Marketing Strategies of Adidas - Research Paper Example

• Introduction
  • Background

Adidas and Puma are one of the world’s most known and popular brands. These two companies have been in not only corporate but personal rivalry for many about sixty years, despite the fact that they originate from two brothers owning a similar sports brand. This enmity led to disagreements not only between the two brothers, but also among the residents of their hometown. In the beginning, the two brothers owned a joint sports show company called Dassler Brothers. This business was carried out in their mother’s house in a small town located in Germany. Dassler sports brand gained recognition and popularity when they decided to use Jesse Owens who was an award-winning gold medalist to boost their brand. Sales drastically popped up since then making the company an international organization. This new found success caused disagreements between the brothers judging from the fact that they were all living in the same house and their wives could not get along.

Moreover, this feud worsened when one of the brothers called Rudi suspected that his brother Adi and his wife had planned to get him out of the business. Later on, Rudi was arrested twice where he suspected Adi and the wife to be behind it. This was further confirmed by a criminal investigation officer. During the time Rudi was locked out in the war prison, Adi took advantage of the situation and expanded the business beyond international borders. In 1948, the two brothers split the business and shared assets. Adi called his company Adidas, whereas Rudi named his Puma. Since that period, the two organizations have grown successfully to become both personal and corporate rivals (Smit, 2008).

• • Purpose of the Study

This research was carried out with the aim of examining the war between two competing sports brands; Adidas and Puma.

• • Significance of the Study

The study is important because it brings into light the story of Adidas in relation to its rival company, Puma. Moreover, it creates a base for scholars and students interested in carrying out related or similar research.

• Theoretical Framework

This study is based on the chaos theory which recognizes that change in any organization is constant. Despite the fact that some things in a company can be managed, some issues go beyond control. This theory also assumes that change is something that cannot be avoided thus must be accepted and managed accordingly. Also, it states the fact that when a company expands and continues to succeed, there is a high likelihood of unavoidable instances to occur that cannot be avoided (William, 2015). . Due to this reason, companies enforce extra effort with the aim of adapting to these new changes that occur. The more efforts they make to adjust, the more structures are required for an organization to maintain its stability and succeed. Therefore, the system continues to be dynamic and to evolve. This theory is directly related to the above study because the success of Dassler Brothers Company led to a feud in the management that brought about changes to maintain stability and growth (Richelieu, 2013).

• Literature Review

Adidas is a well-known popular international brand. However, it has not escaped the issue of sibling rivalry. This universal sports brand has managed to grow and expand its business beyond borders as well as millions of loyal customers. However, the feud between Adidas and Puma has lasted for many decades. This fight not only affected the two brothers who founded Adidas and Puma, but also led to the separation of people within Germany. In an attempt to resolve the rivalry between these two organizations, a friendly match was agreed to take place at their headquarters in Germany (Nauright & Parrish, 2012).

Notably, the feud between Adidas and Puma has been related to the war of Berlin which led to a division of inhabitants. Some of the reasons stated to have caused the fight include accusations that Rudi was having a sexual relationship with Adi’s wife (William, 2015). Another allegation points to the fact that there was competition about which brother was the strongest Nazi, as well as who came up with the stud in the famous boots made for soccer. The fight between Adidas and Puma was so intense in such a way that workers for the two competing organizations could not socialize together. At some point, it was a taboo for a worker to marry a person who supported a competing company (Nauright & Parrish, 2012). Eventually, one of the brothers Adi came out victorious with Adidas gaining both national and international recognition as well as success as compared to Puma. Nevertheless, this fight between the brothers led to popularity of the brands seen today.

Adi and Rudi focused on creating and manufacturing products based on the traditions of their hometown in Germany. They first began by making textiles, slippers and carpets. Later on, they acquired knowledge from their father who was a shoemaker to develop the show business. Adi acquired tools including carpet-slippers and shoes to create new shoes (Nauright & Parrish, 2012). On the other hand, Rudi took the responsibility of managing the company’s operations. Together, the two brothers used their mother’s laundry room as their office to carry out this business which changed to become a successful company. Over the years, neither of the companies has been succeeded by their offspring. Instead, Puma is managed by a goods-maker in France, while Adidas is co-owned by small shareholders. As much as manufacturing products from the two companies has moved to other parts of the world, they still find it important to maintain their roots in the small German town. Moreover, both organizations recognize the necessity of appreciating their history as a means to pave way for future success (Aubrey & Judge, 2012). Both organizations have pushed their limits to ensure they remain known, popular and extend their products to all markets. Adidas and Puma came together and participated in a friendly match to symbolize the end of a feud that was not solved by the founders of the two sports brands. The fight between Rudolf and Adolf Dassler started during the World War where both brothers were members of the Nazi Party. There is no real evidence as to why the two brothers disagreed and became enemies. All that has been stated is based on assumptions, rumors and stories (William, 2015).

Old people from the town Rudolf and Adolf carried out their business claim that it was because the brothers’ wives were great enemies and could not agree on anything. Other people claim that Rudolf was sexually involved with Adolf’s wife which eventually led to the birth of Adolf’s so-called son. Moreover, it is said that Adolf bad-mouthed his brother badly by calling him a dog. Rudolf was angered by this incident which fueled further when he was taken as a prisoner of war until 1948.After leaving prison; Rudolf separated from his brother’s joint business and started his own which was called Puma (Aubrey & Judge, 2012). On the other hand, his brother took off his first three initials of his Sir Name and first name to create his own company called Adidas. This fight made the two brands popular in the eyes of the mass from their court cases which interestingly brought in a huge amount of money. Moreover, there was a stiff competition between the two firms who struggled to outdo each other in every single way (William, 2015).

The small town of Herzogenaurarch in Germany was not only a place where business activities were carried out, but also a playground for the tiff between two brothers who owned Sneaker Company. Both Puma and Adidas belong to the Bavarian Backwater home which does not currently exist anymore. According to the people living in the South of the river about seventy years ago, the Adidas logo which contained three stripes was associated with people wearing Adidas shopped at butcheries and bakeries where Puma supporters were not allowed to enter. The same was allegedly the case in the Northern River which had more Puma supporters unlike Adidas wearers. Due to this reason, this small German town became an area of interested because the first thing tourists did on arrival was to look at residents’ shoes. Up to date, members of the authority are careful to balance their wardrobes with the aim of avoiding bias thoughts in the minds of citizens. For example, when Frank Dassler who was the grandson to Puma’s founder Rudolf Dassler joined Adidas; he was not received with open arms. This is because it is thought that he had joined to work for a rival. It is important to note that Adidas belonged to Adolf Dassler. Fortunately, over the years, the feud has been observed to lessen and neutralize.

• • Research Questions

This research is based on the below research questions:

RQ1: Is the war between Adidas and Puma existent in the present time?

RQ2: What are the marketing strategies of Adidas?

RQ3: Who are the brand ambassadors of Adidas and how have they influenced its success?

RQ4: How has Adidas tapped into the international markets?

RQ5: What are the current and past innovations that Adidas has come up with over time?

• • Hypothesis

This study assumes that:

H1: Adidas has a history of war with Puma.

• Methodology

The above research was carried out using quantitative method of data analysis. In particular, content analysis was used whereby several scholarly articles, journals, books, newspapers and websites were selected. The data was collected strictly from those sources that talked about the history of Adidas in relation to the feud with Puma. Irrelevant information was rejected whereas the useful data was noted down for analysis and description. This method best suited to conduct the research because it was possible to access historical information for analysis. Moreover, it was beneficial in giving factual information about issues that were considered doubtful. Additionally, the method allowed for qualitative analysis as well because random opinions and evaluations could be made. Lastly, it made it easy to analyze and group information in various categories based on the available text. Unfortunately, this method used a lot of time because each and every source had to be read and analyzed fully to determine whether it was useful or not. To add on that, a lot of care had to be placed when analyzing the text because failure to do so would have in one way or another altered the findings (Arnold, 2014).

• Findings and Discussion

Adidas venture into international markets coupled with the intense marketing strategies employed has ensured the company has become one of the biggest shoe makers in the world and additionally has provided a competitive edge against its competitors. The chart below provides a clear illustration of Adidas relative competitive position when compared to its rivals.

(The economist 2013)

• • Tapping international markets

In reference to the fourth research question, Adidas has successfully managed to tap into international markets. This has been achieved through a number of ways as follows:

• • • Ensuring a good track record

The main objectives of Adidas are to increase their profits as much as possible, establish a stable and prosperous business system as well as minimize their expenses. Moreover, their major focus is to grow as they expand at the very same time. Through the concept of timing, Adidas ensures that they have a successful track record of their products and services before they enter a new market. The reason behind this is to avoid taking the risk of spending so much money and yet suffer on the existing resources. Furthermore, Adidas has a careful way of evaluating the costs of production in relation to what they will achieve in terms of profit before they make the tough decision of investing in a foreign location.

• • • Founding an international business model

Despite the fact that Adidas has established a good business track record overseas, they have also practical resources that enable them to imitate this in the international arena. Further, Adidas has achieved this through ensuring they have enough international contacts that come in handy to make the required changes into the international market. To add on that, Adidas has succeeded in employing a global, logistics and delivery company which tales responsibility delivering services that serve the customers efficiently thus boosting consumer loyalty as well as attracting new clients.

• • • Making beneficial product changes

Adidas has credit in terms of altering their sneakers in a way that they suit different markets due to variations in terms of climate, race, religion, gender and so on. For instance, they take pride in making an eco-friendly shoe in response to the universal needs of climate change. Similarly, they have also had different prices for different markets in response to varying economic situations. For example, Adidas sneakers sold at less developed countries come at cheaper prices as compared to those sold in developed countries because the citizens cannot afford the original cos. As a result, this business has maintained stability in that there is an even sales response from all markets as well as brand relevance.

• • Marketing Strategies

In reference to the second research question, Adidas employs more than fifty thousand employees in more than one hundred and sixty countries. Additionally, they produce over six hundred million unit products annually which approximately results to a sum of fourteen billion dollars (Piller, 2012). This means that the company does well in relation to its marketing strategies which are as below:

• • • Analysis of Customers

Customers exist in categories of upper, middle and lower class individuals. In light of this fact, Adidas found out that carrying out mass marketing for all these groups was not going to be sufficient in succeeding in the business. However, they realized that taking the initiative to understand individual consumer needs, lifestyle, habits and objectives in relation to sports would help them create products that suit their needs perfectly.

• • • Analysis of the Market

Over the years, it has proven to be difficult for companies to exist in a particular market, judging from the fact that customers now possess a high bargaining power and noting the increased availability of fake products. As much as these sneakers are meant for sports personalities, other ordinary people such as parents, children and teenagers prefer to wear them on a day to day basis. Notably, these customers are susceptible to change, considering the variety of choices [resented to them by competitors such as Nike and Puma in this scenario. Due to a rise of population, dynamics in people’s lifestyles as well as migration from rural to urban areas, the industry is rising fast. However, unproportioned matching of the demand and supply as well as idle inventory has led to smaller margins of similar companies in the industry.

• • • Competitive analysis

The fact that Adidas has grown over time to popularity among millions of people automatically gives them a competitive advantage over other smaller companies struggling for brand awareness (Nauright & Parrish, 2012). Despite the fact that this company is well known, they still put effort as well as resources in ensuring they continue creating mass awareness about the importance of sport to the public. As a result, Adidas has experience a huge success over its competitors. More so, it has managed to penetrate into international markets where it has played a significant role in boosting economies of various nationalities. The Chart below highlights the company’s success over the past years when compared to its competitors.

Source: (Reebok vs. Adidas. 2014)

• • • Brand Equity

Adidas has come out victorious in selling their sportswear products through the fact that they market their sporting activities through channels such as social media. In addition to that, they have established community Initiated programs which enable the mass to interact and give their ideas. Adidas has ensured that each sub-brand stands on its own in taking the responsibility of creating products and services that will guarantee prosperity in the long run, as well as provision of loyal return customers. To achieve brand equity, Adidas has emphasized on providing unique identities, adopting new technology and maintaining a good reputation.

• • • Strategies of Distribution

Over the years, trends are quickly changing from the fact that the consumer environment is increasingly becoming dynamic. In light of that fact, Adidas has developed a strategy to quickly identify and respond to these changes as soon as they occur. Notably, they had created their distribution channel is such a way that the focus purely relied on the customer. Judging from the analysis of customer purchasing behavior, it was noted that factors such as easy accessibility, interactivity with buyers, convenience as well the product size played a big role in determining the distribution strategy. To achieve a positive effect, Adidas implemented this strategy by availing their products through Franchise and co-branded store outlets.

• • Innovation of Adidas

The aim of Adidas is to improve the lives of sportspeople. Due to this reason, creativity and innovation are plays key roles in ensuring consumers are constantly getting a better value for their money. Decisions regarding the type of material as well as ways of manufacturing play a role in determining the environmental footprint of their goods. For instance, when products are made using slim materials, they are likely to have less waste products and release less carbon as compared to thick materials. Additionally, ideas that save water, energy resources and chemicals are preferred in production. Using the environmental approach to make innovative decisions not only benefits the client but also aids in conserving the environment. Examples of environmental friendly products by Adidas are as below:

• • • Adidas Drydye

This technology enables polyester fabric to undergo the dyeing process without consumption of any water. Moreover, it uses half of the carbon and half of energy unlike the original traditional methods of dyeing fabrics. Unlike drydye, the former method consumed a surprising twenty five liters of water to dye a single t-shirt.

Rather than using water to dye the fabric, carbon dioxide is injected after undergoing compression. After that, carbon dioxide is converted into gas in such a manner that the dye abbreviates and splits from the gas. Therefore, this gas can be reused again for the same procedure.

This invention was introduced by Adidas I the year 2012, whereby it was experimented using fifty shirts. Over time, the technology has expanded in its use dyeing over four million fabrics in a year. This process has led to saving about four hundred million dollars a year. Due to this success, Adidas is considering introducing a similar concept to its footwear products.

• • • Adidas Nodye

This refers to materials that are used in their inventive colors. Through this method, the material is in a position to undergo the process of manufacturing, but at the same time escapes dyeing. When the process of dyeing is eliminated, water is saved and less carbon as well as waste is produced which in overall conserves the environment. This idea was first implemented in the year 2014. However, in due time its use has expanded by ensuring production without dye.

• • • Low waste

This technology confirms that the products are made with the least parts possible, reused materials and with the uppermost efficiency to avoid having waste products.

Given an example of a low waste show, it consists of twelve parts unlike thirty parts of a normal show. This saves about sixty percent of the waste that could have otherwise been acquired in a normal shoe. Moreover, this show is manufactured with eco-friendly materials as well as with high levels of efficiency that saves nearly five percent of waste products. Another great benefit about producing low key products is the fact that their performance in terms of comfortability is exactly the same.

• • • Formation technology

This innovation employs the idea borrowed from the automated industry which is known as the hot runner technology. In this case, the heel system is removed from the sole which makes it possible for the sneakers to adapt to the runners style, making the experience simpler. Hot runners play the role of removing sprue units which as a result reduces waste. Notably, the sprue is a channel where the melted plastic passes through. During the injection period, the melted plastic becomes harder and has to be disposed. This process leads to a reduction of the waste by almost half (Aubrey & Judge, 2012).

Further, there is a modular system which makes it possible for the base to be implemented in different products, thus reducing waste. Application of lighter and harder materials also reduces amounts of carbon waste because the end product is easier to transport. Finally, Adidas has substituted the amount of glue with laser welding and a design of mechanical locking which as a result reduces waste products. However, where glue has to be used, they ensure it is based on water.

• • Ambassadors
    • Product Humanization

Adidas is aware that individuals like to buy from their fellow individuals. Therefore, besides promoting their brand through logos and symbols, they have also implemented the use of social media. Ambassadors have an emotional relationship with the organization, which is transferred to the consumers. They are in charge of creating awareness to the public about the product, solving any consumer queries and assist those in need. Moreover, Adidas fully recognizes the human being’s ability to copy other people’s behavior. Therefore, they select the best individual to influence them into purchasing products and encouraging others to buy similar. It is also evident that when consumers are positively involved in a brand, they help the company to market products.

• • • Product loyalty

Brand ambassadors in Adidas have overtime become loyal to her products through the day to day activities that are involved with the brand. Through helping the company advertise and endorse their products, these ambassadors become attached to them and voluntarily offer assistance where required.

• • • Word of mouth

Adidas brand ambassadors play a big role in ensuring that customers hear about their products and services and spread it through word of mouth. When consumers hear a good comment about certain product through word of mouth, they are most likely than not to consider the brand credible.

• • • Product Knowledge

Ambassadors in Adidas have a clear understanding of what the company is all about, its principles, what it represents and most importantly what makes the company different from others. Therefore, they are in the best position to communicate this message to the public. When consumers understand a brand fully, they relate to it and make it easier to purchase a product.

• • • Trust

Consumers are becoming more and more sceptic about brand advertisements. At the same time, their level of trust towards brands is decreasing from time to time. Notably, the amount set aside for advertising does not reach out to the target market as before due to factors such as a variety of channels and availability of social media. Due to this reason, Adidas uses her brand ambassadors to develop trust with customers which cannot be taken away (Kumar, 2012).

• • • Reputation

Adidas believes in employing brand ambassadors often because they play a huge role in establishing a good reputation for the company. When people believe bad things about the brand, the ambassador’s role is to ensure they change consumer’s poor perception through public relations. Furthermore, potential buyers would associate an ambassador with a good reputation to the brand by simply assuming the products are as good as the person.

• Conclusion

In summary, from the above dissertation, Adidas and Puma not only have corporate rivalry but also personal enmity that has lasted for about sixty years. This rivalry has been documented to have started due to a number of reasons such as infidelity and betrayal. However, none of those assumptions are proven because they are derived from stories and rumors.

Interestingly, the feud between these two brothers contributed to the success of Adidas and Puma today. Notably, Adidas has been proven to come out more successful in terms of sales as compared to Puma. They have implemented efficient ways that have enabled them tap into new international markets, innovated new products that suit the environment and human beings, employed brand ambassadors to boost their reputation, trust, product knowledge and sales. Furthermore, the above hypothesis is confirmed that Adidas has had a past war with Puma. Notable efforts have been witnessed whereby both parties organized a friendly match in the aim of solving the long term disagreement. However, it is not clear whether or not this feud has been solved or will ever be completely settled.

Future research should focus on different ways that companies can solve not only corporate but also personal rivalries that could affect their businesses. Moreover, strategies should be formulated that guide companies that sell the same product to compete healthily. Lastly, there should be laid out rules that guide relatives or friends having a joint business from having relations that could potentially hurt the business.