University Marketing: Adidas Case Study on Operations Management

This case study examines the marketing operations of Adidas, a leading sportswear company. It delves into Adidas's mission, product differentiation strategies, including its focus on innovation, and its multi-brand portfolio. The analysis covers Adidas's pricing strategies, distribution channels, and its adoption of e-commerce. The study also discusses Adidas's supply chain management, organizational culture, and its approach to sustainability. Furthermore, the case study highlights Adidas's competitive advantages, including its strong brand recognition, strategic investments, and the use of price skimming. The study also touches on the company's expansion, marketing techniques, and its response to market competition, including Nike and other competitors. The case study also analyzes the company's pricing strategies and the impact of economic factors on its profitability and supply chain management.

Running Head: MARKETING OPERATIONS
MARKETING OPERATIONS
NAME OF THE STUDENT
NAME OF THE UNIVERSITY
AUTHOR NOTE

1Marketing Operations
Table of Contents
Answer to the question 1.................................................................................................................2
Answer to the question2..................................................................................................................6
Answer to the question3..................................................................................................................9

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Answer to question 1
Adidas is a company in Germany that specializes in shoes and clothing. It is the largest
company for sportswear in Europe and they had also taken over Reebok, Rockport and Taylor
made. It is also the second-largest company in the world. Adidas has been founded by Adolf
dasler in the year 1924; however, it became registered only after 1974 and is headquartered in
Herzogenaurach, Germany. Adidas is the abbreviated version of ‘all day I dream about soccer.’ The
mission of Adidas is to be a high-quality sport emblem in the entire world. Adidas is obsessed with
all sports activities and its requirements. As a part of their thorough making plans initiative, they had
been specializing in enforcing an optimized demand and planning system and device in almost more
than 20 nations in Europe. They standardized or partly computerized certain planning functions to
boom forecast accuracy (Turner 2019).
Adidas focuses extra on the vast differentiation method. The company specializes in
innovation and continuously trying to produce new merchandise, offerings, and strategies to cope
up with the competition. In 2014 centralized income approach & Excellency group has been
created to guide all marketplace throughout the globe and controlled by the worldwide sales
feature. The organization's multi-brand portfolio gives them a vital competitive benefit. This
created a global sales feature which has been chargeable for industrial sports and an international
manufacturers feature which were answerable for the advertising of both brands. The worldwide
sales feature had additionally broken up into departments, wholesale and retail, which catered to
the various desires of each commercial enterprise fashions. This has been executed to maintain
their company degree approach in the long run in such a way that those divisions could
emphasize and work in their respective departments with a view to making the maximum in their
efforts. (AG strategy-overview, 2018)

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They applied a multi-brand strategy via having a various logo portfolio which allowed
them to cater to all segments of the marketplace from players to nearly everybody. This helped
them to preserve a completely unique identity and deal with their center abilities. Adidas targeted
their investments with their excellent advertising and distribution channels in one of a kind
international locations by way of seriously comparing between the behaviors of their client
shopping and their regular conflict to preserve to the top-shelf area. They've additionally
embraced e-commerce is a good way to turn out to be extra green and attraction to more and
more customers and make shopping an awful lot greater effortlessly accessible for them. Their
supply chain is intently communicated and therefore, it facilitates them to personalize their
merchandise which attracts a wide variety of clients. The organizational subculture of the Adidas
institution obligates personnel to be progressive. This subculture forces them to provide
tremendously modern items and with the usage of modern-day generation technology, their
merchandise has excellent high-quality. To become a sustainable organization, they have found
the proper stability among shareholder pursuits and the desires and issues amongb the employees
of the supplier’s factories in addition to the surroundings. Based on data in Adidas-Salomon
(2004) with the use of recent technology they produce merchandise, that has enhanced
performances of the players and they can comfortably give more attention on sports which
includes soccer, tennis, basketball or even schooling shoes, which can be utilized by absolutely
everyone with the capability to run. Product differentiation is a commercial enterprise method
wherein companies try to benefit a competitive gain by growing the willingness of clients to pay
for the products or offerings they must provide. In terms of having a competitive facet over the
most excellent athletic wear manufacturers, Adidas has been able to hold one via product
differentiation. The Adidas not only provide garments for the runner who requires new

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exercising equipment for his or her upcoming marathon. However, they also provide the pinnacle
of the line of apparels for the style-forward man or woman who desires to turn heads at the
subsequent social occasion they attend. It is one of the largest reasons that their product
differentiation is so profound is that despite the fact that their products are excessively high-
quality, they simply charge lower than Nike in quite a few distinct regions strategically. Adidas
has been capable of offering a completely different sort of apparel for slightly lower costs and
they continue to deliver new progressive functions and products to the marketplace. Many try to
replica their achievement; however, it is pretty apparent and it simply makes humans desire the
actual element even greater (Carr 2019).
Adidas enterprise version is enormously centered on developing modern merchandise
designed to meet purchaser desires, as opposed to making an investment in product
endorsements, the organization tries to illustrate its value by using and developing a excessive
overall performance product line primarily based on the particular requirements of athletes and
customers. Similarly it specializes in quicker product advent and manufacturing by constantly
enhancing the infrastructure, strategies and structures. Additionally they emphasize on
considerably reduction complexity on a collection level via streamlining the worldwide product
variety, consolidating the warehouse base in addition to harmonizing above marketplace-
supplier. The ambition to supply the great branded buying reviews in any respect client touch
factors. Progressive pace models in supply chain to respond speedy to purchaser wishes. This
method has stimulated traders from around the globe to buy Adidas not any other inventory and
therefore, the enterprise has proven consistent boom for many years. The public possession
shape of every organization has been an essential part of maintaining boom over the long term.

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Adidas has managed to secure its name in the game of football and tennis and since
football is known to be as a world sport, Adidas has been able to create a niche for themselves in
the world market. Nike on the other hand, even after being more popular then Adidas still trying
to follow adidas by getting into the football market. Price method that Adidas follows is price
skimming. Prices of the Adidas also varies as per the looks and colours of the shoes for example,
white color sneekers are more expensive than the same quality product of different colors. Their
distribution strategy is similar to that with Nike, that they target those areas where there are
concentration of customers and in this way they setup the shops. E-commerce has increased after
they have started using them for sales and it has also lead to the reduction of cost. They have set
up a strong and communicative supply chain and therefore there are no such issues of out of
stock faced by the customers and therefore people prefer Adidas. Apart from this, though there
are many competitors that has come into the market including Nike and crocs and several others.
People these days are ok to pay the price for the good quality innovative goods and therefore
Adidas will have an edge since its target customers are athletics and they really care about the
products and comfort and not the prices. Being competitive in the field of pricing combined with
best quality, Adidas seems to have made a strong base which is very difficult to break by the new
entrants. Basketball players generally prefer adidas shoes as they are unique in their designs and
are also light weight. They use magazines and their collaboration with Reebok has given them
ample of advertising and marketing element and here Adidas in the quest to become the market
leader has employed several advertising and brand endorsements technique to make themselves
the best. However, in order to sustain in such competitive environment they have to get more
innovative ideas and to innovate products that will be technologically as well as advanced like

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the smart shoes which should address the problems faced by the professional athletics (Baena
2019).
It has been noted that Adidas has started from Germany and now they are at every
part of the world. The strategies that Adidas has used in the past and the strategies of what they
are using currently had been really strong and had worked in favour of them. They have made a
strong genre for themselves in the sports athletics apparels and shoes and other necessities goods
that includes even perfume, which also has a sportsman feel. Their advertising and marketing has
made them to sustain in the market for nearly two decades and they are still sturdy. Their
expansion of market shares with the acquisition of Reebok had given them another opportunities
to expand their horizon and to target the untapped market. They have already made a brand in
India, China and Indonesia and now they can also get their market spread to some part of South
Africa. They have a strategic solutions to deal with the current economic situations and also
against their competitors. However, they should continue with their innovation and they should
work more to get more innovative ideas for their products to maintain the edge that they already
had in the market.
Answer to the question2
A company ought to have a great pricing method that is appropriate to the employer’s
cutting-edge scenario or circumstance so as to earn greater earnings. Through adopting an
excellent pricing approach, organization has a key choice to stay feasible. If a corporation desires
to earn greater profit, simply by raising the rate of a by-product then it is not a very good
alternative especially in economic recession. It could lead a business enterprise to downfall as
the organization’s by-product will placed out within the market because of the price aspect.

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Product mix pricing method is the method for setting a by-product’s charge regularly needs to be
modified while the by-product is a part of by-product mix inclusion, derivative line pricing,
optionally available derivative pricing, captive by-product pricing, pricing and spinoff package
pricing. Unique by-product and carrier ought to use extraordinary strategies (Holtbrügge and
Schuster 2017).
Adidas has been able to set up a dedicated department of profitability management,
where they use to monitor the trends of the macroeconomics. It also helps in forecasting the
impact of the cost of product and the supplier and further help in coming up with the supply
chain strategy. Apart from this, these team has been able to focus on the attention to details to the
development and the engineering of goods and derive methods to not compromise on the quality
and at the same times, tries to curb the prices. They have also engaged their supplier into the
activity so as to bring transparency and being able to predict the future costs. They have tracked
the cost of their raw materials and thereafter focusses on leveraging them with the volumes.
Since with large volumes they will be able to negotiate more and thus the cost of the overall
products will ultimately decrease or in other word it will get offset by the volumes. Apart from
this they had an excellent sourcing team which has enable them to improvise their allocation of
products where they can analyze the capabilities of the suppliers and also make sure of the cost
of supply chain.
Negotiation tactics has made them negotiate cost with the transport and suppliers. They
have leveraged volumes in order to compensate for the reduction in the costs by the
transportation and the customs department and therefore able to get the improved shipping routes
and lower cost of transportation from their service providers (Brown and Brison 2018).

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They have also been able to maintain their cost advantages with the help of having a
strong co-operation with their suppliers. Apart from the bargaining they also have some loyal
suppliers that supply them good quality goods at the competitive prices. Adidas has always tried
to strategize its focus on reduction of the production cost and time and to expand their market
share.
It is expected that there will be a certain rise in the price of the cost of the Adidas
products over the next five years due to the fact that there are extreme rise in the wages of the
labor and the material cost. However, there are still chances of compensating this high price with
the help of lifting prices and cutting its edges and also shifting their source of production from
china. There are rising substitute of china for the production process and that is Vietnam, where
the labor rates are comparatively cheaper and thus the cost will gets reduced. Even other
competitors of the shoe makers are also shifting their production base to Vietnam, since for the
shoe making industry, they require a large sections of hand stitching laborers for better sneakers.
Therefore, adidas has a plan to cut their outsourcing quantities to china, thereby outsourcing
excessive pairs to the countries like Indonesia, Vietnam and Malaysia.
Adidas has also planned to set up the factory in Germany which will be operated by
robots which will make almost 510 million pairs of shoes and it will prove to be very effective in
reducing the costs of the labor and the overall costs. However, it has to be noted that Adidas is
primarily dependent over a million of workers and laborers for the purpose of making just 620
million of pairs of shoes and other apparels and accessories. All these are manly in the countries
of china and Vietnam (Kozak 2018).
Adidas is currently trying to cope up with the rising cost arised due to the hike in the
laborers fees and the raw materials by compensating it by means of improved efficiency of the

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factories and also cutting off ranges. Adidas is trying to hedge the dominion od the US dollars
since most of its transactions with the Asian providers are done in the dollars, however, it is not
possible to compensate all the impact that had on the gross profit in the year 2016.
With the help of their closely linked supply chain, close co-operation with the suppliers
planning of cheap laborers outsourcing and ordering and manufacturing in bulk order allows
them to maintain their prices as competitive. Adidas uses both skimming and the competitive
pricing strategy. Keeping in mind their competitors like Puma, Nike, Under armour, they uses
competitive prices when dealing with the out of the mills product. However, when there are new
products launched in the market and their designs are unique then they are supposed to be priced
under the skimming price. The target customers are generally the upper middle class people.
Adidas never uses penetrating pricing strategies as it might have an effect on their brand. It has
been noted that since it is the branded and premium products therefore, higher point pricing has
matched the price quality approach of the people, where people thinks that the higher the price,
the better the quality of the goods will be. Therefore, Adidas rarely drops its prices. However it is
very clear that they maintain lower prices as compared to its rival brands and that add value to
this brand (Darwish et al 2020).
Answer to the question3
Adidas has always aimed at catering to the demand of the customer in a better ways and
therefore it has been tried to be omnipresent. They are continuously up for innovating and
modifying their distribution networks and supply chain with the changing demands of the
consumers and to satisfy their customers. Adidas is among the main gamers in the sports shoe

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enterprise with a massive market base and a robust selling and distribution network which are
spread internationally. The emblem is a main competitor of Nike and has persisted to develop its
marketplace percentage via attention upon product fine quality and its advertising strategy.
Adidas has made numerous crucial modifications to its commercial enterprise operation,
advertising and marketing and supply chain strategies in the course of the latest years. Those
changes have resulted in growing income and sales for the sports shoes, clothing and hardware
logo. But, high-quality advertising and marketing best works whilst you are devoted to
excellence, have an superb deliver and distribution chain, notable manufacturing competencies in
addition to a deep knowledge of marketplace traits. The logo has formulated an extremely good
deliver chain method that guarantees excessive exceptional standards, better availability in
addition to well-timed shipping at competitive expenses (Ind 2017).
Adidas has all their major and globally spread operations under three category and they
are product development, supply chain management and sourcing. They have their priorities set
at the global scale and their main motive is to bring more and more agility to the supply chain
and therefore they keep on changing their supply chain for bringing in more improvement into
the structure of the supply chain and customers satisfaction. They have a clear vision to keep the
customers at the apex and their services revolve complete customer satisfaction and they try their
best to make the goods available to the consumers at the right cost, place and time (Crasto et al
2018)
An agile deliver chain is like the spine of a international organization and in case of
Adidas which has continued to grow its quantity of consumer contact factors over years, its
supply chain performs the function of a critical pillar of business using velocity and overall
performance. Adidas has been able to enhance its deliver chain performance via its worldwide

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Operations features making it incredibly aggressive that's definitely important to survive the hard
competition from the closest and biggest competitor Nike. A huge and agile supply chain helps
you fulfill your customers’ demands higher and on this regard Adidas has proved itself
revolutionary and smart.
Adidas has advanced a powerful product drift inside its deliver chain control technique.
Demand plans and manufacturing planning guarantees that a superior variety of shoes are being
produced inside the factories. Adidas has its factories all around the globe however maximum of
its merchandise are outsourced from 1200 factories which is located in distinct components of
the arena (Adidas organization, 2017). The primary outsourcing countries are China, Indonesia,
India and Vietnam. For this reason, the shoes are first of all evolved inside this type of
manufacturing factories. The completed items are stored for someday in the stock of
manufacturing homes. as soon as the consignment is completed, the footwear get transported to
the big warehouses of the organization. The product then moves to wholesaler’s warehouses as a
stock keep. From wholesaler’s warehouse, the product moves to the store retailer’s warehouse
after which it gets distributed in most of the outlets of Adidas. The pass docking reduces time in
store’s warehouse. The time c programming language between transportation of products from
store’s warehouse to stores will increase the sales and turnover of the business enterprise (Arnold
2018).
The demand making plans process of supply chain control does statistical forecasts via
accumulating purchaser specific records from the order records. The outcomes obtained from
demand making plans technique facilitates in supply planning technique that accommodates of
manufacturing planning. as soon as the manufacturing plans procedure is completed, the data
move to production procedure wherein targeted manufacturing time table is laid out to begin the