Strategic Marketing of Adidas - Case Study Example

Strategic Marketing: Adidas Supervisor: Strategic Marketing: Adidas Student's Last Name 2 A brand is considered a product from a company or organization that is known or recognized. Free Definitions: Define Brand (1998-2004) gives the meaning of brand: "The name of the organization can also serve as a brand. The brand value reflects how a product's name, or company name, is perceived by the marketplace, whether that is a target audience for a product or the marketplace in general (clearly these can have different meanings and therefore different values). It is important to understand the meaning and the value of the brand (for each target audience) in order to develop an effective marketing mix, for each target audience. The value of the brand for a web-based company may have heightened importance due to the intangible nature of the web." A brand is also considered to be a trademark or a product line. It is a distinctive name, which addresses, or identifies, a product, service, or a manufacturer. People purchase a certain brand in order to acquire a distinctive category and to show ownership of the brand that they favour. Companies must develop a marketing strategy. This process consists of coming up with a foundation (a basis) in which to work from. By creating a marketing strategy, companies can create an identity. This identity will be the trademark that used repeatedly in all communications in order for the company logo and message to be known by others. A company's brand, or otherwise known as a trademark or logo/motto, helps to differentiate the company from others and to provide uniqueness. It is suggest that there are four marketing constituents that must be considered and understood when creating a marketing strategy. The marketing components offer the foundation and basis for the brand strategy. The four components are as follow (Developing Your Brand Strategy, Student's Last Name 3 2006): primary target customer, competition, product and service mix, and unique selling proposition. To begin developing a marketing strategy, a company must first define its brand. Defining a brand creates a framework or foundation for every other factor to build on. Adidas' marketing strategy was to focus on the rapidly growing sector of sports and retail. The company does not market sports but markets through sports. Although the two are quite similar and connected by the use of sponsors, marketing through sports involves employing communications in the communication process. An example is to market through an even such as the World Cup. This works tremendously as organisers of the event usually allow only one sports company to represent them (i.e., the official sponsor of the World Cup). Other companies are doing the same thing by incorporating Adidas into their marketing strategy. Even companies that typically do not have anything to do with sports are incorporating Adidas in delivering their brand. An example of this is when Mastercard, which has nothing to do with sports and athletics, uses Adidas in their commercials and other avenues of marketing because it recognises the powerful effects that television and football has on the public. (Hare, 1999.) Adidas also delivers the message that a sport product can also be an everyday consumer product. Sportswear is as fashionable as it is function-able. Branding is extremely important for Adidas as they market to the retail sectors. Polo shirts, track suits (or warm-up suits), and trainers are amongst the products that are popular with households. Knowing the target market is very crucial in determining the brand and all the steps that are required in doing so. A company's target market comprises of the people, which the company wishes to gain the attention and business of. Adidas defines their target market by characteristics such as psychographic, demographic, and geographic. With each target market, the marketing strategies change a bit. For instance, promoting products that are more useable to households calls for a slight change in the advertising of products such as polo shirts and warm-up suits. Eyewear is another line of products that the company has ventured into. Different target markets, countries, cultures, and varying sectors (fashion/retail and athletics/sports) call upon analysing the target market and "tweaking" the market strategy accordingly. However, due to the fact that television and sports plays such a huge role in the public's life, the Adidas' marketing strategy remains the same overall. The brand Adidas has now become a household word such as the brand Kleenex is usually stated in place of tissue paper. Keep in mind that a brand helps the company to stand out amongst the rest. Competitors are fierce and many and a company needs to find create ways to effectively impact the marketplace. Companies need to place their brand and grab the attention of the target market as competitors will drown the companies who do not have a strong brand strategy. An example of the ferocious competition is when Nike focused on gaining more of the footwear market because Adidas was focusing on the apparel. Nike built up an 80 percent share of basketball shoe market based on individual players (stars). However, Adidas focuses on gaining more of the market by focusing on teams. Adidas spent $400 million on an eleven-year deal with the NBA which focuses on their teams and footwear that players do not wear while playing. However, this deal leaves the players open to wearing whatever shoes they wish. (Manners, 2006.) Student's Last Name 5 A strong brand strategy will "tug at the heart" of the audience and create intense feelings which will motivate and persuade people to react. The goal is to get people to view, think, and react positively toward the company. People are bombarded with advertisements, sales pitches, and offers. Just take a look at newspaper and magazine ads, billboards, and radio and television commercials. Focus on telemarketing calls at the front door and on the telephone. Look at the posters at malls and stores. Surf the Internet for just a few minutes. View the labels on products. The demand for people's business and money is a non-stop and competitive cycle. A strong brand strategy should cause the company to stand above the restand be attractive to the target market. This is accomplished by grabbing the hearts and minds of the potential and existing customers. The Internet now offers new tools for companies to use in implementing their market strategies. Organisations can research the information that is needed to learn about their target audience, create the brand that is most suited for them, and then deliver the brand strategy via technology and gain entry into other countries. Using traditional tactics (press releases, newsletters, articles, etc. that are produced for the World Wide Web) and/or innovative media tactics (dialogic communication, blogs, multi-media effects, etc.), an organization can track the latest trends and happenings in the global industry. Immediate responses, interaction with the publics, and real-time monitoring can make or break an organization especially in such a constantly-changing field. Organisations can now implement computer mediated communication and innovative media tactics to their advantage. Wikipedia, the free encyclopedia (last modified 2006) gives defines computer-mediated communication (CMC) as "any form of communication between two or more individual people who Student's Last Name 6 interact and/or influence each other via separate computers through the Internet or a network connection - using social software. CMC does not include the methods by which two computers communicate, but rather how people communicate via computers." A comparison of three countries' Internet usage was evaluated by Adam, Mulye, Deans, and Palihawadan (2002). They found that the "UK firms more likely to be seeking strategic advantage from use of the Internet UK firms are more likely to use the Internet in relationship management than are Australasian firms." These authors quote Hofacker and Murphy (1998) and Dholakia and Rego (1998) in stating "In the eight years business and government have been using the Internet, they have struggled to accommodate this new interactive medium in their integrated marketing communications." E-mails are the most popular form of CMC. A study by Bontis, Fearson, and Hishon (2003) states that "Use of computer mediated communication, specifically electronic mail (e-mail), has grown exponentially in recent years reaching as high as 75 percent penetration per household in some countries. The penetration rate is even higher for corporate environments." Publicity and company information spreads like wildfire via CMC. People can also instantly participate in the controversy. Competition can also instantly participate. Technology and the Internet allow people to create their own websites, blogs, do-it-yourself publishing, instant messaging, reviews, etc. With CMC, messages can be delivered and spread throughout the world instantaneously. I.e., The Political Dogs (2004-2006) is a blog where one can post writings, news, Student's Last Name 7 thoughts, and opinions. This certain blog is written by only a few writers who maintain the website. Information is instantly "published" and posted online and can spread amazingly fast. People who get news from traditional methods miss out on the cultures that have developed through CMC. Lawley states, "Bourdieu (1990) characterizes social relations in the context of what he calls the field, defined as a competitive system of social relations functioning according to its own specific logic or rules. The field is the site of struggle for power between the dominant and subordinate classes.." Cultures have come about regardless of whether or not anyone has tried to create them. The American Heritage Dictionary of the English Language, Fourth Edition (2000) defines culture as "the totality of socially transmitted behavior patterns, arts, beliefs, institutions, and all other products of human work and thought: These patterns, traits, and products considered as the expression of a particular period, class, community, or population. Adidas is aware of the virtual culture that exists and the company markets and focuses on these cultures. By employing websites, online help and assistance, blogs, multimedia ads, interactive websites, virtual shopping, Internet technology, and CMC, Adidas is able to market, communicate, react, and solve issues accordingly to the varying cultures and target markets (such as households, pop culture, athletes, etc.) For example, at the home website www.adidas.com, visitors can select which country they wish to view the site from. The languages and products change according to the country. Visitors can also view original products or performance products. The website is user friendly and allows for ease of viewing, gaining more information, and shopping. Famous athletes are used, different sports are available and divided into categories, and ads can be downloaded for viewing and/or watching. Student's Last Name 8 The Merriam-Webster Online Dictionary (2005-2006) defines innovative as "characterized by, tending to, or introducing innovations". The word media is defined by Soanes and Hawker (2005) in the Compact Oxford English Dictionary of Current English, Third Edition (2005) as "the means of mass communication". Finally, the word tactics' meaning is listed as "a specific action intended to get a particular result" in the Cambridge Dictionary of American English (2006). Hence, to employ innovative tactics means to introduce and use the means, and resources of mass communication to persuade others in order to get them to act; therefore, leading in a certain result. Adidas must keep up with new ways of communication if it wishes to promote services and/or products, to protect their business (from attacks, protect their image, reputation, etc.), and to keep the public informed. Chavez (2004) quotes Julin (n.d.), "The greatest challenge to public relations professionals in the next five yearsis to increase the understanding of public relations as a strategic profession. We are more than the tactics that still define us." CMC is the way to keep the public informed, to promote services and/or products, to protect, defend, and counterattack. This will help the businesses communicate better which will in turn enhance not only the relationships of the management, staff, and all those involved, but it also will enhance and inform effectively the society i.e. the public. Adolf "Adi" Dassler founded the company after realizing the need for athletic shoes. From a small village in Germany, Adidas is now the second largest manufacturer of athletic shoes with more than a hundred subsidiaries worldwide. With bankruptcy looming, the company made the decision to move production to Asia, which lowered the costs, and by using innovative ideas and techniques to market products to various target markets, publics, and cultures. Student's Last Name 9 The company is globally well known because the world needs performance athletic shoes and Adidas marketed well to all parts of the world. Adidas applied the principles listed in this writing to their business strategy. The brand includes the logo which has always contained the three stripes that signifies "Adidas". Although the logo may have some changes i.e., the trefoil (flower) logo still contains the three stripes. This allows customers from all over the globe to recognize an Adidas product. Another part of the branding, which is the top priority of strategic marketing, is to infuse a story and history into company and its products, websites, media information, etc. At the Adidas website the history is listed. This gives the products more value and a personal touch. It is a way of "romancing" the product and creating more sales. The company is implementing many other strategies that are improving its brand. It is now a household name and is continuing to delve into other areas such as joining forces with large companies, musicians, etc. to continue branching out. For example, production was moved offshore to Asia and Madonna was hired to promote the products. (Wikipedia, the free encyclopedia, last modified 2007.) From meeting basic performance needs to high tech products to joining forces with other corporations, Adidas has placed itself everywhere and developing customer loyalty by providing what they want and need (in many areas). Having customers who are loyal to a certain brand is the key to a company's success. When a company can obtain customers who are loyal to its brand, this Student's Last Name 10 is extremely advantageous as the customers are the ones who will do the advertising and the selling. The company does not have to work as hard. Adidas made itself known as a lifestyle product and joined forces with other companies led to many advantages. Gaining a competitive advantage by not just selling a product but selling a community; a place where people could have a sense of belonging knowing that the company will meet their needs, provide the latest technological advances, and products and service that can be counted on time after time. By touching people's emotions, they were able to hit right at the heart, where people are moved, and decisions are easily made based on emotions and what touches them. Their customers were made to feel special and cared for as they lean to a brand (and a company) that they can rely on. It is more than the product that Adidas has delivered but also a lifestyle, a community, a way of life. Another strategy is to support various events and supply footwear and products. This allows the company to be right where the action is-to be completely involved. This also allows additional advertising. For example, Adidas is the official match ball supplier for the FIFA World Cup. The company also provides kits for many football teams around the world and there are many Adidas sponsorships globally. The company uses high profile players in their advertisements. Such names include, as listed by Wikipedia (last modified 2007), "Steven Gerrard, Lionel Messi, Djibril Ciss, Juan Romn Riquelme, Zinedine Zidane, David Beckham, Jermain Defoe, Oliver Kahn, Santiago Solari, Frank Lampard, Arjen Robben, Shunsuke Nakamura, Lukas Podolski, Michael Ballack, Alessandro Nesta, Student's Last Name 11 Bastian Schweinsteiger, Ral, and Kak. They also include past stars Franz Beckenbauer, Zico and Michel Platini." Football is not the only sport as commercials also feature other athletes in various sports such as Haile Gebrselassie for long distance running. Famous actors and musicians are used in advertising and the delivery of Adidas brand in order to reach those who may not be into athletics. Focusing on the pop culture is a strategy that has allowed the company to get its foot in the door of the market segment that would not typically be interested in performance shoes and products. As stated earlier, Adidas joined forces with other large companies and purchased Reebok in 2006 for over $3.8 billion. (Colbert, 2007.) From a single guy in a small German village to the second leading performance/athletic products provider in the world, Adidas' marketing strategy has produced tremendous results. Colbert (2007) lists some key financials for Adidas: Fiscal Year-End December 2005 Sales (mil.) $7,858.6 1-Year Sales Growth (11.1%) 2005 Net Income (mil.) $462.4 1-Year Net Income Growth 7.9% 2005 Employees 15,935 1-Year Employee Growth (2.5%) Student's Last Name 12 As with all companies, Adidas must use value propositions. Kotelnikov states that a company "should deliver a particular customer value proposition to a definable market in order to exist. Competition is all about value: creating it and capturing it." By creating the brand and implementing the marketing strategy, or brand strategy, steps (as listed throughout this essay) Adidas was and still is able to charge higher prices. The benefits justify the prices and customers are willing to pay. For example, Adidas' line for women is a special line and women around the world are willing to pay extra because of the branding and marketing strategy that has been successfully delivered. Once again, the advantages of positioning Adidas as a lifestyle product and joining forces with other companies were many. Gaining a competitive advantage by not just selling a product but selling a community and its benefits; a place where people could have a sense of belonging. By touching people's emotions, they were able to hit right at the heart, where people are moved, and decisions are easily made based on emotions and what touches them. Their customers were made to feel special and a part of an elite group surrounded by others like them as those who purchased the products-one that is upscale yet affordable (compared to real luxury brands that only the wealthy can partake.) It is more than just a mere pair of running shoes or warm-up suit that they were getting. It is a lifestyle, a community, a way of life. Bibliography Adam, Mulye, Deans, and Palihawadana (2002). E-marketing in perspective: a three country comparison of business use of the Internet. Marketing Intelligence & Planning, Volume 20 Number 4 2002 pp. 243-251. Bontis, Fearson, and Hishon (2003). The e-flow audit: an evaluation of knowledge flow within and outside a high-tech firm. Journal of Knowledge Management, Mar 2003 Volume: 7 Issue: 1 Page: 6 - 19 Cambridge Dictionary of American English (2006). Cambridge University Press: 2006. Retrieved January 4, 2006 from http://dictionary.cambridge.org/define.aspkey=tactic*1+0&dict=A Chavez, Lorenzo (2004). 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Oxford University Press: June 23, 2005 Wikipedia, the free encyclopedia (2006). Retrieved December 31, 2006, from http://en.wikipedia.org/wiki/Target_marketing and December 31, 2006, from http://www.google.com.mx/searchhl=es&lr=&defl=en&q=define:Business+ethics&sa=X&oi=glossary_definition&ct=title> and http://en.wikipedia.org/wiki/Starbucks Wikipedia, the free encyclopedia (Last modified 2007). Retrieved January 3, 2006, from http://en.wikipedia.org/wiki/Adidas Read More