Marketing Analysis of Adidas

Executive Summary

The report is the marketing analysis concerning a practical example of Adidas. It focuses on the marketing tools, concepts and marketing mix of the sportswear company. Adidas is a German multinational company established by Adolf Dassler in 1924. The current marketing strategy of Adidas is digital with a focus on innovations and collaborations with famous personalities and celebrities like David Beckham, Kanye West, Beyonce etc. The German sports brand has positioned itself as a ‘Creator Sports Brand’ by partnering up with creative designers, models, celebrities and athletes. Such a positioning helps Adidas not to restrict itself for athletes and sports enthusiasts merely. In addition to that, the evaluation of the sports brand’s existing digital marketing strategy shows that high-speed manufacturing is the central component of it. This report is also an attempt at describing the difference between traditional and digital marketing. Increasing digital trends have changed the way companies market themselves in the digital age. The wide application of information technologies, for instance, artificial intelligence, QR codes, Bluetooth, GPS have resulted in marketing activities like social media marketing, influencer marketing, email marketing etc.

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Organization’s Overview

Historical Background of Adidas

Adidas is a German multinational company which specializes in the production of clothing, accessories and shoes (Flippo, 2019). In Europe, the company is said to be the biggest sportswear while second-largest sportswear worldwide after Nike. Adolf Dassler began this business under the name Dassler Brothers Shoe Factory in his mother’s house with the help of his brother in 1924 (Flippo, 2019). The Dassler brothers first developed spiked athletic footwear and persuaded Jesse Owens, a U.S sprinter to wear their handmade footwear at the 1936 Summer Olympics. After the Olympics, the shoes were recognized as the best amongst the trainers and sportspeople. However, later, the partnership between the brothers broke, and Adolf revealed the new name for the business to be ‘Adidas’ (Adidas, 2020a). In 2005, Adidas developed the first-ever pair of shoes to use microprocessors. In 2006, the company became the official sportswear providers for WNBA, NBDL and NBA. In 2015, Adidas developed the reservation app for customers. The journey of the company shows that it has struggled and achieved numerous milestones till now (Flippo, 2019).

Current Marketing Strategy

The current marketing strategy of Adidas is a digital marketing strategy which it initiated in 2015 under its “Creating the New” strategy (Watson, 2020). Adidas’s e-commerce channel is ever-growing, and the company has also digitized all its production processes (Sa, 2017). Moreover, high-speed manufacturing is a crucial component of the existing marketing strategy of Adidas. Innovation is the heart of its digital marketing strategy too as the company specializes in developing personalized shoes for its athletes. Collaborations with celebrities and influential personalities like Beyonce and Kanye West has been a consistent part of the marketing strategy of Adidas (Shiff, 2019). While Adidas is currently investing entirely in digital advertisement, the sports giant used to heavily promote its brand through traditional advertisement in the beginning. Print ads were the most common source of traditional advertisement for Adidas. The brand was famous for using ‘aggressive storytelling’ in its print ads (Spary, 2019). Moreover, to interact with its customers, Adidas uses the following 5Ds of digital marketing:

Digital Devices Mobile phones, computers, laptops, smartphones
Digital Platforms Social networking platforms including Snapchat, Facebook, Instagram etc.
Digital Media Advertisements, social networking sites, e-commerce
Digital Data Consumer insights, open innovation through crowdsourcing consumers’ ideas
Digital Technologies Adidas app, website

Table 2: Digital 5Ds of Adidas (Chalk 2018; Digital Agency Network 2020; Watson, 2020)

Figure 1: Current Marketing Strategies of Adidas

The above discussion demonstrates that Adidas uses paid, owned and earned media to market its products.

Micro and Macro Environmental Analysis

SWOT Analysis

STRENGTHS

  1. Constant innovation and trendy products
  2. Robust presence in the European market
WEAKNESS

  1. Highly competitive market poses many risks
  2. Foreign exchange and market risk
  3. The brand is perceived to be a premium brand due to which medium and low income people belonging to emerging markets cannot afford it
OPPORTUNITIES

  1. Growth opportunities in emerging markets like Asia
  2. E-commerce as a high growth driver
  3. Increased awareness towards fitness
THREATS

  1. Fierce competition
  2. Excessively dependent on sports segment

Table 2: SWOT of Adidas (Adidas, 2019)

PESTLE Analysis

POLITICAL FACTORS

Adidas is a multinational corporation and thus abides by the following political regulations

  1. Labour laws
  2. Product safety laws
  3. International trade agreements
  4. Customer safety product laws
ECONOMIC FACTORS

  • Adidas manufactures its products in China as it is labour intensive and hence offers cheap labour.
  • Experienced significant growth in 2017 but economic factors like inflation rate, customer retention rate, import, export rates etc. can impact the business in the long run.
SOCIAL FACTORS

  • Sports are becoming popular because of the associated fitness and health advantages.
  • ‘Creating the new’ business strategy allows Adidas to change the lives of customers for the better.
TECHNOLOGICAL FACTORS

Advancement in technology has impacted sportswear companies as sports brands are now developing technology based fitness gadgets.

LEGAL FACTORS

Adidas has patents that protect the business legally. The sports brand has ownership of IP systems and intellectual properties.

ENVIRONMENTAL FACTORS

Adidas is in partnership with many eco innovation collaborators like Parley for ensuring a plastic free ocean.

Table 3: PESTLE of Adidas (Farooq, 2019)

Competitor’s Analysis

The competitor analysis of Adidas suggests that some of the top competitors of the multinational sportswear company are Puma, Nike, New Balance, Skechers, Under Armour and many more. Most of the competitors of Adidas are taking advantage of the digital marketing strategy in the present age. For instance, Puma strongly focuses on this strategy by allocating 90% of the marketing budget on digital channels. The brand mainly relies on content and influencer marketing. The current brand ambassador of the sports brand is Selena Gomez (Nagar, 2019).

STP Analysis

Segmentation: Adidas targets young customers between the age group 14 to 40. Adidas Neo offers fresh and trendy products to the customers between 14-19 years of ages. However, the psychographic segmentation demonstrates that the sportswear company targets the upper middle class to affluent consumers (Ko, Taylor, Sung, Lee, Wagner, Navvaro and Wang, 2012).

Targeting: Adidas strongly targets customers who are passionate about sports and athletes and this customer segment is considered to be the most profitable for the sportswear company.

Positioning: Adidas does not position itself merely as a ‘sports’ brand. The new positioning of Adidas is as a ‘Creator Sports Brand’ in which the brand calls the influential musicians, athletes and designers around the world with a passion to create (Sande, 2019).

Critical Literature Review

The initial explanations of digital marketing considered it to be a projection of conventional marketing. However, with the popularity of the digital world, digital marketing is no longer being considered a subtype of conventional marketing but a separate phenomenon (Chaffey and Smith, 2017). Research generated by Kannan (2017) explains that digital marketing involves utilizing online-based digital technologies and the internet. As a result, digital marketing leads to mass distribution and customization. While digital marketing results in interactive, user-centred and more measurable marketing, it can also result in challenges if digital marketing goals are not aligned with the corporate image and goals.

On the other hand, traditional marketing is the type of marketing that does not occur on online channels (Xu, Frankwick & Ramirez, 2016). This suggests that marketing through direct mail, phone, billboards, broadcast, trade shows, magazines, newspaper, radio and print media are all sorts of traditional marketing. Traditional marketing, in a way, is the complete opposite of digital marketing because several dimensions of marketing such as advertising, targeting, distribution channels used, pricing of services and products, discounts and promotions etc. are similar for all customers (Kotler, Kartajaya and Setiawan, 2016). Traditional marketing is mainly concerned with the push and pull strategy while disseminating a consistent message across the customers. While, on the other hand, digital marketing is forced on responding to specific customer inquiries (Todor, 2016). Experts have not come down to one best type of marketing amongst these two options yet. Some consider online marketing to be the most effective in the digital age, while others regard traditional marketing to be eventually better than it (Yasmin, Tasneema & Fatema, 2015).

The ever-changing digital environment creates both opportunities and challenges for marketing. Research conducted by Mazurek and Tkaczyk (2016) reveals that the 4 P’s of the marketing mix are being replaced by the four Es. These four E’s are referred to as Everyplace, Exchange, Experience and Evangelism. Marketing in today’s world is heavily affected by the digital trends such as the rise of mobile commerce, the convergence of commerce and digital media and increasing digital viewing (Nambisan, Lyytinen, Majchrzak and Song, (2017). An early and prominent example of this is when an article was published about Lady Gaga’s shoes on the Daily Mail website. The article had images and prices of shoes from an online retailer called Polyvore, similar to Lady Gaga’s shoes.

According to research presented by Rindfleisch and Malter, (2019), the evolution in the business world has allowed the exploitation of social media which has made it to be the most vital component of marketing strategy in the digital age. The proliferation of ICT technologies such as Bluetooth, QR codes, big data, GPS, artificial intelligence etc. has led to the development of many digital marketing activities like search engine marketing, social media marketing, affiliate marketing, email marketing, mobile marketing and display marketing (Quinn, Dibb, Simkin, Canhoto & Analogbei, 2016).

Market Research Approach

A research was conducted to evaluate the effectiveness of the marketing strategy of Adidas as it promotes the brand as a ‘premium one’. The research approach chosen for this research is a mixed-method approach as it can incorporate both the qualitative and quantitative data. This approach will allow the researcher to identify contradictions between the quantitative results and qualitative findings (Shi, Wang, Chen and Zhang, 2020). While using this approach gives the advantage of incorporating multiple data sets resulting in deeper and richer research, it also has a drawback. The incorporation of both the types of data in a well-integrated and consistent manner is a hard job (Mikalef, Boura, Lekakos and Krogstie, 2019).

This approach is chosen as the incorporation of both types of data is vital to generate a broader understanding of the research topic at hand (Bhagat, Vyas and Singh, 2015). The report discusses the marketing plan of Adidas and therefore, marketing numbers and statistics of Adidas were included to back up the qualitative data. The research will be based on both the primary and secondary data which would be collected through numerous online and offline sources, such as reputable websites, journals, already published articles, news, Adidas’s marketing reports, academic papers and statistical reports. For primary data, a questionnaire was distributed among the consumers through mail which asked them about their perception of the Adidas brand. After collecting the data, analysis was done on SPSS to determine the mean, median and mode of the data.

Findings

The following marketing mix analysis (7Ps) of Adidas is generated after proper industry research and analysis through marketing tools like SWOT and PESTEL framework. The analysis suggests that Adidas’s strength is continuous innovation that leads to the production of technology-driven sportswear. The manufacturing of products occurs in China because of low-cost labour. The brand positions itself as a premium one and is trying to take advantage of the growth opportunities in emerging markets like Asia. The results of the market research indicated that Adidas has been successful in establishing a premium image in the perception of its customers as most of the respondents revealed that they consider the brand a luxurious one.

Marketing Mix of Adidas

Product

Adidas has four major subsidiaries. The first one is called Adidas, which specializes in selling both footwear and clothing items. The second is Reebok which Adidas acquired as a subsidiary in 2005. Reebok is now said to be one of the leading subsidiaries in the Adidas Group. The third subsidiary is Taylor which focuses on selling equipment and golfing clothing to its customers. Finally, the fourth subsidiary is called Rockport that emphasizes producing apparel, accessories and footwear for the customers (Kruger, Stieglitz & Potthoff, 2012).

Adidas offers several products to its customers of which, the main is ‘footwear’. The footwear of Adidas is said to be robust and perfect for athletes and sports enthusiasts. Adidas has always invested heavily in R&D when it comes to product development and introduces the first shoes for ice and multi studded shoes. Basically, Adidas offers a wide range of products including soccer and lifestyle shoes, apparel, lifestyle and running shoes and sports utilities for volleyball, rugby, basketball, golf, cricket, tennis, skateboarding, tennis etc. (Adidas, 2020b).

Price

All the products offered by Adidas are premium-priced as the company engages in continuous product development. The pricing strategy of Adidas is competitive and skimming as the company targets high profile customers. The main reason behind premium pricing is also that Adidas offers customization. Products are mostly developed in Asia due to cheap labour and hence, duty, import regulations and tariff barriers affect the prices as well (Grahame, 2019).

Place

Adidas has allowed customers around the world to purchase its products through speciality stores, franchises, online retailers and mass merchandisers. The distribution strategy of Adidas is focused on extensive global reach for its customers. Flagship stores of the multinational sportswear company are present worldwide. The last mode of distribution used by the company is ‘online channels’. For this, the sportswear giant uses online fashion stores like myntra.com. Furthermore, the official website of Adidas can also be accessed by customers around the globe (Howland, 2020).

Promotion

Adidas is famous for promoting and endorsing itself through the media. The advertising strategy of Adidas focuses on 360-branding, focusing on all aspects of media and communication. Adidas advertises itself through proper commercial campaigns on billboards, TV and online channels. One of the most memorable and remarkable advertisements of Adidas was endorsed by famous celebrities and influential personalities like Laila Ali and David Beckham, with a tagline ‘Nothing is impossible’ (The Drum, 2016). The sportswear also features famous athletes like Ronaldinho, Sachin Tendulkar and Lionel Messi etc. in its advertisements. The brand has also promoted itself through different game advertisements such as Sony PlayStation. All these promotions enable Adidas to remain in the customer’s minds (Hendrawijaya, 2017).

People

Many people love to purchase the products of Adidas, from referees and players to the general public. Athletes particularly admire the brand as it helps them get proper training. The company ensures that Adidas’s employees have adequate resources and benefits to produce the best quality products. This is the reason why Adidas offers comprehensive, individualized and generous benefits to all its employees. Health insurance, supplemental insurance and retirement plans keep the employees motivated and productive (Chaudhuri and Puri, 2013). Also, Adidas continuously trains its employees. Industrial safety and security training are two crucial training provided by the sports brand to its employees (Sierra, 2019).

Process

The production process of Adidas products is highly innovative. Customers are allowed to customize their products during the production stage as well. Top-notch technology allows Adidas to develop products that ensure comfort under any weather (Greene, Aveni, Lyke, Farris and Nike, 2015). After the production, the international sportswear brand promotes on various online and offline channels. Finally, retail outlets and exclusive online and offline stores of Adidas ensure the safe delivery of products to Adidas customers (Business Wire, 2018).

Physical Evidence

The products of Adidas are customer-safe, innovative, trendy and comfortable. The products have to pass through rigid compliance procedures where they are tested according to the testing procedures and specifications (Adidas Group, 2019). As far as the official website of Adidas is concerned, it is trendy with intuitive design. In addition to that, easy navigation ensures that the user experience is positive. The content available on the website is authoritative and relevant with proper product descriptions and visuals. All this physical evidence associated with the official website of Adidas ensures that it is effective, aesthetically pleasing and user-friendly (Filo & Funk, 2005).

Conclusion and Recommendations

The report describes the marketing plan of the multinational German sportswear company called Adidas. Adolf Dassler established the brand in 1924, and today, Adidas has developed its presence in numerous countries around the world. The STP analysis of Adidas suggests that the sports brand focuses on positioning itself as ‘Creator Sports Brand’. The report discusses the difference between traditional and contemporary/digital marketing and evaluates the impact of marketing in the digital world of today. The analysis of Adidas’s marketing strategy reveals that it focuses on high-speed manufacturing with an emphasis on innovation and personalization. The company also ensures its customer’s personalized experiences by allowing them to customize and pre-order. In addition to that, the heart of the marketing strategy of Adidas is its partnerships and collaborations with famous designers, athletes, models and actors around the world who want to create and change the world for good.

As mentioned in the marketing mix of Adidas, the company positions itself as a premium brand. Due to this, it is not affordable for everyone, and local players might not purchase the brand at all. While Adidas continuously repositions itself by revisiting its portfolio, it should also focus on marketing for this customer segment.

Recently in 2018, Adidas repositioned Reebok for more profitability by promoting the brand through women who want to change the world. For this, Reebok advertisements and marketing campaigns focused on featuring celebrities and influential personalities like Victoria Beckham, Gigi Hadid and Ariana Grande (Digital Agency Network, 2020). Similarly, Adidas can again reposition its portfolio by middle-class customers. Asia is full of athletes belonging to the middle-class customer segment and thus offers immense growth potential. Hence, Adidas can market one of its portfolios to be supportive of emerging athletes from developing nations. This will not only improve the reputation of the brand but also increase its profitability.

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Reflective Statement

This module helped me learn about the fundamental marketing concepts and models with implementing them on a real-life sports brand called Adidas. My Bachelors was more of a general degree, and I realised that I lacked a practical aspect. The courses in this degree focus on a practical element in addition to the theoretical part. Hence, this module allowed me to bridge the gap between academia and industry.

Acquiring about the historical background of Adidas allowed me to learn how the Dassler Brothers are behind the establishment of two big sportswear companies called Adidas and Puma. I also learnt the difference between contemporary and traditional marketing. Understanding the critical role of strategic marketing planning in any business was also a key take away from this assignment. I learnt that marketing plays a vital role in developing customer perceived value. Therefore, in future, I will strive to intensify my marketing knowledge so that I can excel in the industry. By reading several articles on the marketing mix, I learnt a great deal about their role in establishing positive customer perception. Researching about Adidas’s marketing mix allowed me to learn about how innovation and customisation are critical components in the product development stage. Studying, the second marketing mix – ‘Price’ helped me gain a great deal of knowledge about competitive-based, high-low, penetration and cost-plus pricing. Exploring the ‘place’ component of the marketing mix helped me learn about various distribution channels like sale through retail, direct sale, online sale, sale through agent and sale through a wholesaler. Reading articles on ‘promotion’ part of the marketing mix enabled me to learn about various features and stages of integrated marketing communications. Further, research about the marketing mix allowed me to understand that the systems, processes and people associated with the company play a crucial role in the executive of proper marketing strategy. Finally, I understood how ambient conditions, adequate functionality, attractive layout, symbols, signs and artefacts are all associated with the physical evidence. Further research enabled me to realise that physical evidence related to the official website of a company also plays a crucial role in developing a positive perception in the consumer’s mind. I was never much good at research, but this project harnessed my research skills as I read numerous articles to produce this research study.

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