Situation Analysis and Marketing Objectives for Adidas Company - Case Study Example

Executive summary Adidas is one of the largest sports apparel manufacturers in Europe. The focus of this report will be on providing a situational analysis based on the internal and external analysis of the environment that Adidas operates in. Moreover, this report has provided a SWOT analysis of the company highlighting the strengths, weaknesses, opportunities and threats that the company faces. In addition, this report has outlined the marketing strategies of the company based on the SMART criteria. Individual situation analysis and marketing objectives Introduction Adidas is the largest sports apparel manufacturers in Europe. The company was founded in Germany in 1948 by Adi Dassler and has since experienced tremendous growth and success. The company is known for manufacturing sports footwear, shirts, bags eyewear, watches and other sports clothing items. Over the years, Adidas has produced high-performance sports lines that have received good reception from the European market and other countries around the world. The company acknowledges that consumers who purchase its products not only do so due to the fashion statements conveyed by its brand but also due to the quality, convenience and availability of the company’s products. As a result, the company has continuously endeavored to refine it distribution by improving its retail relationships and expanding its outlets. Besides manufacturing sports wear, Adidas is also committed to supporting and promoting sporting performance (Adidas Group, 2008). This report seeks to present an individual situation analysis for the Adidas. The focus of this report will be on situation analysis based on the internal and external analysis of the environment that Adidas operates in. Subsequently, this report will provide a SWOT analysis of Adidas and depict the marketing objectives of the company based on the findings of the analysis. Situational analysis Internal environment Adidas’ mission and vision is to become the world’s leading sports brand that provides sports brands that are built on a sporting lifestyle and a great passion for sports. The company endeavors to provide products that are focused on meeting the needs of consumers by continuously enhancing the quality and image of their products and organisational structure. Furthermore, the company manufactures products that aim at helping sports persons to realise the peak of their achievement (Berger, 2009). The marketing strategies employed by the company aim at realising the company’s mission and objectives. As compared to other sports brands the company enjoys a higher consumer brand loyalty (Dawes, 2009).This can be attributed to its marketing strategies that have since ensured that Adidas is one of the world’s leading sports brands. One of the key mission and objective of the company is to manufacture products that aim at helping sports persons to realise the peak of their achievement. In order to achieve this goal since 1990, the company developed a high-performance sports line also known as the “Adidas Performance”. This line was designed for high performance sportsmen especially athletes. This sports-wear line was designed to meet the specific demands of such atheletes. The company has also continuously endeavored to refine it distribution by improving its retail relationships and expanding its outlets. Moreover, Adidas makes huge investments in brand promotion and advertising in order to promote its products in a highly competitive market. The company takes advantage of its strong brand image, to command high prices and generate more revenue. The company is known to have a rigid pricing structure. Over the years, Adidas has used the marketing slogan, “Impossible is nothing” to market its brand. As a result, the company has managed to stand out as the sports apparel manufacturers with one of the strongest connection with sports. For instance, the company is known for sponsoring the NBA all-star game and the FIFA World Cup among many other sporting events. The target consumers of Adidas products are mainly sports men and women particularly athletes, football, basketball and rugby players and sports fans. In addition, another target market of Adidas products are middle-aged adults, young adults and teenagers who want to find their identity, convey a fashion statement or assert their social status by purchasing a popular brand such as Adidas (Berger, 2009). External environment Europe is the largest market for the Adidas brand. Currently, Adidas enjoys a market share of 6% and has since focused on outsourcing in Asia. Due to the company’s introduction of new and trend brands the company has received strong recognition not only in Europe, but also in countries in North America and Asia (Berger, 2009). Nevertheless, Adidas faces competition mainly from companies such as Nike, New Balance and Converse. One of the marketing strategies that a company like Nike uses in order to stay ahead of its competition in the market is by extensively using celebrity endorsements and providing sponsorship for major sporting events in order to promote its brand. For example, over the years Nike is known for endorsing popular celebrities such as Micheal Jordan, Tiger Woods, Rafael Nadal, Rio Ferdinand, Wayne Rooney and Cristiano Ronaldo (Hatfield, 2003; Kotler et al, 2001). The company also utilises electronic media such as internet application to promote, market and sell its brands. According to the findings of the World Bank, the global GDP is expected to grow by 3.2 % in 2011. In Western Europe, the GDP will increase by 1.7 %. It is therefore expected that the sporting goods market will grow gradually in Western Europe in 2011 this is mainly due to increased income and spending. Similarly, it is expected that in North America, China and other Asian markets, the sales growth rate of sporting apparel and products will accelerate. However, despite the fact that the Japan market showed slight improvements and recovery, the effects of the disaster may minimize the purchasing of sports items (Adidas Group, 2011). In order to maintain its position and relevance in the market, Adidas increasingly adapts to new product and production technologies every year. However, the company is exposed to regulatory risks such as potential losses from civil unrest, terrorism, nationalization and expropriation. Moreover, the company faces risks brought about by the sudden introduction of addition import restrictions, import duties and import tariffs this could compromise the free flow of the company’s products from the suppliers. In 2008, almost all apparel-specific regulations against China were disbanded due to the World Trade Organization (WTO) accession agreement. Despite this, some countries such as Brazil and Argentina sought to introduce protection regulations against footwear imports by using trade defense instruments like anti-dumping measures. Furthermore, Argentina and Brazil have put into place high import duties on footwear imports that are from China. It is expected that these duties will negatively impact on the company’s gross margin (Adidas Group, 2010). SWOT Analysis Strengths Adidas is one of the best manufacturers of athletic footwear and sport apparel in Europe. In addition, the Adidas brand has a strong market position in Europe, North America and a good number of Asian countries. One of the key strengths of the company is that the company produces market leading brands such as Adidas, TaylorMade, Reebok and other renowned sport lines. Over the years the company has been known for enhancing its brand by introducing new technologies and products. For instance, in 2005 in Japan the company became the market leader in sports items mainly because it introduced diverse product launches. As a result, the company built a strong brand image in that region. The company also draws its strength from developing a strong brand image through diverse brand evolutions that focus on the expectations of the consumers (Berger, 2009). For instance, Adidas has been able to establish a long running sponsorship relation to supply FIFA tournaments with successive editions of its footballs. Weaknesses The performance of the Adidas brand is largely dependent on the North American and European market. In 2007, these markets generated the company 29% and 43% of its annual sales. The Adidas brand does not do well in subcontinent markets such as India and some Asian countries. One of the key weaknesses of the company is that it has a rigid pricing structure. The company takes advantage of its strong brand image, to command high prices and generate more revenue (Berger, 2009). Opportunities The Adidas brand has a great opportunity to increase its penetration into the international market. The company can enhance its brand image in the international market through effective advertising. As a result of the increasing global GDP the demand for athletic footwear and sport apparel is bound to increase, this provides an opportunity for the company to expand its production and introduce new sports products into the market that meet the needs of its consumers (Adidas Group, 2011). Threats The company is exposed to regulatory risks like potential losses from civil unrest, terrorism, nationalization and expropriation. In addition, the company faces risks that come as a result of the sudden introduction of additional import restrictions, import duties and import tariffs this could compromise the free flow of the company’s products from the suppliers (Adidas Group, 2010). Marketing strategies Conduct aggressive and effective advertising campaigns of the company’s brand based on concepts such as “Impossible is Nothing”. Employ extensive celebrity endorsements in order to build a strong brand image. Currently, Adidas is endorsed by two-time current FIFA World Player of the Year Lionel Messi, NBA All-star Dwight Howard and IRB Players of the Year Richie McCaw and Daniel Carter. Provide sponsorship for sport events such as the FIFA World Cup and the NBA All Star Weekend. Sponsorship of renowned national and club teams in popular sports such as football and rugby including Real Madrid FC (Spain), AC Milan (Italy) The New Zealand All Blacks rugby team and their franchises and the German National Football team which endears the brand to national and regional audiences. Refine the company’s distribution channels by improving its retail relationships and expanding its outlets Conclusion Adidas is one of the largest sports apparel manufacturers in Europe. The company’s mission is to become the world’s leading sports brand that provides sports brands that are built on a sporting lifestyle and a great passion for sports. The company continuously refines its distribution by improving its retail relationships and expanding its outlets. Moreover, the company makes huge investments in brand promotion and advertising in order to promote its products in a highly competitive market (Berger, 2009). However, the company the company faces risks that come as a result of the sudden introduction of additional import restrictions (Adidas Group, 2010). References Adidas Group. (2008). Profile: Adidas. Retrieved on October 3, 2011 from Adidas Group (2010). Risk and Opportunity Report. Retrieved on October 3, 2011 from Adidas Group, (2011). Adidas Group 2011 outlook. Retrieved on October 3, 2011 from Berger, C. (2009). Strategic Sports Marketing- The impact of sports advertising upon consumers: Adidas- A case study. Munich: GRIN Verlag. Dawes, J. (2009). Brand loyalty in the UK sports wear market. International Journal of Market Research, Vol 51, No. 1. Kotler, P., Cunningham, M. & Turner, R. (2001).Marketing management. Ontarrio: Pearson Education Canada. Hatfield, S. (2003).What makes Nike's advertising tick. Retrieved on March 17, 2011from 2011 from Read More