The business sector for a long time has recognized the significance of marketing strategies in the overall success of any organization (Andreasen & Kotler 2003, p. 3; Claycomb, Germain & Droge 2000, p. 219).
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The sport sector has not been left behind either and is beginning to embrace strategic marketing as well. Marketing strategy is a process by which companies can maximize great opportunities to enhance sales and attain sustainable competitive advantage using the available scarce resources (Kriemadis & Terzoudis 2007, p. 29-30).
The success of the Adidas Company is accredited to the ethics and laurels of its founder, Adolf Dassler. Dassler who is a veteran and founder of the Adidas group , started producing foot wares out of limited resources available in Germany after the first world war and had a very simple dream for his company: to supply athletes with the finest suited foot ware for their respective sports (Kriemadis & Terzoudis 2007, p. 29).
The simple vision was followed up by three guiding principles: Producing the best foot ware for the requirement of different sports, protection of the athletes from injury, and durable products that can withstand all weather conditions. Original Adidas products were designed for soccer and track activities which were common in Europe during that time (Kriemadis & Terzoudis 2007, p. 30).
The biggest rival of Adidas is Nike, which controls a third of the global market in sports ware, considerably higher than Adidas. In addition, there are other small rivals in US and Europe such as Asics, Puma and New Balance. In Asia we have Li Ning, which is China’s largest sports shoe company. All these companies are hoping to conquer Adidas market share, but with more advanced marketing strategy, Adidas has been able to counter all of its rivals (Kriemadis & Terzoudis 2007, p. 30).
Global Sporting Apparel and Footwear Market
The substitutes for Adidas products come from the rival companies that are spread across the globe. The price margin between these companies is small and consumers can switch to different products with ease (Kriemadis & Terzoudis 2007, p. 32).
Athlete foot ware being the most premium product, these companies focus more on the quality and durability of sports shoes since consumers are also looking for good quality and value for their money. In addition, large rivals such as Puma and Nike, substitutes for Adidas products particularly in the apparel market. Three quarter of the world athletic apparel market and about 20% of the global shoe market belongs to localized companies (Pulendran, Speed & Widing 2003, p. 478).
The common barrier for new entrants into the global sporting apparel and footwear market is the massive economies of scale required for production, distribution, research and development among other operations. Entering this market calls for enormous capital investment for developing and promotion of highly innovative products (McDonald 2002, p.3).
In addition, most consumers are looking to buy high quality products from reputable companies that already have strong brand names. Creation of company with highly innovative products and strong brand name in the global market takes a very long period of time, thus makes it very hard for new entrants to survive in this industry (Dibb Farhangmehr & Simkin 2001. P. 410; Kriemadis & Terzoudis 2007, p. 29).
Consumers possess the bargaining power and can always switch to rival products when forced to. Therefore, the global sports apparel and footwear market is characterized by low price margins and highly innovative products of both small and big manufacturers. Consumers have numerous brand names to choose from, with large price variations. The market also lacks complements, thus consumers have higher bargaining power because they are not tied to specific products (Claycomb, Germain & Droge 2000, p. 221).
The suppliers bargaining power is also high, since they sign contracts with famous sports personalities and clubs (Manchester united, AC Milan, New York Yankees, Christiano Ronaldo) to promote and advertise their products.
However, famous sports personalities and clubs in most cases dictate the terms of the contract, consequently increasing the suppliers bargaining power. In addition, there is a strong competition in signing contracts with famous sports events, such as Olympic Games, FIFA World Cups among others, which also increases the suppliers bargaining power (Kriemadis & Terzoudis 2007, p. 31).
Marketing Strategy of Adidas Group
Adidas group uses numerous marketing strategies to place its products into the global market. Some of the strategies used by the Adidas group have already been mentioned in this paper. They include focusing on big events such as Olympic Games, EUFA Champions Leagues, and FIFA World Cups through acquisition of right of sponsorship. In addition, the group has entered into sponsorship deals with big clubs and famous sports icons worldwide (Andreasen & Kotler 2003, p. 4; Kriemadis & Terzoudis 2007, p. 32).
The group also emphasizes on friendly takeovers of other brands to increase its market strength and gain competitive advantage over rivals such as the takeover of Reebok Company in 2005.
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Reebok endorsement boosted Adidas group marketing strategy by adding names of American sports and entertainment celebrities such as Christina Ricci (Hollywood Actor), Yao Ming (NBA Star), JZ ( Hip-hop star) among others. This deal added American Sports Leagues into Adidas group exposing its products further into the American market (Kriemadis & Terzoudis 2007, p. 33).
The company has entered into partnership with Samsung in manufacturing products plus phone scheme that applies wireless biometrics to exhibit information on Adidas-branded Samsung gadgets. Additionally, packaging of footwear with other products such as clothes, eyewear, balls among others creates balance for Adidas.
Furthermore, Adidas sells products which have been signed by famous sports personality and clubs they are in contract with to create a further complement. Technology used in making Adidas clothes for instance Climacool, creates extra complement that attracts consumers globally to Adidas Climacool products (Kriemadis & Terzoudis 2007, p. 32; Claycomb, Germain & Droge 2000, p. 219).
Advanced Marketing strategies of Adidas Group
These are the new strategies Adidas Company have undertaken to build a steady brand image and promote brand value among its diverse brand names to expand its market share among different consumer demographics. Adidas Company has strong reputation for incorporating technology on its product line.
The company is planning to build on this reputation by introducing new product lines that incorporates advanced technology to improve the performance of athletes. For instance, introducing athlete shoes with embedded microprocessor to monitor measures and provide data on the athlete’s body, terrain and body impact. The weight of the electronic gadget will be minimized so as to maintain athletes comfort. The company plans to make this gadget reusable in shoes using similar generation of electronics.
The electronic gadget will also incorporate GPS system for tacking distance and location plus a USB link to the PC. The issue of cost will be very insignificant since Adidas has already developed Adidas 1, which incorporates a microprocessor. The innovative nature of Adidas products has helped the Adidas brand to maintain its technological prowess in the global market (Kriemadis & Terzoudis 2007, p. 33; Dibb Farhangmehr & Simkin 2001. P. 411).
Adidas group has placed a lot of focus in rebranding the image of acquisitions such as Reebok Company. Since the acquisition, Adidas has benefited massively from Reebok and more gains can be realized from its efforts to rebrand Reebok to a highly fashionable line of products for multi-use and active lifestyle.
The group is working hand in hand with the leading fashion designers to develop products that are highly fashionable for active and casual use. Rebranding has made Adidas gain immense inroad with the female consumers. Majority of the female consumers desire products that powerfully incorporate fashion, comfort and functionality. Female consumers have always remained an untapped market segment (Claycomb, Germain &Droge 2000, p. 22; Kriemadis & Terzoudis 2007, p. 33).
Despite of Nike being the number one sportswear company in the world, the re-branded Reebok Company dictates majority of the market share in Asian markets especially in India. “The prime strategy of Adidas is to associate itself with the cricket frenzy consumers in India” (Kriemadis & Terzoudis 2007, p. 34). While Nike spent most of its resources promoting its brand through international sports celebrities, Adidas concentrated on localizing its brand by utilizing local machinery and people
Product Differentiation And Positioning Strategy
Adidas is also putting a lot of emphasis on the emerging new markets in Asia and Latin America. Adidas has already beaten Nike in some of the Asian markets such as Japan and India and are divided over the Chinese market. The group has also seen the rise in its sales volume in Latin America. Adidas group has been achieving this by collaborating with the local apparel manufacturers, sports clubs and sports personalities.
These collaborations have enabled them to easily acquire vital information of different market segments. For instance, in China most of the commercials and advertisements include the Chinese-American Basketball icon Yao Ming who has enabled the Adidas to gain inroad among the Chinese Youths.
Adidas is also working with the local sports like soccer, Rugby, and basketball among others to develop local interests in sports. Initially, such gestures do not create a lot of buyers, but in the long-run it generates interests in sports and markets Adidas brands (Kriemadis & Terzoudis 2007, p. 34; McDonald 2002, p. 6).
In the Asian market especially India and Pakistan, Adidas has developed low-cost products to fit the middle class consumers. In these markets Adidas group has a high reputation in producing high quality products at a low price (Pulendran, Speed & Widing 2003, p. 478).
Adidas focuses a lot in designing high quality products for the favorite sports in each market segments. For example, in India the company has concentrated in making cricket gears allowing it to grow in popularity among the local athletes and consumers (Kriemadis & Terzoudis 2007, p. 36; Dibb Farhangmehr & Simkin 2001. P. 412).
Sustainable competitive advantage
Adidas group has incorporated technology and innovation in the sports apparel and footwear to enhance performance of the athletes. Rebranding of its acquisitions’ products such Reebok has not only increased Adidas reputation but also its marketing strength.
Collaboration between Adidas and the fashion designers helped Adidas to gain major inroad among the female and the youthful consumers, thus enhancing its competitive advantage over its major rivals. Exploration of the emerging markets in Asia and Latin America has increased global Adidas market share and seen its revenue grow exponentially thus indicating that it has a sustainable competitive advantage.
Adidas has gained considerably a large market share in the global apparel and footwear market; this has been achieved through adoption of advanced marketing strategies. These marketing strategies have enabled the Adidas group to gain greater reputation and competitive advantage over its rivals in the foot ware industry.
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