Brand Management Adidas - Case Study Example

Brand Management Executive Summary This study comprises of a critical review and evaluation of Adidas in context of its brand development strategies. The paper focuses on the company profile of Adidas and its brand positioning in context of Customer Based Brand Equity (CBBE) model. The research revealed that Adidas gives utmost emphasis to its customer needs and is customer centric in its approach. The study also evaluated the role of the marketing mix in supporting the brand. Table of Content Executive Summary 2 Introduction 4 Company Background 4 Justification of Brand Development Decision 5 Adidas’ Brand Association with Clients and Customer Centricity 10 CBBE Model of Adidas 12 Role of Marketing Mix 14 Conclusion 15 Introduction Brand image is often defined as that group of characteristics and alliances that customers associate to the brand name. In other words, the image of a brand depends on what customers perceive and feel about it. Brand image is very strongly related to brand awareness, because customers are unlikely to have any image of a brand that they are unaware of. In this highly competitive commercial environment, it has become imperative for corporate organizations to distinguish the products and services offered by them from that of their peers. As a result, brand awareness, brand image, and brand development strategies have become an integral part of the present day business organization in building their brand equity. Company Background Adidas, a German sportswear producer, was instituted in the year 1920 by Adi Dassler. The business started off as a small workshop, but it transformed over the years into a renowned large corporation and turned out to be one of the foremost sportswear brands in the world. The products of the company comprise of sports shoes, sports shirts, bags, and all other sports related goods and equipments. The Adidas Group comprises of three major brands, such as adidas, Reebok and TaylorMade. The figure below illustrates the brands that comprise the Adidas Group: (Source: Adidas, 2012) Justification of Brand Development Decision Despite the fact that brand image development is undeniably a grave challenge to brand managers, there has not been much research to assist brand managers in making a choice between different strategies. There are large numbers of researches that have been accentuated on brand personality (Okazaki, 2006; Venable & Rose, 2003). Nevertheless, the most important focus of these researches has been on the consequences and outcomes of brand personality or on dimension factors. There have not been much studies revolving around how brand personalities are build up as well as how they can be augmented. There are a numbers of constituents that are required during the process of branding, and brand personality is one of the crucial elements. By bestowing a brand with a definite personality, brand managers attempt to differentiate it with brands having identical product characteristics. In the earlier period, researchers have accentuated on finding out how the brand personality is connected to qualities of human beings, or on the building up of brand personality from diverse societies and cultures. With the intention of fortifying the association between an organization and its customers, brand managers across the world have endeavored to build strong brand personalities for their respective brands. David A. Aaker (1991) had defined brand equity as a collection of assets such as brand loyalty, brand awareness, brand associations, perceived quality by consumers and other brand components. These components are vital in the creation of a brand’s personality over time. Brand personality can be described as the collection of human attributes linked with a brand (Aaker 1997). The development of brand personality is the decisive aspect for brand accomplishment as it assists to set apart a particular brand from others, builds up the emotional characteristics of a brand and enhance the individual significance of a brand to the customer. The marketing mix of a brand also plays an imperative role in the creation of the brand’s personality (Batra et al, 1993). The marketing mix of a brand comprise of its price, images related with store localities, attributes and advantages of products or service, packaging, brand logos, promotions as well as advertisement of the brand. Figure 1: Components of Brand Equity (Aaker, 1991). In the year 1993, Kevin L. Keller came up with “Customer Based Brand Equity” (CBBE) Model. According to Keller, CBBE is the degree of difference that is brought about by brand awareness on consumer response to the marketing of the brand. Figure 2: CBBE Brand Knowledge Model (Keller, 1998) Keller stated that a brand develops CBBE when the customer knows the brand and embraces certain complimentary, strong and exclusive brand alliances in memory. He also asserted that brand knowledge is formed of two major attributes, namely ‘brand awareness’ as well as ‘brand image’ (Keller, 1993). To put it in other words, CBBE is the product of the reaction of the customers to the advertising and promotion of the brand. Adidas’ Brand Association with Clients and Customer Centricity The digital uprising has had an immense impact on the rivalry between various brands, the way customers assesses these brands, in addition to providing additional information pertaining to products to the consumers. As a result, it has become all the more crucial for organizations to develop their brand personalities so that the consumers can effectively distinguish their offerings from the rest. Price had been a very crucial aspect of business, on which organizations had been competing with each other. It is a vital component in the process of decision making by the consumers, particularly due to the depressing economic conditions that are prevailing currently. Nevertheless, with the rise in competition amongst the various brands, it has become increasingly complicated for the customers to make out the best offers. Hence, with the rise in competition and change in the perceptions of customers, price has lost its position as the decisive positioning aspect of a brand. It has rather become a more generic parameter in terms of branding a particular product. As a result, brands like Adidas has to make sure that its offerings stand out as unique and exclusive in the market. Such a perception amongst the consumers would make the product as well as the brand very striking to the target consumers. Nevertheless, brands are hardly ever exclusive in terms of their functionality, for instance companies like Puma and Nike also provide similar products. Most often the exclusivity of a brand depends on how it is portrayed by the organization and its brand managers in addition to how it is perceived by the customers. Even if organizations come up with unique products with exclusive advantages, it is copied almost immediately by the competing organizations in the market. This had intensified the pressure on the organizations to develop their brand personality in such a manner that they can associate efficiently with a wide base of consumers. As a result, Adidas have started concentrating more on the relationships and associations customers have with their brand in addition to the requirement to focus on common values with their target consumers. Previously, Adidas had not focused on the association of their brand with the consumers. However, lately it has become increasing imperative for the organization to focus more on this intangible aspect of branding, in comparison to the other tangible aspects such as price or product. The associations are crucial in context of developing appropriate brand personalities and hence organizations are required to express a complete understanding of the values and lifestyles of their customers. This would act as an initial point for the building up of an efficient brand personality in terms of developing a priceless association with the consumers. In order to accomplish such a relationship with its consumers, an organization is required to regard its offerings as primary and the sales of its offerings secondary. Additionally the organization would have to position its service as the integral aspect of the consumers’ experience with its brand. Such an approach is based on cross-strategies and associations build on such strategies would be bonded in such a strong way that it would be difficult for the rival organizations to pull way the customers of the company. Adidas has realized that for its long-term success, it is important that it adheres to its core customer focus. Accordingly, the brand portfolio strategy of Adidas is such that it can associate efficiently with a wide base of consumers. Figure: Brand Architecture of Adidas (Source: Adidas, 2010). CBBE Model of Adidas According to the CBBE model, the preliminary step for a company is to build an identity associated to its brand, conveying the consumers who they are. Then, it is imperative for the company to illustrate their difference from other rival brands, so as to position their brand in the minds of the consumers. Finally, a company is required to create positive associations amid the consumers and its brand, in order to accomplish brand loyalty. With the intension of developing itself as a prominent brand, Adidas had efficiently addressed the six components of CBBE model, namely, salience, performance, imagery, judgement, feelings and resonance. 1. Salience: Adidas enjoys high awareness by consumers as a result of its covert advertising, sports sponsorship. It has successfully positioned itself in the consumers’ mind as a high quality manufacturer of sportswear and accessories as well as equipments associated with sports. 2. Performance: Adidas is considered as a brand with elevated performance and is renowned for its high product quality. The company had always focused on quality, reliability and durability of its products, while putting equal emphasis on the products’ style and design. 3. Imagery: Adidas had successful associated itself with renowned sportspersons and has also involved in many sports events. As a result, the brand is now considered to be an icon of status and a trendy accessory amongst the consumers. 4. Judgements: Adidas is perceived by the consumers as a brand of high quality and one which is innovation oriented. 5. Feelings: Over the years, Adidas as a brand has associated itself with a sense of achievement and passion to compete. 6. Resonance: This attribute indicates the brand loyalty of the consumers. Adidas targets a wide range of customers and fulfils all their needs pertaining to sports, by means of their high quality products. As a result, the growth rate of the company had been very impressive over the period. Conclusively, it can be stated that Adidas is a well balanced brand in context of the six components associated with brand equity. Consequently, the company has been able to create a strong and positive brand image on the minds of the consumers. Role of Marketing Mix Adidas offers a wide product range in the sportswear, equipments and accessories segment, unlike many other sportswear brands. Moreover, customers perceive Adidas a high performance brand, which is associated with durability, comfort as well as style. The pricing of its products is also very crucial, because the products of a particular brand are not properly priced and if the customers perceive that they are not getting adequate brand value, then even the most efficient brand positioning would not help. Considering Adidas’ rising growth rate, it can be assumed that the company had been successful in pricing its products correctly. The place or distribution channel used by a company also plays an imperative role in its success. During the last five years, Adidas had significantly expanded its retail stores. This is played a crucial role in the company’s growth because the concept stores helped to showcase the wide range of products the company offered, while their factory outlets acted as clearance conduits. Moreover the retail stores created distribution in markets where conventional wholesale markets do not exist (Adidas, 2010). Promotion comprises of the marketing tools employed by a brand to communicate with the consumers. Various forms of promotion include advertisement, direct marketing, sales, media, and public relations among others. Adidas had efficiently employed its promotional activities to positions itself in the consumers’ mind. The wide range of products that the company offers in the sports segments as well as its multi-brand architecture catering to the needs to a broad category of customers, has provided Adidas with a major competitive edge over its peers (Adidas, 2010). Conclusion The study of the brand development strategy of Adidas revealed that the company, with the help of its brand architecture, caters the customer segments it has categorized. Its unique brand architecture as well as differentiation helps it accommodate for broader customer needs, at the same time as maintaining clarity of brand communication as well as brand values. References Aaker, D. A. 1991. Managing Brand Equity: Capitalising on the Value of a Brand Name. New York: The Free Press. Aaker, J. 1997. Dimensions of Brand Personality, Journal of Marketing Research, 34 (3), 347-356. Adidas, 2012. Adidas Group. [Online] Available at: http://www.adidas-group.com/en/ourgroup/assets/History/pdfs/logohistory-e.pdf [Accessed on July 4, 2012]. Adidas, 2010. Annual Report 2010. [Pdf] Available at: http://www.adidas-group.com/en/investorrelations/assets/pdf/annual_reports/2010/GB_2010_En.pdf [Accessed on July 4, 2012]. Batra, R., & et al. 1993. The Brand Personality Component of Brand Goodwill: Some Antecedents and Consequences, USA: Lawrence Erlbaum Associates, Inc. Keller, K. L. 1993. Conceptualizing, Measuring and Managing Customer-based Brand Equity. Journal of Marketing, 57(1): 1-22. Keller, K. L. 1998. Strategic Brand Management: Building Measuring, and Managing Brand Equity. USA: Pearson Education Inc. Okazaki, S. 2006. Excitement or sophistication? A preliminary exploration of online brand personality, International Marketing Review, 23 (3), 279-303. Venable, B. T., & et. al., 2003. Measuring the brand personality of non-profit organizations, Advances in Consumer Research, 30 (1), 379-380. Read More