Adidas Operation Management, Product Differentiation Analysis

This report provides a comprehensive analysis of Adidas' operation management, focusing on its product differentiation and cost leadership strategies. The report delves into how Adidas has successfully created a market advantage through unique product features, extended product lines, and substantial investments in marketing and celebrity endorsements. It also examines the company's approach to lowering prices through cost leadership, analyzing how Adidas manages raw material costs, price equilibrium, and product pricing to appeal to a wide range of customers. Furthermore, the report explores Adidas' marketing strategies, including the use of celebrity endorsements and its distinctive logo, to enhance brand recognition and customer loyalty. The report highlights the significance of the company's focus on customer needs, innovation, and market adaptation, providing insights into Adidas' ability to maintain its competitive edge in the global market.

Adidas operation management 1
Adidas Operation Management
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Adidas operation management 2
Operation management
Adidas company product differentiation
Adidas growth and development history has been a great insight and motivation for the
workers and stakeholders in the business. In today's business environment, competition has been
very tough. Therefore, the companies aiming to outwit other business in the market competition
has to ensure there is uniqueness with their strategy to provide product differentiation(Yang and
Luo, 2019). The company has been facing severe completion until the time it began to devise
ways of winning the market (Tomlinson, 2005). The company has faced a generic competition
which is not easy to overcome with weak strategies. With generic completion, the company has
to create a market advantage by servicing ways to attract customers or making product
differentiation. Adidas uses the following policy to create a market opportunity gap by ensuring
product differentiation via the following procedures (Wright, 2019). All the above strategies
require the company to use a sophisticated management team who conspire to ensure company
growth.
How Adidas uses the product differentiation strategy
There are several factors considered by Adidas when using product differentiation. These
factors help in the actualization of the company competition capability(Yang, 2019d). The
company always ensures several innovative measures are taken. Adidas has been a bit company
whose reputation is known worldwide. The company has arrived and mainly used several criteria

Adidas operation management 3
to achieve its market competition(Yang, 2019a). The various considerations embraced when
creating market opportunity through product differentiation is as follows.
One of the most valued factors is to emphasize mostly on its unique product features.
Despite the similarities in the product with those of other companies in the generic competition,
the company products have their uniqueness (Yang, 2019b). Some of its product features are,
therefore, relatively different. To create a Niche, the company has to put more effort into the
uniqueness of the products. For example, Adidas shoe wear has the following unique features.
First is that they are a comfort boost. All runners will always focus on the comfortability of the
shoes. Under thorough research, the company has ensured that the shoes are very comfortable
when running. And therefore, many customers have been moved to purchase and even spread the
goodness of the products. Also, the shoe has a spring that boosts the arch. It has a lightweight
bridge between the forefoot and front foot(Sköld and Dymek, 2019). The design helps the shoe
to adapt to the running surface with ease and without straining. The boots are also of the upper
class. It is now revealed that a new invention has been done. And shoe product has been
developed that has knitted, seamless uppers that take a form of socks. The shoe is designed to
have a soft upper that flexibly can bend during leg movement. It is also designed with an
integrated three-dimension wireframe. The frame is said to provide a combination of support and
adaptability to changes and temperature. The company has emphasized these new features, and
therefore it has ensured attraction to the customers hence creating a market gap. The inventions
and inclusion of the unique and integrated needs if the customers have enabled the company to
come up with these unique features.
Moreover, the company has extended its product line to fit its customers' needs. With
insatiable human wants, everybody will want to have the best property than ever. The companies

Adidas operation management 4
producing a particular product similar, may at one time find or realize a specific level of the
product and be comfortable (Dibenedetto et al., 2019). However, it is always not enough to be
good when able to be the best. Adidas has extended its line of operating products to meet
customers' interest. Adidas has extended its product line to meet customer demand. Previously,
Adidas was producing sport wears(KAL and ABED ALGHANI, 2019). However, today it has
been a general dealer as it can create and sell the same product to all the customers worldwide.
Adidas product was initially slated for the sports. Today Adidas can supply wears to the general
public and hence increasing the market demand of the product.
The decision has risen after the company has realized that the general public is the
willing majority customers, and thus they need to purchase the products even under low prices.
The company has planned and ensured to establish production centers to reach all the
customers(Costa, 2019). The company is also working hard to factor in the demand of middle-
class customers by designing products that can best fit them, and that can be of interest to them.
The objective is met by regulating the prices. And it was ensuring that there is a way devised to
suit their needs. The action has made it attractive, and hence the general public has now become
the primary customer for the Adidas products. The company is also extending the line of
production by making other wears for the general public. The products are not only designed for
the game but also for formal dressing. The company has also maintained its reputation by
ensuring the originality and materialism is kept at high quality.
Extensive experience has been another factor that Adidas is using to ensure there is
differentiation in production. Adidas has been operating under a slogan that is based on five
performance criteria of more robust, smarter, more relaxed, faster, and more natural. The
company has worked under this slogan for a long duration, which has been the future of the

Adidas operation management 5
business. It is more impressing for all the workers to operate in mind that what they shall
produce is always good, more so to the customers (Yang, 2019c). The company ensures this
objective by hiring the most qualified and experienced experts. The company also maintains its
experienced personnel to ensure no downgrading. The company will always achieve its objective
and win the most customers with a high product. The experience with the workers is based on the
top quality products. The production typically has been tailored on the daily innovations. The
innovations are also attached to the company product benefit slogan(Collister, 2019). The
company also has impeccable experience in the market changes. And therefore, it always works
to improve the taste of its products. The company has a wide range of expertise. It is now
believed that Adidas has almost all the customer need options.
The company has also enhanced product differentiation through substantial investment in
product marketing, advertising, and celebrity endorsement. However, the company product may
be serving the same purpose as that of the competitors, and the company has ensured popularity
through massive advertisements. Marketing has also been a thing about the company. The
company is now well known over the world (Aurel et al., 2019). The unique product features
have boosted the company product marketing, and hence no customer wishes to make a different
option from that of the Adidas company. The company products are well known, and therefore,
they gain a difference in the market. The originality and uniqueness of Adidas products and top
quality have been proven by most of the customers. The company has always been seeking the
needs of the customers. And the production has been done regarding the customer tastes and
preferences. The use of a lot of finances to vest on the advertisement gives typically back to the
company financial inflows when the sales increase. The ad has been fruitful to the company as it
has sold as many products as possible (Graham et al., 2020). The company has also used

Adidas operation management 6
celebrities to make their products accessible. The company developed and grew through selling
its products to the sportspeople who are known worldwide. The company has gained popularity
through such people as they have been very loyal customers who are known worldwide as they
are watched by their guns all over the world. The famous people in the world have been carrying
their activities while putting on Adidas garments. Sportspeople have testified that Adidas
products are the best in terms of comfort and even cost.
The other factor is the company logo. It is designed with three ascending bars that speak
the power of the company(Behar et al., 2019). The company has a very peculiar logo which is
known all over the world. The company has been using the same logo in advertisement and
product promotion hence the popularity. The company products are designed with the same logo,
which is known to predict the love and its commitment to games and sports activities. The
company typically has a necessary foundation under sports. It is the second after Nike. Adidas
has unique product texture, which is very attractive and original with durable and perfect
material to meet the purpose. It has specialized in both national and multinational trade. All its
customers have firmly believed in its products. The company has also established product outlets
and intermediaries, which help in reaching the customers' market. They have online-based stores
that serve the international market and also have international marketing departments that help in
dealing with customer tastes and interests (Torvinen et al., 2019). Every moment a customer
acquires goods from the company, he or she is well appreciated. Due to the company's
popularity, most people ensure to purchase and wear Adidas products to improve their status
quo.

Adidas operation management 7
Adidas ability to lower prices
Adidas has been using a cost leadership strategy to increase its sales. Like any other
business, Adidas has worked downs and ups to ensure there is the maximization of the profits.
The company management team has been able to do a thorough analysis of the raw material.
Therefore they have based their quotes on the bulky raw materials, which generally reduce the
cost of the raw materials (Werner et al., 2019a). The company has been doing the investigation
on the supplies which can source and provide raw materials at a favorable cost, which enables
the company to predict a low price for the products. The company also has been doing price
equilibrium. By ensuring that the level of the customer income determines estimates of the
products. Customers of the middle class who are the majority have the products at a relatively
low price that can give the company just a little profit per product. However, it is compensated
through big sales, which are made under middle-class customers. The middle-class customers
have been able to promote the company sales by purchasing a lot of products at relatively low
prices. Within the financial period, the company can sell very many products to middle-class
customers hence making profits at economical prices. The company has also been able to
produce goods that can fit the financial position of middle-class customers (Lussier, 2019). The
popularity of the company has enabled it to serve a wide range of multinational customers. The
customers are very willing to purchase at high prices after realizing the goodness of the products.
In some cases, the sales prices are based on the number of goods purchased per person or
per order. The company can also choose to sell under low prices for the new customers and
finally increase the costs. Due to the popularity of the company, the amount can be reduced since
no much need for advertisement. The company can, therefore, choose to lower costs to the
customer and ensure it is compensated using the amount aimed for the ad.

Adidas operation management 8
The company has also been able to lower the prices of some goods and increase rates of
the other assets so that there can be compensation (Burich et al., 2020b). Some products are of
high demand than others. The company will always ensure its products are sold depending on the
urgency and age. Some products, for example, shows can be sold at a relatively high price but
lower the price of the games kits to compensate for the price hence selling more goods. Goods
produced at a low cost will also predict low prices. Therefore companies mostly ensure the sale
of goods increased through lowering the prices while maintaining the profit margin. The most
important thing when making sales is to do market research and strategize on keeps the product
profit margin (Burich et al., 2020a). No matter the price of the product, the company should
ensure the profit margin will either increase but not decrease. If the cost of production is high, it
follows that the selling price has to grow, and the reverse is true. Adidas company has worked
closely with their marketing departments from overseas, and therefore more customer feedback
is availed. The company always is making product difference by reducing the prices at the
relevantly little amount, which seems insignificant to the company but psychologically attractive
to customers.
The upper-class customers do not like cheap gods, and hence they will always vie for
costly goods. The reason for upper-class customers to like expensive products is capable of
improving their game and status quo. The upper-class customers also have very high levels of
income, and therefore, they feel comfortable when dealing with expensive goods (Munson et al.,
2019). All products supplied to upper-class customers are usually of high quality and prices. The
company ensures it provides this kind of market with very high quality at high prices. The high
rates and benefits are used to compensate for the lower costs and losses made when dealing with
middle-class customers, among others. The company ensures the product uniqueness is

Adidas operation management 9
manifested to these top customers who but products without bargaining the prices. The company
provides no losses made when making sales to upper-class customers. Hence, the company has
even many customers who have bee maintain from middle class to upper class after meeting their
fortunate.
The use of a cunning price strategy has been used by Adidas company. It has been taking
advantage of the places where the market is favorable to its products (Kahn and Baum, 2020).
The company can find that in some new areas, customers view their prices as if they are low
when the company knows they are high comparing to the cost of production and sales. The
company can, therefore, raise its prices to fit the customer's expectations. Some other times even
customers would buy goods due to their quality without valuing the costs. The company can also
use psychological prices to win customers. If the market price of a product is ten dollars, the
company pricing strategy may be used to reduce the cost by reducing the amount to the lower
limit of the amount. It is hence convincing the customers psychologically that they are going to
purchase the price at a relatively low cost (Page et al., 2019). The company can also use the
pricing war strategy to ensure that they win the market when the competition is high. The price
war hurts the competitors but the advantage to the buyers; however, it can be solved. The
company will always purpose in providing the best of its efforts to outdo the other competitors.
The company can outwit the lower price effects by compensating during the peak season. After
winning the market, the company can now regulate its prices to offset the uncured loses. The
Adidas company has recorded the best pricing strategy; hence it is about to win the competitors.
Adidas has ensured that there is low product and sales cost, which is brought about by proper
allocation of the resources and production process by use of supper modern technology, which is
of very high speed (Kahn and Baum, 2020). It is now well known that Adidas has closed its old

Adidas operation management 10
factories and replaced with very high-speed factories which are doubling other companies
production rate.
The success of Adidas supply chain
Adidas is one of the companies which has been noticed to have a high technological
integrated supply chain. It is compounded by the robust network approach and high-speed
factories (Junejo et al., 2019). The company supply chain management is characterized by an
exceptional understanding of market trends and demand forecasting. Adidas has an agile supply
chain that has been serving a wide area of operation. The company has a wide field of service,
which is worldwide. The Adidas customers increase day by day and even in different points of
the world. Therefore the company requires a highly strategized supply chain. Adidas has
established production centers for areas that have high market demand for Adidas products. The
company has also had very many warehouses all over the world to ensure maximum supply to
the customers. Adidas has already established high-speed factories that generally serve the
market under contractors and supply agents overseas. On its supply, Adidas has been focusing on
the following factors to achieve its objectives (Kim et al., 2020). The company is aiming to
become a fast sports company, which implies accelerating things up manifold. The company has
ensured the achievement of this objective by using very speed factories which have been toping
in production rate with minimum am latency. The factories e believed to produce several goods
within a short period. The o eject can e improved by using warehouses to locate products near to
the customers and also making the customers demand a perspective to ensure there is
satisfaction. The company has been making a thorough research and demand prediction for
sports activities. However, it is now awful that the demand may go down as a result of the
current condition caused by the coronavirus, which is affecting sports worldwide (Welker and

Adidas operation management 11
Nikula, 2019). The company supply chain is based on creating a seamless consumer experience
since business should be consumer-centered. The company is up to transforming the way the
Adidas creates and produces.
The company has been thriving under various considerations during its production
processes. The company has been ensuring no running out of stock by using speed factories and
also producing goods, considering the demand forecasting (Lanpher et al., 2019). It is also
ensuring the production of goods through creating in seasons. The company has been looking for
market trends and using such data to produce fresh products. The company is also prepared to
respond to seasonal demand by creating supplies with a short lead-time response. The company
has been manufacturing goods at very high speed and, therefore, able to react quickly to seasonal
demand. The ability of the company supply chain to satisfy such yearly requirements is
considered to be an excellent characteristic. The company can now reach the market broadly at
the appropriate period (Zagel et al., 2019). The company has a minimal lead time, and hence it is
considered the fastest company in the world.
Distribution network
The company has been concentrating on optimizing the speed of the company to supply
goods to the stores. The company has recently opened new distribution centers in German and
China. The new distribution centers are tailored to provide products to increasing new customers
in China and German. It has numerous warehouses and distribution centers worldwide. The
Adidas company is aiming at reaching the customers with minimum or no lead time. Therefore it
has to improve its strategy, which has developed (Cauwood et al., 2019). The company has a
highly sophisticated management team that is alert about the market demand tend s and has
appropriate supplying network and distribution channels, which are finished through close

Adidas operation management 12
market research and operational supervision. The company has a successful supply chain, which
has been rooming in the market. The company is now known to have an approximate of 2500
retail stores and 13000 mono franchise brand stores (Cauwood et al., 2019). The company also
has around 150000 wholesale warehouses (Manz et al., 2019). These warehouses help the
company to quickly meet its increasing customer demands (Ellis and Schwartz, 2020). The
Adidas company also has a well-coordinated chain of supply. The company also has
technologized its chain of supply service to customers by creating an online portal for customers
to check whether goods are available in store and or request for availability. The platform also
allows the customers to order for the shipment and even pay online. The online service is paying
attention to many, which can serve the customers across the world. Through this technology, the
company has been supplying goods to the customers after ordering and paying online. The
company also is for use on the sale of the product through wholesale and even small quantities.
The packaging is done upon payment. All these efforts have made the Adidas supply chain
successful (Werner et al., 2019b). The Adidas supply chain has a high-speed communication
system that communicated to both the strategic department through the logistics department and
to the other stakeholders to ensure the process is successful.
Another robust activity that has empowered the company supply chain is strategic
planning, which has been of great importance. The company's strategic planning department has
ensured there is a minimal lead time in supplying products to the customers after placing orders.
The company has minimized the cost of supply (Poegl et al., 2019).
Transport the company is using a sensitive system of transport that is reducing the cost of
transport. The company uses its premium means of transportation to transport goods to the
stores. The company there requires the distributors now to use home-based means to reach the

Adidas operation management 13
customers; hence no cost of shipping from distributors to the customers. The customers usually
cater for the transportation of goods from the distributors' warehouse by picking the products
from the nearby warehouses except for those making bulky orders (Blekanov et al., 2019). For
such customers, the company typically give them after sales device by ensuring goods are taken
to their stores. The successful effects of the Adidas supply chain have made Nike a competitor to
lower its prices to cover its low market demand.
Failures of the Adidas supply chain
Based on the company's weakness, the company has been painted a bad image by the
poor working conditions of its overseas factories. The companies have not been proofing the top
name of the company that has been known all over (Madura, 2020). It has been caused by
distance monitoring, which does not enforce seriousness in production. The overseas company
management should be finished and restructured to portray the right image of the company. Due
to the poor working conditions by offshore intermediaries, the company has not been recording
good cash inflows through such branches. They have been recording a low-profit margin over a
long period. The company should realize the importance of improving the condition of such
companies to ensure quick supply of goods to the customers under the overseas market. These
companies have such poor working conditions due to poor management. However, the product is
of the same value and quality despite the poor working conditions in such companies (Xu, 2020).
The company products are also getting increased market demand overseas, even with such
working conditions.
Secondly, the company has not established e-commerce in the united states of America.
Since America is one of the superpower statuses, it should have things done with much

Adidas operation management 14
sophistication. The company has not been able to satisfy them German market due to poor
resource allocation to such areas (Deepak and Jeyakumar, 2019).
Finally, there is another nagging issue if the company production system breakage during
the adoption of the new technology, which is going to be enhanced by launching the speed
factories to the remaining production centers. And now, due to the coronavirus outbreak, it is
most likely that there will be challenges when supplying products to the destination, and
production activities may go down (Deepak and Jeyakumar, 2019). The company is aiming at
introducing some robots which will perform duties under remote control to contain the current
situation whose end is not easily predictable.
Conclusion
Adidas company has more strengths than weaknesses, and hence it is most likely to be
the most efficient company to both customers and stakeholders. The company has a well laid
down operational strategies and, therefore, is going to outwit the market worldwide. Adidas
company has very many market advantages of logo, popularity, and ability, among many other
factors. It has more capability to cover the losses and record a positive cash inflow. Adidas is
one of the best companies that can be emulated by growing companies. It has well laid down
operation strategies and proper resource allocation. The management departments are equipped
with an appropriate system of communication, which ensures there are clarity and oneness hence
promoting teamwork among the employees. The company has a good business culture than can
be applied by other growing companies. Adidas has posed a challenge to its competitors in terms
of production rate, among other factors.

Adidas operation management 15
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