Factors Affecting Marketing Strategy

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Table of Contents

Introduction
Market Analysis
The Marketing Environment
Targeted Market
Conclusion
References

Introduction

Marketing strategy is basically incorporation of strategic way of thinking in the field of marketing. It is the process that enables an organization to focus its resources to greater opportunities to enhance sales and attain competitive advantage (Cravens & Piercy, 2006, p. 6).

Marketing strategies are normally based on the concept of consumer satisfaction. Marketing strategy is most effective when it is integrated into the business strategy. In such case, it defines how the organization engages with its customers, makes plans and handles its competitors (Cravens & Piercy, 2006, p. 8).

Given the fact that customers are the major source of the companys income, marketing strategy is highly linked to sales. The main aim of marketing strategy is to align marketing with business goals and objectives (Kriemadis & Terzoudis, 2007, p. 30).

Marketing strategy also acts as a foundation for the marketing plan and vice versa. Marketing strategy entails a set of action that enhances marketing plan. For that reason, marketing strategy is the foundation of marketing plan intended to satisfy market needs and accomplish marketing goals (McDonald, 2002, p. 13).

In most cases the marketing strategy combines business goals, policies and activities into one. Marketing strategy thus acts as the reference point for all the marketing activities within an organization (Cravens & Piercy, 2006, p. 10).

The aim of this paper is to develop a marketing checklist for Adidas Company that would focus on corporate or organizational capability, competition, target markets and business environment.

Marketing checklist is meant to provide direction for the business managers on factors to consider when formulating and implementing marketing strategy.

The marketing checklist also helps to enhance the current marketing activities and to establish prospective opportunities. The checklist is also meant to help the company to effectively service the requirements of the target market.

Market Analysis

Global Sporting Apparel and Footwear Market

The competitors of Adidas company are spread all over the world. The price margin between these companies is small and consumers can switch to different products with ease (Kriemadis & Terzoudis 2007, p. 32).

Athletic footwear being the most premium products, 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 to large multinational companies dealing with similar products, for instance, Puma and Nike, competition also come from local companies found in different market segments.

Three quarters 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 massive economies of scale are a major barrier for new entrants into the industry. Entering this market calls for enormous capital investment for developing and promoting a highly innovative product (McDonald 2002, p. 3).

In addition, most consumers are looking to buy high quality products from reputable companies with already strong brand names.

Creation of a 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 (Kriemadis & Terzoudis 2007, p. 29).

Consumers possess the bargaining power and can always switch to rival products when forced to. As a result, 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 and as a consequence consumers have higher bargaining power because they are not tied to specific products (Claycomb, Germain &Droge 2000, p. 221).

Competitive Environment

Competitive business environment refers to the number and type of competitors within the industry (Salicru, 2010, p. 5). Competition varies from one market segment to another and therefore it is the responsibility of the marketing managers to formulate suitable marketing strategies for each segment (Keegan, 2002, p. 70).

In addition to other factors, high competition in the market complicates the matters in the business environment. Businesses under such conditions normally face high uncertainty and advanced marketing strategies (Salicru, 2010, p. 5).

The biggest rival of Adidas is Nike, which controls a third of the global market in sportswear, considerably higher than Adidas. In addition, there are other smaller competitors found in different corners of the world. In Asia we have Li Ning which is Chinas largest sports shoe company.

All these companies 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). The Adidas group uses numerous marketing strategies to place its products into the global market.

Its target market includes big events such as the Olympic Games, EUFA Champions Leagues and FIFA World Cups. One of the strategy used by the company to reach its target market include 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 Marketing Environment

Successful businesses are those that have adapted to their surrounding environment. Organizational contact with the environment squarely lies within the marketing domain and the development of suitable marketing strategies (Kotler & Armstrong, 2001, p. 25).

Over the past twenty years, most business literatures have paid a lot of attention in the area of marketing strategy. The reason behind the growing interest is mainly attributed to the remarkable transformation in the business environment (both internal and external environments).

Nonetheless, literatures in strategic management and strategic marketing focus on the external business environment (Cravens & Piercy, 2006, p. 8).

Social Environment

Social environment encompasses the trends and demographic factors in the target market, for instance, societal attitudes or demographic shifts that can either have a negative or positive impact on the marketing strategy.

An example of demographic shifts is the education levels in the Asian Market which have forced the company to spend more money on staff training and promotional activities. The high population in China and Indian has led to more focus in the Asian market (Kriemadis & Terzoudis 2007, p. 33).

The increasing passion for sports has led to re-branding of Adidas products. Adidas has benefited massively from its efforts to re-brand its products to the 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. Re-branding has made Adidas gain immense inroad with the female consumers.

The majority of the female consumers desire products that powerfully incorporate fashion, comfort and functionality. Female consumers have always remained untapped market segment (Claycomb, Germain &Droge, 2000, p. 22).

Economic and Political Environment

Economic environment refers to the overall economic state and condition of a given state or region. The general state and condition of the economy normally have considerable impact on the companys decision making process (Salicru, 2010, p. 12).

Countries/ regions with the sound economic condition and high consumer purchasing power generally attract a high number of investors. This does not mean that companies do not venture into areas which are unhealthy economic-wise and have lower consumer purchasing power.

Adidas group has been able to develop products that suits different market segments (Salicru, 2010, p. 14).

Understanding the political environment of the targeted market is very important especially for companies venturing into foreign markets. Political environment encompasses government policies and regulations that could have a positive and negative impact on the marketing strategies (Chaneta, 2002, p. 23).

Being a multinational company, Adidas has also entered into agreements and negotiations with different governments in matters related to laws and regulations (Dibb, Farhangmehr & Simkin, 2001. P. 409).

Technological Environment

Technological environment comprises of computers and computer systems used to manage businesses today and the infrastructure that supports these systems and processes (De Mooij, 2005, p. 101).

Changes in technology enhance the vibrancy and intricacy of the business environment (Cravens & Piercy, 2006, p. 33), which increases the complexity of marketing strategy developed by businesses (Chaneta, 2002, p. 24).

Adidas Company has a strong reputation for incorporating technology on its product line. The company is planning to build on this reputation by introducing new product lines that incorporate advanced technology to improve the performance of athletes.

For instance, introducing athlete shoes with embedded microprocessor to monitor, measure and provide data on the athletes body, terrain and body impact. 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 maintain its technological prowess in the global market (Kriemadis & Terzoudis, 2007, p. 33; Dibb Farhangmehr & Simkin, 2001. P. 411).

Internal Environment

Internal business environment refers to internal conditions that have considerable impact on the decision-making process and general well-being of the business (Salicru, 2010, p. 6). Internal environment includes organization culture, staff commitment and competence, and internal control and evaluation mechanism (Chaneta, 2002, p. 28).

Organizational culture could positively or negatively impact the formulation and implementation of the marketing strategy. This depends on the compatibility of the organizational culture with the environment.

Innovative culture in Adidas Company has facilitated the formulation of credible strategies and smooth implementation of marketing strategies (Keegan, 2002, p. 77; Kriemadis & Terzoudis 2007, p. 32).

The company is well endowed with analytically competent staff. These employees are capable of analysing problems and opportunities and coming up with remedies and strategies for the same (Pulendran, Speed, & Widing, 2003, p. 479).

They are also able to use a number of analytical and marketing tools such as SWOT analysis, Ansoff matrix and product Lifecycle analysis among others. Analytical competency not only enhances the role of staff in strategic marketing but also increases the companys autonomy (Salicru, 2010, p. 9).

The companys employees are also loyal and highly committed and always put more effort during the formulation and implementation of the marketing strategies. Increased staff commitment ensures effective assessment and management of the marketing strategy (Huczynski & Buchanan, 2007, p. 7).

Strategy evaluation and monitoring process is very important because of the constant changes in the market and consumer preferences. Hence, efficient evaluation and monitoring process put in place by the company positively impacts marketing strategy (Keegan, 2002, p. 19).

Corporate Capability

Numerous studies have been carried out regarding the development of core competencies to improve the performance and competitive advantage of organizations. The resource-based theory of the firm emphasizes on both the tangible and intangible capabilities (Hall, 1993, p. 608).

Therefore, the main responsibility of any organization is to establish those capabilities that give its competitive advantage over its rivals. These capabilities are normally rare, intricate and implicit.

They are rare because they are not easy to copy, intricate because they are related to a number of factors that are linked to greater consumer value and implicit because they are permanently entrenched in the company (Johnson & Scholes, 1999, p. 5).

According to Hall (1993, p. 611), the main building block for any form of business strategy is a core competency. However, according to him, core competency is different from capability.

He defines core competence as the blend of technological entities and production expertise that forms the basis for all the products of any given company, for instance, the incorporation of technology (GPS tracking devise) in sportswear by Adidas company (Dibb, Farhangmehr & Simkin, 2001. P. 411).

Consider a company like Adidas which has moved from sporting footwear to global sporting apparel and footwear. Experts attribute the success of this company to its core competency in sportswear.

However, they argue that even though its core competency has significantly contributed to its success in the global sporting apparel and footwear industry, the success cannot be attributed to the underlying competence alone.

After all there are other well known companies, for instance, Nike and Puma which are successful designers and producers of sporting apparel and footwear. Hence, what gives the company a competitive edge over the competitors is its focus on capabilities (Stalk, Evans, & Shulman, 1992, p. 65; Dibb, Farhangmehr & Simkin, 2001. P. 411).

Some of the companys capabilities include incorporation of technology in its products and product realization which entails studying the needs of the market and providing products that meet those needs (Stalk, Evans, & Shulman, 1992, p. 66).

From the above example it is apparent that core competencies and capabilities are two different but complementary features of corporate strategy. They highlight the behavioural aspect of marketing strategy as opposed to the traditional structural dimension of marketing.

Therefore, both core competency and capabilities represent the universal model of corporate strategy (Vorhies & Harker, 2000, p. 155).

Targeted Market

Target market refers to the prospective customers of the companys goods and services. In other words, target market is the group of individuals and businesses that are targeted for sales and marketing (McDonald, 2002, p. 33; Lauren, 1999, p. 3).

Effective identification of the potential client base generally helps to identify marketing strategies that can be incorporated into the business plan. Once this group is identified the four Ps of marketing (that is price, product, place, and promotion) are applied to determine the best product or service that fits a particular market segment (De Mooij, 2005, p. 4).

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 achieved 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 which has enabled the Adidas to gain inroad among the Chinese Youths. Adidas is also collaborating with the local sports fraternity to increase interest in sports.

Initially, such gestures do not create a lot of buyers, but in the long-run it generates interest in sports and markets Adidas brands (Kriemadis & Terzoudis 2007, p. 34; McDonald 2002, p. 6).

Conclusion

Marketing strategy is a process through which companies can make best use of opportunities to enhance sales and attain sustainable competitive advantage using the available scarce resources. Marketing strategies are normally based on consumer satisfaction models and are more effective when integrated into the business strategy.

However, there are a number of factors that have significant impact on the formulation and implementation of marketing strategy. They include internal and external environment, corporate capabilities, targeted marketing, and the level of competition among others.

Corporate capabilities dictate the behavioural aspect of marketing strategies. Environmental factors and competition can either represent opportunities or a threat to the existing market strategies.

References

Andreasen, A.R., & Kotler, P. (2003). Strategic Marketing for Nonprofit Organizations. 6th ed. Englewood Cliffs, New Jersey: Prentice Hall

Chaneta, I. (2002). Environments That Affect Marketing Management. Journal of Comprehensive Research, 7, 20-28.

Claycomb, C., Germain, R., & Droge, C. (2000). The effects of formal strategic marketing planning on the industrial firms configuration, structure, exchange patterns and performance. Industrial Marketing Management, 29, 219-234.

Cravens, D.W., & Piercy, N.F. (2006) Strategic marketing (8th ed.). Boston: McGraw Hill.

De Mooij, M. (2005). Global Marketing and Advertising: Understanding Cultural Paradoxes. Thousand Oaks: Sage Publications.

Dibb, S., Farhangmehr, M. & Simkin, L. (2001). The marketing planning experience: UK and Portuguese comparison. Marketing Intelligence and Planning, 19 (6), 409-417.

Hall, R. (1993). A framework linking intangible resources and capabilities to sustainable competitive advantage. Strategic Management Journal, 14 (8), 60718.

Huczynski, A., &Buchanan, D. (2007). Organizational Behaviour: an introductory text (6th ed). Harlow: Pearson/Prentice Hall.

Johnson, G. & Scholes, K. (1999). Exploring Corporate Strategy. Hemel, Hempstead: Prentice Hall Europe.

Keegan, W.J. ( 2002). Global marketing management (7th ed.). New Jersey : Prentice Hall.

Kotler, P., & Armstrong, G. (1991). Principles of marketing. Englewood Cliffs, New Jersey: Prentice-Hall.

Kotler, P., & Armstrong, G. (2001). Principles of marketing (9th ed.). Eaglewood Cliffs, New Jersey :Printice Hall.

Kotler, P., & Armstrong, G. (2001). Principles of marketing (9th ed.) Eaglewood Cliffs, New Jersey: Printice Hall.

Kriemadis, T., & Terzoudis, C. (2007). Strategic Marketing Planning in the Sport Sector. Sport Management International Journal, 3(1), 27-45.

Lauren, L. (1999). Why is a target Market Analysis Important. Georgia: Georgia Southern University.

McDonald, M. H. B. (2002). Marketing Plans: How to Prepare them; How to Use Them (5th ed.). London: Prentice Hall.

Pulendran, S., Speed, R., & Widing, RE. (2003). Marketing planning, market orientation and business performance. European Journal of Marketing, 37(3), 476-497.

Salicru, S. (2010). The Process of Formulating and Implementing Market Strategy. San Francisco: Innovation Centre.

Stalk, G., Evans, P., & Shulman, L.E. (1992). Competing on Capabilities: The New Rules of Corporate Strategy. Harvard Business Review, 92209, 59-68.

Vorhies, D.W., & Harker, M. (2000). The capabilities and Performance Advantages of Market-Driven Firms: An Empirical Investigation. Australian Journal of Management, 25(2), 154-173.

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