Marketing Strategy of Adidas - Essay Example

Contents Contents Introduction 2 Marketing Strategy – Theory and Applications with reference to Adidas 3 Importance and the use of information in the marketing strategy of Adidas 5 Relation between the Marketing strategy and Organizational strategy 6 How Adidas has embraced eBusiness strategies in its Marketing 7 References 8 Bibliography 9 Introduction When one thinks about footwear, Adidas is perhaps one of the earliest to come up. This German footwear manufacturer is the leader in its industry in Europe and is rivaled only by Nike in the whole world. The Adidas group has Reebok in its portfolio and has moved into sports wear, bags and other clothing materials. The group recorded a growth of 4.9% in the total revenue it earned over 2007, the figures rising from 10,299 € million to 10,799 € million. In the process the group experienced a phenomenal increase in the profits which rose from 555 € million in 2007 to 644 € million in 2008 (Full Year 2008 Results, 2008). Adidas is guided by the three principles which were laid down by the founder, Adi Dassler – to aim for the production of the best possible foot wear to serve the requirement of sports, to aim for the protection of the athlete from any possible injury and produce a durable product (Step back in time, n.d.). They company operates out of Europe, Asia, Latin America and North America through a network comprising of more than 170 subsidiaries. The organisation is headquartered at Herzogenaurach, Germany, employing over 31,344 people worldwide (Adidas AG - Financial and Strategic Analysis Review, 2009). The journey for the company began in 1920, when Adi Dassler, with the aid of two shoemakers, produced homemade leather training shoes. A major milestone was achieved, resulting in superb promotion for the company, in 1932, when Arthur Jonath, a German athlete, won a bronze medal in the 1932 Olympics using shoes produced by the company. The company was on its upward spiral and soon the revenues of the company crossed 400,000 Reich mark in 1935. Sportsperson from 120nations used Adidas products in the Seoul Olympics in 1988. The company has seen many highs and undergone major structural changes in the way it has approached the market place. It has been quick to realize that marketing and customer orientation have become vital on the part of a modern company. The company has changed its entire outlook – which resulted in the creation of the three divisions - adidas Sport Performance, adidas Sport Heritage and adidas Sport Style from the existing Footwear and Clothing/Accessories. The company also decided to give its customers to option of customising the products they wanted to buy according to their own specifications – a business model which is now replicated all over the market space. The company went ahead with its aggressive marketing campaign and adopted a new tagline in 2003 - “Impossible is nothing” (Step back in time, n.d.). Marketing Strategy – Theory and Applications with reference to Adidas The basic essence of the marketing strategies of a company revolves around the efforts of the company to differentiate their market offerings from that of the competition here Nike, Puma etc. The process of differentiating the offerings is a three step process. First comes the process of defining the customer value model. Here the organization tries to enlist all the products and services that it perceives might be instrumental in influencing the perception of value with the end customer. Adidas is primarily a footwear company; it strives to come out with the best possible option that it thinks the customer will seek in case he is looking out for a shoe. The company has also added other items like watches, bags, eyewear, and sports related equipment to its portfolio over the last decades. Secondly the organization tries to construct a hierarchy based on the value as perceived by the customer. The prime levels of hierarchy that the company can set out to fulfill may be basic, expected, desired and finally, unanticipated. Adidas has moved into the unexpected, with giving the option of customization to its customers. The third step which a company considers while differentiating itself from the competition is by deciding on the ultimate value package that the customer receives. It is basically a mix of the tangibles and the intangibles which the organization deems fit for presentation. Product differentiation can take several forms – it can be attempted on the basis of form, style, features, performance, durability, reliability, conformance, reparability, and design. Adidas has developed eqiptment for almost every sport imaginable – it is a renowned name in the field of studded moulded boot for football, bestsellers being the Copa Mondial Boot, the ‘Predator’ and the ‘Traxion’. The Barricade Tour Model is a similarly popular racquet designed by the company for professional tennis players. Apart from these the company has also ventured into other games like Lacrosse, Basketball, Cricket and Golf. Recently the company has successfully moved into toiletries by producing deodorants, aftershave lotions and perfumes. Performance qualities are a region where a company can take different stances – it can go on for continuous improvement of the product, or maintain the quality at a given level, or else induce reduction in the product quality over time. Adidas seemingly has gone for the first, as evident by the high return on investment (Full Year 2008 Results, 2008) and stable market share of the company. The cornerstone of the marketing strategy for Adidas has been the investment that the company has made in the research and development. Conformance Quality and reliability are two crucial regions of concern for the company –it has had to make sure that the product variants are similar across all the markets in which it operates. Another vital area in which a company can look forward to differentiate itself from the competition is its focus on design. Design adds that extra bit to the value of a product beyond the price that helps probable and existing clients in choosing it over other alternatives. Like wise style lets the company connect to its customers - it is the option that the companies explore in their tryst to become the market leader, especially in apparel and related industries. Adidas launched the worlds first intelligent shoe, which is capable of provide cushioning by continuously adjusting itself. The marketing strategy of Adidas also corners around services differentiation mainly on the grounds of ordering ease and delivery that the company provides. Image differentiation also lies at the cornerstone of the marketing efforts of Adidas. The image helps the consumers distinguish the product effectively. An effective image does three things – it establishes the product character and the value proposition associated, in a unique way conveys the characteristics so that the company is not confused with the competitors, and lastly it creates a degree of brand recall for the company. The most powerful image that has been associated with Adidas is its three stripe trademark. This logo is attributed with a brand awareness value of more than 90 percent (Marinovich S., 2006). Adidas has seen to it that there is no loss of attention for the stripes due to confusion as created by competitors. “It has been permanent jurisdiction in German courts since the 1970s that two, three and four stripe designs infringe adidas’ three stripe trademark.”” According to the German Federal Court of Justice, the public recalls and recognizes such well-known and distinctive brands rather than un-established marks. It is therefore likely that consumers associate and confuse signs with two, three or four parallel stripes with the adidas trademark.” (Marinovich S., 2006). The German giant has also entered into successful litigation with Nike and Tom Tailor over infringement issues. The Adidas marketing effort also revolves around the issue of brand leadership as perceiver\d by the company and the industry as a whole. Adidas has worked hard to create a unique brand identity. The company has also worked hard towards providing brand related customer benefits – like learn, try, touch, feel and experience. Reebok and Adidas stores have easily positioned merchandise – customers are expected to spend time in the store so that they make the perfect choices and hence have a superior shopping experience. It can also be seen that brand building is not only about advertising –other factors like sponsorships, endorsements sub-branded products and Flagship stores play an important role. Adidas is associated with top sports teams in the world like the New Zealand national rugby team, Australian and the England Cricket Teams. The company spent close to € 70 million for sponsoring several events during the 2008 Beijing Olympics. Successful branding also calls for the organizations to connect to the consumers at an emotional level (Aaker D. A. & Joachimsthaler E., 2000). Adidas through the Adidas Street ball challenge does just. Importance and the use of information in the marketing strategy of Adidas Like every major successful company in the present decade, information is an asset that Adidas has been able to use since a ling period of time. It has used extensive customer feedback data to stay ahead of the times with regards to new product development. The company has used information in other ways as well; it gathers customer complaint related data to improve some shortcomings which might have crept into any product. For example, in 2006 there was an incident related to a new sports sneaker that the company was launching, Predator. It was found that the colour of the shoes was fading fast. However Adidas could react fast as because of the way in which it treated information from the market. It received feedbacks from an outside source, VML, a unit of WPP Groups Young & Rubicam Brands, that consumers were unhappy about the colour on the shoes (Patrick A. O., 2007). The company quickly passed on this information to its new customers so that they could treat the new shoes before using them so as to stop the fading out of the colour. The adoption of an online order - & - delivery system also means that the company has to maintain a strong data warehouse, so that customers feel at ease while attempting to use the online systems. Relation between the Marketing strategy and Organizational strategy Adidas has a goal of becoming the market leader in the sporting good industry and build powerful brands which complement a passion for sports. The organization can be credited to generate and enhance the profitability its brand portfolio. Adidas is inclined to cash on its athlete friendly image by continuously investing on research and development. Moreover it is inclined to go closer to the customer so as to strive for a win – win relationship – the company gains economically by reducing the investment in third party retail formats while the consumers get a product according to their own specifications, hence increasing value. Across all the markets in which the company operates, the management follows two distinct strategies – market penetration in markets in which the company has formidable presence, and market development in newer territories. The organisational strategy sets the tone for the marketing strategy of the company – the company has put in a lot of investment in its CRM initiatives. Being a significant player in both the mass market and its niche variant, Adidas is slowly but surely all viable portions of the consumers’ surplus. Thus Adidas is there for the common man as well as for the pro golfer, hence spanning the entire market in the process. All the brands of Adidas have distinguishable core competencies, each have different usages and appeal to a different set of consumers. On the organization front the company aims to be market leader in every market that it operates. This calls for co ordinate efforts from the marketing department as well – it has the onus for identifying the areas on which the company can capitalise so as to gain this target. Adidas has gone to local levels when it has taken the initiative to sponsor a sporting event – it sponsors diverse events like the London Marathon, Indian Premier League cricket and the Australian Rugby league. Innovation is one more area of strength for the company – the group has the goal to launch at least one major technologically superior product every year (Leading through innovation and design, n.d.) How Adidas has embraced eBusiness strategies in its Marketing Adidas stands apart from many companies in the manner which it uses the e – business strategies to fortify its position. It has successfully helped the customer to co create, thereby putting in place a symbiotic relationship in place. The users are able to participate in the process of value creation through the use of technology as it guarantees ubiquitous connectivity, low cost and instant participation. Both the parties are able to contribute towards further specialization, better quality control through tools and practices like reputation systems, attention information, and user ratings. Adidas partnered with Kana Communications, Inc., a leading player in the enterprise relationship management solutions market to create a strong online presence, increase revenue inflow and improve customer service. Customer service representatives at Adidas were receiving 5000 emails weekly in 2000, who were seeking online assistance or information about newer products. Using the Kana platform Adidas was able to store and process this huge amount of data so as to get closer to the customers and improve their relationship with Adidas. The new look Adidas website aims at engaging the customer in conversation, deliver specific promotion related messages and successfully track all data pertaining to recipients. The new platform aims to transfer specific customer information to the database of the company while maintaining the field structure of the data; so that further analysis could be done (adidas Runs with Kana to Drive Revenue and Online Customer Service, 2000). The marketing department at Adidas is credited with the development of the promotion "brand in the hand" in 2004. This event along with a lot of other mobile marketing campaigns that Adidas launched in 2004, such as a mobile news ticker for the 2004 European soccer championship, showed how the company was eager to use the changing technology to come even closer to the customers (Rohm A., et al, 2005). The leader takes it all, as Adidas has shown by its early adoption of technology in almost all aspects of marketing. A cursory glance at the company’s website shows the organizations’ level of commitment towards customer orientation – the levels to which Adidas will go to see the consumer happy. References Aaker D. 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