Table of Content
2. Executive Summary
3.3. Unique selling proposition
4.1. Segmentation, Targeting & Positioning
4.2. Marketing objectives & goals (SMART)
4.3. Marketing strategies and goals (4 Ps)
2. Executive Summary
The Adidas group, headquartered in Herzogenaurach (Germany) was built on 18th August 1920 by Adolf Dassler. The brand and its products celebrated their first worldwide success in 1954 after the German have won the soccer world championship. After some commercial disappointments in the middle 80´s, the family enterprise had to open up for investors. In 1995 followed the initial public offering on Frankfurt´s exchange market. To stay competitive to Nike on the US-market, the company had taken over Reebok in 2006.
Furthermore, the company has worldwide 169 subsidiaries and had total revenue of 11.990 Mio. Euros in 2010. The company uses the image of its brand and the available amount of capital to sponsor many sports events such as soccer championships, Olympic Games or Paralympics and many more. In 2012 Adidas will be the official sportswear-partner of the Olympic Games and the Paralympics in London. Additionally Adidas´ high-qualified experts and its international network of suppliers make the company a competitive manufacturer of sporting goods.
Adidas is one of the most famous manufacturers of top-quality sporting goods. The present report deals with its marketing strategies and analyzes the performance data of Adidas and the competitors in the market.
The first part of this report is dealing with the current situation of Adidas and is presented by SWOT, PESTLE and USP analysis. Using these methods, a short overview of the company and its business is given. In the second part of the report the suggested strategies will be analyzed by using contemporary marketing methods and techniques, such as STP, SMART and 4P´s.
The SWOT-analysis highlights how internal factors such as strength and weaknesses or external factors as opportunities and threats are affecting the organization and its decision-making.
Since 1995 the organization is listed as a stock corporation and benefits from the adjusted capital. This enables the company to invest more capital in innovated and effective technologies to advance unique products. Adidas is by now the second largest manufacturer of sporting goods and worldwide known for top-quality products. This amount of capital enables more investments in marketing and promotion. The company uses the image of its brand and the available amount of capital to sponsor many sports events such as soccer championships, Olympic Games or Paralympics and many more. In 2012 Adidas will be the official sportswear-partner of the Olympic Games and the Paralympics in London. The company is going to provide the volunteers and the athletes with its products and features the merchandising as well as marketing rights.
Furthermore the company has got 169 subsidiaries worldwide and had a total revenue of 11.990 Mio. Euros in 2010. This turnover is the profit of the whole Adidas group, which means that the company benefited from the turnover of Reebok International ltd. and TaylorMade-Adidas Golf, too. As Adidas produces in “low-wage countries” and has a big supply chain, the company is able to sell the goods for cheaper prices and stay competitive on the market.
Additionally the company shows an efficient working network between many varied facilities and the high qualified personnel. It enables a 24/7 real-time work, for example designing a new article or managing a new project. The time difference and its network make it possible to work in Germany, America and Japan 24 hours on the same project. Furthermore Adidas has “Workplace Standards” to guarantee an efficient supply chain and top quality products. These “Workplace Standards” are based on the human- and employee-rights-conventions of the International Labour Organization (ILO) and the UN. (www.adidas-group.com). In order to enhance the manufacturing process, the organization proceeded and developed training programs and workshops for the suppliers.
In 2006 Adidas took over the Reebok International ltd. to gain more shares in the US-market. Since that time Reebok represents a problematic part of Adidas. Due to the situation caused by the financial crisis in 2007/2008 the company had to fight against lower incoming orders. Reebok lost 29% of the orders on the North American market as well as a two-digit deficit was registered on the Asian and European market in 2009. However Adidas had to help out financially its subsidiary in the past and therefore reduced the advanced profit.
Another weakness are the manufacturing facilities of the company. As Adidas is producing in “low-wage countries” it is very difficult to guarantee top-quality products. The organization engages 67% of its plants in Asia because the shoes cannot be produced mechanically and 90 % of the production process has to be done by employees.
As Adidas experiments with new techniques like “miCoach”, a new program for optimizing the training-process, the company follows the trend to combine sporting-goods with electronic tools like heart-frequency-meter or smartphones. Following this trend and developing a right marketing strategy means that the organization has the possibility to enhance its exchange.
There are a lot of competitors in the sporting-goods market, but there is one with high risk, Nike. Nike is the market leader in America and Asia and has the same products as well as the same price range. But the maximum risk is the product counterfeiting in Asia. These organizations are producing the same goods, with much lower quality and selling them cheaper than Adidas. The customers with less money would buy the fake articles.
External influences are defined as political, economical, socio-cultural, technological, legal and eco- environmental headings. This leads to “PESTLE-analysis” as an instrument for this report. Because Adidas’ headquarter is in Germany, I will focus mainly on this country.
Adidas is a global company and is therefore bound to various governmental regulations. This is affected by aspects like laws for work schedule, labor unions, noise and emission level, tariffs or other trade barriers like taxes or price and exchange controls. Other political risks are new legislation or changes in existing legislation.
Germany is a politically stable country and is governed by the Christlich Demokratische Union (CDU), under the first female Chancellor Angela Merkel since 2005. For the last 6 years of governance the party achieved following political ends:
more investments for the infrastructure
investments for Research and Developing
tax-reduction for organizations
enhancement of value added tax about 3 points to 19 %
enhancement of tax in high earners
abandoning nuclear energy
The party tries to find a political equilibrium between multinational concerns and the general population. (www.cdu.de)
Germany is a member of the European Union (EU) and its largest Economy, that is why it attracts millions of immigrants. The country is the fourth biggest Economy in the world in terms of nominal GDP and fifth in terms of purchasing power. Its Gross Domestic Product reached 3.316 trillion US-Dollars and had approximately an unemployment rate of 7.4% in 2010. The GDP per capita (nominal) was 35,700 US-Dollars. The world´s financial crisis harmed the domestic demand and diminished the GDP growth by 4.7% in 2009. (www.cia.gov)
Moreover the country dominates the following industry segments: motor vehicles, machinery, chemicals and household equipment. However, in terms of imports and exports, Germany is the world´s second largest trader. (www.cia.gov / www.economywatch.com, 2011)
As Adidas is a worldwide operating company and engages high professional employees with varied cultural backgrounds, the company has to take into consideration all the social aspects, religions, ethical issues and different cultures. To work out a perfect marketing strategy, Adidas has to adopt these mentioned criteria on each country it wants to sell their products.
Germany, as one of the largest economy in Europe had 81.772 million habitants in 2010 and its population density measured 229 people per square kilometer. It is the sixteenth largest population in the world. The country has a net migration rate of 0,54 migrant(s) / 1.000 population and has two major religions, Protestant and Roman Catholic. About 68% of the population practices these religions. There are 15,5% of the population below poverty line. (www.cia.gov, 2011)
The German industry is one of the most powerful industries in the world, that is why high investments in Research and Development are needed. EU statistics have shown that Germany is one of the leading European countries in research and development expenditures. Staying on top of it, it is necessary to adopt market requirements. Especially in the sporting goods market, where the consumer´s demand is seasonal or dependent on a movement. Germany’s expenditures for research and development were 67 billion Euros in 2009. In 2010 the first time, since 1997 the budget for innovation-projects was reduced to 3,1%. (www.destatis.de, 2011)
As above mentioned, the Adidas concern has to adhere a lot of regulations and laws so that its´ productions and processes can go on smoothly. Additionally the company is exposed to the risk that third parties assert claims because of infringements of property-, patent- or other rights. Therefore the group extended its resources in the industrial property right department.
Furthermore Adidas has to consider laws concerning health, employment, financial regulations, product safety, environment and many more. (Adidas Annual Report 2010)
The current discussions about climate changes and nuclear phase-out persuade the Adidas group to reduce the CO2 emission at its production plants and manufacturing processes. Additionally products have to be eco-friendly as much as their usage and disposal. The production processes should pollute the environment as less as possible, nevertheless without affecting the quality of the products. (www.adidas-group.com, 2010)
- Quote paper
- Arkadi Borowski (Author), 2011, Adidas Marketing Strategy - An Overview, Munich, GRIN Verlag, https://www.grin.com/document/180809