Marketing strategy of Adidas - Essay Example

?[Marketing] The paper is about the whole of marketing strategy of Adidas. Adidas is a company that sells sporting equipment and accessories relevant to sports. Task one Adidas is the largest sport manufacturer in Europe and has Puma and Nike as its major competitors. They have divided their whole range of products into two segments: Adidas Performance and Adidas Originals. Adidas performance aims to show the loyalty and devotion of the brand to athletes, while Adidas Originals are all about fashion and lifestyle. The definition stated by Philip Kotler is: “ The science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.  Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services” (Kotler, 2000). Adidas have been since its inception looking for opportunities in the market by constant market analysis. It has been seen that they have been the company of many firsts and therefore a company who has been creating a niche in many sectors. They introduced Adidas originals to target the market that did not wear the sportswear as they had no relation with sports but then Adidas cashed in on the opportunity by releasing a line of casual wears which would ultimately establish them in the non-sport sector as well (Peng, Chen, Narain, 2007). Main points from the definition: science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit (Kotler, 2000): Adidas have been exploring the market opportunities that exist in the market. Therefore, the first part or exploring is the market research that Adidas does time and again so that they remain in line with the current requirements. The second part that talks about satisfying the need of the target market at a profit, since its inception Adidas is a premium brand. It pinpoints which segments the company is capable of serving best and it designs and promotes appropriate products and services (Kotler, 2000): Adidas has been selling and marketing sports related things since it was established. The only new thing it has ventured into is the fashion and style apparel industry as well. It has done the promotion of its products by hiring clubs and sportsmen from different sports and countries to be their ambassadors.. As for their casuals line they have even hired sportsmen in this arena but used them to portray the use of Adidas besides the sports they play, in their routine lives. Task Two SWOT Analysis is a strategic planning method that is used by companies to identify their internal and external conditions in one go. Strength and weakness are utilized as internal analysis tools while the opportunity and threats are used for external analysis. The SWOT analysis for ADIDAS is as follows (Smit, 2000): Strength: Adidas is a very established brand. It has been in the market since 1949 producing the sportswear for the world to wear. Deliverance of the promise. Adidas is a premium brand that promises to offer the best quality and delivers the same. Brand Ambassadors. Adidas has a very long and powerful list of brand ambassadors that includes people from nearly all the sporting arenas. It has sponsorship for huge sporting events like NASCAR and the IPL recently held in India. It has also had major sponsorship for some of the famous Football events. Diversity in the product range. Excellent supplier relationships. They have never had any lawsuits in relation with child labor or poor working. Adidas has a very established network of distribution; their goods are sold worldwide. Weaknesses: They are very heavily reliant on the sports industry alone. This may prove to be a disadvantage at a point as they have to diversify into other sectors as well to increase their own portfolio and reduce risks. They are a premium brand therefore they charge quite highly. There have been quite a lot of instances where people had issues with their helpdesk people. This creates a weak impression for any company. Opportunities: They can increase female sports line and launch it through branding it by famous female sport stars. They can introduce E-commerce throughout the world even by outsourcing the web development area to the third party. They can also introduce their products in the World Wide Web through collaboration with online retailers who have been in business for quite a lot of time. Threats: They have quite a lot of competitors like Nike and Puma who have similar comparable established image as Adidas has. The continuous increase in the inflation has also increased the prices of the raw materials this will affect the prices of the goods which will be high. Tensions in different countries create issues related to import and export barriers or duties. Task three PEST model is used to analyze the macro-environmental factors that play a major role in any business. Here PEST stands for, Political, Economical, Social and Technological, respectively. It is a total external analysis model (Belch, Belch, 2010). Political: Adidas will have to be very careful to abide by the employment laws of the particular country they are operating in and as well as the global employment laws. For example, the labor laws of UK are far stricter than the labor laws in the Asian and south East Asian countries. Therefore, the labor in Asian countries is cheaper. But then they will have to bear the cost of transportation for such countries. They also have to be careful in relations with the material that they are discarding into the environment. They should also contribute to the R&D of better materials of use instead of PVC. Economical: As a manufacturing firm, Adidas has helped many countries by providing employment opportunities in those countries. This helps drastically in the increase of employment of the country. Exchange rates and interest rates play a very important role in such manufacturing companies. In case of Adidas the factories are placed in the Asian region as raw materials and labor is quite cheap as compared with the European countries. Social: Adidas products are for ages, color cast or creed. There has been no differentiation in ads that they place as well. Adidas has been trying to prove to the world that there should be no differentiation on basis of color; this is evident from the event when they were the first ones to sign a black athlete to sponsor their spiked shoes for marathon. Technological: Adidas makes use of technology like e-commerce, what more can be done is to expand the business through a wider setup of e-commerce throughout the world. They were the first ones that made a running shoe that had a built in mp3 in it. This was quite an innovation when it was done. They also use melting adhesives, these kinds of adhesives melt and bond when they are faced with higher temperatures, and this also makes the shoes very tough and temperature resistant. Task four SMART is an acronym for S=specific, M=measureable, A=attainable, R=realistic, T=timely. Applying these SMART criteria on Adidas the following things can be said (Zwick, Cayla, 2011): Realistic goal for Adidas will be to create a newer line of brands altogether so that they have a backup plan incase their shares are going down. The new line can be casual clothing for females, not the sporty casual kinds that they are already producing, but trendy clothing which would attract a whole new set of the target market. They can also, along with the female line launch a line for kids too. They are already in the apparel business therefore it would just be a brand extension. It would not require any separate whole range of marketing activities. Timely goal would be to launch the female and the kid’s brand within the span of two years, so that they can have the first mover’s advantage in the sports category to start such a business. They already have many of their units established in the Asian zone; therefore, it wouldn’t be much of a hassle for them to launch into this business. The raw material availability would also be quite high and at a far more reasonable rate that they can achieve anywhere in the world. Task five The first step of research is to decide whether Quantitative analysis or Qualitative analysis should be used. Once that’s decided, marketing magazines, social media can be used to decide upon the reaction of the general masses with regards to the products launched by Adidas. The goal of the research should be clearly decided and highlighted. The company has an existing CRM system that keeps records of the customers who have been the loyal ones for quite some time. Also, data for the POS terminal can be used to know the frequency of purchases and the things that are purchased. Adidas can also use customer representatives to send out surveys to decide the percentage of the target market and the segments in which their market is divided. Once all the data is compiled, using SPSS or some other tool the data can be analyzed and the necessary deductions be made to revamp or realign the marketing strategy that they devised (Kotler, Armstrong, 1991). Task six (A) The most common structure used to describe the buying behavior in the customer is the buying decision process. People recognized the existing need for the sportswear and other such things. They searched around for details and they would discover the brands that were offering the items that they required. The customers will look into the options that they have with regards to brands available. They will then look for the pros and cons of the brand that they might purchase, the advantages that they may have from the brand and the disadvantage that they might have. They will then make the purchase and after they have purchased it they will then look for the promises that were made by the manufacturer, one they are satisfied they will again buy it. Adidas has been delivering the promise it has made since its inception therefore, the customers keep coming back and they have a loyal customer base (Grewal, Levy, 2010). (B) The development of the spiked shoes was the starting point of the business, which was the development phase; they then introduced it to the market through getting a brand ambassador in the form of a marathon runner. After selling footwear for quite a lot of time they went into other stuff too like clothing, protective wears, shoes, eyewear, bags and socks. This phase emphasizes the growth that took place in Adidas and brought about a higher number of sales and a wider range of products. The brand is currently at the maturity stage, where they have stable sales and are earning profits. Though they haven’t reduced the prices of the products that they sell but even then people prefer to buy them because of them being a premium brand as well as a brand that delivers promise (Hawkins, Mothersbaugh, 2010). (C) Adidas should try to launch itself more dominantly in Asian countries as well. Its major warehouses and production units are placed here, but due to its over high prices it is out of the reach of the people living here. They should also look to establish themselves in the field of women sportswear and launch it well as well. Task seven (A) The target market for Adidas is the group of people who are interested in playing sports. The serious sportsmen will only be the person who will be willing to send quite the amount that Adidas charges. Sportsmen worldwide are the target market, and also they have started targeting the female sportswomen which has diversified their customer base. It is by no means the group of customers that Adidas can retain as they are all seasonal and will vary. The female sportswomen are less but they have also been involved into the customer base now. Children and non-sporty people are out of the customer range of Adidas (Peng, Chen, Narain, 2007). (B) As it is evident from the positioning map we can see that Adidas is placed highly above all its competitors this signifies that Adidas has been doing what it has promised it customers of. It is far more focused on technology used in the brand production and performance of the brand rather than focusing on the luxury side of the brand (Kotler, 2000). Task eight Marketing mix for any product comprises of four P’s which form the basis of any marketing strategy (Kotler, Armstrong, 1991) (Kotler, 2000). PRODUCT: The product that Adidas offers is the sport wear. They offer sport wear for all kinds of sports. They can launch themselves into female sport wears as well. This will help them increase their market and establish a better image for themselves for promoting equality in gender. For launching themselves more prominently in Asia they can offer sportswear for the sports that are more popular in Asia. When people look at Adidas as a product they are looking for the durability, factor of being comfortable and stylish at the same time. PRICING: Pricing is the part of the marketing mix that generates profit for the company. The price should not be very high as it will generally be out of the reach of many consumers. It shouldn’t be too low both as it will not project an image that the product is of not good quality. Pricing at the right point is what is necessary as people who know the real value will be the ones willing to buy it. As it is placed as a premium brand therefore, the price is high and at the same time quality is high as well. This is the best kind of pricing that can be done. PLACEMENT: They can place their brand in malls and shopping centers of the region so that it gains visibility. They can also use a local but famous brand to partner with them so that their own visibility increases and people learn that the brand is just not for the high and mighty or for only sports person but also for those who want to go for a trendy look. PROMOTION: The best way to promote would be to hire Asian athletes to be brand ambassadors. This will help people relate well to the brand. They can also give giveaways by keeping contests which will attract more and more people to buy their brand. One other way that they can use is to start sponsoring local events this will make people aware of the brand. They can give their long term customers some sort of complimentary gifts to please them. REFERENCES SMIT, B. (2008). Sneaker wars: the enemy brothers who founded Adidas and Puma and the family feud that forever changed the business of sport. New York, Ecco. PENG, Y., CHEN, J., & NARAIN, S. (2007). Adidas. Singapore, Page One. KOTLER, P. (1980). 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