Performance of Adidas in respective market

A three parallel strip of the same color is what defines the brand of Adidas. It was originated by a German named Adolf Dassler who is a shoe maker with the help of his brother Rudolf Dassler in the year 1920’s. Since the death of Adolf son (Horst Dassler) the company had been brought and sold by numerous individual and business groups.

And in the year 2005 Adidas brought the rivals Reebok, and ever since had established themselves as the world best sports performance product after Nike. Numerous number sports personality has endorsed these products such as Kaka, Zinedine Zidane and David Beckham.

The Market Environment

Define the geographical market

Adidas main headquarters are based in Herzogenaurach. They operate around the world in almost all the countries, with each country almost have Addidas store in almost every corner.

What business are they in?

Adidas is well known for their performance apparels and clothing, watches, sports protective clothing. Their basketball, football as well as athletic shoes are one the world best.

PEST – G analysis

Political

Policy to control and monitor the use of hazardous items

To eliminate the PVC making items

Finding alternatives to PVC

Undertaking training sessions to increase the employee standards, safety and HR

The company protects its employees under the employment laws

Economical

It decreases the unemployment by increasing the employment in the company every year

Interest rates are not good since it will result in the increase of the price

Direct taxation plays important part in the company’s economical standing

Social

They are very consumer friendly

They have products to all age, religion, race and size

They mainly concern in sports and athletes.

They conduct a lot of fund raising and charitable activities

Technological

They always look for new innovations Eg. They produced the world’s smart shoe

They use suitable packaging for long distance transportation

They use re-cycled items and environmental friendly

They always use alternative production to reduce the cost and pollution.

Environmental

They should look for another source of producing their commodities since they are using raw materials from animals

They outsource their work to developing countries and exploit the works at cheaper rate.

They re-cycle most of their items and environmental friendly

The competition

vi. Market Share

The Company

vii. Sales and Profit trend

x. Business Sector

One of the sectors in the business which generates considerable income is the sports industry/sector. Sports industries consists goods of sports equipment, apparels, accessories. Not only the global giants but local industries also contribute towards the growth and development of Sports industry.

xi. Project focus

Adidas mainly focus on their products specially performance product.

xii. SWOT analysis

Strength

Brand strength

Brand presence

Strong leadership in marketing

Operation chain is strong

Financial power

Consumer’s loyalty

Effective and efficient Market strategy

Weakness

High prices

Product line is limited

Only selective consumers

High structure cost

Opportunity

Consumers lifestyle changes

New innovations and technology

Expanding Operations

Getting inside new markets

Increasing the products available to Customers

Threats

Change in consumers taste

Taxation increase

Fierce competitors

Suppliers gain power in setting price

Consumers gain power in setting price

New competitors entering market

Price war between competitors

The company’s Marketing Strategy

xiii. Segmentation

Industry Category

They are the second largest sportswear manufacturer.

They produce sports equipment and accessories as well as sports apparel.

Geographic location

They are headquarters are situated in Herzogenaurach.

They have their manufacturing as well as retail outlet around over the world.

Amount of Purchase

They products have various price rang.

It’s based on the quality and performance of their apparels.

They are converting into consumer friendly by making their price less costly

xiv. Targeting

Their target market is the population between the ages of 18-35 year old.

Their target is to acquire as much sports personality into using their apparels.

To acquire the market leadership in some new markets.

xv. Positioning

Adidas only strong competition in sports equipment as well as apparels is Nike. They both have dominated the sports industry in terms of sales and consumer satisfaction. But Adidas has always dropped behind Nike in innovation. Nike has always tend to come up new Sports apparel, more refined and better then their last creation. But Adidas has not been able to come up with new and refined product every 6 months. Adidas positioning in the market has behind Nike, in terms of trend, as well as Profits and sales.

Adidas strives to have their products available to a wide variety of venues and they want to make their product accessible to all the customer groups.

xvi. Differentiation/ Low cost leadership/ Focus

xvii. Growth Strategy

The goal of Adidas is to be the leading organization in sports industry whose brand is based and build on the passion for sports and its lifestyle. Adidas continuously has to strive to create a culture of innovation so that they can anticipate and respond to their customer needs. By grooming this culture, Adidas can push the boundaries of their products, services and process and they can strengthen their competitiveness.

Brand portfolio diverse

A flexible supply chain

Potential markets and channel focused for investment

Leading through innovation.

The Marketing Mix

xviii. Product

The marketing mix is a very important component of Adidas, since they a have large range of products. Marketing mix provides the product not only to communicate with the customers but also to convince them.

Featured Product

Sports Product

Other Adidas products

Real Madrid FC

Adidas professional Boots

Adidas Originals

Basketball

Football

Tennis

Golf

Running

Women

Outdoor

Sports equipment

Body care

Eye wear

Watches

Others

Xix. Price

This is the marketing mix which generates revenue to the company. Hence the company adopts the price strategy considering various factors.

Brand Value

Price should match the psychology of the consumers.

Higher price will lead to decrease in demand and less buyers

Price should not be too low, which will decrease the value of the product

Price should be moderate

Suitable for the target consumers

The price should match the customers who are targeted.

When targeting higher class customers, price will be higher

Middle class customers, price will be moderate

Hence the price should match the target consumers being targeted.

Quick generation of revenue

If Adidas wants to generate profit maximization then their marginal revenue should match their marginal cost, thus MR=MC.

xx. Place

In the marketing mix it is a very important decision to identify the distribution channels.

Distribution sectors

Channels

Logistics

Location

Internet

Mobile technology

Market coverage

Adidas distribution strategy

Concentrating the products to the profitable customer segments

Regional market expansion

International market expansion

Offering complete customer service at higher price

xxi. Promotion

This is a marketing mix in which the products of the Adidas are promoted to customers. The new release of a product is also advertised so that it reaches the potential customers.

Tools of promotion

Messages

Advertisements

Direct marketing

Public relations

Sales

Media

Adidas promotion strategy

To attract various market segments

Looking forward to alternative distribution channels

Increase in advertisement in other medias

Communication Improvement with present customers

Trying to reduce the loss of customers

Giving promotions to the loyal customers

Product Life Cycle

It is the cycle in which the product passes through various stages, from the original idea to the decline of the product.

Research and development is the first take of the product cycle, in which the ideas are put forward and researched this leading to the production of the prototype.

Once the prototype is produced into a finished article, it is then branded and then its copyrighted as well its protection rights are obtained. Then comes the pricing strategy, the price of the product is decided based on the cost of production. The Adidas product which is currently in this section is Adidas F50

In this stage is where the product is introduced to the customers. This is the stage where the product has to grow in the market. The sales of this product increases sharply and it is a fast selling, thus stabilizing the market and making profits. The other Adidas product which in this category is Adidas Predator Pulse

If the product survives the previous stages, they will then spend their time in the malnutrition stage. Here the product, due to its advertisements and effort put into its growth reaches its highest sales point. As it is the same case of Adidas Predator Pulse whose sales has been increasing rapidly.

Once the product crosses the malnutrition stage it started to decline in the sales and profit of this product. It is caused to innovation, advancement of technology and even competition from other products. The Adidas Predator Precision is the product which is currently in this stage.

Hence, product life cycle is the start of the product to the upward motion to its peak and then it is destined to fall to its lowest decline point.

Boston Consultant Group Matrix

To determine the product, BCG used the market growth and share. There are 4 different categories the product can fall into.

Dogs

In this category it is the product which does generates low growth and profit for the company. It can mean this product has reached its decline stage or never has been able to produce any improved results. If the company has this type of product, its best to remove this product. The Adidas Predator Precision as been around for a while and it’s about time it has be gone.

Cash Cows

In this category there is high market share in a low market growth. This means this product has reached its highest sales point amongst its competitors who are fighting for the market share. The perfect example of Adidas Predator Mania which is hitting high sales

Problem Child

Here there is low market share but high market growth. This category does not bring in any profits. The Adidas f50 is the perfect example.

Stars

In this stage, there is high market growth in high market share. This also brings in large profits and should be kept can be used in Problem Child. Hence, Adidas Predator Pulse is the one falling in this category.

Star

Problem Child HIGH

MARKET

Cash Cow

DOG GROWTH

LOW

High MARKET SHARE Low

Evaluation of the company’s strategies and tactics

xxvii. Evaluation of the company’s current position

Adidas has grown itself and have made its brand name a pioneer in Sports industry. They have had come out with lot of new innovated products especially in 2009-2010 period. They have an aggressive marketing strategy, to improve their sales by promoting to their loyal customers as well as to acquire new customers. Even after all this they still drop behind their main competitors Nike, in terms of their sale and profit trend as well as the customer satisfaction and loyalty. Even after all the innovation Adidas still falls behind Nike. Hence Adidas current position in the sports Industry is World No. 2.

xxiv. Evidence of the company’s success

Adidas have tried to reduce the marginal cost, and make the product more available to a large amount of potential customers. Their sales and profit has dramatically increased from the last 2 years, mainly because they are the main sponsors of FIFA World Cup 2010 as well as Euro 2012, after their successful tenure in the Euro 2008. Adidas sales in the year 2007 was 11,459 Million $, it was increased to 12,599 Million $ in 2008, by the year end of 2009 Adidas had made 14,878 Million $ in sales.

When we look the profit of Adidas in the year 2007 it was 7,185 Million $ and they had increased to 7,408 Million $ in 2008, but in 2009 they had dropped to 6,753 Million $

xxv. Prospects for future growth/success

Adidas has a lot of ground to cover, and a lot of future growth is in store for them. They have to start first in the innovation and regularly come out with new products. They also have to reduce their prices as there is a lot of scope to new markets around the world. Adidas could still take up some ground to promote their brand by taking franchise of some well known sports team around the world.

Conclusions

Adidas never started off as the world top Sports performance product manufacturer. Since they acquired Reebok, they have started to hit the market running. But they still fall behind their main rivals Nike. As we have already discusses and went through all the marketing strategy used by Adidas, they are aggressive in the world market and to take over as the top Sports performance Producer. Hence, they have started their innovation and trying to create numerous numbers of products. We can conclude that Adidas still lacks the mentality of their competitor, mainly in Promotion of their product and innovation.