A Strategy for Devise and Launch of a new Adidas Product - Research Paper Example

New Product Development for Adidas Introduction Adidas have been a renowned player and global leader in the sections of footwear, clothing and accessories of the sporting fraternity for both men as well as women. The story of this reputed brand began in 1920 when Adolf Dassler (the founder of the brand) made first shoes after the World War I. The name of the brand came from the initials of the founder (‘ADI’ from Adolf and ‘DAS’ from Dassler) thus resulting into Adidas. Though the functioning of the enterprise commenced much earlier, the naming of the company was done in 1948. Later in the year of 1989, the Dassler family withdrew from the group and the enterprise became corporation. The group floated stocks in 1995 under the leadership of Robert Louis-Dreyfus as chairman of the executive board. Presently, Herbert Hainer is in charge of the group. Adidas has wide and varied history of acquisitions. It was in the year of 1997, the group acquired Salomon Group, thereby changing the name of the group to Adidas-Salomon AG. But in 2005, Adidas decided to part its way with Salomon and changed its name to Adidas AG. The company had remarkable achievement in 2006 when it acquired Reebok International Ltd. With this takeover materialising, the two of the most reputed brands in the industry expected to have a wide market share with complementary products. The world wide market of the group includes Europe, North America, Asia-Pacific and Latin America thus making the company truly multinational (Adidas Group, “The Adidas Group at a Glance”). Product range The present type of the products of the company includes three broad heads that of footwear, clothing and accessories. The section of footwear includes shoes and flips flops. Host of items like jackets, jerseys, shirts, shorts, pants and tights, sweatshirts, tracksuits, swimwear, tops and pants are part of the clothing section. Accessories of Adidas include bags, eyewear, watches, hardware, hats and stocks, etc (Adidas, “Catalogue”). Being market leader of all most all the product segment they are into, Adidas might look into new product line so that the company can get diversified. The development and launch of energy drink can be a viable option for the company. Energy drinks are such drinks which provide more energy to the drinker compared to other drinks. Adidas already has a wide market in the arena of sports with all its existing products. With energy drink in the product category, the company can expect to get more penetration in to its core competency i.e. designing and developing complete sporting gear. The energy drink will augment the need of the sportsperson as they would require it to boost their level of energy. Also the drink can be presented to any and everybody as simple drink. To get the drink aligned with the brand of Adidas, the name Adirade would fit it. Adirade Adidas being a strong name in the arena of sports, the energy drink can be promoted as a typical sports drink. The motto of the drink would be to provide the drinker with the required energy that is essential to excel in the game he is involved into. Most expectedly, Adirade would be taken in the intervals in between a game or before the start of the game. Therefore, the drink should be so prepared that it adheres with the existing rules of the sports regulatory bodies in terms of ingredients of the drink so that it does not qualify for dope test. The drink would consider glucose, fructose, sucrose and polymers as its ingredients. The drink basically is expected to compete with the widely drunk beverages like Gatorade (from PepsiCo Holdings) and PowerAde (by Coca-Cola). As the other competitors of the company like Nike or Puma are not having any such drink, so Adirade can expect to cater to the niche market in the arena of sports. Segmentation of the market Segmentation of the market refers to dividing the proposed market in to various groups on the basis of factors like geographic, psychographic, demographic and like. Segmentation helps the company to understand the market in much better way which ultimately supports the company in finding better ways to meet the customer needs and wishes. Many of the notable authors of marketing have held the view that segmentation of the market is necessary only when the product is weak and therefore does not appeal to all. But this is not true. In fact, market segmentation is necessary to guide the management about the product strategy to obtain high return on investment (Fennell & Allenby, “Market Segmentation”). The primary segmentation of the Adirade should be the known market for Adidas. It would be best if the company can launch Adirade as the official health drink for all the teams and championships with which they are associated by a way or the other like FIFA World Cup or the UEFA Championships in soccer. Such step would provide the product with huge mileage and help it to be adopted by mass. Associating the drink with various national sides which Adidas sponsors (like England in Cricket or New Zealand in rugby) would also help to meet the objective. Target Market The segmentation of the market is done with the expectation to reach the focussed market with ease. Therefore, segmentation leads to the target market. Traditionally, the athletes and the sportspersons were considered as the only target customers for any energy health drink. But, with time the notion is changing with the change in lifestyle of the people. Though, sportsmen and sportswomen would be the target group of customers for Adirade at the first place, the drink should also aim to be part of lifestyle for the younger generation (Fact Expert, “Energy Drink Target Market: Who Is Buying”). As there is massive change in the pace of life of people of every corner of the world, Adirade would approach by providing the much required energy to them through a few sips with few seconds. At the outset, the target market for Adirade would be sports persons. As it gains popularity, the target base of customers would also include the sports enthusiasts (as most of the time they blindly follow their sports idols, so it would be easier to convince them), the populace ranging from teen agers to early thirties and the hip hop crowd. The drink can also aim to tap the market of those who earn their livelihood by virtue of physical labour. Differentiation and Positioning The market for health drink or energy drink is ever increasing. The recent research reports suggest that since 2002 the market of health drink is increasing by more than 30% every year. The report also says that around 40% of the soft drinks market is covered by health drinks and fruit juices (Just Drinks, “Executive Summary”). So, Adidas should not worry about the market. What is required is a bit of differentiated product from that of the existing products in the market and strong positioning strategy of the new product i.e. Adirade. The positioning of the product can be expected to reap the returns if it can communicate the merits of the product to the target group and persuade them to purchase it (Matsuno, “STP Process”). The positioning might include one or combination of more than one step. The product might be launched on the basis of its benefits or during certain occasions. It might also be positioned with respect to its competitors. The product differentiation of Adirade from its competitors like PowerAde or Gatorade should be based on high level research and development. It should ideally be on the ingredients and composition section as decided by the experts. The energy enhancer health drink of Adidas could be launched at the time of World Cup soccer or any such major event when the world succumbs to sporting mania. Once launched, the drink should be positioned on the basis of its own attributes and merits. The packaging should be attractive and handy so that it is easy to carry. Marketing Objectives The ultimate objective of any and every marketing strategy is to enhance sales and to earn increased revenue for the company. But this objective can not be achieved overnight or by touchwood. The various smaller plans, strategies and objectives are taken on a constant basis to achieve the ultimate objective. Some of the prominent objectives of Adirade marketing would be as follows: To popularise the brand of Adirade in most parts of the world with the help of sponsorships of the popular sports like soccer, rugby and cricket. To have a global reach through dedicated distribution channel so that buyers find it any where and everywhere. To align the younger generation (teen agers to the early thirties) with the product so that it can become part of their lifestyle. To ensure market reach with in the target group. To redefine value for money and promote societal marketing. Las but not the least, to ensure that all these objectives are with in the periphery of the organisational objective and is contributing towards increased sales and revenue generation. Marketing Mix Marketing mix can be defined as the process or the strategy initiated to reach to the target market in a better way, armed with effective planning and execution of different factors of marketing like product, place, promotion and price. An efficient marketing mix is instrumental for selling the product. In a broader perspective, marketing mix of any product can comprise of every factors that help it to get sold more. Traditionally it has been believed that the four Ps of marketing are the major components of any product marketing mix (Business Management for Electrical Engineers & Computer Scientists, “The Marketing Mix”). They are discussed as below: Product – The product i.e. the health drink must be of world class standard. If the product is not satisfactory, the entire process and the investment incurred, falls flat. Adirade, the proposed product must be the result of continuous research and development by the professional biological, nutritional and sports expert. The drink must cater to the needs of remaining hydrated for sports persons, add energy to the drinker and recover nutrients (Biren, “Hydration”). The drink should contain carbohydrate, potassium, sodium and water. As it is primarily designed for sports person, the usage of caffeine and steroids would be strictly banned. Price – Right pricing strategy is very important for the success of any product. And when it is about the health drink to be launched by the global sports brand of repute Adidas, there is no doubt about it. The company should verify the prevalent prices of the existing products and then decide the price for Adirade keeping in consideration the purchasing power of the target group in this time of recession. The pricing should not be too low as it might instigate the buyers to think the product as inferior which would in turn affect the brand equity of Adidas. The expected price rage can be any where around $ 2 for a 12 ounce pack. But it should vary with respect to economies. The pricing at United States should not be same as that of Asia. Promotion – Adidas sponsors whole lot of superstar sportsmen and sportswomen. The company should select some of the notable sport personalities like Lionel Messi, Kaka, Saviola (from soccer), Sachin Tendulkar, Kevin Pietersen (from cricket), Ian Thorp (from swimming) and others as the brand ambassador for Adirade. The company must also look into events like Roland Garros or Indian Premier League to promote it. The company would initiate massive promotional techniques in the form of road-shows, advertisements in electronic and print media and advertorials. It can also use the social networking sites, blogs and short message services campaign to be a part of the target market’s lifestyle. Place – The place in marketing mix essentially mean the distribution channel. The distribution channel is important because all the efforts taken to popularise the product will go in vain if the product is not available to the buyers when desired for. The distribution channel can take several forms. At the outset, it would be preferred to sale Adirade from the Adidas and Reebok showrooms. The product should also be available to the souvenir shops of the leading clubs and teams sponsored by Adidas and other leading sports and soft drink shops. Once popular, the product is expected to hit the market through the dedicated channel of wholesalers and retailers. Cost & ROI The objective of any business unit is to earn revenue and create value for its share holders and stake holders. For the purpose, ensuring desired level of return on investments is must. As Adidas, aims to create sustainable development for its stakeholders, it is extreme important for them to have positive net profit from each of its product. It is expected that the cost of marketing strategy of Adirade would definitely be of considerable amount as it would include signing superstars as brand ambassadors, initiating certain promotional techniques in the reputed mediums of electronic and print and sponsoring some of the world famous events like that of World Cup soccer or Indian Premier League or Roland Garros (for the purpose of product launch). But the most important question is by when the company can expect to get the return. There can be no perfectly right answer as it would depend on certain external factors like that of competitors’ counter strategy, economical factors and regulation of certain national governments. Still, the time frame to reap benefits from the new product should not exceed three years from its launch. Conclusions The major competitors of Adirade are expected to be that of Red Bull, Gatorade and PowerAde. The major difference of Adirade with the other health drinks is that they are promoted by beverage companies where as Adirade would be from the house of leading sports gear company. The fact has both merits and demerits. The merits would be such that it would give the drink easy reach to the target market and also the drink would not suffer from any of the existing industrial predicaments and can start all in a new way. The demerit would be that as the company would be new to the health drink industry, it might lack the required expertise to be successful. To overcome it, Adidas should try to hire the leading professionals of the industry and retain them. The packaging, pricing and distribution channel should be based on well defined market research. The new product should also be made part of the corporate social responsibilities initiatives and societal marketing. The quality of the product is extremely important and adequate care should be taken to ensure there is no usage of any harmful ingredients as it is primarily meant for sports persons. The list of ingredients and manufacturing steps and processes should be clearly stated on the container of the drink so that there is absolute clarity among the buyers and drinkers regarding its harmless quality. With all the adequate and relevant measures, Adirade should wait for a sporting event (which would be a sort of global mania like World Cup Soccer or Indian Premier League or Olympics or Roland Garros) to hit the market so that when it hits, it hits hard. References Adidas Group. “The Adidas Group at a Glance.” Information. 6 July 2009. Adidas Group. No Date. Adidas. “Catalogue.” Products. 6 July 2009. Adidas. No Date. Biren, G. B.. “Hydration.” Health and Exercise Science Department. 6 July 2009. Rowan University. No Date. Business Management for Electrical Engineers & Computer Scientists. “The Marketing Mix.” Marketing Strategy. 6 July 2009. Stanford University. No Date. Fact Expert. “Energy Drink Target Market: Who Is Buying.” Target Groups For Energy Drink: Ads and the Market. 6 July 2009. Fact Expert. No Date. Fennell, Geraldine & Allenby, Greg. “Market Segmentation”. Integrated Marketing. . 6 July 2009. Fisher College of Business. 2004. Just Drinks. “Executive Summary.” Fruit Juices & Health Drinks. 6 July 2009. Just Drinks. No Date. Matsuno, Ken. “STP Process.” Notes on Targeting and Positioning. 6 July 2009. Babson College Faculty Web Server. No Date. Bibliography ABAC School of Management. “Gatorade.” Marketing Management Term Project. 6 July 2009. Assumption University. 2007. Platinum One. “Strategy.” Powerade. 6 July 2009. Platinum Group. 01 August 2003. Read More