Advertising and media in the marketing environment - Lab Report Example

? Table of Contents Table of Contents 2 Brief overview of Adidas and Industry Trend 5 Porter Five Force 5 Purchasing Power of Buyer 5 Power of Supplier 6 7 Entry Barrier 7 Threat of Substitute 8 Competitive Rivalry 9 PESTLE 10 Political Environment 10 Economic 10 Social Environment 10 Technological 11 Environment 11 Laws and Regulations 11 SWOT Analysis of Adidas 11 Market Competition 12 Competition in Advertising Theme 13 Rationale of the Campaign 14 Segmentation and Target Market 14 Positioning Statement 14 Perceptual Map 14 Campaign 15 Campaign Slogan 17 Genesis of the Campaign 17 Evaluation of the Campaign 18 DAGMAR 18 1? Perception 18 2? Learning 18 3? Persuasion 19 Execution Strategy 19 Tone 19 Celebrities in the Advertising Campaign 19 Media Strategy 20 Television 20 Internet 20 Recommendations 20 Conclusion 21 Reference 22 Impossible is nothing- Adidas This report will try to throw some light on global advertising campaign themed ‘‘Impossible Is Nothing,’ promoted by Adidas in the year 2004. Brief overview of Adidas and Industry Trend Adidas is iconic German multinational company specializes in sports apparel, footwear and accessories. The company is headquartered at Herzogenaurach, Germany. The company was founded by Adolf Dassler in the year 1924. Market capitalization of the company is $13.30 billion as of 2011 (Yahoo Finance, 2012). Porter Five Force Purchasing Power of Buyer Buyer power in the industry has weakened due to individuality of customers. Individual consumers lack in financial strength to affect business strategy of large manufacturers such as Nike, Puma, Adidas and others. Buyer power is low due to following factors: (Source: Marketline, 2012) Power of Supplier Sportswear industry is complemented by three inter connected themes such as innovation, research & development and adoption of style trend. In many cases it has been observed that Nike and Adidas design their sportswear in counties like USA, UK and other developed countries but subcontract manufacturing process to developing countries such as China, India and South Korea. Partial control over forward and backward integration of value chain decreases power of retailer but increases power of supplier hence it can be said that supplier power is strong. (Source: Marketline, 2012) Entry Barrier New entrants need to form a new company and diversify their business in order enter sportswear industry. New entrants need to establish strong distribution channel and sustainable logistics framework. New entrants need to invest huge amount of money on setting up logistic division while revenue growth is not very exciting. Risky condition of business and high start up cost have created high entry barrier for new entrants. (Source: Marketline, 2012) Threat of Substitute Online retailers such as eBay, Amazon has emerged as major competitor for brick and mortar sportswear retail channels. In many cases it has been observed as e-business companies are selling branded sportswear to customers without mentioning mark-up difference and technical knowhow. This situation creates negative image about the brand such as Adidas, Nike or Puma in the mind of consumer hence it can be said that threat of substitute is high. (Source: Marketline, 2012) Competitive Rivalry Companies like Nike, Puma and Adidas are trying to compete with each other at every aspect of sportswear products. Presence of online and offline retailer has intensified the completion while switching cost is low for customers because branded companies do not provide incentives to them. Based on the situation it can be inferred that competitive rivalry is high in the industry. (Source: Marketline, 2012) PESTLE Political Environment Adidas need to work in coordination with Political Action Committee (PAC) in order to handle government issues of particular country (Curtis, 2010, p. 43). Economic The world is going through economic crisis such as Eurozone sovereign debt problem and recession. These two events have dampened the growth of economy (Lynn, 2010, pp. 94-104). Adidas need to change their pricing strategy in accordance to global situation. Social Environment Adidas need to change their marketing strategy and product portfolio in accordance to social structure of particular country. For example social culture in China differs from culture in USA (Clark, 2012, p. 98). Technological Adidas need to use ERP or enterprise resource planning and electronic document management system in the value chain to decrease procurement cost (Sumner, 2006, P. 6). Environment Companies need to focus on reducing total carbon footprint in forward and backward integration of value chain to achieve sustainable growth (Kovacs and Spens, 2011, pp. 76-78). Laws and Regulations Adidas need to maintain high quality in their product in order decrease scope of legal action against them. Consumer protection Act in different countries can create legal barrier for the company (Green, 2011, pp. 34-35). SWOT Analysis of Adidas Strengths Weakness The company has established strong retail distribution channel in foreign market. Adidas developed strong brand equity after the success of FIFA 2010 World Cup. The company relies heavily on third party manufacturing. Opportunity Threat The company is working on sponsorship agreement of upcoming sports event in order to increase brand equity (Shimp, 2008, p. 402). Counterfeit products are decreasing brand equity among customers. (Source: Marketline, 2012) Market Competition Sports goods industry is growing and hypercompetitive due to presence of various multinationals such as Nike, Puma, Reebok and others. Puma is small player in comparison to global reach of Adidas or Nike. Brand value of Puma is US$2.3 billion which is way lower than that of Adidas (Brand Finance, 2011). Brand value of Adidas, Puma and Nike is explained in the following section. (Source: Brand Finance, 2011) Market share of Puma, Nike and Adidas is described in following diagram. (Source: Brand Finance, 2011) Competition in Advertising Theme Nike and Adidas compete with each other extensively in the field of promotional campaign (Ronkainen and Czinkota, 2007, p. 577). Both of them use top athletes as brand ambassador for advertisement. Advertisement of Nike focuses on showing other side of athletes (for example, showing Tour de France champion Lance Armstrong doing boxing or tennis player Serena Williams playing volleyball) while Adidas focuses on showing athletic capability of their brand ambassador. Rationale of the Campaign In 2004, Adidas launched year long advertisement campaign in order to synchronize attitude of the brand and life of international athletes. The campaign was launched by boxing legend Muhammad Ali and executive board member Erich Stamminger in the city of New York. "Impossible is Nothing" campaign was biggest advertising initiative for the company. The campaign was launched through television, internet, print media, outdoor advertising channels and point of sales banners. The campaign was developed by global advertising agency 180/TBWA of Amsterdam (Adidas, 2004). Segmentation and Target Market The campaign was created for 12-34 years old people involved in any kind of sport. Study conducted by Adidas showed that people in the age group of 17 to 34 spend more online in comparison to watching TV. Positioning Statement Advertising agency 180/TBWA created the campaign complemented by journey to success of twenty two sports icons. The campaign focused on how they encountered physical, social & psychological impediments and vanquished those obstacles to find the way to success. Perceptual Map Brand Fashion Price Quality & Brand Equity Adidas Moderate Puma Read More