the market can be reduced. Porter's generic strategies is adopted by
Adidas, so that they can get the maximum amount of shares.
The shoes offered by the company are very comfortable as compare to other products.
The apparels are very stylish and attractive in design so that it will fulfil the needs and
requirements of the consumers. They are providing sponsorship to the sports of football, cricket,
golf, basketball, rugby and top football clubs like Real Madrid, Chelsea, Manchester united. In
this way, they have attracted more consumers towards their products which increases their sales
rates in past 3 years (Xiao, Choi and Cheng, 2015). Adidas is getting major competition from
Nike and Puma, because both these brands are having very high market shares in the sport's
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industry. If Adidas plans to open their new store in some other country, then they are required
recruit those people who are having quality skills to sell the product.
Their marketing operations are very fast paced, so people need to be highly flexible in
doing those kinds of job which can be useful in increasing the sales and thus profitability. This
team will be having those individuals who are capable of solving the issues faced by the
consumer's both internally and externally. The candidate must have proper analytical skills so
that they are able to complete day to day tasks. These are the few skills required in the members
of the sales team, if the company is opening new store in the country. Adidas products are
designed according to the needs of the consumers and suitable to the particular sports. The
designed products must look attractive, so that the consumer will buy those products. Further, the
merchandise must be having good material and developed by using the latest technologies so that
the life span can be increased and it remains sustainable in this competitive market.
For increasing the sales of the product, the early buzz must be created on the social
media, so that more people will get to know about the new product and they will take interest in
knowing more about that. The company must run an integrated social media campaign so that
they will be able to explain more about the qualities of the product (Roscoe and Baker, 2014).
The design should be very rare and it should be quite unique. The consumers will not buy those
products who are having same design or somewhat similar. Therefore, Adidas must make sure
that they are manufacturing those products who are different from the products of their
competitors. It will help them in increasing their sales rate. The launch date of the product should
be accurate, and it should be in that time when the sale is high. People will attract more towards
the product and definitely the sales of that product will be more.
The market segmentation of Adidas is being done in four ways; geographic, behavioural,
demographic and psycho-graphic. The geographic segmentation is further divided into different
units which are based on the neighbourhood, region, states, cities, countries etc. The behavioural
is further divided into the following segments like; regular user of Gym, sports lover, brand
freaks or people who want benefits and value for money. In demographic segment, Adidas is
targetting the people who are having their age from 15-40 (Sara, 2017). The income level must
be above $15,0000. The class will be upper middle or higher class and can be of any gender. The
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final segmentation is psycho-graphic and the targeted people are those who are well experienced,
hard workers or goal achievers.
The products of Adidas are highly durable and flexible. The company is known for
producing the fastest shoes. Their slogan was Impossible is nothing. This makes belief to the
consumers that their products are of the highest quality. Therefore, it helped in increasing the
sales. Adidas is also the brand name for all the sports mainly football. Their products are
something different among all other products. The desirability of their products are very high.
There was an increase in their sales rate from 11% to 13% in 2016. The following year sales has
jumped up to 18% generating the revenues of $20.4 billion USD (Haseeb, 2015). In coming few
years, Adidas will be selling more shoes and products than Nike or any other top brand in the
sport's industry. The company is claiming that next year the sales rate will further increase,
because of their collaboration with some top players like Sachin Tendulkar, Lionel Messi etc.
The market analysis of Adidas was done on the basis of their marketing strategies and it
was found out that because of the presence of other competitor products and high bargaining
power of the consumers, it is very difficult for them to sustain in the market. The industry is
changing because of the changing lifestyle of the youth, the economic conditions are also
changing and people will not even hesitate in switching over from one brand to another. The
company has understood that mass production or mass marketing is not the successful strategy if
they want to remain sustainable in the market and retain their consumers. They have identified
the wants and needs of the customers who are of middle upper class or upper class. The products
are now manufactured according to the way consumer wants. By doing this, they have certainly
increased their sales rate in last few years.
The final conclusion of this essay is that Adidas has successfully implemented their
marketing strategies so that their sales rates has increased. They have used competitive pricing
strategy by keeping their competitors in mind. The products developed are quite unique in design
and for those products they used skimming pricing. Further, it was concluded that the major
target segmentation was done on those people who are having their age from 15-30. The
designed products are according to these people, which helped them in enhancing the sales rate
and increasing the profitability of the company (Adidas says sales may rise fastest in 5 years,
2016). Their aim was to become the biggest selling brand in context with the sports shoes, and
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from last three years they have surpassed Nike in terms of sales and now they are the largest
selling company of the sport's accessories.
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