Category: Adidas

Description and Analysis of the Companies

Adidas

Adidas is a leading sports apparel retailer founded in 1924. Since that time, the company develops a multibillion dollar business operating on the global scale. The company employs 38,980 people and generates €642 million a year. For Adidas, the essence of value unquestionably lies in providing products or services that fulfill customer needs. The long term success of a firm in the marketplace is predicated upon its ability to react to, anticipate, and even create needs.

The customer could explain his/her needs–air travel routing with stopover, variations on a dinner order, advice from a securities analyst–and often receive service in real time. Again feedback could also be instant, resulting in high communicated value, provided responsiveness, flexibility, and learning ability are incorporated into the system.

Firms that have staked their success on standardized services must offer customers enough to replace personalized attention. Lower prices as in the case of routinized legal counsel, a combination of prices and quality/cleanliness provided by fast food firms like McDonald’s, and speed of service offered by quick oil change specialists are some of the compensatory benefits customers are often willing to settle for (Adidas Home Page 2009).

Nike

Nike, a direct competitor of Adidas, was founded in 1864. For Nike, the mingling of value construction and communication that occurs in businesses in which the customer enters the system is worth striving toward in manufacturing firms as well.

Today, net income of the company is US$ 1.883 billion. Since operations personnel are familiar with the caliber of product value built into the product/service, who better to communicate value to customers and receive feedback than those who installed the value in the first place? While we do not advocate the abolition of Marketing Departments everywhere, the establishment of direct links between producers and buyers of a product facilitates not only quick, accurate feedback and responsiveness to market needs but also provides operations personnel a higher purpose (value enhancement) stimulated by direct contact with the beneficiary of this value, the customer.

Overall cost is an inseparable part of all the value activities. The design affects the materials and process used (and vice versa) while the message of value conveyed to customers has to be tailored to the value constructed. Cost reduction efforts, therefore, should not focus exclusively on any one part of the value process (Nike Home Page 2009).

Business Industry Analysis

The sport apparel manufacturers operate on the global scale in order to achieve competitive advantage and attract millions of buyers. The functions of retailers in the channel have been to assemble merchandise, maintain an inventory, price, promote, advertise, sell, and account for the merchandise, again as a service to the manufacturer and the ultimate consumer. Further, retailers have also provided a place for consumers to shop and find other services that might assist them in obtaining or using the available goods.

The channel systems that have developed and, granted, have been improved over the years, have been built on some very basic beliefs about consumers, their needs and wants, and what they are willing to accept from channel members. It is these basic marketplace assumptions that are being challenged by direct and database marketers (Dobson and Starkey 43). As was discussed earlier, technology and communication allow consumers to learn about and demand increasingly differentiated and even personalized products.

As this occurs, the traditional economies of scale that have accrued to those manufacturers and retailers with extensive facilities and large sales volumes are no longer important in the marketplace. Smaller companies, using technology and direct and database marketing approaches, can compete not only effectively, but in many cases more efficiently than can large companies. As technology expands and sales-driven inventorying becomes more prevalent, the balance will shift to direct/database marketers simply because of their ability to respond more quickly and more effectively to consumer demand (Drucker 43).

Sport retailing can be defined as businesses primarily engaged in the final sale of tangible goods to individual, ultimate consumers and households. In recent years, marketing professors have increasingly realized that some or most sectors of the service industries, those establishments engaged in selling intangibles, have many location, operational, and promotional opportunities and problems analogous to those of merchandise retailers. In fact, many writers now speak of services retailing. The major types of retailers include specialty stores, department stores, supermarkets, convenience stores, discount stores, off price retailers and superstores (Adidas Home Page 2009).

Although there are variations across the retail categories surveyed women’s specialty apparel, men’s specialty apparel, department stores, and by region of the country. Sport product retailing is most price sensitive; furniture is least price sensitive. Supermarkets are large retail stores proposing a low cost and large merchandise. A supermarket may carry fifteen to twenty different products while a department store would require over a million to track every item down to the lowest price (i.e., by color-size-style). This movement toward lowest-level the products will accelerate and expand to all of retailing and will spread most dramatically to department and specialty stores. Special sport appeal chains are again experimenting with home delivery service (Drucker 65).

How well direct selling Organizations prosper in the future will depend on how well the opportunities offered will match the various rewards sought by this legion of independent performers as their needs and lifestyles evolve. Marketplace changes in buying behavior, values, and accessibility will impact product lines offered and mechanisms for channeling them to buyers (Drejer 51). Thus, it may be that direct/database marketing, if only because of the lower capital requirements, may become the retailing form of choice for new businesses around the world.

Where once the manufacturer had control, today it is the powerful retailers with major market shares who are demanding and gaining concessions from the manufacturer. Because of the power of technology, logistics, and marketing expertise, we will likely see more and more of this domination of the manufacturer by the retailer. For instance, many large companies such as General Motors and BMW have representative offices in big cities around the world (Dobson and Starkey 31).

In this industry, customer behavior and response, a competitor’s action, and the impact of socioeconomic forces, all fit this prescription. They are complex factors beyond the control of the marketing decision-maker, though having a marked impact on the results of decisions. For instance, a favorable economic climate, though uncontrollable by the decision maker, may nevertheless affect the payoff of any particular strategy.

Similarly, competitors’ actions, which cannot be controlled by an individual may easily affect the market impact of any alternative choice. While decision makers “control” the acts, nature “controls” the events. In determining which alternative to choose, therefore, it is desirable to try to assess future states of nature. Complete assessment can never be attained, since it is difficult, if not impossible, to identify all these states (Drejer 71).

In Adidas, strategic marketing is based on strategic thinking which can be seen as a unique vision of the problem. The subject of decision making raises the larger issue of the planning organization’s strategic thinking; specifically, the question is about prerogative and responsibility. Although most “professionally managed” organizations now subscribe to “participatory” decision making, there is nowhere any uniform understanding of exactly what that means.

The opportunities of Nike include high potential to growth and profitability, professional management team and unique corporate culture, customized order system and discounts (Dobson and Starkey 54). There is a great opportunity for supermarkets in this field, because specialized shops, throughout the world are interested in goods produced in the environmentally friendly manner (Drucker 71).

The opportunities include high potential to development and expansion, professional approach to management and wider product range. Retail service assesses the areas in which the organization can benefit the most from greater emphasis on creativity and innovation. Competitive advantage serves both as a way of identifying what creative and innovative things competitors are doing as well as finding out for each of the areas requiring imagination and innovation who is the best (Adidas Home Page 2009).

Conclusion

The main weaknesses of Nike and Adidas are low market potential in some geographical areas. Competition is the main threat for Adidas and Nick. In spite of weaknesses and threats, Nike has an attractive position based on a combination of cost management and customer services. In spite of weaknesses and threats, Nike has an attractive position based on a combination of cost management and customer services. The market trends establish challenges for generating creativity and innovation for large companies like Nike and Adidas. They also provide research challenges from a creative and innovative management perspective.

Research challenges fall into two major approaches of further success: one deals with methodologies and the other deals with issues to rethink, realign and reorganize large-scale retail companies. Limited geographical market and increased competition are the main threats for Nike (Drejer 71). The main threat for Nike and Adidas is increased competition and near monopolistic position of other entailers on the market. New methods of accountability will be needed to ensure that creative and pioneering activities are truly better than traditional ways. The case of both companies shows that firms can behave this way because they are big and powerful.

Therefore, they reinforce survival of the fattest. Though, these companies must realize that by not being proactive and not attempting to counteract instability in business is likely to lose money in both the present and future. Continuous value enhancement in a single product area is certainly laudable, but prudence dictates that other stakeholders’ needs (shareholders, employees, creditors, and suppliers, for instance) also be taken into consideration. Diversification is an important strategy in assuring that the needs of a variety of stakeholders are given careful enough attention to merit their strong approval.

Works Cited

Adidas Home Page. 2009. Web.

Dobson, P., Starkey, K. The Strategic Management: Issues and Cases. Blackwell Publishing, 2004.

Drejer, A. Strategic Management and Core Competencies: Theory and Application. Quorum Books, 2002.

Drucker P. F. Management: Tasks, Responsibilities, Practices. New York: ] Harper Collins, 2003.

Nike Home Page. 2009. Web.

Executive Summary

The case concerning Reebok and its merger with Adidas is well informed and augments the understanding of the impact that technology has on client behavior in marketing. The paper delves into the details presented by the case, which include competition and consumer behavior. Competition is a detail faced by Reebok from dominant companies like Nike. Moreover, the frequent shifts in client behavior lead to complexities, especially whenever the shifts occur unexpectedly. The paper also analyzes the case and provides theoretical implications supported by Ansoff Matrix, which is in resonance with the contents of the case study. The four components outlined by the matrix resonate with the performance of Reebok and its merger with Adidas. Some of the key issues that emerged from the case include innovation and technology. It became evident from the case that innovation has the power to change the company’s performance. Besides innovation, it also emerged from the case that technology has become a dominant player, which dictates the operations in almost every aspect of modern marketing. Notably, the paper clarified that failure to align a firm with the trends posed by technology is a downturn that can initiate a premature exit from the market.

Introduction

The increasing competition in the market and the trendy changes demonstrated by technology are some of the major issues evident in the case concerning Rebook and Adidas. It is evident from the case that the current situation of Rebook and Adidas has progressed especially in the face of the rising competition from rivals. Notably, Reebok’s merger with Adidas is one of the positive steps that improved its position and market share. From the case, the growth of Reebok, Nike, and Adidas largely hinges on the innovative strategies that addressed client requirements, market trends, and effective use of technology in communication and product development. The case study is important because it helps companies and scholars to understand the issues that dictate the marketing environment and make timely changes that improve their revenues. The case study is also important as it helps the subject companies, which are Reebok and Adidas, to review their position and performance and make amends with the view of propelling their revenues and market share. It is within this backdrop that the case reviews the performance of Reebok, its merger with Adidas, and its probable future.

Discussion

Details of the Case

Competition and Changes in Client Behavior

An assessment of the case study brings details that include competition and the changing consumer behavior to the fore. All through the case, competition is a detail that determines the success rate of Reebok and Adidas. Before the merger of Adidas and Reebok, the main competitor was Nike. It is clear from the case that Nike went ahead to surpass the market share enjoyed by Reebok after introducing several innovative strategies. To coin the innovative nature of Nike, which is Reebok’s major competitor, Post explains that in 1990, Nike was enjoying a higher market share as compared to Reebok (5). The explanation substantiates the importance of competition and the role it plays in shaping the company’s performance. It is important to note that competition continued to increase because some start-ups are also introducing new products to the market that appeal to potential clients in terms of price and quality.

Another important detail that is evident from the case is changing client behavior. Since the formation of the company to the present time, consumer behavior has shifted significantly. Presently, clients look at a product from the perspective of quality and the price. The shift in client trends witnessed in the 20th and 21st centuries is highly attributed to the numerous advances in technology. Moreover, online reviews from past users comprise some of the major factors that dictate the product selection process. Post notes that in 1982 when there was a rise in demand for aerobic shoes, Reebok enjoyed a high market share and revenues (1). The high revenues witnessed when aerobic shoes entered the market relate to consumer dynamics and facilitated Reebok’s growth. However, the decline initiated by the change in behavior greatly affected the sales of Reebok shoes. As such, client behavior is one of the details that stem from the case concerning Reebok and Adidas.

Analysis of the Case

The contents of the case study revolve around Reebok’s entry into the market, its progress, the challenges it has experienced, as well as its probable future. In the case study, there is a systematic analysis of how Reebok gained its market share, the various strategies it utilized, and how it eventually merged with Adidas. The analysis provided by the case concerning Reebok amplifies the understanding that individuals have concerning the company and its competitors. A scrutiny of the case proves that since it entered the market, Reebok has faced serious competition from companies like New Balance Inc. and Nike. These competing firms have similar products and use strategies such as celebrity endorsement to attract potential customers. Moreover, it appears that the companies understand the relevance of the right positioning, a factor that helps them make informed adjustments, which improve their reputation before the target clients. A good example took effect when sales representatives from Nike attended meetings with laptops when their counterparts from Reebok came in with bags of shoes.

Therefore, while Nike representatives displayed images of designer shoes using their laptops to the executives in these meetings, those from Reebok were busy removing shoes from their bags. The overall implication of the scenario is a reduced appeal to investors and potential clients. In effect, poor adoption of well-designed strategies led to its merger with Adidas. It is clear from the case that after the merger, the company began to improve in terms of sales and revenues (Post 10). Right timing, employment of well-designed strategies, and implementation of timely redress measures about client feedback are some of the ingredients that Adidas introduced to Reebok’s products to trigger its come back. The contents of the case provide a well-structured discussion of Reebok, Adidas, and the competition it faces from companies like Nike. The case discusses the strengths of Reebok, its merger with Adidas, and its future expectations.

Theoretical Implications

Ansoff Matrix and Its Relevance in the Case

From Reebok and Adidas’s case, the role and implication of the Ansoff Matrix become practical. The matrix highlights various issues such as competition and consumer behavior, which resonate well with the contents of the case. The four components of the matrix that espouse market penetration, product development, market development, and diversification are all visible in the case study. In the early stages when Reebok entered the market, the main concern of the company was to penetrate the market and win the hearts of potential clients. Thereafter, the company focused on developing products that matched with the demands of the clients. The stage of product development is evident as early as 1982 when the company introduced shoes intended to serve aerobic dances.

The introduction of these aerobic designed shoes increased the company’s market share and made it one of the leaders in the industry. Post elucidates that between 1983 and 1995, the revenues earned by Reebok grew from $50 million to $3 billion, a phenomenon that enabled the company to penetrate the market successfully (1). After a successful entry into the market, the company in line with the provisions of the matrix focused on issues like diversification of the market and products. The company started venturing into regions like Asia, North America, and Europe. The expansion is evident when the company experienced invoicing challenges between the United States and Canada (Post 3). Moreover, the contract between Reebok and Yao Ming, a Chinese shoe company, so that it sells its shoes in China is an indication of the diversification (Post 8). The contract resonates well with the diversification, which is one of the stages outlined by Ansoff Matrix. Fundamentally, market and product diversification stages outlined by Ansoff Matrix will help Reebok in the future even after its merger with Adidas.

It is important to state that the role that Ansoff Matrix plays in the stages of Reebok and its progress in the industry affirms its relevance. The resonance witnessed between the contents of the matrix and the progress of Reebok makes it crucial for the case. Moreover, an analysis of the matrix not only helps the company assess its past performance but also enables it to move forward and minimize challenges that can affect its profitability. By using the matrix, which has positive implications, the company can understand its position and the steps to take as it graduates into another stage of the matrix.

The change in the market that affected the growth rate of Reebok was its inability to switch at the right time as per the provisions of the matrix. Post explains that when the sales executives from Nike walked into offices with laptops, those from Reebok walked in with bags of shoes (2). If the company had followed the provisions envisioned in the matrix it would have realized that the times had changed and required the adoption of the right accessories that facilitate efficiency in place of bags of shoes. By using the right measures, competing firms like Nike won deals and improved the scale of their revenues.

Key Issues

Continued Innovation and Impact of Technology

Innovation and technology are among the key issues unearthed from Reebok and Adidas case study. The shifts and trends evidenced in the market are outcomes of technological advancements and innovation. For instance, on the first page, Reebok became innovative and introduced shoes targeting women who loved aerobics, a strategy that was productive (Post 1). Later on, in the case, companies like Reebok, Nike, as well as Adidas used celebrities to endorse their shoe lines. Celebrity endorsement and the introduction of new types of shoes demonstrate continued innovation among the companies highlighted and discussed in the case study. Post asserts that celebrities like LeBron James, Jay-Z, Michael Jordan, and 50 Cent played a role in improving the revenues of Reebok, Adidas, and Nike(9). The endorsement from these celebrities is a sign of creativity that the firms exercised to expand their market share and client base.

Another crucial issue presented by the case is the impact of technology. Notably, technology has played a role in dictating the revenues earned by Reebok, Adidas, and Nike. The late adoption of technological devices by Reebok led to a decline in its sales and introduced an eventual merger with Adidas. When Adidas merged with Reebok the first operations focused on improving the company’s information technology. Post notes that when customers purchasing predator soccer shoes complained that the colors faded quickly, Adidas responded swiftly and provided timely and positive feedback (10). The timely response also indicates the presence of superb platforms that facilitated effective communication between consumers and the company. Presently, several small and large companies experience losses triggered by a slow or delayed response to complaints raised by customers.

Recommendations

Fundamentally, the future of marketing continues to be dynamic and cutthroat. Companies like Reebok and Adidas are likely to experience increased competition especially from startups who capitalize on their high operating costs to introduce low-cost products that match client expectations. Notably, competition from startups will add up to that exerted by large enterprises, which include New Balance Inc. and Nike. As such, some of the recommendations that can help Reebok to improve its market share and profitability include engaging in continued research and the optimal utility of the technology. When Reebok employs these recommendations, the likelihood of improving its share of the market and increasing the scale of its revenues is high.

Due to the ever-changing client expectations and market dynamics, Reebok has to undertake continuous research with the intent of understanding the shifts in the market. Moreover, continuous research enables Reebok to identify areas that need rectifications on time. It is momentous to elucidate that timely amends is a cornerstone that differentiates smart companies from those that are underperforming. Therefore, by engaging in regular research, the company places itself strategically and notices any trends in the market on time. Another important recommendation that is useful in amplifying the reputation and position of Reebok, as well as Adidas, is the optimal use of technology. The impact of technology is practical in almost every aspect of marketing. Shoe companies like Reebok should rely on technology to execute efficient distribution systems, market their product lines, communicate with their clients, and develop high-end products. Therefore, when Reebok uses technology optimally, its shoes will not only match client expectations in terms of quality and quantity but the position of the company in comparison with its competitors improves.

Conclusion

Reebok is one of the leaders in the shoe industry alongside other companies like New Balance Inc. and Nike. Its merger with Adidas gave it a new image and improved its performance in the market. The merger enabled Reebok to challenge the dominance enjoyed by Nike and facilitated a new insight into the changing market forces. Although the company introduced some strategies that facilitated its success, the delay in responding to important ventures and adopting technology was a downturn that worked against its success. One of the examples is evident on page 5 of the case study when Foot Locker went to Nike after Reebok’s reluctance to take up the venture. Although Reebok tried to reestablish good relations with Foot Locker later, the returns were no longer practical. It is important to explain that the company should continue engaging in research to ascertain the market changes and diversify into new regions so that it can increase its profitability and spectrum of operation.

Work Cited

Post, Gerald. “Reebok and Adidas.” Management Information Systems Cases, pp. 1-15.

An organizational structure is a framework that specifies how various operations within an enterprise are coordinated to meet its objectives. Joseph and Gaba (2020) enumerated that these operations may include regulations, positions, and obligations. Additionally, the management chart impacts how information moves between firm levels. In a centralized system, for instance, choices flow from the top down, but decision-making authority is spread across multiple organizational levels in a decentralized model. The firm structure permits businesses to maintain efficiency and concentration. A growth plan enables businesses to extend their operations by adding new sites, investing in client acquisition, and increasing product lines. Thus, a company’s growth plans are influenced by its sector and primary audience. This essay describes the institutional structure of Adidas Company, including details about the type of ownership, corporate hierarchy, and business model. Moreover, the paper discusses some of the opportunities for growth available for Adidas by identifying three external factors that it needs to consider.

Description of the Organization

Adidas, or Adidas AG, is a German maker of athletic footwear, athletic gear, and general merchandise. The corporation abbreviates the name of its founder, Adolf (Adi) Dassler, to get the moniker Adidas (Adidas, 2022). It was the largest sporting goods maker in Europe and the second largest globally, after Nike, at the turn of the 21st century. Historically, Adidas items bear a three-stripe symbol, which is included in the corporation’s trefoil and mountain emblems. Adidas flourished significantly in the 1950s as association football (soccer) players adopted the institution’s lightweight, screw-in cleat-equipped shoes (Adidas, 2022).

In 1963, the firm created a line of athletic goods by manufacturing soccer balls. Adidas was the industry leader in athletic shoes for several years, but rivalry rose in the 1970s, particularly from smaller companies such as Nike (Schmid et al., 2018). Adidas’ mission and objective are to be the leading sporting equipment manufacturer worldwide with a distinctive product portfolio ranging from athletic apparel for sports enthusiasts to luxury fashion to suit all customer requirements and grow the customer base from several angles (Adidas, 2022). The Adidas AG Company’s business headquarter is in Herzogenaurach, Germany.

Description of Organization’s Structure

The Adidas Group’s organizational structure is based on a matrix architecture. Adidas arranges its personnel and resources based on its function and product. Consequently, individuals in the programs, engineering, and logistics divisions may have two managers. After completing the project, the staff will collaborate with other personalities. Matrix organizational structure is a dynamic framework that allows other sectors to collaborate, obtain diverse, innovative solutions from another unit, and gain new competencies and administrative management tasks inside the steering committee (Jin and Cedrola, 2019). There are three corporate entities within the Adidas Group: the annual general conference, the supervisory board, and the executive management. The executive board controls the organization, including its overall planning, internal surveillance and threat monitoring systems, and adherence. The governing council approves and removes members of the executive board and oversees and informs the executive board of its operations.

Type of Ownership

The type of ownership at Adidas AG Company is general public ownership. In other words, that is to mean that the company is a publicly traded organization. The investors of a public company have an entitlement to a portion of the institution’s assets and income. Through the free trading of stock shares on trading platforms or over-the-counter (OTC) marketplaces, the control of a publicly traded corporation is divided among broad public stockholders (Silitonga, 2020). Silitonga (2020) insinuated that an initial public offering (IPO) is the procedure in which a private firm’s shares are transferred publicly for the first time. Suppose the IPO entails selling directly to a vast pool of investors, regardless of whether they are small retail investors or significant funds. In that case, this IPO is known as general public dissemination.

Organizational Hierarchy

The high echelon in the corporation is the CEO, who is responsible for all of the corporation’s accomplishments and failures and assumes responsibility for overseeing the entire organization. Second, the finance department is accountable for organizing monetary and accounting tasks, such as producing and submitting appropriation statements and providing management with financial records. Human resources are responsible for hiring new staff and guaranteeing they are knowledgeable in their respective fields. The sales staff is responsible for the economic achievement of the entity by transforming brand enthusiasm into productive and long-term business growth. The brand’s department is responsible for exploring, creating, and commercializing the group’s sports and lifestyle goods by providing innovative merchandise and unique moments.

IT and mechanical engineering are the two divisions of the engineering faculty. One is responsible for web design and the IT system, while the other is for machining equipment and operations. The primary objective of this section is to aid Adidas in creating innovative technologies that will enable them to be more profitable and efficient. The operations division involves product development, manufacturing schedules, sourcing, and transportation. Its role is to increase the distribution chain’s effectiveness while assuring the highest standards for product excellence, reliability, and dispatch.

Business Model

Adidas’s business model relies heavily on creating creative, consumer-driven items. Instead of engaging in sponsored posts, the firm strives to show its value by developing a high-performance brand portfolio that caters to the unique needs of professionals and shoppers (Shah, 2018). It accelerates product creation and manufacturing by continually enhancing technology, procedures, and tools. In addition, they stress considerably reduced group-level fragmentation by reducing the worldwide product portfolio, unifying the storage base, and standardizing above-market service. The goal is to provide the greatest branded retail experience across all client connections. Innovative distribution channel concepts accelerate the response time to consumer demands. This technique has prompted investors worldwide to acquire Adidas’ common stock, and the corporation has maintained constant expansion over the years (Shah, 2018). The public ownership framework of the business has been a vital component of long-term success.

Discussion of External Influences that Impact Growth

Competition

Adidas faces severe rivalry from its conventional rival Nike Inc. in the sportswear and clothing industry, which significantly impacts its potential development. Nike Inc.’s brand is valued at $122.3 billion, contrasted to Adidas’ $20.19 billion (Ennis, 2020). Nike’s luxury pricing approach, best cost provider methodology, offers Adidas severe competition since it pursues customers who build a unique level of familiarity with the commodity, eventually forming brand loyalty. Nike makes use of the fact that brand trust has been developed to link purchasers with their prices. Therefore, Nike knows buyers will be willing to pay for its branded merchandise.

In addition, Nike notably emphasizes a broad differentiation approach beating Adidas’ corporate-level approach. Based on this philosophy, Nike creates its athletic merchandise in three mechanisms (Ennis, 2020). Firstly, the company produces for three distinct demographic groups: men, women, and children. Secondly, it distinguishes its goods by providing a selection of gear and peripherals, such as shoes, gym bags, mittens, and skates. Thirdly, Nike has the license to produce and market non-athletic commodities such as school supplies, broadcast media gadgets, and smartwatches under the Nike name (Ennis, 2020). This plan is superior to Adidas’ corporate strategy, which concentrates on creativity and attempts to create new goods, solutions, and procedures to compete.

Political Uncertainties

The most significant political challenges affecting Adidas are shifting trade policies and political turmoil in numerous nations. Adidas must address these concerns to maintain its worldwide presence and economic performance. The Trump administration implemented trade restrictions and levies (Ennis, 2020). Regarding price increases, US tariffs on Chinese commodities continue to be a significant source of worry for Adidas and other athletic apparel manufacturers. Germany is a significant exporter, and US import restrictions and taxes could cost the country as much as 20 billion euros (Ennis, 2020). Adidas’ global activities include the shipment and delivery of items and offerings. Adidas cannot fulfill its ultimate targets and objectives without enhancing its multifaceted distribution network to adhere to worldwide and political regulations. Therefore, this will negatively impact Adidas’ sales, revenue, and brand recognition.

E-Commerce Platform

Following the popularity of its online operations, e-commerce allows Adidas to expand its digital capabilities. Performance in digital sales outlets is also reflected in the net sales growth of the institution’s highest-ranked online vendors. The three largest online retailers by net sales, adidas.com, adidas.co.uk, and reebok.com, have all significantly improved their net sales compared to 2019. Reebok.com recorded the highest year-over-year growth of 125%, with overall net sales exceeding €262 million (Russell, 2021). Therefore, it is reducing the gap with adidas.co.uk, which produced improved net sales in 2020 (€322 million) (Russell, 2021). By integrating offline and online interactions into an app-centered digital environment. The corporation is also expanding its direct-to-consumer sales avenues by utilizing a new premium subscription app, among other strategies. Consumer studies and similar tactics other major retailers employ demonstrate that the novel integrated online-offline strategy hits a chord.

Conclusion

In conclusion, the corporate structure enables organizations to maintain efficiency and focus. A growth strategy allows firms to expand their operations through the addition of new locations, investment in customer acquisition, and expansion of product lines. The organizational structure of the Adidas Group is built on a matrix architecture. The staff and resources at Adidas are organized according to their purpose and product.

The Adidas AG Company is owned by the general public, indicating that it is a publicly traded organization. The apex of Adidas is the CEO, who is accountable for all of the corporation’s successes and failures and assumes oversight responsibilities for the entire business. Adidas’s business model depends significantly on developing innovative, consumer-driven products. Instead of participating in sponsored postings, the company aims to demonstrate its worth by developing a high-performance brand assortment that serves the specific demands of professionals and consumers. The external variables that affect Adidas’s expansion include rivalry, political uncertainty, and e-commerce.

Reference List

Adidas | Company Overview & News. (2022) Forbes. Web.

Ennis, S. (2020) ‘Formulating and implementing sports marketing strategy‘. In Sports Marketing (pp. 129-151). Palgrave Macmillan, Cham. Web.

Jin, B.E. and Cedrola, E. eds. (2019) Process innovation in the global fashion industry. Palgrave Macmillan US.

Joseph, J. and Gaba, V. (2020) ‘Organizational structure, information processing, and decision-making: a retrospective and road map for research‘. Academy of Management Annals, 14(1), pp.267-302. Web.

Russell, C. (2021). Adidas or Nike? Which retail giant is winning the sneakers war?. Forbes. Web.

Schmid, et al. (2018) ‘Adidas and Reebok: is acquiring easier than integrating?’ In Internationalization of Business (pp. 27-61). Springer.

Shah, A. (2018) ‘The Adidas brand: climbing up or decelerating?‘ Forbes. Web.

Silitonga, N. (2020) ‘The moderating effect of independent commissioners on financial policy and public ownership toward corporate financial performance’, International Journal of Contemporary Accounting, 2(2), pp.139-154. Web.

Executive Summary: Adidas Marketing

The marketing plan relates to Adidas Company which intends to launch a new product called Adidas Score. The new shore is targeted to non-players. A Situation analysis evaluating the market condition and the firm’s performance is given. In addition, the firm’s strengths, weaknesses, opportunities and threats are given through a SWOT analysis.

The firm’s core strategy and strategic options in the process of producing and launching the product are also analyzed. The set of objectives which the firm intends to achieve by launching the new shoe are outlined. A comprehensive marketing strategy is incorporated in marketing the product.

This is attained by evaluating the various marketing variables which include price, product, promotion and place. The plan also includes the firm’s organization, implementation and control strategy to ensure effective marketing of the product.

Adidas Marketing Analysis

Over the past few years, the footwear industry has become very concentrated (Arnis & Cornwell 2005).The industry consists of a large number of smaller and segmented players. The large number of market players has resulted from the lucrative nature of the industry. In its operation, Adidas specializes in designing and manufacture of various sports apparels and shoes.

Through a market research conducted by the firm, the findings indicated that there is a high market potential with regard to the shoe industry. The findings of the market research revealed that customers are increasingly appreciating soccer. As a result, consumption of soccer products has increased (Cashmore 2010).

Despite the effects of the recession, a large number of consumers in the European Union are preferring quality and fashionable footwear (Arnis & Cornwell 2005). In addition, demand for footwear products is also associated with personal lifestyle. Over the years, Adidas has been well positioned with regard to designing and manufacture of football shoes to various football clubs around the world.

Its growth has also been enhanced by growth of football industry globally (CBI 2010). According to a study conducted in 2010 by NPD Sports, Adidas had a global market share of 34% with regard to football shoe brands (Boyle 2010).

In its core market which includes North America and Germany, the firm’s football market share is above 50%.Considering the shift in consumer behavior amongst the fans and non-players, the firm has identified an opportunity for it to grow.

Microenvironment

In its operation, Adidas is faced with intense competition from other companies which deal with designing and manufacturing of street soccer shoes.

The firm’s core competitors include Nike Inc., Amer Sports Corporation, Callaway Golf Company, Puma, Reebok, New Balance and K-Swiss. In its effort to launch the new shoe, the firm is faced by intense competition from Nike Inc. which as launched Nike Total90 Shoot III which is a street soccer shoe (Innovation Leaders 2010).

In marketing its products, Adidas has a well established network of suppliers and distributors. The distributors are located in various regions to ensure ease of accessibility of the firm’s products. The firm has 1000 distributors around the world.

In marketing its products, the firm has targeted consumers of diverse age groups. For example, the firm targets both the young and the elderly. As a result, the firm is able to increase the size of its market (Innovation Leaders 2010).

SWOT Analysis

The table below entails an evaluation of the firm’s strengths, weaknesses, opportunities and threats.

Core strategy

In the process of developing adidas score, the firm will integrate the concept of product differentiation. Product differentiation entails integrating uniqueness in a product and service. According to Jobber and Fahy (2009), a firm can attain a high competitive advantage through product differentiation. The firm will differentiate adidas score on the basis of quality. This will contribute towards the product appealing a wide range of customers.

Strategic option

Considering the fact that the firm has been in operation for a number of years dealing with production of a wide rang e of products such as shoes, the firm will incorporate the concept of product development as its strategic option (Jobber & Fahy 2009). This will entail marketing the new product in its existing market.

Adidas Marketing Objectives

In introducing the new product into the market, the firm’s management team intends to achieve a number of objectives as outlined below.

• The firm intends to attain a market share of 25% within a period of one year.
• By marketing the adidas score, the firm intends to increase its revenue level with a margin of 30% within a period of one year after launching the new shoe.
• The firm is also committed at ensuring that it supplies high quality shoe to its customers.

Marketing mix

Product

The firm will ensure that adidas score is of high quality. In order to achieve this, the firm’s management team will make use of Fusion Frame System Technology. Adidas will ensure that the new street soccer shoe is well designed to fit the customers’ requirements. The shoe will have an air cushioning and an innovative foam cushioning.

This will make it to be effective with regard to impact absorbing. A thin plate is sandwiched between the cushioning systems to ensure effective support of the feet. In addition, meshed materials will be used in making the shoe. This will ensure that air can flow freely thus giving the customer a comfortable and cool feeling. The new shoe will also be of relatively low weight.

In order to appeal a wide range of customers, the firm will ensure that the shoe is produced in a variety of designs. To ensure increased customer satisfaction, the management will conduct continuous innovation to the new shoe so as to move with the industry trends.

Pricing strategy

Considering the fact that the firm is introducing a new product into the market, the management of the firm will conduct a competitor and a consumer market research. The objective of the competitor market analysis will be to identify the pricing strategy of other firms in the industry. This will aid the management in the process of formulating its price strategy.

On the other hand, the consumer market research will aid the firm’s management in determining the price sensitive nature of the customers. From the research, the management will be able to formulate a good pricing strategy.

In its effort to enter the new market, the management of the firm will incorporate the concept of penetration pricing strategy. This involves setting the price of its products and services at a relatively low level compared to its competitors (Lamb, Hair & McDaniel 2008).

As a result, the new shoe will appeal to a wide range of customers considering the fact that consumers are price sensitive and their desire is to maximize their utility level.

Psychological pricing will also be integrated in the firm’s pricing strategy considering the fact that consumers consider the firm’s product to be expensive. This will involve setting price points that have psychological effects on the consumers purchasing process (Jobber & Fahy 2009).

For example, the price of Adidas-Score will be set at $ 18.99. This is relatively low compared to Nike Total90 Shoot III whose price is set at $19.99. This price points will play a significant role in ensuring that the firm’s products price appeals to the emotions of different customers in their purchasing process. As a result, individuals of different income groups will perceive the product’s pricing strategy to be fair.

Promotion strategy

The success every business establishment depends on the degree of market awareness through effective communication (Lamb, Hair & McDaniel 2008). This means that firms venturing into the footwear industry must conduct comprehensive market awareness. One of the ways through which this can be attained is through marketing communication (Doren, Fechner &Green 2000).

To attain this, the firm’s management team has formulated a comprehensive marketing communication. The management team will incorporate various market communication methods which include advertising, sales promotion, public relations and advertising.

Marketing communication through advertising will integrate various mediums. These include television, radio, outdoor advertising through use of billboards, print media such as newspapers and magazines (Koekemoer & Bird 2004).

The management team of the firm has realized that it can attain a high level of revenue through incorporation of the emerging Information Communication Technology (ICT). As a result, the team will integrate electronic commerce in communicating to the market. This will be attained through use of the internet.

Use of internet advertising will enable the firm to reach to a wide range of customers in the United Kingdom. This is due to the fact that a wide range of customers access the internet daily (O’Guinn, Allen & Semenik 2008). To achieve this, the firm will enter into contract with major search engines such as Google and Yahoo. The contract will enable the firm to post information regarding adidas score in these sites.

The management will also make use of the emerging social networking tools in creating market awareness. These tools include You Tube, wikis, blogs and Face book. In integrating these social networking tools, the management will make use of the most famous wikis and blogs in the UK.

You Tube will be an effective market awareness tool since the firm will post the pictures of adidas score on You Tube. This will ensure that potential customers see what the firm offers. In addition, use of You Tube is more cost effective.

The firm will also post the new shoe in its website. The website will enable potential customers to access information regarding the firm’s products and services. In addition, use of Wikis and Blogs will ensure that the firm creates an interactive environment with potential customers.

To ensure that market awareness is well created, the management of the firm will also integrate outdoor advertising. This will be achieved by entering into contracts with local advertising companies which have their bill boards located in strategic locations. The firm will post pictures of adidas score in these billboards. In addition, the advertisements in these bill boards will integrate catchy slogans that will appeal the customers.

Distribution strategy

According to Pickton and Broderick (2005.) product distribution is paramount in ensuring that a product is easily accessible in the market. The management team of the firm is committed at ensuring that the new shoe is accessible in the entire market. To attain this, the management team of the firm has formulated a comprehensive distribution strategy.

The strategy will integrate both direct and indirect forms of distribution. Direct distribution methods will be used within the local market. This will be attained by incorporating vertical distribution system in its supply chain.

Adidas Score will be supplied to wholesalers and retailers in the entire domestic market. In addition, the management of the firm will open distribution outlets in all the regions in the UK. The firm will distribute its products to major retailers.

Organization, Implementation and control

In order to ensure effective launching of the product, the firm’s management team has set a substantial amount in its marketing budget as illustrated below.

Evaluation: Marketing Objectives of Adidas

According to Milne (2008), the implementation process is significant in marketing since it turns the plans into actions. In addition, Milne (2008) asserts that the implementation defines the day to day activities which will contribute towards the plan’s success.

Implementation is paramount in contributing to the success of a firm’s marketing plan. This is due to the fact that the probability of market failure is high during the operation phase compared to planning phase.

In its operation, Adidas management team has formulated a comprehensive implementation plan which will ensure effective execution of the developed strategies in relation to marketing adidas score. The firm’s implementation plan has incorporated a schedule which defines the activities to be undertaken.

This results from the realization of the fact that assumption of that the entire marketing personnel will contribute towards the successful implementation of the firm could result to its failure. The table below illustrates the activities which will be undertaken and the time in which they are expected to commence.

A marketing plan cannot result into the desired success of if it is not controlled. As a result, the firm’s management team has integrated the concept of marketing control in marketing adidas score. Marketing control entails monitoring the plan which the firm’s management team intends to implement.

Through control, the management team will be able to mitigate the probability of deviations from the set plan. The ultimate result is that firm will be able to attain the set goals. Control entails a number of activities which includes evaluation, measurement and monitoring (Stapleton& Thomas 2007). A number of control standards to ensure that the marketing process is successful have been established.

The firm’s marketing department will conduct an analysis of adidas score market share compared to those of the competitors from time to time. This will enable the management team to assess the progress of the new shoe in the market.

Through market analysis, it will be possible for the firm’s management team to determine whether the new shoe has successfully penetrated the market. The percentage of market share attained by the new shoe will serve as an indicator with regard to the degree of market acceptability. The table below illustrates the intended control processes.

Conclusion: Marketing Plan of Adidas

From the analysis, there is a high probability of Adidas succeeding upon launching the new shoe. This arises from the fact that there is a change of trend amongst the consumers especially with regard to football. A large number of individuals are increasingly appreciating soccer in UK.

In addition, consumers have become quality conscious. By launching the new shoe, there is a high probability that a large number of consumers will be appealed. In order to achieve this, the firm should conduct a comprehensive market analysis.

This will ensure that it identifies market trends effectively. As a result, the firm will be able to adjust its marketing strategies appropriately. To ensure success of the product, the firm should implement an effective implementation and control strategy. The strategy should be evaluated from time to time to determine its effectiveness.

Reference List

Arnis, J. & Cornwell, B., 2005. Global sports sponsorship. London: Berg Publishers.

Boyle, B., 2010. NPD reports on athletic footwear and sports apparel market. Web.

Cashmore, E., 2010. Making sense of sports. New York: Taylor and Francis.

CBI. 2010. The future of footwear market in the European Union. Web.

Doren, D., Fechner, D. & Green, K. 2000. Promotional strategies on the World Wide Web. Journal of Marketing Communications. Vol. 6, issue 1 pp. 21-35.

Innovation Leaders. 2010. Profile: Adidas. Web.

Jobber, D. & Fahy, J.,2009. Foundations of marketing. London: McGraw-Hill International (UK) Ltd.

Koekemoer, L. & Bird, S. 2004. Marketing communications. New York: Juta and Company Limited.

Lamb, C., Hair, J. & McDaniel, C., 2008. Marketing. New York: Cengage Learning.

Milne, G. 2008. Implementing your marketing plan. Web.

O’Guinn, T., Allen, C. & Semenik, R., 2008. Advertising and integrated brand promotion. New Jersey: Cengage Learning.

Pickton, D. & Broderick, A., 2005. Integrated marketing communications. New York: FT Prentice Hall.

Stapleton, J. & Thomas, M., 2007. How to prepare a marketing plan: a guide to reaching the consumer market. New York: Gower Publishing Ltd.

Abstract

Market segmentation is an important marketing strategy that many organizations have tried to implement. Organizations have grouped their markets based on a number of variables such as demographics, operating variables, purchasing approaches, personal characteristics, and situational factors among others.

The two companies discussed in this case study are Nike and Adidas. They operate mainly in the sports footwear industry, with Nike having the upper edge in competition. They both utilize the market segmentation concept to delineate their markets. Some of their ways of applying this concept are discussed in this case study.

Introduction

Nike and Adidas are organizations in the sports footwear industry. They have engaged in fierce competition. An important concept in marketing is market segmentation, which refers to the grouping of markets into unique segments that organizations can devise a specific marketing strategy that targets the segments (Choi, Jungwoo, & Jongsu, 2013).

Companies are able to segment the market based on demographics, operating variables, purchasing approaches, personal characteristics, and situational factors among others (Quinn, & Dibb, 2010; Quinn, 2009, p. 254). One of the marketing concepts that the two organizations have used is market segmentation. This case study looks at the historical background and marketing environment in the two organizations. The case compares the use of market segmentation in the companies’ marketing strategies.

Nike

Brief background and History

Phil Knight and Bill Bowerman founded Nike, Inc. in 1962 with the aim of importing Japanese-made shoes to America, with the two partners working under the name Blue Ribbon Sports (Carbasho, 2010). The company has grown to a global market share of over 30%, which is the biggest market share for any company in the footwear industry, with over 22,000 retail outlets in the US alone. Its products are sold in over 165 countries in the world (Larson, 2011).

It also ranks the top shoemaker in the world, with the main market products being the athletic footwear, equipment, and other wears (Carbasho, 2010). In 2008, the distribution of revenue in the segments above was 52% for footwear, 28% for apparel, 6% for equipment, and 14% for the other products (Carbasho, 2010).

The company uses its name as the main brand name, with some of the other names used being Nike Pro, Nike+, Nike Golf, Air Jordan, and Nike Skateboarding (Nunez, 2012). The company has a trademark titled “Just do it” that has been a favorite element for many people. This trademark is one of the marketing strategies that it applies. It also uses a recognized logo that has evolved over the last few years to the level of being recognized by many people (Levin, & Behrens, 2003).

Market Segmentation

Demographics

The aspect of demographics refers to the segmentation of the market based on the industry, company size, and location. Nike serves small and medium-sized companies as a strategy in its demographic market segmentation. For example, the company serves small outlet shops with its products.

It has a series of stores that it owns such as the ‘NIKE Sydney City’ that is located in Westfield Sydney along Pitt Street. In the location aspect of the demographic segmentation, Nike serves markets mainly in the US since most of the industries are in this region, with other markets around the world only taking secondary priority such as in Dubai.

It also collaborates with many companies in the United States and around the world as a means of ensuring a strong presence in this economically important area. Examples of these companies include FC Barcelona and Chelsea Football Club. The company’s contract with these organizations is renewed yearly, with the football companies making billions of dollars out of the sponsorship.

Personal Characteristics

As part of the market segmentation, the personal characteristics include the consideration of buyer-seller similarities, attitude towards risk, and the loyalty of companies that the organization engages in. Nike only sells to companies whose values are similar to its principles such as companies whose customers take risks and/or those who exhibit loyalty to their suppliers. In the use of technology, the company has developed smart shoes that are about to be marketed as an example of the commitment that it places on technology.

The company is also developing special gadgets such as training watches to complement the sports shoes (Nunez, 2013). Nike is among the global American companies that are recognized for the use of technology in their supply chains. The company is in the process of developing technologically advanced design methods at its factories and in the delivery and sale of its products online. For this purpose, the company has collaborated with Amazon and Microsoft companies.

Situational Factors

Situational factors refer to the elements that organizations apply when they wish to take advantage of situations to market their products. The use of situational factors as a market segmentation strategy includes consideration of urgency, specific application of the provided products, and the size of orders. Nike mainly does business with organizations that have no urgency in demand. However, in situations where these organizations require services urgently, the company is able to provide at the same rate.

The company has also focused on specific use of its products by engaging mainly in the production of sports shoes and appliances. It also focuses on large orders as opposed to small ones since it has the capacity to provide such orders. Some of the examples of companies that Nike supplies large orders include outlets such as Wal-Mart.

Operating Variable

This form of market segmentation involves the application of technology, customer capabilities, and the use or non-use of the products being provided by the company. The company serves medium and heavy users of its products, with sporting teams such as those in the NBA being large users of its products.

In terms of customer capability, Nike provides services to organizations and individuals who need only the services that it provides. Clients who need many services including different brands of shoes are also served although they are fewer. In the use of technology, the major companies that Nike has collaborated with include the Apple Computer Company and Fuel band.

Purchasing Approaches

This refers to the categorization of markets to be approached by an organization based on the power structure of client organizations, their purchasing policies, and the purchasing function. In the purchasing function organization, Nike serves organizations with a centralized purchasing structure such as Barcelona FC, Liverpool FC, and a number of retail stores such as Wal-Mart. In power structure, Nike serves organizations that are mainly financially dominated as opposed to being engineering dominated.

Examples of the organizations that are financially dominated in the relationship with Nike include Chelsea FC. In the nature of existing relationships, Nike has established relationships with a number of organizations with which it does business including those mentioned above such as Barcelona FC. However, the company also goes for the most desirable organizations to engage with without mostly having to consider the existing relationship.

An example is its engagement in e-marketing in collaboration with Google and Microsoft organizations. These two organizations also prefer working with Nike under service contracts instead of leasing. This link is a good example of the general purchasing policies that Nike applies. In terms of purchasing criteria, Nike markets itself as a company that is dedicated to quality. Hence, it approaches companies seeking quality including basketball teams such as The Lakers of Florida.

Adidas

Brief Background and History

The German Adolf Dassler founded Adidas after the end of World War I. He used scarce materials at the time to achieve his dream of equipping sportsmen with the right shoes for their respective ports.

The company grew to employ over 100 people by 1930. It was able to withstand the effects of the Second World War with the reputation of making the best sports shoes. Dassler later renamed the company as Adidas after the war. He proceeded to make shoes that made his country win the World Cup in 1954. Currently, the corporation has beyond 30,000 employees throughout the globe, with approximately 2500 of them being stationed at its main offices in Herzogenaurach, Germany.

Market Segmentation

Demographics

Just like Nike, Adidas serves customers in the sports footwear industry, with limited services to other industries. It also serves companies in these industries, with the main companies served being the sporting organizations. One of the strategies that Adidas uses in market segmentation is geographic marketing where it is able to market specific products to some prioritized geographical areas. For instance, the company marketed the soccer shoes in Europe because the sports industry is popular there as compared to North America.

Operating Variables

In terms of technology, user-non user status, and customer capability, Adidas has managed to put in place several measures. Some of these measures include the introduction of technology that is related to sportswear. An example on the use of technology is the smart watch that the company is in the process of developing to match the sports footwear it makes. Adidas also serves heavy and medium users of its products.

Unlike Nike, Adidas serves customers who require many services although they are related to the sporting industry. An example of psychographic segmentation as an operating variable is the brand marketed by Adidas under the brand name ‘Rebook Original’ that is meant for enthusiastic Rebook fans.

Personal Characteristics

Adidas has applied a number of personal characteristics of its customers to develop market segments (Adidas Industries, 2011). Adidas only serves organizations that have similar services and products together with customers who have the risk-taker element such that even if they are new to Adidas, they are not afraid of purchasing from it since they are assured of quality products at the end of the day. The companies that Adidas focuses on are those that show loyalty to suppliers.

These companies can be found in the sporting arena, and hence the reason why most of the clients are sports enthusiasts as evidenced in the interests that Adidas shows in sports teams. It also supports several soccer clubs in the various football confederations around the world including “Chelsea FC, FC Bayern Muenchen, and Liverpool FC” (Quinn & Dibb, 2010, p. 1245).

Situational Factors

The situational factors in the market segmentation including the manufacture of products for specific applications are practiced in Adidas. For example, the company embarks on the production of technologically advanced products such as the proposed ‘smart shoe’, which is developed based on the response that the development of similar products by Nike has had on its markets.

Purchasing Approaches

The organizations that Adidas serves are highly centralized and financially dominated. The organizations include outlets and large holding companies. The companies served are those that have strong relationships with Adidas, with all the purchasing policies such as leasing, contracting, and systems purchase being applied.

Adidas markets itself as a quality company whose policies include service to companies that seek the provision of quality products. The promotion of performance gear brands has been established as a way of reaching the youthful cohort that is more energetic compared to the grown-up folks.

Comparison

Similarities

The use of demographic segmentation is the most evident strategy in both Nike and Adidas. These companies have applied age as one of the demographics in their marketing (Quinn, & Dibb, 2010). Both companies market their products to the young generation, with a significant proportion of their sales taking place. Both companies have the American market as the prime target in many commercials.

These two companies have similar strategies in the use of personal characteristics and situational factors in their market segmentation strategy. In the use of personal characteristics as a factor in marketing segmentation, the companies have targeted the young by adopting technology as an important component in their products. The companies sell to other companies and individuals with similar values such as risk taking and/or one who show significant loyalty to suppliers.

The companies are also recognized as sponsors of the major sporting events in the world, with an example being the FIFA World Cup and the Olympics. They have several teams and sporting personalities under their sponsorship such as Ronaldo to ensure that they are able to compete with each other as they try to remain on top of the competition. Both companies have targeted the sports industry as their main market.

Both have applied market segmentation in this sector especially in soccer and basketball sports. For example, they have embarked on producing BB II High-Performance basketball footwear, which is a contemporary design for the modern sportsman, combining lightweight materials with more durable ones to ensure the best guarantee for their customers.

Differences

The two companies have a difference in their market segmentation in that when Nike applies the geographic segmentation to enter the developing markets in other parts of the world, Adidas focuses on the United States’ markets to improve its sales in the sports shoes sector.

Some of the markets that Nike has targeted include South America and the developing nations of Africa. On the other hand, Adidas has only started to approach and consolidate these markets. Nike is also known to apply contracts in the sales and purchase of its products, as opposed to Adidas that mostly applies leasing.

Conclusion and Recommendations

Market segmentation allows companies to group their markets into appropriate segments so that they are able to target them with specific measures that are aimed at improving their competitiveness and profit returns. Nike and Adidas have applied a number of strategies in their market segmentation.

However, Adidas has been slower in the implementation of measures to attract the specific targets, as evidenced in its market share, which is second to Nike. Some of the recommendations for these companies include that they should segment their markets more by targeting submarkets such as distance runners. They should also ensure that they put more measures to keep up with the latest trends in the fashion industry by providing products that match the trend.

Reference List

Adidas Industries. (2011, November). Ch. 8 Segmenting and Targeting Markets. Web.

Carbasho, T. (2010). Nike. Santa Barbara, Calif: Greenwood.

Choi, J., Jungwoo, S., & Jongsu, L. (2013). Strategic management of new products: Ex-ante simulation and market segmentation. International Journal of Market Research, 55(2), 289-314.

Larson, D. (2011). Global Brand Management – Nike’s Global Brand.ISM Journal of International Business, 1(3), 1-14.

Levin, A., & Behrens, J. (2003). From Swoosh to Swoon: Linguistic Analysis of Nike’s Changing Image. Business Communication Quarterly, 66(3), 52-65.

Nunez, D. (2012). Nike Inc.: Ch. 8 – Segmenting and Targeting Markets. Web.

Quinn, L. (2009). Market segmentation in managerial practice: a qualitative examination. Journal of Marketing Management, 25 (3/4), 253-272.

Quinn, L., & Dibb, S. (2010). Evaluating market-segmentation research priorities: Targeting re-emancipation. Journal of Marketing Management, 26(13/14), 1239-1255.

Introduction

Different business models are implemented to enhance the productivity of a working process. Two famous companies, Nike, Inc. and Adidas Group, serve as examples of successful performance. Nike is an American multinational corporation that designs and produces sports clothes, athletic footwear and accessories. Adidas is Nike’s main competitor from Germany. These global giants are widely available on the Saudi Arabian market and make a profit over $50 billion a year (Mahdi, Abbas, Mazar, & George, 2015). Their management methods have certain similarities and differences. The purpose of this paper is to discuss business models of Nike, Inc. and Adidas Group in order to make a comparison analysis.

Competitive Advantages

Both Nike and Adidas produce athletic shoes. These companies shifted production to other countries like China, Indonesia and Thailand. These countries are distinct due to the low wage level. Hence, Nike and Adidas are able to relocate their manufactures really fast. For example, Nike sneakers are produced in Vietnam, and one of the main suppliers of Adidas is Cambodia. However, these companies have other competitive advantages.

A vast endorsement campaign that involved many famous sportsman and artists made Nike more popular than Adidas. Due to the engaging different basketball stars, its products are widely distributed in the North America. Also, Nike has recently become highly popular throughout the rest of the world. On the other hand, Adidas cornered the European market as it produces an excellent outfit for soccer and tennis players. In addition, Adidas is expanded worldwide like Nike.

Another advantage of Adidas is price. Overall Adidas’s prices are lower than the competitor’s. However, Nike employs another pricing strategy. This company targets high-income people. Hence, that well-designed scheme makes Nike very competitive.

Sales Trends

Nike’s sales have risen for the last several years. The profit of Nike in 2015 has increased to 31.34B, comparing to previous years 27,8B and 25,3B in 2014 and 2013 respectively (Brohi, Prithiani, Abbas, Bhutto, & Chawla, 2016). The thorough analysis of these figures forecasts the expansion of the business in new countries as it may have 10-11% increment in sales. However, Adidas was successful as well.

The stock got higher more than 65% in the past 12 months and sales have increased by 20% in the most important regions, such as North America, Western Europe and China (“Outlook,” 2017). The company expects an increase in sales at a rate between 11% and 13%. The gross margin should increase up to 49,1% (“Outlook,” 2017). However, US dollar hedging rates will hinder the gross margin from the development.

The Sales Management Process

All sales in these companies are supervised and controlled by sales-management. Sales-managers establish an effective system and control the stability of a working process. It involves comprehensive analysis and a person-selling strategy. This type of management requires the implementation of organizational techniques that ensure sales operations. Generally speaking, sales-managers plan, guide and control work of their subordinates. Hence, a sales-management process is made up of several activities.

Planning is necessary to predict negative and positive outcomes. A successful plan is based on the market monitoring. It is always focused on a specific product. It is highly important to discuss all issues with other executives that involved in the plan implementation. Coordination ensures the productivity of a working process. A sales-manager always controls the work of every department and enhances the interaction among them. Motivating is a prominent component of sales-management. Cultivating the team spirit and inspiring subordinates increase the productivity of an entire organization as stimulated sales-persons accomplish better results.

The Salesforce Organizational Structure

These companies have complicated and well-designed salesforce organizational structures that enhance abilities of departments and their interaction (Mahdi et al., 2015). Such organization helps to deal with dysfunctions among regional markets. Divisions are based on geographic locations. However, corporate managers implement leadership programs. It assists in passing on key messages to semi-autonomous departments. These departments aim to monitor and meet demands of regional markets. Optimization of companies’ strategies is their main purpose (Kumar, 2017). A strict hierarchical structure serves to keep a dynamic and fast-changing working process in order and properly distribute roles.

The Process of Customer Service

Customer service is a prominent component of a successfully performing business. Customer service is organized in a similar way in both Nike and Adidas companies and “it aims to maximize the sales by analyzing, planning, implementing and controlling Salesforce activities” (Mahdi et al., 2015). It is necessary to highlight the main principles of an efficient customer service. These are collaboration and community management.

These principles create a system that supports and collaborates with different communities. It requires constructive discussion ensured via call centers, the comprehensive evaluation of a situation and feedback management (Jahanshani, Hajizadeh, Mirdhamadi, Nawaser, & Khaksar, 2014). These processes are integral to a customer service framework and work in an interdependent manner.

Conclusion

In conclusion, these two companies employ similar techniques but target a different audience. It is the main factor that determines their unique ways. The described above processes establish comprehensive and interrelate concepts. However, they require constant control and supervision. Figures illustrate the effectiveness of collaboration of departments that perform in different regions. Therefore, by creating competitive challenges to each other, these corporations contribute to the development and prosperity of sportswear industry.

References

Brohi, H., Prithiani, J., Abbas, Z., Bhutto, A. H., & Chawla, S. K. (2016). Strategic marketing plan of Nike. Web.

Jahanshani, A. A., Hajizadeh, G. M. A., Mirdhamadi, S. A., Nawaser, K., & Khaksar, S. M. S. (2014). Study the effects of customer service and product quality on customer satisfaction and loyalty. International Journal of Humanities and Social Science, 1(7), 253-260.

Kumar, A. (2017). Suggesting measurable outcomes via studying sale trends & range of season SS16, FW16 & SS17 for brand originals. Web.

Mahdi, A., Abbas, M., Mazar, T. I., & George, S. A. (2015). A comparative analysis of strategies and business models of Nike, Inc. and Adidas Group with special reference to competitive advantage in the context of a dynamic and competitive environment. International Journal of Business Management and Economic Research, 6(3), 167-177.

Outlook. (2017). Web.

Abstract

A firm’s internal and external environment determines its competitiveness in its industry. An environmental scan can help a company assess its strengths and weaknesses as well as identify growth opportunities and mitigate business risks. The information gathered can help a firm in strategic planning, which will translate to improved performance and profitability.

In the wake of globalization, firms experience stiffer competition than ever before. Thus, an effective business strategy helps a firm gain a competitive edge over its rivals in the industry. In this paper, an environmental scan of the two companies operating in the sports footwear and apparel industry is presented. The two firms, Nike and Adidas, have different internal and external environmental factors. The external and internal factors are analyzed using PESTEL and SWOT analysis.

Additionally, the two firms’ business strategies are analyzed to determine their effectiveness. An assessment of the measurement guidelines used by each firm is also given.

Introduction

Environmental scanning plays a crucial role in corporate strategic planning. It helps an organization identify external opportunities and threats as well as internal strengths and weaknesses that may affect its competitiveness. The sports footwear industry is a highly competitive industry globally. The key players employ different marketing strategies to compete effectively in this market. This paper gives an environmental scan of three sports apparel firms Nike and Adidas and analyzes the strategies they use to maintain a competitive position in the sports apparel and shoe industry.

Internal and External Environments Nike, Inc.

Internal Environment

Strengths

Human resources – Nike, Inc., over the years, has accumulated specialized skills and competencies in its employees. The firm attracts talented and experienced people who can drive innovation and growth.

Financial resources – Nike also has sufficient financial resources in terms of credit lines, assets, liquidity, and other sources of revenue. Its revenue in 2010 rose by $19.2 billion, with the footwear segment representing 53.7 percent of the sales (Nike, Inc., 2013).

Tangible resources – Nike owns several shoe lines, retail stores, factories, and equipment. Besides its footwear products, Nike produces sports apparel that accounts for 27 percent of its revenue (Nike, Inc., 2013).

Logistics – Nike has 143 retail stores in different locations worldwide. Products manufactured in the factory are shipped to these distribution centers. Nike’s logistics department collaborates with local consolidators to facilitate shipping and manage the company’s supply chains.

Weaknesses

Supply chain management – Due to a large number of products shipped to different markets, it is difficult to maintain efficient supply chains. Rivals can obtain information about Nike’s inventory levels and use it for marketing their products to the consumers.

Shipping expenses – Nike incurs high transportation costs, import duties, and tariffs, which reduce its profits.

External Environment

Economical – The 2007 economic downturn affected consumer spending in the US, as many people lost their jobs. The job losses reduced per capita income, which affected the purchase of goods, such as footwear, that are ranked high in Maslow’s hierarchy. The fluctuation of the exchange value of the dollar also affects Nike’s profitability.

Social – The US population is diverse in terms of age, race, and ethnicity. Nike makes tailor-made products for particular demographics based on their needs and preferences.

Political – The American textile industry, which is Nike’s sole source of raw materials, has been affected by certain political actions. Laws restricting the export of raw materials reduce the number of products Nike can ship out of the country.

Legal – Court battles regarding patent infringement often lead to huge financial losses. The cost of obtaining international patents is also prohibitive.

Technological – Footwear companies, including Nike, have invested in research and development to develop innovative sneakers and apparel for athletes.

Adidas Group

Internal Environment

Strengths

Strong brands – The firm produces trusted brands such as Reebok shoe products for athletes and other consumers. Currently, it has over 2,200 retail stores that sell its top brands globally (Adidas Group, 2013).

Improved performance – Football tournaments, such as the 2010 FIFA soccer tournament, contribute to the firm’s strong performance. The firm’s revenue from its sales during the 2010 event stood at $2.2 billion compared to $1.8 billion earned the previous year (Adidas Group, 2013).

Weaknesses

Third-party agents – Adidas relies on third-party firms in Asia for over 90 percent of its production (Adidas Group, 2013). This affects product quality, as the firm cannot regulate overseas production.

The decline in demand – Adidas’ revenue in the Asian market decreased by 15% in 2010 due to a drop in consumer demand (Adidas Group, 2013). This has affected the company’s performance.

Opportunities

Endorsements and sponsorships – Agreements between Adidas and sports organizations, such as UEFA, will enhance the firm’s performance and profitability.

Reebok’s acquisition – Adidas acquired Reebok in 2007. Reebok has begun to show signs of recovery with products like ‘EasyTone’ that enjoys a market share of over 40 percent (Banham, 2006).

Threats

Exchange rate variations – Adidas operates in different markets globally. Its revenue may be affected by the fluctuations in exchange rates.

Stiff competition – Adidas’ business rivals in the sports footwear industry are many. Puma’s and Nike’s innovative products could give stiff competition to Adidas’ brands and reduce the company’s earnings.

External Environment

• Political – Political upheavals in the nation that Adidas operates in will affect its profitability. Additionally, regulatory policies and import duties can affect the shipment of raw materials to overseas plants.
• Economic – Globalization, unstable interest rates, and inflation can affect people’s income and spending. This affects Adidas’ performance.
• Social factors – Adidas produces products for people of different demographics. Its products are tailor-made for people of different social attributes.
• Technological – Customers can purchase Adidas’ products online. The company also advertises its products using online media channels.
• Environmental – Adidas monitors its emissions that may cause climate change. It runs programs such as the ‘Better Place’ project that produces environmentally friendly products.
• Legal – Adidas risks lawsuits related to patent infringement in the sports industry. To avoid legal battles, the company must ensure that it complies with the legal requirements relating to designs and product names.

The Firms’ Competitive Advantages

Nike utilizes target marketing to differentiate its products and gain a competitive edge over its rivals in the industry. Nike’s clients can customize their sports footwear and apparel through the company’s website (Nike, Inc., 2013). This product differentiation strategy is lacking in Adidas.

Nike also invests in technology to produce items like the ‘Nike+’ shoes. It collaborates with the technology giant, Apple, to develop innovative products. Nike prides itself on brand quality, innovation, and competitive prices for its products. Its marketing strategy involves high-achieving athletes, teams, and coaches to create a strong brand image.

On the other hand, Adidas’ competitive advantage is its use of differential pricing strategy. Adidas’ products are priced based on the target market characteristics. The firm uses “low prices and market skimming tactics” to penetrate its target market (Banham, 2006, Para. 4). Regular appraisal of its prices enhances the competitiveness of its products in the market. Moreover, the firm’s promotional strategy is unparalleled in the industry. It includes collaborations with international sports bodies like FIFA and UEFA.

The Firm’s Business Strategies

Adidas and Nike employ different business strategies to create value and sustain a strong competitive advantage. Nike uses a number of business strategies to maintain its leading position in the market. It has better product differentiation than Adidas. Its products range from football, gym, and basketball apparel and shoes. Nike also invests in technology, which ensures that its products meet the needs of its customers. Nike also uses high profile endorsements from renowned athletes and players to enhance its reputation.

Adidas’ business strategies include investments in promotional campaigns, flexible supply chain, innovation, and broad product range. Its acquisition of Reebok, which is a renowned brand in the US, was a major breakthrough that promises to enhance its business growth. Reebok’s fitness technologies, including the ‘Step Reebok,’ will help Adidas maintain a sustainable competitive advantage.

The Firms’ Measurement Guidelines

To measures the effectiveness of its business strategy through its manufacturing and sourcing standards. It has a sustainability index that evaluates its different plants based on “quality, cost, and on-time delivery” (Nike, Inc., 2013, Para. 6).

Nike also works with its supply chain agents to ensure its manufacturing model and product quality standards are adhered to. Through its sustainability index, Nike ensures that its manufacturing initiatives are implemented in its production plants. On the other hand, Adidas’ measures its promotional strategy by monitoring its marketing activities during sports events like the London 2012 Olympic Games. It monitors social media users’ views, likes, and comments to determine whether its business objectives are met, and the expected ROI is achieved.

The Effectiveness of the Measurement Guidelines

Nike’s sustainability index helps the firm measure the cost-effectiveness of its innovations. In 2012, Nike implemented the ‘Flynit’ technology to make footwear. Using the sustainability index, the firm established that the technology made cost savings of up to 80 percent in the 2013 financial year (Nike, Inc., 2013). This indicates that Nike’s measurement technique is effective. Adidas’ ROI measurement approach may be effective because social media comments and views do not translate into actual sales.

References

Adidas Group. (2013). Adidas Group Annual Report. Web.

Banham, M. (2006). Media Week Online: Adidas and Reebok set to merge £200m Global Media Spend. Web.

Nike, Inc. (2013). Our Sustainability Strategy. Web.