Executive Summary
This paper elucidates about the world’s 2nd largest sportswear manufacturer – Adidas. It first offers a brief introduction to the brand, its history, and existing market position. It further offers details about the background and target market of Adidas. The next section elucidates about the strengths, weaknesses, opportunities and threats associated with the brand. Afterwards, brand structure and brand architecture of Adidas have been discussed. Lastly, it offers some strategic recommendations that can be potentially used by Adidas to enhance its brand performance.
Introduction
Adidas AG is the 2nd largest sportswear manufacturers across the globe after Nike. It is also the largest manufacturer in Europe. Adidas AG is a Germany-based multinational corporation based in Herzogenaurach - Bavaria, which manufactures and designs sports shoes, accessories, and clothing. Adidas was founded by Adolf Dassler in 1949 in Germany as a clothing and shoe design manufacturer. It is a globally recognized public incorporation with more than 46,000 employees in its 170 subsidiaries across the world. Rudolf Dassler, who was the elder brother of Adolf founded the Gebrüder Dassler Schuhfabrik (Dassler Brother Shoe Company) in 1924. However, following the World War II as a family feud, Rudolf established Puma. Later, Adolf Dassler founded Adidas that quickly became a considerable competitor of Puma and has now superseded it. Adidas brand name is adequately uncapitalized with small ‘a’. The corporate logo, as well as, all the shoes and clothing designs typically feature the three parallel bars insignia, which represents Adidas.
Organizational Background &Target Market of Adidas
Adidas has an extensive and diverse target market. It targets both males and females between the age group of 13 to 40, as well as, people who are sporty, athletes or simply want to stay active by undertaking sport activities like cricket, football, swimming, running, snowboarding etc. Adidas employed differentiate targeting approach to target adults, young adults, and children who are passionate about sports and fitness. Although it targets the individuals of 13-40 years of age; however, most of its customers are between the ages of 15 to 30 years, and come from luxury to middle class. Comprehensive targeting of audience enables Adidas to distinctively recognize the needs and requirement of every individual market segment and delivering the product that is closest to the customer expectations (Balmer & Greyser, 2003).
SWOT Analysis
Strengths
Adidas has a strong heritage and legacy with remarkable global identity. The brand has come a long way to be recognized as the favorite sports brands
Adidas has a diverse brand portfolio which involves an extensive array of footwear and sports accessories that precisely target distinctive audience e.g. Reebok offers the mediocre range; whereas, Adidas is for the premium segment.
Adidas has developed strong branding through various touch points such as celebrity endorsement and sponsored sports events, as well as, organizations such as UEFA, FIFA, Olympics and NBA that significantly contributes in generating sales by targeting a huge customer base.
The organization has a strong financial position with more than 2400 outlets across the globe (Schultz & De Chernatony, 2002).
Weaknesses
Products are highly priced due to the incorporation of expensive production methods and innovative technologies that have made Adidas products affordable to a limited group of buyers, particularly in the developed markets.
The recently assimilated brands of Reebok has got just two brands within their group; however, they have deep categories within brands. Therefore, there is a lack of deepening product line with a scope of product expansion (Knox & Bickerton, 2003).
Opportunities
Adidas has a great opportunity to enter into the new market and this also tends to be the only way to stay competitive and successful in the future.
With the market saturation in developed countries, the rise in demand for premium products, changing preferences, tastes and lifestyles of consumers, there are great future business opportunities to expand in emerging market of developing economies.
Adidas has a great opportunity to expand the Reebok Product line (Peterson, 2015).
Threats
Adidas is facing intense competition from brands like Nike, Puma and other local players, as well as, replica products that are hurting its revenues.
Adidas needs to strive harder to steal the market share from Nike that is leading the market with the lion’s share.
Adidas Brands Structure
Adidas brand structure is mainly classified into two types of brands i.e. Adidas Corporate Brand and Adidas Master Brand. Adidas Corporate Brands are further divided into three categories, which include Reebok, Adidas, and Runtastic. Whereas, the Adidas is further divided into several product lines such as Adidas originals, adidas®, Stella McCartney, Porche Design Sports and Adidas NEO. Master brands are divided into CCM, TaylorMade, and Five Ten. TaylorMade is classified into sub-brands including Adams Golf, Ashworth etc. This extensive brand structure of Adidas shows that it precisely target the demands and requirement of every particular audience.
Adidas Brand Architecture
The brand architecture of Adidas comprises of six Cs i.e. Culture, Character, Communication, Covenant, Constituencies and Conceptualization. Culture represents the remarkable organization culture that incorporates the values like diversity, high performance, passion, inspiration, commitment, and creativity. The character represents the brand persona of Adidas, which infuses the eccentricity of being the most competitive brand with a diverse portfolio, high level of innovation, constantly improving design quality, and staring brand heritage. Communication focuses on continuously enhancing the internal and external organizational communication with all the stakeholders, attaining superlative financial outcome, and enhancing business sustainability to become a global brand. Covenant reflects the Adidas pledge to be the first global leaders in sports while exploring the emerging markets and creating the new opportunities for future advancements.
Similarly, Constituencies reflect the approach of Adidas to develop shared learning among all its subsidiaries, communities, and other counterparts to enhance customer loyalty, developing stronger communities while respecting and valuing their distinctive cultures. Lastly, Conceptualization reflects the fundamental notion behind Adidas, which echoes the ideas of being in the rundown of Global 100 and being the top employer of choice while maintaining successful partnerships and utilizing the Adidas funds optimally (Aaker & Joachimsthaler, 2000).
Adidas Brand Challenge
Adidas is encountering several challenges including intense competition from market rivals. This requires Adidas to consistently bring in competitive advantage in order to compete with its biggest competitor Nike that has outpaced Adidas. It is also required to optimally utilize its marketing budget to enhance customer loyalty and engagement in relation to its competitors. Adidas is also obligated to be the love mark for their audience (Balmer & Greyser, 2006).
Strategic Recommendations
Adidas should create the competitive advantage to be distinguished and unique. It should enhance the level of creativity and innovation in order to gain a competitive edge.
Adidas should progressively engage with the modern style and preferences of new generation by developing branding themes (Aaker, 1996).
Adidas should also increasingly focus on enhancing its online shopping experience to engross modern technological means.
Adidas should also focus on the particular target audience to precisely focus on apt markets.
Adidas needs to build a strong relationship with its potential and existing customers by incorporating innovating modern communication plan (Adidas Group, 2015).
Conclusion
The above discussion concludes that Adidas is one of the finest leaders in the business World with string heritage and legacy, defined product portfolio, and established base of customers. However, the brand is consistently experiencing many challenges that tend to affect its brand performance. Adidas is recommended to work on some strategic alternatives that tend to enhance its competitiveness and market performance while helping it to be the most successful global sportswear manufacturer.
References
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Peterson, H. (2015). Adidas in a trouble. Available: http://uk.businessinsider.com/heres-where-adidas-went-wrong-2015-3?r=US&IR=T. Retrieved on March 15, 2016
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