adidas--marketing-strategy.doc
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adidasTRANSCRIPT
If there is an Indian equivalent of Tiger Woods, Roger Federer,Michael Schumacher... it is HIM, it is HIM. He personifies the 'new India' – someone with the confidence and desire to excel. Sachin is not transitory like bollywood Actors. Sachin is 'real', Sachin is a face of indian and world cricket in todays world . In ad terms, He has the performance connect plus the personality connect."
"You've got to create heroes and you've got to pay them," said Mark Mascarenhas of WorldTel back in 1995 after he made Sachin Tendulkar India's first multimillionaire sportsperson. Make no mistake Sachin Tendulkar is a cricketer and a brand all rolled into one.
Sachin Tendulkar endorses the following products:
* Pepsi: 1992 - Present
* Canon: 2006 - 2009
* Airtel : 2004-2006
* Aviva Insurance
* Nazara Technologies: 2005 - 2008. License for Mobile Content development based on Sachin.
* Reliance Communications sub-licensed brand 'Sachin Tendulkar' to update the user of the latest 2007 Cricket World Cup scores and news in Sachin's voice.
* Hutch - ICC's prime communication sponsor protested calling Reliance's plan as 'ambush marketing a charge that Reliance Communication denies.
* Britannia: 2001 - 2007
* HomeTrade: 2001 - 2002
* Sunfeast: 2007 - 2013/14
* National Egg Coordination Committee (NECC): 2003 - 2005
* Boost: 1990 - Present
* Action Shoes: 1995 - 2000[82]
* Adidas: 2000-2010
* Fiat Palio: 2001 to 2003
* Reynolds: 2007 - Present
* TVS: 2002 - 2005
* ESPN Star Sports: 2002 - Present
* G-Hanz: 2005 - 2007
* Sanyo BPL: 2007 - Present
* AIDS Awareness Campaign: 2005
* Colgate-Palmolive
* Philips
* MRF
* VISA
OBJECTIVES OF THE STUDY
To study the marketing of Adidas and also about the current position of
Adidas in market
To find out Adidas and Nike are main competitors but Nike is more
preferred brand then others.
To find out that how Adidas hold to the market and what are the area
seen which adidas can improve.
COMPANY PROFILE
In the small German village of Herzogenaurach the world began its
love affair with Adidas (Ryno’s Company History). In 1920, Adolf
“Adi” Dassler brought to life those three little stripes. With his
brother, Rudolph, Dassler manufactured his first sports shoe, made for
training, after realizing the need for performance athletic shoes.
In1948, the Dassler brothers separated to form their own two separate
companies. Dassler formed Adidas and his brother formed Puma, both
headquarters in Herzogenaurach.
The Adidas mission has changed little since founder Adi Dassler began
making sports shoes in the 1920s: to be the best sports brand in the
world. The history of Adidas is one of consistently meeting the
evolving needs of the athlete. Focusing more on function and less on
fashion, Adidas strives to provide athletes with shoes that can make a
noticeable difference in their performance. Meeting athlete needs is
what makes Adidas the best. Adidas America has continued to build on
this history.
In February of 1993, Adidas acquired Sports Inc., a US-based sports
marketing company founded by former Nike executives Rob Strasser
and Peter Moore. Sports Inc. had been working in conjunction with
Adidas USA on the design, development, and marketing of the Adidas
Equipment line. This line helped rejuvenate and reposition the Adidas
brand in the United States by creating an exclusive line focused on
fulfilling the functional needs of the athlete and by utilizing the best
materials and athlete input in the tradition of Adi Dassler. It offered
moisture management, thermal insulation, weather protection, ease of
movement, and safety, helping the athlete to perform more efficiently.
After the successful creation and launch of Adidas America
General Information
For over 83 years Adidas has been part of the world of sports on every
level, delivering state-of-the-art sports footwear, apparel and
accessories. Today, with total net sales of 6.1 billion and net income of
208 million, Adidas - Salomon is a global leader in the sporting goods
industry and offers the broadest portfolio of products. Adidas-Salomon
products are available in virtually every country of the world. Our
strategy is simple: continuously strengthen our brands and products to
improve our competitive position and financial performance.
The company's share of the world market for sporting goods is
estimated at around 15 percent.
Activities of the company and its approximately 100 subsidiaries are
directed from Adidas-Salomon AG's headquarters in Herzogenaurach,
Germany. Also located in Herzogenaurach are the strategic business
units for Running, Soccer and Tennis as well as the Research and
Development Center. Additional key corporate units are based in
Portland, Oregon in the USA, the domicile of Adidas America Inc. and
home to the strategic business units Basketball, Adventure and
Alternative Sports. The strategic business unit Golf is based in
California. The business unit Winter Sports is in Annecy, France. The
company also operates design studios and development departments at
other locations around the world, corresponding to the related business
activity. Adidas-Salomon AG has approximately 13,400 employees
worldwide.
Turnover and Brand Image
The turnover of Adidas company has grown to 20Million US dollar in
year 2005-06. Almost 53% of the turnover is from sale of apparel and
accessories with the rest from footwear.
The Adidas brand is one of the most popular brands as determined by a
within brand survey of sportswear brands in the year 2007.
Future Plans
Turnover is expected to rise to 22 Million US dollar for Adidas India
in 2006-07 cash break even is fore cast during calendar year 2005 and
an operating break even during 2006. The other Adidas – owned
brands, salomon & taylor made are expected to hit Indian Adidas
stores during 2005 and 2006.
The Company
Adidas entered the Indian market in 1996 by setting up a 100%
subsidiary of Adidas AG called Adidas India Ltd. and announced its
joint venture with Magnum International Trading Company Ltd. on
October 1, 1996. The new joint venture – Adidas India Ltd. – was
incorporated with an initial investment of US $ 205 million with
Adidas India Ltd. holding 80% of the equity and Magnum holding the
balance 20%. This investment was raised to US $ 6.4 million with the
equity structure remaining the same. Currently, the total investment
stands at US $ 11.4 Million with the equity structure changing to
91.4% by Adidas and 8.6% by magnum.
Adidas’ Range of Products in India
A month after announcing the joint venture, Adidas India Ltd.
launched its range of sports footwear, apparel and accessories in New
Delhi on November 1, 1996. Subsequently, Adidas products were also
launched in Mumbai, Bangalore, Chennai, Hyderabad and Calcutta.
Currently, Adidas products are available in 30 cities in India.
The range of Adidas products available in India include sports
footwear featuring some of the most popular innovations and
technologies developed by Adidas such as Feet You Wear, Torsion
system and adi wear. The sports footwear available in India includes a
wide range of core categories such as adventure, basketball cricket,
golf, indoor, running, tennis, training, soccer and workout.
Adidas has introduced in India, a wide range of sports wear for both
men and women. These include apparel for athletics, basketball,
cricket, golf, running, soccer, swimming, tennis and training for Men.
The women’s range includes apparel for athletics, golf, running,
swimming, tennis, training and workout. Accessories include bag
packs, campus bags, medium and large kit bags, caps, socks, wrist and
headbands.
Adidas Markets its products in India through a combination of mega
exclusive stores (area of 1000 sq. feet and above), exclusive stores,
multi-brand stores and distributors.
At present, Adidas is available in 80 exclusive outlets out of which 34
are company – owned with 8 new Company – owned stores planned
for 2005 and in 500 multi-brand outlets in India.
MARKETING-MIX (FOUR P’S): ADIDASMARKETING-MIX (FOUR P’S): ADIDAS
The Product
Whatever your athletic preference, you can now purchase an extensive
range of Adidas footwear and apparel online. From running shoes to
baseball cleats, eye wear to lanyards, collegiate licensed jackets to
good old fashioned cotton T-shirts, all things sport are available at the
Adidas store.
How do adidas create its Products
Adidas goal is to create a product that is honest – it must
perform. The rule is simple: form follows function.
Technology and functional design. A development team makes
the actual prototypes. These prototypes are then presented to
the retail market by the marketing department.
An Adidas product is the result of the intense thought and
creative energy of many different people. The following is a
general outline of how we create our performance-based
products.
1. The marketing department evaluates athletes’ needs and
develops a basic concept of how those needs should be
met. This concept is then presented to the design
department.
2. Based upon this concept from the marketing department,
the design teams sketch possible prototypes.
3. The people from design and marketing consider the
prototype sketches together, narrowing the selection to
those they anticipate will most successfully meet athletes’
needs.
4. The development department then works with the design
department to create an actual prototype from the selected
sketches.
5. Three separate groups – marketing, design and
development – meet and discuss how to improve the
prototype.
6. Samples are wear-tested to ensure the product meets
Adidas standards for performance and durability and
stands up to the demands of the sport for which it was
designed.
7. Preview samples are presented to key accounts and
consumer focus groups for feedback. Based upon this
information, final changes are made.
8. Samples are distributed to Adidas sales representatives for
presentation to retailers.
9. The finished product is delivered to retailers.
I. As A BRAND
At Adidas –you have got to be sporty. At Adidas the brand
awarding is been taken rather seriously at its headquarters.
Adidas wants to bring inline skates into India.
What that kind of stuff got to do with Indian market? Yes, it
won’t really be a hot seller, but it will contribute a lot to
Adidas brand image. That’s the Adidas way of doing it – image
is a critical part of branding strategy the world over.
The idea of the company is to introduce performance specific
sports shoes in the Indian market by building images around
the world & at the same time create the need for these shoes at
the ground level.
Adidas already has heavy weight sportsmen such as Sachin
Tendulkar, Leander Paes & Mahesh Bhupathi endorsing the
brand in India. They had the image, apart from endorsing the
performance element in the brand. Adidas steps out of crease
with a clear sports positioning. Adidas will take on arch Nike
with almost the same positioning. Its working with promising
athletes to give them a taste of its products. Adidas nowadays
is capturing an attitude that is sports related.
Adidas in fact did go through a limited fashion phase. Adidas
says – that you are tempted to make quick buck but we would
like to stick to the sports brand image because that make us
fashionable.
VALUE OF IT’S PRODUCTS FOR ADIDAS
Our goal is to create a product that is honest – it must perform. The
rule is simple: form follows function.
As studied earlier an Adidas product is the result of the intense
thought and creative energy of many different people. If a
company sell an automobile, is it selling a certain no. of nuts
and bolts, some metal sheet, an engine and four wheels?
If a company sell a delivery service, is it selling so much wear
and tear on a delivery truck and so much operator fatigue? As
per Adidas the answer to these question is instead what we are
really selling is the satisfaction, use or profit the customer
wants.
Adidas says that all the customer wants is, that whatever
product they purchase should fulfill all their needs and
preferences. They don’t care how they were made. Further they
want that when they order something, the don’t really care how
much out of the way the driver had to go or where he/she has
been. They just want their package. That means for them only
the final service matters.
As per Adidas the idea of product potential customer’s satisfactions or benefits is
very important. Adidas says that the total product is not just a physical product with
its related features, but it includes accessories, installation, instruction on use, the
package, perhaps the brand name which fulfills some psychological needs a warranty
and confidence that service will be available after the purchase.PLACE AND
PHYSICAL DISTRIBUTION:
A: Place
Adidas is very much concerned about its second “p”. as per
Adidas place and physical distribution of the product is
something on which almost every company spends a handsome
amount of money.
Hence Adidas takes a good care of its place and physical
distribution process. Adidas has appointed marketing
specialists who are taking care of the supply of the product and
their distribution channels and process.
Process used – assorting progress
Entire range, which is available is put together to give a target market
what it wants. Marketing specialists put together an assortment to
satisfy some target market. His is usually done by those who are close
to the retailers only.
B: Physical distribution
As per Adidas nearly half of the costs of marketing is spend upon the
physical distribution.
To take care of this problem Adidas has appointed marketing managers
who decides how the transporting and storing functions should be
divided within a channel.
Note: Physical distribution can be varied endlessly in a marketing mix and in a channel system.
TRUCKS
In Adidas, except the export products, trucks are considered to be the
best medium for transport. The flexibility of trucks makes them really
good for moving small loads for short distances. They can travel on
almost any road. According to Adidas they can give extremely fast
service. Also trucks causes less breakage in handling.
PROMOTION:
Adidas is one of the India’s biggest company of sports that spends
nearly $10 million on its sales promotion and advertising in Indian
Market.
Adidas believe that it just cannot be taken lightly. It is a very important
aspect of products life cycle. It is the process which is responsible for
the growth or decline in the sale of the product.
Adidas thinks that promotion is communicating information about the
product between the seller and the buyer to change attitudes and
behavior.
To handle the company’s promotional activities Adidas has employed
marketing managers, wherever the Adidas is located. These marketing
managers look after process of the promotion of the products of their
company.
As per Adidas the marketing managers promotion job is to tell the
target customers that the right product is available at the right place
and at the right time and especially at the right price.
Adidas thinks that only taking the product to the customers is
not a task of the company. But company takes a very important
look about how the product works and this message is
communicated to their consumers. Because a wrong message
can lead to the end of their products life.
Sales Promotion
Adidas is the most popular amongst its rival for its excellent sales
promotional activities.
As per Adidas they say that they themselves are responsible for the
encouragement of the customer to by their products. Adidas believes
sales promotion tries to compliment the company’s selling efforts.
STEPS THAT ADIDAS TAKE TO PROMOTE
SALES
In the last years the Adidas has almost given sale to its
products 6 to 7 times i.e. almost twice in a year Adidas goes
for discount on sales. They arrange contest.
In order to motivate the employees of the company Adidas also
prepares training material for the company’s own sales force.
They even design the sales materials for the company’s own
sales force to use during the sales calls.
As per Adidas, people see same message in different ways.
They may interpret the same words differently. So Adidas
always tries to deliver the message which everyone can easily
understand.
ADVERTISING
As per Adidas advertising can get results in a promotion blend. Good
results are obtained at a cost of course. The amount spent in the Unites
States for advertising is growing. Continuously, from World War II to
1980 it went from $1 billion to $50 billion.
Adidas also spends nearly $2.9 million on its advertising throughout
the world. Adidas in India is spending almost $17 million on
advertising.The heavy weight players like Sachin Tendulkar,
Leander Paes and Mahesh Bhupathi are already attached with
their ad-campaigns.
PRICING:
Adidas is clear, it wants to become the no. one sports brand in
India, a choice brand for all brands. So far so good, but how
will it tackle a price conscious market like India?
Adidas feels that being a high energy business Adidas
introduces 600-700 articles every six months – enables the
brand to remain fresh and bring on an international and Indians
the brand from the price stand point.
Price, that’s the most critical factor in the Indian context.
Adidas believes it has to deliver a functional at an affordable
price. It’s a tough job – to maintain the integrity of the
performance and still come out with a product a right price
point. Globally shoes start at $50. But in India as the perceived
need is lower, you have to make the product more affordable.
To tackle this, Adidas came out with speed 2000, a product
priced at Rs.995 with the help of local and Hong Kong source
people. Adidas however feels that its just the matter of time
before India coverage’s the world on this front. It is very
difficult to operate on a lower price point and maintain
integrity of product, but its been barely 3 years since the sports
market has taken off.
The original sector is just 20% of the total market and 80% of
the volumes comes from sporty shoes. But our market is
producing products at a price that is relevant to the consumers.
Adidas feels that as the volume go up, Adidas will try and
work out price points as people graduate with better
understanding of quality and price perception. Volumes are
bound to go up. Adidas started at the time when India had no
strength out in the sports products market in 1989 – 90. Its then
licensing partner Bata, and it had limitations of what it could
have put behind the brand. So company took the next best step
when the licensing agreement ended to take a bigger share in
business.
To conclude we can say that Adidas is putting all efforts to
bring down the price consciousness in the Indian market.
Company is trying to make products, which are easy to afford
and still maintain the integrity of their performance.
Growth has been phenomenal for Adidas even given the base is
small. In 2002 Adidas grew by 25%, 2003 by over 50% and
this year Adidas is expecting more than 50% in terms of value
in both shoes and apparel, while the industry growth as a best
case estimate has been 20-25%.
MARKETING STRATEGY – ADIDAS OTHER STRATEGY
Adidas, the brand with three stripes, seems to use the elements
of high-tension in its ads. Remember the Sachin Tendulkar
commercial? How everything is near-frozen, and the shattering
glass signifies release. Release of tension. Adidas gives you a
chance to but the boundaries – in every sphere.
Only now, the setting is not the playground or the track or the
court, it is the urban landscape – with its omnipresent traffic
jams, crowded streets and so forth. This way, Adidas becomes
a part of life. Anyone’s life. You don’t have to be the high-
voltage performer to be a part of the Adidas family. And it
goes beyond that – Adidas becomes something that makes you
better. Not just as an athlete, but as a sports person, a better
human being.
One of the advertisements: The spot featuring Boldon,
shows him chasing a thief (who’d stolen a TV set when its
owner was in the bath) through the dark streets. To help a man
(the owner, in a towel) in distress. And he uses all the power
that he can, to do what he has to do and what he needs to do.
And Adidas helps him perform better, than he would otherwise
have been able to. This is perhaps shown in an oblique way
when the spot ends at the feet of Boldon and the bather.
One is wearing a pair of Adidas shoes while the other is
barefoot. Adidas makes you better, goes the base. In short, the
other man could have done as well as Boldon. The bather reads
any man. Any man who wears Adidas. And Adidas goes
beyond athletic performance – it becomes everyday life. In
stark reality. Though humorously and light, it has a deep
meaning.
MARKETING: ADIDAS
In 1997, Adidas became Adidas-Salomon with its US $1.4 billion
purchase of Salomon, a French manufacturer of skis and other sporting
goods. The deal put Adidas one step closer to competitor and world
market leader Nike, and one step ahead of Reebok.
Salomon, aside from its winter sport equipment, also owns golf club
brand Taylor Made and cycle brand Mavic. The merger makes
Adidas/Salomon the second largest sport marketer in the world, and
number one in Europe. Salomon is currently very strong in North
America and Japan, and Adidas has the largest market share in Europe.
Adidas is, like Nike, very active insuring sponsorships advertising
deals with celebrities. Some of the most famous are Martina Hingis
(tennis), Kobe Bryant (basketball), Peyton Manning, Paul Palmer
(swimmer), jan Ullrich (racing cyclist) and the New York yankees.
David Beckham, Patrick Kluivert and Zidane all wear Adidas boots,
the Predator Accelerator.
LEVERAGING ON SACHIN: ONE MAJOR PART OF
MARKETING STRATEGY IN INDIA
Continuing its association with trump card Sachin, the local four-ad
print campaign tries to connect Adidas’ product attributes with
Sachin’s magic. “Instead of presenting just one dimensions :
The first ad connects Sachin’s choice of a heavy bat with Adidas’
Falcon Dorf light weight shoes. Says the headline: ‘Sachin likes his bat
heavy, not his shoe.’
The second new shoe range to be introduced for the first time in India.
Sub-branded ‘Aksu’ and priced at Rs 2,299, these are athletic sandals
primarily meant for water-based adventure sports. Finally, The next ad
will convey that Adidas covers various price points by promoting its
existing Portland range priced at Rs 1,499 and 1,799 (the leather
version).
The importance of celebrity sponsorship and events to Adidas is
illustrated by Robert Louis-Dreyfus’ letter in the company’s 1998
annual report :
“When it comes to showcasing our brands, 1998 was truly exceptional.
Early in the year, the Winter Olympics focused the attention of sports
enthusiasts on Nagano. In summer, the Soccer World Cup in France
attracted more spectators than any single sports event before. When the
French team, promoting the three stripes, won the World Cup, we
could not have wished for more. These were great times for our brand.’
Adidas has reached an agreement with ISL Marketing G of
Switzerland to become an official sponsor of the 2000 UEFA European
Championships. Adidas will have access to the official emblems,
mascot and trophy for the design of its own products..
In 1998, the overall Adidas budget for promotion and sponsoring
accounted for nearly 15% of turnover.
The positioning is being communicated through its global campaign-
released worldwide in February 1999 but in India, only in May-as well
as through a four-ad print campaign developed locally by RK
Swamy/BBDO. Says G Kanan, general manager, marketing, Adidas:
“We are the only brand with heritage in sports. As a brand, we’re not
an attitude that’s fashionable. We’re an attitude that is relevant all the
time.
The campaign also introduces a new brand line for Adidas: ‘Forever
Sport’. The line sums up the “deeply-felt” and “long-term love affair”
(it has been involved with sports since 1928) that Adidas has with sport
in all of its forms. Interestingly, the new brand line has been introduced
almost after a decade, when it was using ‘Earn your stripes’ as its tag-
line. The company dropped it during the late 80s after it found that it
wasn’t connecting too well with its consumers.
But the golden question is that will the campaign make Adidas
run?
The company expects the campaign to strengthen the image of the
brand since research had indicated that neither of the three
multinational sports shoe brands present in India had a clear image:
most were perceived as diffused brands and personality-led. Says
Kanan: “Sachin has and will play a major role in pushing the brand. He
is important, as there are certain values a consumer needs to know
about Adidas. But after a certain duration, we have to present a global
perspective too and hence the Forever Sport campaign.”
Interestingly, Adidas claims that it did not want to be caught up in
the clutter of the World Cup promotions-and deliberately chose not
to associated with the World Cup. Instead, according to Kanan, the
campaign has been broken now to coincide with the peak season
(April-June). “The World Cup is incidental. It’s too large an event to
make significance for us”, says Kanan.
However, the company is maintain a steady and dominant presence in
the media during the Cup: strewn over select channels like Star,
Discovery, and ESPN are the Sachin ads promoting Adidas. “Star
News is delivering good value while through Discovery, we can catch
the elite customer”, Kanan says.
Although Kanan admits that the sports shoe and apparel market is at a
nascent stage, he claims that Adidas has grown by over 250 per cent
from last year. As a company that takes pride in not joining the price
brawl, Adidas does not intend to bring down the prices of its products.
Says Kanan, “We don’t look at driving down the market by lowering
the price. We are willing to wait for the market to evolve.”
For Adidas, the real breakthrough, says Kanan, has come through a
combination of strategies: signing on Sachin, Leander and Bhupathi;
expanding its reach (it opened 45 stores last year); a revamped range
which covers a band of price points; and support to the brand. "“e
built-in value pricing in our products, and supported them through
sports icons who are looked up to. We have realized that to have just
one good guy endorsing your brand is more important than having
several unknown faces”, says Kanan
The company is enlarging the scope of its business by concentrating on
apparel. “Apparel is driving the business. Most consumers start
experimenting with the brand through apparel”, admits Kanan.
Essentially perceived as a male brand, Adidas however defends its
range by pointing out that currently it has 50 items out of a total of
250, for women.
Further, Adidas is planning to add 30 new stores this year. “We’re
looking at driving the market through exclusive stores”. Says Kanan.
The logic is clear: use Forever Sport to ensure sales forever.
Never achieved profitability and collapsed under the weight of its
own unrealized ambitions.
Adidas’s objective with the new line of footwear is to generate sales
leads through its Web site, either through direct purchase or a retailer
finder. Villota says that every style of footwear has a story, particularly
those endorsed by star athletes, and it’s these stories that sell the shoes
to buyers.
While Villota wouldn’t disclose how much of Bryant’s Adidas
footwear is sold online, he did say one of three visitors to the Bryant
portion of the Adidas site demonstrated purchase intent by clicking
through to the store or to the retail finder.
The newest version of Bryant’s footwear hits the street Nov. 1,
coinciding with the start of the 2003-2004 NBA season. While Adidas
won’t comment on the new site’s features, citing competitive pressure,
Villota says it is Adidas America’s most ambitious integration of Web
content and electronic marketing.
The Adidas - Salomon Executive Board will propose paying a dividend
of CC 0.92 per share to the Annual General Meeting of Shareholders
on May 10, the same amount as in the previous year. This decision to
maintain a stable dividend level, despite the EPS decline in 2004,
underlines Management’s confidence in its ability to achieve its 2005
targets. Management views 2004 as a year of consolidation and
restructuring and has increased the pay out percentage to reward long-
term shareholders.
THE ADIDAS LOGO
The “Trefoil” was adopted as the corporate logo in 1972. It
represents the heritage and history of the brand. In 1996, it was
decided that the Trefoil would only be used on heritage
products. Examples of product featuring the Trefoil logo
include the Stan Smith, Road Laver, A-15 warm-up, and
Classic T-shirt.
Equipment
The Adidas Equipment line was launched in 1991. This line of
footwear and apparel represents the most unique and functional of
Adidas products. Equipment is the ultimate expression of what is
uniquely possible by design when form follows function.
In January 1996, the Three-Stripes brand mark became the worldwide
Adidas corporate logo. This logo represents performance and the
future of the Adidas brand. This logo is used in all advertising, printed
collateral and corporate signage.
Since 1949, the Three-Stripes have been an integral part of our brand
and product designs. This trademark has become synonymous with
Adidas and its dedication to producing high-quality athletic products to
help athletes perform better.
ADIDAS: COMPANY’S
FINANCIAL FACTS
For over 83 years Adidas has been part of the world of sports on every
level, delivering state-of-the-art sports footwear, apparel and
accessories. Today, with total net sales of £182 million, Adidas-
Salomon is a global leader in the sporting goods industry and offers the
broadest portfolio of products. Adidas-Salomon products are available
in virtually ever country of the world. Our strategy is simple:
continuously strengthen our brands and products to improve our
competitive position and financial performance. The company’s share
of the world market for sporting goods is estimated at around 19
percent.
SWOT ANAYSIS
Strengths:
The main strength of Adidas is his Product Quality. The quality
and the material uses in Adidas is very good.
The company has a good brand image in the market, the
publicity and the advertisement is also very good and lastly
company hold a healthy market share in the market.
Another strength of the company is its well efficient and
effective management, which works as a team.
Weakness:
The major weakness in the Adidas is that the manufacturing of
the products of Adidas is not done in India itself it is being
import hence the cost become high and the margin of profit
becomes low that’s why company must give a deep thought on
manufacturing their products in India.
Another major weakness in the company is that it is not
catering to all the segments which I have already discuss above,
If these two weakness in the company can be eradicated then
the company may earn high profit and better market status.
Opportunities:
Adidas does have many products for the urban segment or poor
people, but there is hardly any product or we can say that there
are no products for this segment. India is more a rural country,
in the total population of India major part of population lives in
rural area and these people can not afford the costly products of
the company like Adidas hence company must target this
particular segment they must introduce the shoes and other
product according to their demands.
Also price is one of the major factor which may influence this
type of segment hence company should make their policy
accordingly.
Company must also consider the range and the variety of the
products as compare to Nike and Reebok.
In my opinion the company must introduce more rage or more
variety in the market to compete with their competitors and also the
customer have more choices to choice the product from.
Threats:
Adidas does not have strong distribution network as compare to
Nike and Reebok in India. Nike has more number of retail
outlet then Adidas and Reebok has a unique distribution
network, the company Reebok not only uses its outlet for the
sale of their product but also use some other shoes company
outlet like “Bata”. In a Bata showroom u can find Reebok shoes
and other products. But this is not a case with Adidas hence
Reebok has an extra advantage over Adidas.
Adidas do not have any competitive advantage as compared to
Nike and Reebok.
RESEARCH METHODOLOGYRESEARCH METHODOLOGY
STAGE ONE
The project study started with collection of Secondary Data. The
sources for the secondary data are as follows:
Data Sources
News Papers
Magazines
Internet
Press articles on Adidas.
Stage Two
I visited the Adidas India Ltd., which is located In Mehrauli (new
Delhi). I Also Met Some Of The Marketing Executives Who Helped
Me Getting The Required Information.
I Also Got Some Of The Information From The Other Resources Of
The Corporate Office Like :
Company Journals
Company Catalogs
Questionnaire (Structured & Non Disguised)
And Other Related Sources.
Primary data:
I have prepared a questionnaire for the general public asking about the
marketing strategy of Adidas, in that particular questionnaire I have
asked some question give in finding and analysis section: (the
questioner is filled by 80 people).
FINDINGS
Company research report
(A) Company Description
Adidas-Salomon AG(ADIDAS). Production and marketing of sports
equipment, footwear and apparel under the brand names of Adidas,
Salomon, Taylor Made and Mavic. Sales of Footwear accounted for
45% of 2004 revenues; Sales of Apparel, 35% and Sales of Hardware,
20%.
(B) Competitor Analysis
Adidas-Salomon AG operates in the Men’s & boys’ clothing sector.
This analysis compares Adidas with three other sport shoe and apparel
manufacturers: Nike Inc. of the United States (2004 sales of $9 billion
of which 59% was Footwear), Reebok International Ltd. of the United
States (2003 sales: $2.87 billion of which 73% was Footwear), and
Amer Group PLC which is based in Finland (2003 sales of 6.46 billion
Finnish Markka [US$996.88 million] of which 24% was Racquet
Sports). Note: not all of these companies have the same fiscal year: the
most recent data for each company are being used.
(C) Sales Analysis
During the first quarter of 2004, sales at Adidas totalled 1.56 billion
euro. This is an increase of 2.7% from the 1.52 billion Euro in sales at
the company during the first quarter of 2003. During the previous 17
quarters, sales at Adidas have increased compared with the same
quarter in the previous year.
Sales at Adidas appear to have some seasonally: during each of the
previous 5 years, sales have been highest during the third quarter,
which has accounted for between 28.0% and 32.0% of the annual sales.
Adidas reported sales of 5.38 billion Euro (US$5.35 billion) for the
year ending December of 2004. This represents an increase of 9.0%
versus 2000, when the company’s sales were 5.35 billion Euro. Sales at
Adidas have increased during each of the previous five years (and
since 1999, sales have increased a total of 226%).
D. Recent Sales at Adidas
(Figures in Billions of Euro)
In 2002, sales in Latin America were up at a rate that was much higher
than the company as a whole: in this region, sales increased 36.0% to
171.00 million euro. Adidas also experienced significant increases in
sales in Asia-Pacific (up 3.9% to 875.00 million Euro).
GROWTH
Adidas is a constantly growing company. It is global in scope with the
majority of its sales coming from Europe, followed by the United
states, with the smallest percent of Adidas’ sales coming from Asia.
Adidas sales have grown significantly each year from 1994 to the
present. Adidas is the leading producer of sporting goods in Europe
and it is second in the overall world market, just behind Nike. Nearly
55% of Adidas revenues come from Europe, while 37% come from
the Americas, and only 9% of revenues come from a growing Asian
market.
For anyone not familiar with the structure of this company (since it is
not based out of the USA), it is much like US based competitor Nike.
Adidas has stock traded on exchanges in Frankfurt and Pairs, and its
ticker symbol is ADDDY. The pie chart below shows exactly how the
ownership of the company is spread out across the world. Most of the
ownership comes from Europe, while a substantial 30% comes from
the United States, and the rest from Asia.
Adidas is a growing company as stated above, but how much and how
fast? As you can see from the graph of net sales over the past five
years, sales have grown rather exponentially, although growth slowed
in 1999. This growth in sales comes from not only an improving world
economy, but from Adidas’ marketing efforts to make it one of the
most popular sporting goods brands.
This shows that Adidas does not have a large market share in Asia as
compare us and Europe and my questionnaire (given below) also
suggest that company can improve a lot the certain areas are marketing
distribution and competing with the competitors. The company has to
become innovator not follower they must do something differently to
come with the flying colors.
DATA ANALYSIS
1. How does u rate the company marketing strategy as compare to the
other competitors company like Nike, Reebok etc.?
Out of 80 people 36 had said Adidas have a good marketing strategy
and should continue like this only, 24 had said Nike is more better then
Adidas, 16 said Reebok is good and 4 said others.
2. Do u think that the company Adidas is giving its customer what
they want in terms of quality and prices or value for money?
Out of 80 people 68 person are satisfy with the quality and the
price of the product and other says that they are not satisfy.
3. Do u think that the advertisements and the brand ambassador of the
company is good enough?
Out of 80 people 66 person said yes they like the advertisement
very much and rest said no they don’t like them.
4. What things u keep in mind while purchasing shoes will it be
quality, advertisement, price or design?
Out of 80 people 69 person had said that the product must have good
quality and good design and other said they purchase these shoe for
status symbol only.
5. If u have to purchase shoe except Adidas which shoe it will be and
why?
Out of 80 people 42 have said Nike, 23 said Reebok and 15 others,
which shows that the main competitor of Adidas is Nike. They have
given different reason for that some said Nike and Adidas are have
same range of products and there quality and prices is also same, so
different people have different opinion.
6. What do u think that the company Adidas must do to improve its
marketing strategy?
Most of people said Adidas has a good marketing strategy but the
company should launch more products or u can say more variety to
their products.
LIMITATIONSLIMITATIONS
The research project has been completed with ease and
comfortably. No particular limitation or shortcoming
was realized during the analysis.
Also, due to time constraints, enough justice could not
be done to the project.
CONCLUSIONS
ADIDAS in INDIA has always been driven by its Value-for-money
strategy. The company needs to identify critical success factory and
work assiduously towards achieving it.
As the world grows to become one, many problems will arise that
cannot be solved. One of the primary challenges associated with
globalization is balancing conflicting and competing objectives. In the
case of Adidas, it has faced such problems already and how they have
dealt with them is with flexibility and calmness. Despite what could
be higher costs, Adidas has chosen to stick with their human right
codes and Standards of Engagement rather than continue to be
associated with subcontractors who treat works in inhumane ways. As
Adidas has grown worldwide, it has had to deal with problems of
heterogeneity vs. homogeneity. In other words, in an increasingly
heterogeneous and global world, diversity in the workplace has
appeared to emerge as an issue. Companies, including Adidas are no
longer homogenous in the sense that their companies have grown
worldwide. And as a result, Adidas has had to make worldwide
headquarters and produce information and products in several different
languages. Having to spread its workforce, Adidas has come to
depend on intangibles.
The knowledge, worldwide experience and diversity that an Adidas
employee can bring to the table are valuable. Recently, how successful
companies are in the global world is increasingly derived from
intangibles, such as these, that organizations cannot own. Adidas is
greatly affected by these external influences since indeed it is a global
company. For some it is not common knowledge that Adidas is a
German company. This is a result of good global business. Adidas
has created a product that is global and with that diversity and
knowledge greatly affect the company. Adidas must be able to easily
adapt to different cultures and must be culturally aware when
conducting business. The long list of Adidas subsidiaries where it
conducts business proves that Adidas is constantly adapting to cultural
changes and must be extremely diverse. Because of this necessity,
knowledge is greatly valued. Great changes occur in this industry and
as a result, new ideas, intuition and inspiration are an asset that is a
necessity in this industry and to remain a global company. Who leads
this knowledge and maintains diversity are the managers, yet they too
are facing new changes.
RECOMMENDATION
For 2004, the Adidas brand’s new divisional structure will be in
place to start delivering positive results for the Group. Adidas
America will remain a challenge but nevertheless will deliver
qualitative sales improvements in the second half of 2005. Top-
line growth is expected in all other regions. Double-digit
growth from Salomon is projected as a result of the continued
innovative strength and the increasing profile of their products.
The integration of Mavic with Salomon, which began in 2002,
will continue in 2005, with further synergies between the two
brands. At Taylor Made-Adidas Golf, increased marketing and
sales support will target ambitious golfers, and solid growth in
all the major golf markets is expected to continue.
In addition to these positive top-line developments, gross
margins are expected to remain within a range of 41% to 43%,
operating expenses will decline as a percentage of sales, and as
a result net income is projected to increase by 15%.
Adidas is currently ranked third in almost every category in the
global athletic shoe industry. However, they rank second only
to Nike in terms of sales. The main competitors of Adidas
include Nike and Reebok However, other smaller competitors
include Fila, Puma and Easy Spirit. Adidas commands only
5% of the athletic shoe business in the U.S., compared with the
40% for the fearsome Nike, but the rejuvenated Adidas has
climbed to within easy reach of Reebok, which has been
struggling in the past couple of years. Adidas is also steadily
regaining market share lost to other brands such as L.A. Gear
and Fila (Fortune, 2000)
Since acquiring their current president, Louis-Dreyfus, Adidas,
a wholly owned subsidiary, has competed with a whole new
strategy. Aside from cutting the whole line of German senior
management, Louis-Dreyfus also fired management in Asia,
who failed to match competitors’ low costs in subcontracting
shoemaking to local companies. While Louis-Dreyfus fought
bring down costs, he also took a gamble on the side. Adidas
began to focus on global marketing.
But the battle has only started, and the foreign sports companies are
here for the long term. They can sustain losses for years to come in
order to gain market share. What they are doing at present, is building
up distribution networks to cover every nook and corner of the country
and, setting up manufacturing facilities.
Only those Indian manufactures which have a strong focus on
manufacturing and technological upgradation will survive in the long
run, although with a much smaller market share than they have at
present. Small companies will be sidelined totally and will exit from
the sports market altogether. ADIDAS in INDIA has always been
driven by its Value – for-money strategy. The company needs to
identify critical success factory and work assiduously towards
achieving it.
ANNEXURE
QUESTIONNAIRE
1. How do u rate the company marketing strategy as compare to the
other competitors company like Nike, Reebok etc.?
Adidas Nike
Reebok Others
2. Do u think that the company Adidas is giving its customer what they
want in terms of quality and prices or value for money?
Happy Not Happy
3. Do u think that the advertisements and the brand ambassador of the
company is good enough?
Happy Not Happy
4. What things u keep in mind while purchasing shoes will it be
quality, advertisement, price or design?
Quality Otaher factor
5. If u have to purchase shoe except Adidas which shoe it will be and
why?
Nike Reebok
Others
6. What do u think that the company Adidas must do to improve its
marketing strategy?
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BIBLIOGRAPHY
Books:
PHILIP KOTLER, MARKETING MANAGEMENT, EDITION 2005.
V.S RAMASWAMY AND S. NAMAKUMARI MARKETING MANAGEMENT, SECOND EDITION.
WILLIAM STANTON.J, MICHALL J.ETJEC, BRUCE J.WALKER FUNDAMENTAL OF MANAGEMENT.
RAVICHANDRAH.N COMPETITION IN INDIAN INDUSTRY.
Web Sites
www.adidas.com
www.indiainfoline.com
www.webcrawler.com
www.indiatimes.com
Class Notes is referred
Magazines
A&M
Business India
India Today
Business Today
Newspapers
The Times of India
The Hindustan Times
The Economic Times