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Adidas Case Study

Jun 04, 2012

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Primary Question for adidas. Does adidas's corporate strategy, including recent acquisitions and restructuring, stay true to its brand while positioning itself to improve shareholder value and challenge Nike as the leader of the global sporting goods industry?. Secondary Questions. What enabled adid

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1. adidas Case Study By: Ray Moorman Dan McLindon Tom Anderson Kyle McDaniel Jeremy Smiley

2. Primary Question for adidas

3. Secondary Questions

4. What enabled adidas to be the Market Leader in the past?

5. Product Innovation Analysis � adidas was an early entrant into athletic shoe industry. They developed many of the features still present in shoes today. Strong presence in Olympics and soccer. Created a strong brand based on high quality, innovative products that top athletes choose to use in training and competition.

6. Marketing Innovation Developed strong following with top track and field athletes. Applied this same model years later with soccer shoes and apparel. Successful because adidas was creating innovative, high quality products. Product innovation enabled marketing innovation. Different than Nike � marketing is what set them apart from the start.

7. What is happening in the industry and how did adidas lose the lead to Nike?

8. External Environment: PEST �Significance� represents value-neutral impact, and may be either positive or negative for Whole Foods.�Significance� represents value-neutral impact, and may be either positive or negative for Whole Foods.

9. Porter�s 5 Forces

10. Porter�s Five Forces

11. How Did adidas Lose US Market Share to Nike?

12. How has adidas's corporate strategy changed over time, specifically before and after the 2005-2006 restructuring?

15. What has the adidas brand represented in the past and what does it represent today?

16. adidas�s Brand

17. A Closer Look at Brand Today

18. A Closer Look at Brand Today

19. A Closer Look at Brand Today

20. The Importance of Brand Identity

21. Have adidas�s acquisitions helped improve their position against the competition?

22. Salomon Acquisition: Was it Successful?

23. adidas�s Stock Price

24. adidas after Salomon was divested

25. TaylorMade-adidas Golf Sales by Product Line

26. 2007 TaylorMade/adidas Golf Sales Breakdown

27. SWOT Analysis for Reebok

28. SWOT Analysis for Reebok

29. Reebok Acquisition On paper it looks like Reebok�s product portfolio, endorsements and relationships round out adidas and together they can join forces to overtake Nike. Issue is can management overcome Reebok�s reputation for poor quality and lack of innovation? Can two companies come together with such different cultures and focus? adidas � product innovation and commitment to quality Reebok � marketing focus

30. What role do developing countries have in adidas's future success and how is adidas positioned in those countries?

31. adidas is a global player 43% of sales from Europe, which is slowest growth market Encouraging that #1 in developing eastern European market, Russia expected to be most profitable market in Europe by 2010 2006 acquisition of Reebok not enough to overcome Nike in North America Growing number of sales in Asia market, fueled by adidas success in China. Strong demand and large population

32. Net Sales in Emerging Markets

33. Regional Footwear/Apparel Markets

34. Should adidas be concerned about losing North American market share to Nike?

35. adidas AG Geographic Revenue Performance

37. adidas Global Revenue Sources (2007)

38. Reebok Global Revenue Sources (2004)

39. U.S. Retail Store Strategy

41. Use adidas as revenue driver outside of U.S. market � restructure Reebok strategy to capitalize on historic revenue performance in U.S. Decrease number of adidas retail outlets in U.S. - convert to Reebok retail Increase Reebok U.S. endorsements Use adidas global distribution to further increase TaylorMade international revenues

42. Recommendations Be satisfied with #2 in the U.S. market. �Nike is Nike and will continue to be Nike� Focus on strong growth potential in Europe, Asia, and Latin America. Increase distribution networks in these markets Increase brand loyalty and brand awareness in these markets through contractual endorsements with athletes

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Adidas AG is a German multinational corporation, headquartered in Herzogenaurach, Germany, that designs and manufactures shoes, clothing and accessories. It is the largest sportswear manufacturer in Europe, and the second largest in the world. It is the holding company for the Adidas Group, which consists of the Reebok sportswear company, Taylor Made-Adidas golf company (including Ash-worth), 9.1% of Bayern Munich and Runtastic, an Austrian fitness technology company. Adidas revenue for 2016 was listed at 19.29 billion. Adidas was registered on 18 August 1949 by Adolf Dassler, following a family feud at the Gebrüder Dassler Schuhfabrik company between him and his older brother Rudolf. Rudolf had earlier established Puma, which quickly became the business rival of Adidas, and is also headquartered in Herzogenaurach. The company’s clothing and shoe designs typically feature three parallel bars, and the same motif is incorporated into Adidas’s current official logo. The brand name is uncapitalized and is stylized with a lower case “a”. Check out this site for more information :- http://www.outletsnearme.net/adidas-o...

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Adidas Case Study By: Ray Moorman Dan McLindon Tom Anderson Kyle McDaniel Jeremy Smiley.

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A brand case study Adidas

2. adidas; history of the brand, 3. history cont., 4. brand values, 5. product life cycle, 6. life cycle cont., 7. dead dog cont., 8. target audience, 9. pricing strategy, 10. marketing and pr, 11. marketing and pr, 12. impossible is nothing, 13. pr and sponsorships, 14. place and distribution, 15. place continued…, 16. s.w.o.t analysis, 17. weaknesses, 18. threats, 19. opportunities.

• Development
• Digital Marketing

Adidas Case Study And SWOT Analysis

Adidas was founded by Adolf Dassler and his elder brother Rudolf Dassler in the early 1920s and is now recognized as one of the most famous global manufacturers of sports products. Adidas is developing its products to serve customers’ needs at best possible level. Adidas works on its products by incorporating new fashion trends and technology and making them more sport-specific. Today, we will discuss the Adidas marketing strategy, marketing mix, and market analysis through SWOT analysis in this case study. 

There are three main areas of marketing where Adidas sees an increase in its mix of sales and investment. 

• First, the company is expanding into new places, such as developing new products and services, enterprising in new fields, and moving from production to development for upkeeping. 
• Second, Adidas’s presence on social media platforms is increasing as people seek out its products for fresh flavors and ingredients. 
• And third, Olympics-related advertising will continue to be a major part of Adidas’s marketing strategy.

Marketing Mix of Adidas

Here is Adida’s marketing mix comprised of the 4Ps of marketing: Product, Place, Price, and Promotion.

Product:  This product that Adidas markets under its various labels, such as energy boost, running, football training, tropical heat wear, etc.

Place:  This is a place where these products primarily sell out depending upon the developed region.

Price:  Adidas is aggressive in promoting prices to enjoy a competitive position. In this area, Adidas believes the price will be dictated by the market’s demand, not its shortages or excesses. In 1964 when Adidas began pricing shoes at $12 vs. Nike at $15, Shoe sales went down, but once set price, they stayed the same, becoming more attractive to prospective buyers versus new entrants with their much lower prices.

Promotion:  This refers to the strategies of Adidas for attracting consumers to purchase its products, whether it is competition, direct marketing campaigns, or social media messaging and advertising.

Adidas differentiation strategy

Adidas focuses more on the broad differentiation strategy. The corporate level strategy of Adidas focuses on innovation, trying to produce new products, services, and processes to cope with the competition. The group’s multi-brand portfolio gives them an important competitive advantage. That created a global sales function responsible for commercial activities, and international brands serve accountable for the marketing of both brands.

The global sales function was split into two departments, wholesale and retail. That catered to the various needs of both these business models . It has been done to sustain their corporate-level strategy for the long run so that these divisions could emphasize and work hard in their respective departments to make the most of their efforts.

They implemented a multi-brand strategy by having a diverse brand portfolio, allowing them to cater to all market segments, from players to almost everyone. It helped them to keep a unique identity and concentrate on their core competencies.

Adidas’ digital marketing strategy

Adidas uses a straightforward digital marketing strategy to communicate with its current and potential customers. By implementing this strategy, they have been able to take competitive advantage with their top competitor, Nike. By changing the behaviors of consumers with this digital transformation, Adidas has to change how they work. The use of technology has helped Adidas connect with more consumers and build stronger relationships with customers.

Six components aid Adida’s digital marketing strategy, including:

• Digital and technology
• High-speed manufacturing
• Personalized experience to create strong relationships with customers
• Open-source innovations and collaborations
• Strategic cities include London, LA, New York, Paris, Tokyo, and Shangai.
• Improve portfolio of both brands, i.e., Adidas and Reebok.

Creative Idea

Creative Insight: 

The past year has witnessed the growing popularity of Instagram Reels with millennials and Gen-Z audiences. Thus, harnessing the popularity & impact of Instagram Reels was the approach to creating visually appealing and stirring content that drove product heat and led the campaign story #OpenForum

Visual Storytelling & Content Output :

Social media has played an important role in bridging information gaps. In contrast, brands have ensured that Indian consumers access the best global launches on the same day as consumers in other parts of the world.

An Instagram campaign was undertaken that engaged 50+ creators from various fields to bring the campaign message to life and drive appeal for the launch of the new Adidas sneakers through relevant storytelling.

View this post on Instagram A post shared by I S H A B H A N S A L I (@ishabhansali)

SWOT Analysis of Adidas

SWOT analysis is the method of measuring the organization and its environment, whether internal or external. It is the first stage of planning, which helps marketers focus on the key issues an organization can face.

SWOT stands for Strengths, Weaknesses, Opportunities, and threats. Adidas’ strategy analysis focuses on Strengths and Weaknesses, which represent the company’s internal environment. In contrast, the other two represent the external environment with direct and indirect impacts on the business.

• The brand recognition of the product it’s well-reputed.
• High-quality products.
• Provides a diverse range of products (shoes, bags, shirts, perfumes, toiletries, etc.)
• Obeys environmental laws (Adidas has never been accused of pollution)
• Adidas’ policies and management safeguard employees’ rights.

Weaknesses                                              

• Online stores are offered only to the USA or some locations in Europe.
• Customer services are not functional, which creates problems, especially in the case of e-marketing
• Price is interwoven to high quality.

Opportunities

• Outsourcing web development and e-commerce/marketing to a third party is possible.
• The growing market for sports apparel
• Joint Venture with partners around the world to increase participation in athletics.
• Unstable economic environment
• Competition at the supply chain management level
• Nike’s strong reputation in the sports industry

Related: Amazon Case Study: Marketing and Advertising Campaigns

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By: Ray Moorman Dan McLindon Tom Anderson Kyle McDaniel Jeremy Smiley

Primary Question for adidas

Does adidas's corporate strategy, including recent acquisitions and restructuring, stay true to its brand while positioning itself to improve shareholder value and challenge Nike as the leader of the global sporting goods industry?

Secondary Questions• What enabled adidas to be the market leader in the past?• How did adidas lose the lead to Nike?• What has the adidas brand represented in the past and what

does it represent today?• How has adidas’s corporate strategy changed over time,

specifically before and after the 2005-2006 restructuring?• Have adidas’s acquisitions helped improve their position

against the competition?• What role do developing countries have in adidas's future

success and how is adidas positioned in those countries?• Should adidas be concerned about losing North American

market share to Nike?• Is there another corporate strategy adidas should be

What enabled adidas to be the Market Leader in the past?

Product Innovation

Track and Field

• 1925:studs and spikes

• Arch support

• 1949 – molded rubber cleats

• 1952 - screw in spikes

• 1954 – screw in spikes

• 1963- Began producing soccer balls

• 1967 – athletic apparel

• Over 700 patents

• Strong reputation among top athletes

• 1970 – leading brand in consumer jogging shoes

Analysis – adidas was an early entrant into athletic shoe industry. They developed many of the features still present in shoes today.

Strong presence in Olympics and soccer.

Created a strong brand based on high quality, innovative products that top athletes choose to use in training and competition.

Marketing Innovation

Gave shoes to German

athletes in 1928

2 stripe (and later 3 stripe)

75% of track and field athletes

wearing adidas in 1960

78% of athletes wearing adidas

at 1972 Olympics

•Developed strong following with top track and field athletes.

•Applied this same model years later with soccer shoes and apparel.

•Successful because adidas was creating innovative, high quality products.

•Product innovation enabled marketing innovation.

•Different than Nike – marketing is what set them apart from the start.

How did adidas lose the lead to Nike?

How Did adidas Lose US Market Share to Nike?

Nike emerging in the 70’s

Aggressive launch new styles – going after youth and fitness craze

Large endorsement contracts – sign Michael Jordan

Focused, aggressive, dedicated leadership

Outsourcing of manufacturing to Asia

Innovative leader dies in1978 – quality declines, innovation drags

Dedicated to competitive athletes

Passed on Michael Jordan

8 years of management and ownership changes

Costly German manufacturing facilities

How has adidas's corporate strategy changed over time,

specifically before and after the 2005-2006 restructuring?

Adi’s leadership…

Loss of focus…

Focused on athletic footwear/apparel. Success factors are marketing and product innovation.

Focused on Puma, while Nike underestimated. Tries to catch up via acquisitions which yields product breadth instead of specialization.

Return to form via restructuring…

Design and Innovation, differentiated image for brands, improved retail and supply chain

adidas’s Evolving Strategy

adidas’s Current StrategyProduc

• 1 major product innovation expected per year from each business unit

• Partner with Sporting events

• Notable athletes to sponsor

• Superior Customer service

• POS experience

• Able to educate customers

• Various setups:• Mono

brand• outlet• ecomm• team

shops Supply

ency • New styles

quick to market

• Low production costs

• Responsive to market place

Back to Basics Improved advertising, marketing, manufacturing efficiency

What has the adidas brand represented in the past and what

does it represent today?

adidas’s BrandCompany Time Period Brand Success?Dassler Brothers’ Shoe Factory

1920s → 1940s Innovative athletic shoes for world class athletes

adidas 1950s → 1970s Athletic apparel and innovative footwear for the world class athlete and recreational jogger.

adidas 1980s → mid 1990s N/A – Lack of quality and innovation.

No definable brand essence. adidas-Salomon 1998 → 2005 N/A – Footwear, apparel, and wide

range of sports equipment. No definable brand essence.

adidas AG 2005 → present Performance enhancing athletic

footwear/apparel for competitive athletes and stylish comfortable footwear/apparel for casual lifestyle.

TBD, but trending

adidas is most successful when it has a clear definable brand essence.

A Closer Look at Brand TodaySport Performance Innovation Endorsements Sponsorships (UEFA and Olympics) 80% of branded sales 2007 10% increase in sales in 2007

adidas OverallEurope – Market leader, low growth NA – Small market share, low growthEmerging – Market leader, high growth

Sport Performance and Europe give the most sales, but Sport Style and emerging markets present the most opportunity.

Sport Style 20% of branded sales

2007Small R&D = large profit 1% decline in sales in

A Closer Look at Brand Today Bad reputation (quality, innovation, styling) Loyal following in women’s general fitnessEndorsements strengtheningSponsorships (NFL, MLB, NHL)Rockport casual men’s shoes~7% decline in sales in 2007 (NA and Europe)Strong growth in Latin America and Asia in 2007

Reebok has baggage from past, but the necessary changes have been made. US is stagnant but other markets show promising growth.

A Closer Look at Brand Today Sales in overall industry have declinedProduct innovationEndorsement contracts with PGA Tour prosLeader in drivers, fairway woods, hybridsWeak in irons, wedges, putters, ballsStrong growth in apparel and golf shoes

Performance has been strong overall, but changes in the industry have caused recent declines.

The Importance of Brand Identityadidas is not a manufacturer. 95% of production is outsourced.

adidas, at its core, is an R&D and marketing firm.

Brand image is adidas’s most important asset.

Have adidas’s acquisitions helped improve their position against

the competition?

Salomon Acquisition: Was it Successful?

Product Line Before Product Line After

Athletic Shoes Athletic Shoes

Athletic Apparel Athletic Apparel

Ski Equipment

Bicycle equipment

Winter Sports Apparel

• Conclusion: Paid 1.5bn to diversify product line. Surpassed Reebok as world’s 2nd largest sporting goods company, however…

1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

Adidas Stock Price

adidas’s Stock Price

• Stock price fell soon after acquisition in 1998, Salomon divested except for Taylor-Made Golf line. adidas overpaid for acquisition.

adidas after Salomon was divestedProduct Line Before

Product Line After

Product Line After Divestiture

Athletic Shoes Athletic Shoes Athletic ShoesAthletic Apparel Athletic Apparel Athletic Apparel

Ski Equipment Golf Clubs*Golf ClubsBicycle equipmentWinter Sports Apparel

• Net addition was TaylorMade golf

TaylorMade-adidas Golf Sales by Product Line

2004 2005 2006 20070

MetalwoodsApperalFootwareOther Hardware

Sales (in millions)

Conclusion: TaylorMade/adidas has been able to keep sales up through athlete endorsements even though USGA rules have limited tech advances & an industry decline in the number of golfers.

2007 TaylorMade/adidas Golf Sales Breakdown

MetalWoods42%

Other Hardware

31%MetalWoodsApperalFootwearOther Hardware

Conclusion: Use adidas’s marketing model of track & field/soccer shoes to gain more sales in footwear & apparel.

Reebok AcquisitionSWOT Analysis for Reebok

Strengths•Strong in hockey, football and baseball•Loyal female customer base•Past success in marketing•Strong stable of professional athlete endorsements

Weaknesses•Poor reputation for quality and innovation•Greg Norman golf apparel brand•Limited distribution channels

Opportunities• Encouraging sales growth in Latin America and Asia•Economies of scale with adidas supply chain and distribution

Threats• Possibility of cannibalization if sold in same place as adidas products• Still third in market share in its strongest market, North America

Reebok Acquisition adidas Reebok

•On paper it looks like Reebok’s product portfolio, endorsements and relationships round out adidas and together they can join forces to overtake Nike.

•Issue is can management overcome Reebok’s reputation for poor quality and lack of innovation?

•Can two companies come together with such different cultures and focus?

•adidas – product innovation and commitment to quality•Reebok – marketing focus

What role do developing countries have in adidas's future

success and how is adidas positioned in those countries?

adidas is a global player

Net Sales by Geographic Region

EuropeNorth AmericaAsiaLatin America

•43% of sales from Europe, which is slowest growth market

•Encouraging that #1 in developing eastern European market, Russia expected to be most profitable market in Europe by 2010

•2006 acquisition of Reebok not enough to overcome Nike in North America

•Growing number of sales in Asia market, fueled by adidas success in China.

•Strong demand and large population

Net Sales in Emerging Markets

2000 2001 2002 2003 2004 2005 2006 2007

AsiaLatin America

Analysis – strong growth trend in sales in two very attractive emerging markets. Growth may be result of adidas brand strength in soccer, world’s most popular sport.

Regional Footwear/Apparel Markets

Region Size Market Growth

adidas Sales adidas Sales Growth

adidas Position

North America

$42.5 billion 3% $2.9 billion 5% #2 behind Nike

Europe N/A 2% (20% Eastern Europe)

$4.3 billion 8%, mainly in Russia

Asia 3.2 billion people

13% (South and Central) 15% (China)

$2.2 billion 17% #1

Latin America

N/A N/A $657 million 39% #2 behind Nike

Analysis – adidas is strong in several developing markets (Eastern Europe, China) but its focus and acquisitions have been geared towards overtaking Nike in the large, but slow growth North America market.

Should adidas be concerned about losing North American

market share to Nike?

Retail Store Strategy2006 2007

adidas Retail Locations

Reebok Retail Locations

adidas AG Geographic Revenue Performance

2004 2005 2006 2007€ 0

€ 500€ 1,000€ 1,500€ 2,000€ 2,500€ 3,000€ 3,500€ 4,000€ 4,500€ 5,000

106.4%-9.4%

1229.2% 56.4% 31.7%

Key Growth Potential:Europe – continue focus on soccer (including endorsements) and build brand loyaltyAsia/Latin America – increase distribution network and brand awareness - All three regions averaging double-digit growth rates

*Acquired Reebok

TaylorMade Advantages

Shift to International Markets

Strength in Metalwoods

Strong Apparel Presence

Revenues from Asia:1999 – 13% of total2007 – 35% of total

Decreasing reliance on U.S. Market:1999 – 69% of total2007 – 52% of total

Metalwoods currently hold number one ranking.

Irons hold less than half market share of industry leader

Golf balls have seen limited success

Over 70 touring pros lift apparel presence.

Conclusion – TaylorMade should hold U.S. market share in U.S. given the brand’s strengths, however, TM is only 8% of adidas AG global revenues. TM cannot help adidas overtake Nike in U.S. market

adidas Global Revenue Sources (2007)

N.A. market 28.7% of revenues

Remaining regions = 71.3% of revenues

Conclusion – The majority of adidas’s revenue streams are outside U.S. market and are growing significantly – let Nike lead U.S. market but dominate Europe and emerging markets.

Reebok Global Revenue Sources (2004)

EuropeUnited KingdomUnited StatesOther Countries

U.S. market 54.7% of 2004 revenuesConclusion – Use adidas’s

control and production efficiencies to enhance Reebok’s distribution network in U.S. to increase U.S. revenues.

Is there another corporate strategy adidas should be

Alt Strategy Options• Use adidas as revenue driver outside of U.S.

market – restructure Reebok strategy to capitalize on historic revenue performance in U.S. – Decrease number of adidas retail outlets in U.S. -

convert to Reebok retail– Increase Reebok U.S. endorsements

• Use adidas global distribution to further increase TaylorMade international revenues

Slides that follow still need to be placed or cut.

External Environment: PEST

Category Issue Threats/Opportunities Ranking (1-5)

Political Operating multi-nationally – awareness of cultures, laws, image, environment, regulations

Threat- mistakes can be costly 2

Economic Current state of economy – customers may be less willing to pay for higher priced items

Threat – high quality means higher prices 2

Extreme forces in competitor pricing.Opportunity – supply chain

efficiencies and multiple distribution channels

Social Keeping up with the wants of the younger generation

Opportunity – Reebok’s strength in this area 4

Technological Product innovation is a key driver in the industry Opportunity – core competency for adidas 4

Porter’s 5 ForcesThreat of SubstitutesLow

Bargaining Power of SuppliersLow

Bargaining Power of BuyersHigh

Threat of New EntrantsLow

Intensity of Competition

Porter’s Five ForcesFactor Description Impact

Threat of Substitute Products •adidas’s strength is product innovation and meeting customer expectations Low

Threat of New Entrants•Strong presence of established brands and distribution channels•Customers already loyal to their brand•Huge resources required of new entrants

Bargaining Power of Buyers

•Huge number of buyers means adidas must market products effectively•Must be able to differentiate from the competition•Buyers more conscious of their spending •Buyers have access to more information

Bargaining Power of Suppliers•Multiple sources of materials for shoes and apparel – commodity status•Suppliers are very dependent on adidas and others•Ease in switching suppliers if necessary and can do so globally

Competitive Rivalry•Recent acquisitions in industry•All competition has global reach – internet and e-commerce•Remaining a leader is expensive – aggressive sales and marketing•Always struggling to get a competitive edge

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