Adidas’s target market for their shoes, clothes and other accessories are males and females between 18 and 35 years old.Is committed to the design the more fashionable products to meet the needs of young today
â-† Adidas (adidas) Brand Profile:
Create Year: 1924
Brand Registration Year: 1949
Product Category: mes and athletics apparel, yoga clothing, sports accessories (watches, glasses, etc.), footwear, men’s fragrances and skin care products
Founder: Adolf â€¢ Dassler (Adolf Adi Dassler)
Company headquarters: Germany, Nuremberg
Adidas (adidas) brands: Y-3, Adidas classic clover (adidas Original), adidas SLVR Label
Adidas (adidas) Advertisement: “Impossible is Nothing”
Part Two. Problem Identification
Strong competitors in the industry
As a rival of Adidas, the strength of Nike is beyond doubt. It is one of the most recognizable companies in the entire world as well as the most popular brand in, not just America, but throughout the whole world.
But as competitors in the same industry, Nike has a strong competitive edge cannot be ignored. Nike’s target customer is the same as Adidas. For their shoes, clothes and other product committed to more fashionable design to meet the market need today. On the other hand, Nike offers all the athletic shoes, clothes, and other accessories one would need to wear in their certain sport. The same, Adidas also sponsors many sports and sports stars, in order to promote their products.
In this case, if Adidas would like to stand out from competitors in the industry, there must be more strongly competitive, in addition, more rational strategy is essential.
Market share threatened
% of Market Share
The % of Market share before Adidas acquired Reebok
-Compared with NIKE
Market share refers to the relative market adoption of various products. In the athletic shoe industry, only identify the target market, and using effective strategies to increase market share stable.
As the competitor- Nike, Its competitive market has expanded and dominated in the international market. It disburse TV ads during professional and college sports events, prime-time programs, and late-night TV programs, all are very effective strategies to influence and attract the target customers to meet increasing market share and sales.
-Acquisition of Reebok
Adidas’ acquisition of Salomon complemented its existing sporting goods manufacturing by adding snowboarding, skiing, cycling, and golf markets. In contrast, Adidas’ acquisition of Reebok only strengthens its position in its existing production of athletic goods, footwear, and apparel. The two company’s geographic market segments complement each other very well. Reebok holds a strong position in the United States with 12.2 percent of the athletic footwear market and also holds the leading market share in the “classics” shoe category. Meanwhile, Adidas has 9 percent of the U.S. athletic shoe market and has a stronger position in the European market. However, industry leader Nike holds 36.6 percent of the U.S. athletic shoe market.
Part Three. Analysis
The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company’s unique value chain. SWOT analysis groups key pieces of information into two main categories:
·Internal factors – The strengths and weaknesses internal to the organization.
·External factors – The opportunities and threats presented by the external environment to the organization.
The following will be based on the two parts to do a detailed analysis:
Internal — SWOT (SW)
-Strong success in Europe
-Recent selling of subsidiary “dog” Salomon
-Complementary brand identities and market segments
-Shared R&D, patents, technology, and innovations
-American athletes endorsed by Adidas are not as popular as Nike’s
-Nike gaining ground on European soccer market
-Public dissent over use of sweatshops
-Values among management
-Complexity of joining corporate cultures
According to data analysis the following conclusions can be obtained, One of the important strengths is that Adidas-Salomon produces high-performance shoes. They have been able to attract hardcore athletes as customers due to efficiently made shoes (adidas.com). Adidas recently announced that it will be selling its Salomon brand to Amer Sports Corporation for $624 million. This move will allow Adidas to rid itself of the recently slumping Salomon brand, which posted a 1 percent drop in revenue along with a 74 percent drop in operating profit in 2004. The sharp decrease in operating profit is due to recent restructuring that reduced French production of Salomon products from 55 to 35 percent with new production taking place in Romania and China. News of the sale spiked Adidas’ shares up 9.2 percent, reaching its highest point in six years, while Amer Sports shares gained 7.6 percent.
Adidas brand’s main weakness is that their current sales of athletic shoes, one-third of the U.S. market. Another weakness is the Adidas soccer shoes market in the recent decline. Nike soccer shoes to participate in the European market, and its success in the Air Zoom Total 90 first. The final weakness of Adidas, must be mentioned is their use of sweatshops. Allegations of inhumane conditions have Adidas factories in Asia in 2000. However, Adidas that they attempt to resolve the condition.
(ii) External —SWOT (OT)
-Acquisition of Reebok (Acquisition of Reebok reduction in costs as well as decreased competition)
-Growing revenue from opening of own retail stores
-Growing strength in golf industry through TaylorMade and recent acquisition of Maxfli
-Cross-over promotion by sponsored athletes
-Foreign exchange rates will result in loss of actual profits
-Nike’s possible acquisition of Puma
Adidas has huge opportunity in its horizon. Adidas acquired Reebok in a more opportunities should be allowed to enter the U.S. market, Reebok sports shoe industry is currently in second place. Another opportunity Adidas Solomon is likely to expand their brand TaylorMade. While Adidas is currently being sold to pay close to it in 1997 if the deal does not include half of TaylorMade golf brand Salomon brand. TaylorMade – Adidas Golf has a strong hold on the golf industry, is considered the top U.S. and European PGA Tour (Adidas Salomon.com) driving position. TaylorMade holds 7.5 percent of the market share for golf balls and Adidas increased its opportunities in 2002 by acquiring golf-ball maker Maxfli from the Dunlop Slazenger Group. Finally, Adidas can expect to see revenue increases due to their newly implemented and recently successful own-retail activities. These include concept stores, factory outlets, Internet sales, and parts of Asian markets.
An important threat cannot be ignored for Adidas is that it sees a negative impact on its revenues due to the exchange rate differences between the Euro and the United States dollar. They are made â€‹â€‹in Asia, in commercial transactions are conducted in most of the U.S. dollar. So, Adidas is forced back to the early production phase of the euro. Now, the Euro is being used in its national sales.
Industry — Porter’s 5 Forces
The basic analytical framework and market conditions
Michael Porter in his classic book “Competitive Strategy”, the proposed model of industry structure analysis, the so-called “five forces model”, he said: industry, the existing competitive situation, the bargaining power of suppliers, bargaining power of customers, the threat of substitute products or services, the threat of new entrants drive the 5 major competition to determine the profitability of the enterprise. Compare the effect of 5 kinds of forces, to analyze the competitive U.S. state of sports shoes.
First, the existence of high barriers to entry fields. U.S. athletic footwear industry, from “do not plant,” the brand-based companies, large companies in advertising, product development and sales network, exports are more cost advantages. More importantly, the brand personality and consumer loyalty give potential entrants set an invisible barrier.
Secondly, the bargaining power of suppliers is weak. Because most of the athletic footwear industry, the inputs are homogeneous, especially in the Nike launched a wave of outsourcing, more than 90% of the production are concentrated in low-wage, labor-surplus countries far.
Third, end users care about sports shoes prices, while more sensitive to fashion trends, but for the company’s profit margins are not very negative impact. Because if there is reduction in profits, then it will reduce production in developing countries to make up. In addition, most brands with successful product differentiation can facilitate buyers in continuing to transform the brand with the brand image link.
Fourth, because the other shoes are not suitable for sports, so it’s not a complete alternative to athletic footwear.
Fifth, the U.S. athletic footwear market is seen as challenging and saturated, filled with fierce competition and slow growth, so for new entrants only a small space. Nike, Adidas and Reebok are the major brands which occupy more than half of the market share and remained relatively stable.
Through analysis we can see, on the one hand, this is a coveted market, but barriers to run up, have a lower supply of bargaining power, bargaining power of buyers of moderate and there is no alternative to well-known brands, hard to squeeze out of profits. On the other hand, when in addition to a high degree of market concentration, but there is no monopoly power, the region where the combat is very intense. Thus, in this competitive environment, the extraordinary profit independent company relies heavily on the sustainability of their strategies.
Adidas’s market position
Adidas marketing is one of the two core strategies. In 1997, Adidas announced the acquisition of Salomon, the formation of the world’s leading sporting goods company, the company has outstanding brand shares. The two companies’ co-ordinate in product and geographic complementation. Solomon was especially strong in North America and Japan, which Adidas increase market share in the U.S. helpful. They re-focus, re-positioning the brand Adidas to explore its full market potential, all the products into three specific customer groups: the eternal sports, unique, and equipment. This division in sports, physical education and sport lifestyle customer, creating an even stronger market penetration. Adidas always a celebrity spokesperson for the products, and sponsorship of sports leagues. Kobe Bryant, Anna. Kournikova and David Beckham are Adidas’s extraordinary genius. In the Barcelona Olympics, European Football Championship, France football World Cup, the U.S. women’s soccer World Cup, etc., Adidas is always one of the biggest sponsors.
In addition to marketing, research and development is another core strategy of Adidas. They established a new technical innovation team, at least put a big innovation. In 2003, Adidas established a “mass customization” system, according to the customer foot the different situation, personal preferences and requirements of design special shoes, the advantages of a leader in this area to Adidas in the first.
Part Four. Strategic options
Adidas’ mission statement testifies that “Adidas-Salomon strives to be the global leader in the sporting goods industry with sports brands built on a passion for sports and a sporting lifestyle” (Adidas-Salomon). They are always seeking a higher quality and higher-valued product. Their main goals are to be highly recognizable on all parts of the globe and to continue to be a fast-growing, profitable company. Adidas also considers themselves customer focused. Every part of manufacturing and designing products is based on whether it will bring happiness to the customer.
According to numerous studies have shown that the main reason for the failure of a merger between the companies lack of cultural integration. In previous mergers, companies often ignore, rather than executing them, which often lead to the failure of their combination of cultural differences. Many managers and supervisors did not cross-cultural knowledge workers, so they need to be trained.
Acquisition of a large company like Reebok, Adidas disadvantage is that although changes in management and infrastructure, or a combination of the new learning culture difficulties in the new merged company, its competitors are running at full speed. However, it seems in the long run, Adidas and Reebok will be able to overcome these challenges and be able to compete more actively with Nike. One reason is that Adidas has recently acquired a large company experience.
Just seven years ago, Adidas acquired Salomon and became the second largest sporting goods manufacturer in the world, behind Nike and ahead of Reebok. This recent experience of acquiring a company will ease the difficulty of acquiring Reebok. The two acquisitions share many of the same difficulties. Adidas, a German based company, must deal with acquiring Reebok, a company that is based outside of its own country, in the United States. Similarly, Salomon is a French-based company, so many of the same complexities will arise with this new acquisition.
Part Five. Recommended Strategy
From offensive to defensive , increase market competitiveness
Offensive strategy after the defensive.
Although Nike is currently leader in sporting goods in the global market, but as long as the opportunities for Adidas in developing countries and emerging market, develop strategies and market transformation the role of conversion, shake the Nike`s Dominance is possible.
Strategic transformation of the supply chain
ADIDAS should using the cost control efforts to reduce costs. In the country which SALOMON distributors to sell products change to through the use of ADIDAS institutions in these countries, product sales, reducing costs and improving efficient. ADIDAS sales channels will rationalize and coordinate ADIDAS SALOMON their sales and distribution channels, with retailers using ADIDAS footwear products in the strong cooperation to promote the sale of SALOMON, such as SALOMON products in the skating industry’s sales. The TAYLOR MADE in the golf retail on the strength also helps ADIDAS clothing and footwear sales.
Determine the ‘best product strategy
Strategic alliances, symbiotic marketing works
Improve product design and promotion, improve product attractiveness to customers, competitors compete for market share, taking the ‘best products’ market position.
Strategic alliances are not only designed to be reflected in the brand, but also from the spread of brand expression. The concept of value innovation, product and sales more effective
Part Six. Implementation
1, The product implementation localization
As a German sports brand Adidas in the U.S. market, it should put the shoes on the “Americanization.” Europeans like the product may not comply with the American appetite. Adidas recruitment and training should be those who truly understand and can predict the market, this dynamic talent. This is an inimitable resource. Then you can predict the results of these re-shape your market segment, so that one hand to meet the needs of American consumers, it also ensures you are in this market segment has unique advantages. Americans are more stressed the personal, so in terms of advertising, Adidas shaping its image should be a more personalized, but also to reduce the use of stars.
2, The consolidation of quality advantage to improve products
How do companies choose a strategic decision rely on it to go past the path. From this consideration, Adidas have long been renowned as a strict quality control system is known, this system guarantees the high quality of Adidas products, so this tradition should be maintained and encouraged. Also, the strategy to regain world dominance, driven by an attempt, Adidas should be designed to win the so-called “dynamic efficiency” (dynamic efficiency) of the new strategy. While Adidas has established a market he added, but they can also strengthen the “network effect” to move beyond Nike. For example, they can design a full range of sportswear, caps, scarves and handbags to shoes with their support.
3, To play the patent advantage
Nike and Adidas also be said that a “patent race” of the two rivals. Adidas, Nike should be able to estimate the R & D investment. In addition, concerned about the European home market, because the United States is a Adidas overseas markets, so the company should be personalized by putting more elements into its future product design in order to promote the product localization.
4, Drawing on the ordering and distribution strategy of Nike
Nike’s future orders programs to help the company grow rapidly. Adidas retailers should be implemented in conjunction with its ordering system similar to imitate this improve the strategy, this can keep their inventory an optimal level. But Adidas must also recognize that the successful operation of this mechanism is based on many conditions, such as the accurate sales forecast, market strong demand and so on. In addition, compared with Nike and Adidas have not done enough in e-commerce success. To win this key battle, it is essential that Nike, Adidas must learn the professional e-commerce enterprises authorized to operate its online sales.
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