Company: Tyson Foods (focus on the Brand)
STRATEGIC MARKETING PLAN PART 1 FORMAT
The strategic marketing plan should be written according to the following outline:
TITLE PAGE: To include student name as well as the company and product name.
TABLE of CONTENTS (Include the title of each section and sub-section and the page number)
SECTION 1: Company mission/vision/values or other indicators of a market driven organization
SECTION 2: Current marketing situation
Internal factors
External factors
SWOT Analysis
SUMMARY OF CURRENT SITUATION: emphasis on main conclusions, predictions and inferences drawn from analysis, not a repeat of facts presented in the data.
SECTION 3: TARGET MARKET: A full description of the market segment selected as the target market for the strategic marketing plan, why it represents a uniquely different market segment from other market segments and why it represents a growth opportunity for the company. Also discuss the positioning strategy to be used.
SECTION 4: STRATEGIC MARKETING PLAN OBJECTIVES: To include at least two strategic, quantifiable and time bound objectives for the product/market situational. The objectives must be SMART: Specific, Measurable, Attainable, Realistic, and Time-related.
REFERENCES: Be sure to include your references as well as your footnotes, as appropriate, using APA.
SUBMISSION GUIDELINES
All strategic marketing plans should be prepared in MS Word format using a 12-point typeface (Times New Roman), double spaced with no more than inch margins. There are no minimum or maximum page counts, but brevity is appreciated. Adequately address each section of the Marketing Plan; however, if Part 1 is longer than 20 pages, it should be reviewed to determine if all the material is necessary.
Please be sure to note the beginning number of each section and the name of each section in your strategic marketing plan.
Graphs and charts are excellent ways to present data and their use is encouraged as is the use of exhibits to provide additional information that does not necessarily belong in the main body of your marketing plan.
A number one reason why papers are marked down is that the content doesn’t make sense and the writing is sub par. You will be graded on composition and grammar as well as citations. Your facts won’t come from thin air, but a lot of that research work will already have been done in the individual writing assignment. Be sure it transfers to your marketing plan.
Refer to the grading rubric for specific grading guidelines and be sure to review it prior to submission to maximize your grade potential.
MRKT 495 Strategic Marketing Management
Competitive Analysis Worksheet
|
Company/Product Name (Ex. Ford/Focus) |
Criteria 1: Annual Revenue (Billion Dollars) |
Criteria 2: Sales Growth (%) |
Criteria 3: Number of Employees |
|
|
The Coca-Cola Company |
33 |
11.41 |
80k |
|
|
Mondelez International, Inc. |
26 |
2.76 |
79k |
|
|
Archer-Daniels-Midland Company |
64 |
0.47 |
39k |
|
|
Tyson Foods, Inc. |
47 |
8.95 |
141k |
|
Competitive Positions* |
Company/Product |
Basis for Position (e.g. product leadership, cost leadership, innovation, core competencies, etc.) |
|
Market Leader |
Strong operational capabilities: Archer-Daniels-Midland (ADM) forges every link in the food chain from field to processing to store. ADM also has a solid global transportation network (Hoovers, 2021). |
|
|
Market Challenger |
Global Customer base: Tyson Foods serves a strong and wide clientele ranging from wholesalers, retailers, restaurants and institutional customers such as schools and hospitals catering in more than 145 countries (Hoovers, 2021) |
|
|
Market Follower |
Billion Dollar Brands: Coca-Cola is a leading beverage company serving consumers worldwide. The company has over 500 brands in its portfolio comprising 21 billion-dollar brands, which strengthen and enable it to launch new products and facilitate its foray into new markets (Hoovers, 2021) |
|
|
Market Nicher |
Manufacturing Network: An efficient manufacturing network strengthens the company’s operational efficiency. It also helps the company gain operational synergy and enables it to efficiently serve its consumers (Hoovers, 2021) |
Notes:
Each criteria for your competitive analysis must be a quantifiable number found in a reputable source and documented in your report.
You should have one market leader, but other three companies/product can all be followers, or a combination of challengers/followers or nichers. Your basis should fully explain your choices and further detailed in your written report.
5
Competitive Analysis
Archer Daniels Linseed and Midland Linseed. In 1923, the company Archer Daniels Midland was created following a merger between two companies. Thus, this merger led to a diversification of the group in cereals, cocoa and specialized foods. The strong growth of Archer Daniels Midland began during the post-war period, from 1946. By 1949 it was the US’s leading processor of linseed oil and soybeans and was fourth in flour milling (SWOT Analysis, 2021).
Many industries rely on Archer Daniels Midland products. Indeed, there are sectors such as paint, leather, printing, gasoline, paper, cosmetics, pharmaceuticals, rubber, ceramics, and insecticides. The company operates in three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Agricultural services represent three-quarters of ADM revenues, carbohydrates’ solutions 15%, and the remaining nutrition. This high level of operational capabilities and diversification makes Archer Daniels Midland company a leader in the industry, and Strong manufacturing capabilities enable the company to effectively handle fluctuations in demand (SWOT Analysis, 2021).
Tyson Food, headquartered in Arkansas, is the world’s leading poultry producer, with 40 million chickens produced per week. The company has 141,000 employees worldwide. Tyson is a challenger because of its rapid expansion; the company is currently building six new chicken plants in Asia, they are also increasing production capabilities by 2% over the next two years (Hirtzer, 2021). Its customer base is another reason it is a strong challenger; Tyson Foods serves a solid and vast clientele ranging from wholesalers, retailers, restaurants and institutional customers such as schools and hospitals catering in more than 145 countries (SWOT Analysis, 2021).
Market followers
The Coca-Cola Company is the leader in manufacturing and selling non-alcoholic beverages. The firm performs three different types of activities. The sale of beverages represents the majority of its activity. Coca-Cola company offers several types of drinks such as sodas, fruit juices, syrups and tea drinks. These products are marketed under different brands such as Coca-Cola, Nestea, Minute-Maid and Sprite. The company distributes products in over 200 countries and territories through distributors, independent bottling partners, wholesalers, retailers, and its owned or controlled bottling and distribution operations to two billion customers per day (MarketLine Company Profile: The Coca-Cola Co., 2021). Considered the symbol of globalization par excellence, The majority of the world’s population recognizes the Coca-Cola brand. That is one of the company’s driving forces coupled with its aggressive acquisitions; Coca-Cola is a leading beverage company serving consumers worldwide. The company has over 500 brands in its portfolio, comprising 21 billion-dollar brands, which strengthen and enable it to launch new products and facilitate its foray into new markets (SWOT Analysis, 2021).
Mondelez is one of the major players in the international food industry, particularly in confectionery and chocolates. The American company was born in 1923, under the name of National Dairy Products Corporation. In 1930, the latter bought Kraft Phenix. It was not until 1969 that the company became KraftCo, then Kraft in 1976. In 1988, the Philip Morris group took over Kraft and integrated it into General Foods. In 2007, Kraft Foods split to become Mondelez International and Kraft Food Group. Mondelez is in a niche market, the confectionery industry, knowing a positive outlook; this is the driving force behind revenue growth. Strong growth in revenue helps the company gain investors’ confidence and increase its ability to allocate adequate funds for future growth prospects (SWOT Analysis, 2021). But its biggest strength is its manufacturing network; it also helps the company gain operational synergy and enables it to efficiently serve its consumers (SWOT Analysis, 2021).
Of the three non Leaders, I believe that Tysons is best positioned to gain additional market share. All four companies rely either on a solid distribution system, operational capabilities, acquisition or research and development. The most significant advantage that the market leader is in its impressive manufacturing capabilities; ADM has 450 crop procurement locations, more than 300 food and feed ingredient manufacturing plants and more than 60 innovation centers around the world (Spector, 2021). Tysons currently has strong operational capabilities focused on the protein market and a global customer base. Today, the company has a slew of meaty brands in addition to its own, including Jimmy Dean and Hillshire Farm. Tyson has 19 test kitchens and a 39,000-square-foot pilot plant (Spector, 2021). Tyson can gain significant market growth through expansion initiatives, strategic partnership, and diversification.
Hirtzer, M. (2021). Tyson Foods to Add Six Asian Chicken Plants in Global Expansion. Bloomberg.Com, N.PAG.
MarketLine Company Profile: The Coca-Cola Co. (2021). In Coca-Cola Company MarketLine Company Profile (pp. 1–72).
App-avention-com.ezproxy.umgc.edu. 2021. SWOT Analysis. [online] Available at:
Spector, N., 2021. The 10 Food and Beverage Companies Making the Most Money. [online] GOBankingRates. Available at:
Running head: STRATEGIC MARKETING PLAN GROUP PROJECT PART 1 & 2
Strategic Marketing Plan Group Project Part 1: Adidas Athletic Shoes
Shareen Cleary, Adeline Delorme, Shanese Francis, and Alexander Grzyb
University of Maryland University College
Professor: Cynthia Mable
Saturday, December 8, 2018
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Executive Summary
Adidas must look forward, not backward. The future holds an opportunity to make their
presence known even more than in recent years. Nike may be the industry leader, but Adidas has
room for improvement and an opportunity for growth. The athletic footwear industry is a
competitive market with voluminous branders. The market leader Nike should not become
complacent because in recent years Adidas is gaining market shares in the athletic footwear
industry.
Adidas has a balanced portfolio and is reaping the benefits of growth in Adidas Originals,
training apparel, and most importantly, core footwear. Adidas needs to embrace what’s recently
been a major source of strength for them. They have already relegated Under Armour to a distant
competitor. Now they encapsulate the status of being a market follower. There’s still more work
that needs to be done. That’s why Adidas is audacious enough to take on the endeavor of giving
of challenging Nike. This explains why Adidas aspires to increase their market share in North
America from 10 to 15 percent in the next 3 years, according to their North American brand
president Mark King (Low, 2018).
This could all be huge for Adidas and considering how opportunistic a company they are
and have been throughout their history. This is a huge opportunity and could behoove the
company. The main reason why is results. Adidas changed their vision and structure for the
company, starting in 2015, and now there are tangible results that speak for themselves. When
the numbers materialized, retail researcher NPD Group divulged that in May of 2017, Nike’s
share of the American footwear market dwindled from 35.9 percent to 34.7 percent. To
exacerbate matters for Nike, their subsidiary the Jordan brand, who mainly specializes in
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basketball shoes, saw their market share drop from 14.8 percent to
11
.8 percent over that same
timespan. This is especially impressive for Adidas when you juxtapose it how they fared during
the time period in the late 2000s through early 2010s. In fact, they saw their market share nearly
double from 6.3 percent to 11.3 percent (Roberts, 2017). These are the kinds of results that
Adidas had by undergoing a metamorphosis with their business and marketing model. They need
to perpetuate this ideal to continue to have results like this for the rest of the decade and beyond.
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Table of Contents
Section 1: Company mission/vision/values or other indicators of a market-driven
organization……………………………………………………………………………………………………………………1
Section 2: Current marketing situation……………………………………………………………………………2
……………………………………………………………………………………………….13
……………………………………………………………..15
…………………………………………………………………………………………..18
…………………………………………………………………………………………….23
…………………………………………………………………………………….25
……………………………………………………………..26
………………………………………………………………………………………30
……………………………………………………………………………………………..31
………………………………………………………………………………………33
………………………………………………………………………………………………………………………..36
…………………………………………………………………………………………………………………….39
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Running head: STRATEGIC MARKETING PLAN GROUP PROJECT PART 1
1
Section 1: Company mission/vision/values or other indicators of a market-driven
organization
Adidas was founded in 1924 as Dasslers Brothers Shoe Factory. Later they branched out
to Adidas in 1949. Adidas is well-known footwear worldwide. Adidas mission is to be the best
sports company in the world. In a sustainable way, they build and sell one of the best sports
products worldwide, and the best service and experience. Three strategic choices are made:
speed, cities, and open source.
Speed: how they deliver their products to consumers fast and desirable. Adidas aims to be
the true fastest company.
Cities: where they deliver their products, shapes consumer perception, trends, and buying
decisions. Six cities where Adidas wants to share their trends, mind, and market are
London, Los Angeles, New York, Paris, Shanghai, and Tokyo.
Open Source: how they create and collaborate and innovate. They aim to invite athletes,
consumers, and partners to co-create the future of sports (Adidas Group, 2018)
Adidas is very competitive in the footwear manufacturing industry. It is known for its
footwear, but also sell clothing and accessories. Adidas is the single biggest growth opportunity
in North America because its total share is 40%, which is the biggest market in the sporting
goods industry (Adidas Group, 2018). This is why Adidas will continue to focus and invest in the
U.S. market. It has annual revenue of $25.42 billion, having their biggest competitor as Nike.
Nike is the largest footwear manufacturer, and Adidas is right behind them as a strong competitor
based on company offerings, financial results, and business relationships.
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Section 2: Current marketing situation
Internal factors
Analysis of the company’s current offerings
Adidas is known in the sporting goods industry for having a portfolio of products
containing apparel, sports accessories, and footwear. In the global market, apparel and footwear
make up Adidas Group biggest segment with a shoe production in 2017 of 403 million globally
(Statista, 2017.) Adidas’ footwear has a wide range of shoes from athletic, running, casual shoes
and sandals. Athletic and running shoes cater both to the professional athlete, amateur athlete and
fitness enthusiasts. In addition to athletic footwear, Adidas is tapping into the casual athletic
footwear market which offers sporty shoes to consumers to be worn for regular everyday use and
fashion. Additionally, Adidas vies for consumers that are runners by developing technology in its
shoes that improve performance and comfort. The company has introduced a new line of shoes
known as AM4 which stands for “Adidas made for” and are running shoes that designed for the
specific needs of runners in different major cities (Amidst the Retail Apocalypse, 2018.) Whether
it is athletic or casual athletic footwear, the company understands the need for innovation,
performance, and attention to the consumer’s needs in all its products.
Analysis of financial results
Adidas footwear sales for 2017 reached $14.09 billion which was up from sales in 2016
of $11.49 billion (Adidas Annual Report, 2017.) See Exhibit 1 of past three years of footwear
sales from Adidas Annual Reports. Note profit financial information has not been able to be
located for the athletic footwear segment. Exhibit 1 contains sales only from past three years.
This growth is in part due to the expansion of sales in the market of North America and China. In
North America’s market, Adidas reported that sales were up 31% following other quarters which
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were in the high-twenties and low-thirties (Green, 2017.) Green contributes positive financial
results in recent quarters to the company’s ability to deliver what the consumer wants,
particularly in the running category of athletic shoes (2017.) Additionally, another footwear
category that is driving sales is Adidas casual athletic footwear which makes up 23% of market
shares of casual footwear (Roberts, 2017.) In the US athletic footwear market share, Adidas grew
from 6.3% in 2016 to 11.3% in 2017 (Roberts, 2017.) 2017’s strong financial and operational
performance has kept the company on track to increase profitability in local and global markets
in upcoming quarters.
Analysis of key business relationships
Adidas has achieved strong relationships through its partnership approach. These
partnerships include stakeholder engagement through representation and ongoing engagement;
collaborations with organizations that promote sustainable innovation, environmental conditions
of materials used and proper representation in sporting goods industry; government outreach in
regards to human rights and working conditions; civil society such as engagement with the
Greenpeace Detox Campaign to reduce hazardous chemicals in the supply chain and other
campaigns that impact human rights; and sporting events through a presence in major sports
(Adidas Partnership Approach, n.d.)
Adidas has a large presence in sports through sponsorships deals in the Football World
Cup, Olympic Games, sports teams, leagues, and colleges, and with such sports figures as James
Harden, Paul Pogba, and Aaron Rodgers. The 8-year partnership with USF Athletics and Adidas
formed in December 2017 is just one of the many sports partnerships that provide official athletic
footwear to men and women’s sports teams (Athletics Announces Partnership, 2017.) These
partnerships and sponsorships elevate the brand through reaching a core audience of sports
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enthused consumers by building brand passion, brand awareness, and engagement for Adidas as
it competes in a highly competitive market of the athletic footwear industry.
Adidas’ relationships with third-party retail partners is key to company sales. While
Adidas uses different distribution channels to sell its products, 70% of Adidas’ of its products
sold in 2017 were through third-party retail partners (Trentmann, 2018.) These retail partners
include Dick’s Sporting Goods Inc., Foot Locker Inc., and Amazon. These business relationships
are an important part of sales growth for the
company.
Lastly, another business relationship for the company comes through its supply chain and
sourcing with manufactures. Because Adidas outsources product production globally, the
company seeks long-term partnerships as part of its sourcing model. Managing outsourcing
relationships is critical to the development of the product, overall success, and growth of the
company.
Analysis of core competencies
Adidas has such core competencies as technology, consumer focus, and brand
recognition. Adidas provides products that bring the best footwear technology to its consumers.
The company introduced Boost foam in 2013 in its running shoe that provided runners with
support, durability, and energy return (Charboneau, 2018.) The Boost has been refined over the
years and Adidas continues with developing new designed techniques such as tailored fiber
placement with Solar Boost, an EVA foam Bounce, and an adaptive torsion system to bring about
the best performance for consumers in its products (Charboneau, 2018.) Such technology as
Adidas’ Boost foam started out in its running shoes but can now be found in other sports styles
including basketball and training as the ideal cushioning choice in athletic shoes. The
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development of these technologies is one way that Adidas improves the experience of its
consumers and leads into another core competency upheld which is customer focus.
A large part of Adidas’ mission is to be consumer-focused by offering products that meet
needs and expectations of its consumer. The innovation of products not only comes from the best
footwear technology but also through style, comfort, the quality that enables the company to
offer products with the highest value that meet consumer needs.
The last identified core competency of Adidas is brand recognition. Sport sponsorship
deals and championship support have contributed to building brand recognition. Other channels
including social media presence have built strong brand awareness. The company’s three-stripe
logo is ranked the number one most social media shared logo with an average of 6,664,170
unique images per month across such social media channels as Twitter and Instagram
(Brandwatch, 2018.) This heightens the company’s brand engagement while building brand
recognition.
Analysis of current customers
Adidas strives to make and offer sportswear that is accessible to all consumers. Current
customers include professional sports figures and sports teams, the amateur athlete, and the
consumer with a fitness lifestyle. Adidas athletic footwear customers include children, young
adults, and adults. While Adidas footwear has customers in all age groups, the company targets
an age range of males and females 13-40 years. However, customers in the 15-30 years of age
range have been identified to make up much of the company’s current customers. These
customers consist of upper & upper-middle class social groups. Current customers are influenced
by social acceptance, luxury, fashion and celebrity endorsements, product quality, product
innovation, and the latest trends in athletic footwear.
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Current customers purchase Adidas footwear through a variety of channels including e-
commerce and retail. With more consumers choosing online shopping, Adidas has closed
thousands of retail stores and turned to more online channels (Trentman, 2018.) Additionally,
communication and online interaction through social media channels are becoming a necessity as
this is becoming the customer’s preferred channel of communication.
Competitive Analysis
The athletic shoe industry is highly competitive with Nike leading the competition. Nike
exhibits higher annual footwear sales of $21.1 billion in 2017 (Ritcher, 2018) compared to
Adidas annual footwear sales in the same year of $14.09 billion (Adidas Annual Report, 2017.)
Nike also leads with more employees than Adidas and has a larger US athletic footwear market
share of 34.7% compared to Adidas market share of 11.3%. Even though Adidas has had a solid
performance in the industry it hasn’t reached being the leader in the market. But if there is a
company that is going to be a market challenger to Nike, Adidas has the greatest opportunity
when compared to Under Armour. Adidas has a strong lead in annual footwear sales over Under
Armour’s $1.0 billion annual sales (Richter, 2018) and its low US athletic footwear market share
of 2.4% (Roberts, 2017.) Adidas has a strong global presence and consistent association with
sports sponsorships which are competitive advantages to the brand in the athletic shoe industry.
See exhibit 2 for competitive analysis worksheet.
External factors
Demographic trends
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One of the demographic trends that affect Adidas the most is the rise of millennials. As of
2016, Millennials in the United States were nearing population numbers of Baby Boomers
(Cilluffo & Cohh, 2018.) This shift in the age demographic population can increase the number
of consumers that the company can reach. Companies need to adapt communication to reach its
consumers effectively and efficiently. Studies have shown that millennials are more engaged and
addicted users of apps than any other age bracket by spending an average of 3.2 hrs. per day on
apps (Soper, 2017.) The latest Adidas app was introduced in 2017 and brings personalization to
the customer through a personalized news feed, customer inquiries, and online shopping (Green,
2017.) The Adidas app is reaching an audience of users through a popular platform for
millennials with engagement features and integration of products and services.
Economic trends
Economic factors are important for growth and success of Adidas. Economic fluctuations
have an impact on a business because low economy results in loss of employment, which in turn
results in lower consumer buying, and effects the sales and growth of companies who sell
premium priced products. Adidas experienced a 97% drop in profits during the economic
downturn in 2009 (Adidas sees profits drop by 97%, 2009.) Economic growth works the
opposite resulting in an increase in employment, consumers spending, and more sales. Global
economic growth has seen its highest since 2011 reaching 3% and prospects of steady growth in
upcoming year (World Economic Situation and Prospects, 2018.) This economic growth has had
a part in Adidas’ sales growth as it markets goods to consumers in a stronger economy.
Environmental trends
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In the American market, 55% of Americans rank environmental protection as a top
priority (Anderson, 2017.) Because Adidas is a global company it has many sites and operational
impacts on the environment. The company is showing responsibility to the environment in
operations by dedication to such environmental issues as water efficiency, sustainable materials,
and reducing absolute energy consumption and CO2 emissions (Adidas Environmental Approach,
n.d.) A commitment to bettering the environment also can come in materials used in products.
An example of this would be the Parley Shoes which is made with Parley Ocean Plastic. The
knitted uppers of these shoes’ features upcycled waste of fishing nets and coastal area debris
converted into yarn fibers (Adidas Product Description, n.d.) Environmental factors and trends
need to be a focus for many global businesses as sustainability and environmental protection is
important to many consumers in this era.
Technological Trends
Technology trends affect many aspects of the business including marketing, operations,
customer service, and products. Technavio identifies three trends that will impact the athletic
footwear market the most. These include the demand for eco-friendly products, sole technology,
and customized products (Business Wire, 2016.) These factors are directed at products and
highly related to Adidas. In efforts to deliver what the consumer needs in products, Adidas must
be on top of the latest trends in technology. Examples include built-in sensors that track, and
sync gathered data to Adidas’ mobile app (Amidst the Retail Apocalypse, 2018.) Additionally,
broadening the channels of communications to stay connected with the consumer requires a
digital focus. Being digitally focused helps Adidas gain consumer attention, gather useful data,
and build consumer connections (Harvard Business Review, 2018.) Technology enables better
performance by Adidas which in turn results in growth for the company.
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Political-Legal/Regulatory Trends
Technology doesn’t come without regulations. Being a European based company, Adidas
is impacted by the General Data Protection Regulation (GDPR) enforced in Europe in May 2018.
According to the European Commission, this regulation will regulate a company’s processing of
personal data of individuals in the EU (What Does the GDPR Govern? n.d.) This would include
data processing Adidas may perform on personal data to send promotional communication and
other means of marketing to consumers through digital channels.
Government regulations, taxes, and trade relationships have an impact on businesses.
This is especially applicable for companies like Adidas that sources its products from contract
manufacturers in other countries. Adidas sources 97% of its products to manufacturers in Asia
and various factories globally (Trentmann, 2018.) In the US market, the company faces possible
tariffs on Chinese imports which has the potential to impact Adidas’ supply chain and business
operations.
Social-Cultural Trends
Being a global company with a mission to make footwear that directly meets the needs of
the consumer requires attention to social-cultural trends. In the athletic footwear industry,
identifying trends require a look at what consumers are searching for to meet their fitness needs.
The industry has identified trends in the running fitness segment to meet consumer needs
effectively. In some global markets, a trend on the rise is trail running with 72% of runners
preferring to run in nature (Angermeier, 2018.) Identifying this social trend will assist Adidas in
making running shoes that meet the specific needs and specs of trail runners.
SWOT Analysis
See exhibit 3 for SWOT chart.
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Strengths
1. Distribution Network-Fast supply chain and faster production times bringing fresh products to
their shelves faster. Distribution centers in China, Germany, and Pennsylvania, US create
seamless consumer experience (Pratap, 2018).
2. Strong financial position-Adidas has 2400 stores globally with an annual revenue of $25.42
billion is a strong financial position.
3. Collaborations and sponsorship- Adidas has partnerships and sponsors major sporting events,
such as the Olympics, FIFA, NBA, athletes, and sports teams. The launch of the Yeezys made
Adidas seem cooler than Nike in the fashion world (Pierson, 2017).
4. Diversified-Strong diversified portfolio, with many athletic shoe offerings.
5. Branding and strong market presence-The brand has a popular image and recognition. Its
strong presence in key markets such as North Americas, China, and Japan.
Weaknesses
1. Premium price range-Adidas shoes are costly due to innovative production and technology
used.
2. Outsourced manufacturing-97% of Adidas products are outsourced in Asia to reduce costs.
This has questioned the quality of their products and they are criticized for the lack of labor laws
and children working in their factories.
3. Limited product line-Adidas can advance their product line to reach a greater target market.
4. Ongoing rivalry meaning customers change over to other big brands-Nike is one of Adidas
biggest rival; it has caused switching costs to be low and customer retention to be challenging.
5. Spur in marketing investment-The company has put a lot of focus on their marketing; due to
this, it has caused marketing expenses to increase (Halwatura, 2017).
Opportunities
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1. Market development-The company can venture into new markets, in order to succeed and
compete in developed economies.
2. Changing Lifestyle-It is known to change taste, preference, and lifestyles with the developing
economies. There is a rise in demand for premium goods.
3. Increase in demand for premium products-Considering new markets in new global areas will
help grow the market size and develop business opportunity.
4. Expand product line- They may want to consider other offerings. Expanding will differentiate
Adidas from other competitors.
5. Product and design innovation- Adidas generates almost 60 new shoe designs per year;
continuous product and design help retain and attract customers. This will help boost sales and
revenue.
Threats
1. Competition-Nike is the biggest threat, and there is other competition such as Under Armour
and Puma.
2. Supplier dependency-Adidas has a high dependence on suppliers and should focus on
backward integration in order to improve efficiency and save on costs.
3. Government Regulations-Outsourcing increases the tax on imported goods from China, which
is over 90% of their products.
4. Replica/fake shoes -Replica Adidas shoes affect the brand image and cut into profits.
5. Economy uncertainty in key markets-Currency fluctuations and when the dollar strengths
threaten profits. Also, there is economic uncertainty in key markets such as Russia, which affects
the financial performance (Hitesh, 2018).
Summary of current situation
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It can be concluded that Adidas has experienced steady sales growth in 2017 and shows
the ability to maintain this growth momentum in the competitive athletic shoe industry. Financial
and operation growth has been achieved through strong core competencies, innovative products
up to date with trends and technology, and expansion into growing markets.
Adidas includes a wide age range of customers from children to adults with varying
sports levels including professional sports athletes, amateur sports athletes, sports and fitness
enthusiasts. Since athletic footwear is seeing a trending popularity, Adidas is also growing in
popularity among consumers as it delivers premium athletic footwear that meets consumer
demands.
The athletic shoe industry is competitive with Nike leading the market by a wide margin.
It is predicted with Adidas ’corporation and financial growth the company holds the ability to be
a market challenger to Nike and a leader above other companies in the shoe industry. As Adidas
competes with Nike for consumer attention and growth, Adidas needs to continue its marketing
strategy of being customer-centric by establishing strong customer retention and effective
customer engagement. To continue developing customer relationships the company must adapt to
changing trends and channels of communication to stay relevant in the market, build customer
engagement, and secure customer retention. Attention to these internal factors as well as
understanding how external factors impact operations is necessary for developing strategic
marketing strategies for continued growth and overall success.
Section 3: Target Market
Adidas is the second largest athletic shoe brand in the world. Therefore, the market
segment is important for a successful brand like Adidas. It divides the market into groups of
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buyers that have different characteristics, behaviors, and needs. Adidas focuses on demographic,
behavioral, and psychographic segmentation.
Demographic segmentation referring to the demographic variables, regarding sex and
age. The different range of male, female, and kids. Adidas targets ages 15-36, customers that love
sports and style.
Behavioral segmentation focuses on attitude, knowledge, and response to product use.
For Adidas, the behavioral segmentation is for: gym lovers, athletes, image seekers, and sports
lovers. The sports lovers play all kind of sports; football, soccer, baseball, basketball,
gymnastics, boxing, cricket, golf, hockey, lacrosse, rugby, skateboarding, tennis, track and field,
and volleyball. Adidas has shoes for all of them. The characteristics of these consumers who play
these sports have a passion for sports and prefer quality sports gear. Due to this, Adidas chooses
admirable athletes for sponsorships. It impacts the brand image and the consumer culture
(Fender, 2016).
Psychographic segmentation divides consumers by the lifestyle, values, and personality.
Adidas focuses on the social class because there is a similarity with the buying traits. This market
is usually, well-experienced, hard workers, and goal achievers.
Because of Adidas’ numerous market segments, it has developed a large portfolio of
products to meet target markets within these segments. In the footwear industry, Adidas attempts
a full market coverage where it offers multiple products to multiple markets so the most coverage
can be achieved. However, in the athletic footwear portion of the company’s products, Adidas
takes a product specialization approach. In this approach, the company will specialize in certain
products, i.e. athletic footwear, and tailor it for the different needs of market segments (NetMBA,
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n.d.) Adidas’ understands the need for product specialization and designs its athletic shoes to
meet the various needs of various target markets. Adidas’ running shoes are an example of how
the company reaches the runners’ target market with a wide portfolio of running shoes. The
attention Adidas gives by making a running shoe for a specific group of customers is what brings
a specialized product to the consumer. Adidas has been able to determine markets that have high
potential and then make a product that meets the needs of the target market efficiently.
Runners along with other sports and health enthusiasts are included in the millennial
target audience for athletic footwear. Studies show that millennials identify running to improve
physical, emotional, and mental health (Schneider-Levy, 2016.) Additionally, this age group of
consumers includes fitness as a large part of their social activity and seek shoes that meet all
needs including performance, fashion, and current trends. Since the main target audience of
Adidas is millennial consumers, it gives the company the greatest opportunity to expand and
achieve growth within the company. The market segment selected as part of the marketing plan
will include the demographic segmentation of millennials, as well as, target markets within the
behavioral segmentation which consist of consumers of any sports levels including sports
athletes, non-athletes, and fitness enthusiasts Marketing strategies developed will be based on
these target audiences.
Adidas has high brand recognition in the athletic footwear market and has positioned the
company in the market by the way of product leadership. This has enabled the company to build
market shares and market growth in the industry and position the brand to be a market challenger
against such other athletic footwear companies as Nike. While product innovation and quality
will still be at the forefront of the company, there will be a shift in positioning to become more
consumer-centric in products, services, and communication. With a consumer-centric model,
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Adidas can strive to be the best athletic footwear brand bringing shoes to consumers who have a
passion for sports and a fitness lifestyle all while connecting with the consumer to personalize
communication channels, build relationships, and develop products with the power to change
lives.
Section 4: Strategic Marketing Plan Objectives
Brand reconstruction has been the focus for the leading sports apparel company in the
recent years. Once centered around athletes and technology-based shoe designs Adidas has
revaluated the market. Simon Atkins Brand Director for Adidas North America states the
company saw a shift in their industry placement (Atkins, 2017). This shift ignited Creating the
New which is a global strategic marketing plan for the year of 2020 (Atkins, 2017). In the
attempt to rebrand Adidas based their plan around three concepts: 1) The consumer is in
command. 2) The consumer needs to hear a single voice. 3) The cultural shift this requires is
intense.
Digital media has now put consumers in command and Adidas can no long nurture the
growth of their shoe launches as they once did. Adidas has had to invest in social media and
digital presence. Through Social media platform and apps, Adidas has given the consumer
control to easily maneuver through their inventory. Mass marketing is a thing of the past for the
brand, now though unifying data and content, Adidas can market more clearly.
Specific Objective 1: Reach Millennial Target Market by Growing Adidas mobile app users
by
50% by the year 2020.
One of the biggest markets for Adidas is the millennial demographic, millennials make up
30% of the population. The best way to reach the millennial market is through social media.
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Adidas chief executive Kasper Rorsted explained to NBC “It’s clear that the younger consumer
engages with us predominantly over the mobile device. Digital engagement is key for us — you
don’t see any TV advertising anymore.” (O’Reily, 2017). The increasing focus on online presence
has made online shopping much more competitive; millennials make up 58% of mobile shopper.
To compete Adidas launched their mobile app in November of 2017; the customer can now make
all Adidas purchase through their mobile app (Alvarez, 2018). Since the fall of 2017 launch, the
app has been downloaded by more than one million users and is contributing to boosting digital
revenue (Hofer, 2018.) Currently the new mobile app is launched in the US and the UK with
more countries to be added in coming years (Green, 2017.) By expanding availability of the app
into more countries this will enable the growth goal of mobile app users by 50%. Additionally,
Adidas can promote and market the mobile app across social media channels to expand reach to
consumers and convert them to mobile app users. Growing mobile app users by 50% (approx.
half a million users) will enable Adidas to expand its consumer reach, build consumer connection
and relationships, and drive e-commerce sales.
Specific objective 2: Adidas plans to achieve 40% of their sales from speed-enabled
products by 2020.
Adidas plans to achieve 40% of their sales to come from their speed-enabled products.
This means how fast they deliver their high-in demand footwear, by replenishing these products
and having them delivered faster. From 2015-2020 Adidas will replenish their seasonal best
sellers quickly (Hobbs, 2016). Their best sellers such as Yeezys, collaboration with rapper Kanye
West are in high-demand but they are not fulfilling this demand. They will put more focus on
their ‘speed’ as a company, and deliver products faster to consumers. This will occur by the
company producing the shoes closer to consumer’s locations. The Adidas Speedfactory has two
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locations; one located in Ansbach, Germany and the other is located in Atlanta. It creates athlete-
data driven designs with accelerated footwear production. Also, the factory has 3D printing and
intelligent robotics for manufacturing products quickly (Fisk, 2018). Adidas marketing efforts
focus on major cities. Up until 2020, Adidas will invest more marketing and retail experiences
within their six cities they focus on New York, Shanghai, Paris, Los Angeles, Tokyo, and
London. Adidas continues to drive their brand image in these global metropolitan cities where
there is an influence on trends and brands. These objectives are to outperform rivals in brand
image and market share (Hobbs, 2016). Lastly, Adidas continues to partner their brand with
athletes, but also celebrities, partners and consumers who can help shape the future of sports.
Another attempt to resonate with the millennial market is through collaboration with other
popular brands and artist. Adidas spends about half of its marketing investments on
collaborations and digital media content (O’Reily, 2017). Adidas has recently collaborated with
artist like Pharrell, Rita Ora, and Kanye West. Stealing musical artist Kanye West from Nike was
a big deal in the millennial market, due to the famous Kanye West shoes YEEZYs (Taras, 2017).
YEEZYs are high-end shoes that retail between $200-$1600, the recent release of the YEEZY
700 Runner is by Adidas and they retail for $300 (Adidas, 2017). Adidas also has taken on
Kendall Jenner as a brand ambassador, she is one of the highest paid models with a high
millennial/generation z following (Taras,
2017).
Section 5: Product Strategy
Adidas’ product strategy focuses on the market and its needs, key product features and
differentiators, and business goals.
Market and Needs
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Adidas’ target market for the athletic footwear consists of millennials and consumers of
varying sports levels including athletes, non-athletes, and fitness enthusiasts. Adidas has
identified the millennial target market as being highly important to achieve growth in the
company. By bringing innovative products to its product portfolio, Adidas can compete in the
marketplace of the millennial generation and sports focused consumer.
Identified market needs:
The ability to meet high in demand footwear with speed to
market.
Innovative, performance-driven footwear that meets consumer expectations of quality
and performance.
Up-to-date footwear with trends and technology.
Adidas has a large athletic footwear product portfolio for sports and sports lifestyle
consumers which consists of running, football, basketball, golf, and athletic casual shoes. This
range of products has enabled the company to become widely known in the footwear industry,
but Adidas wants to stand out among competitors by being known as the fastest sports company
selling innovative and high-quality footwear. This requires a footwear product strategy that is
based on identified market needs and products that will attract consumers, outperform
competitors, grow sales, and capture market share in the
athletic footwear industry.
The product
strategy includes speed-enabled footwear, custom-designed footwear, and technology advanced
footwear.
Key Product Features and Differentiators
Speed-enabled footwear
Marketing Objective 1 states, “Adidas plans to achieve 40% of their sales from speed-
enabled products by 2020.” As of 2017, speed-enabled product net sales increased to 28%
(Friedman, 2018.) This makes them close to the goal to be achieved by 2020. Speed-enabled
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footwear addresses the high demand for products by being able to develop, replenish, and ship
products quickly to consumers. Speed-enabled footwear ranges from running shoes to Yeezy
fashionable shoes. Adidas has identified speed and how fast products are delivered to consumers
as key to the company’s success in a highly competitive market. When Adidas struggled to
replenish the YEEZY shoe line because of continually selling out, Speedfactories (one
contributor to the growth of speed-enabled products) helped to resolve the issue by quickly
manufacturing and replenishing with speed to the consumer (Hobbs, 2016.)
Speed-enabled footwear reshapes the business model and how products are created,
sourced, managed through the supply-chain, marketed, and sold (Adidas Group Provides Further
Details on Three Strategic Choices, 2016.) Speed-enabled products are made possible through
Speedfactories, digital technologies like 3D printing, and a real-time supply chain (Störk, Kubis,
& Kleiner, 2018) Speedfactories will support the production of speed-enabled products but isn’t
the only contributor to the expansion of speed-enabled products. Speed-enabled products are
supported by digital technology in manufacturing processes. The footwear produced in
Speedfactories will not substitute but complement the company’s main supply source and
production in Asia where digital technologies are also being implemented. Speed-enabled
products will differentiate from others by meeting consumer demand with speed to market. The
speed-enabled product marketing objective enables Adidas to better compete against other
companies in the athletic shoe industry by outperforming rivals with products that are data-
driven to develop the highest performance designed footwear and digitally processed to achieve
distinct features.
Custom-designed Footwear
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Custom-designed athletic shoes are another footwear product category that can enable
Adidas to compete against other brands and capture the attention of the target market of
millennials and athletic consumers. Direct competition from Nike and Under Armour in the
custom-designed shoe category has forced Adidas to improve how it customizes footwear to the
consumer with speed. Custom-designed shoes are available through main supply sources, but it
has been identified that Speedfactories with its automated processes would enable better
customization. If Speedfactories automated engineering processes are used, consumers will be
able to custom design specifications and have footwear that is fully customized with speed
(Green, 2018.)
Adidas has included a product collection that brings a new kind of customization to
consumers to stay competitive. Adidas has used market research from real runners to develop
themed shoes known as the “Adidas Made for” series based on key global city’s terrain and
weather. While this footwear line is manufactured in Speedfactories (Adidas HQ in Germany
and Atlanta, Georgia) and tailored for specific cities (London, Los Angeles, New York, Paris,
Shanghai, and Tokyo) they are sold globally and across all distribution channels. The following
are some of the shoes and features from this product collection:
Adidas Speed factory AM4LDN is a sneaker inspired by London and made for
city-running or cross-training (Ismael, 2018.)
Adidas Speed factory AM4NYC is inspired by New York City and has support
features for rough street running (Ismael, 2018.)
Adidas Speed factory AM4LA is inspired from Los Angeles’ coastline with it
Parley recycled ocean plastic while the perforated Parley knitted uppers provide
excellent breathability (Ismael, 2018.)
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Adidas Speed factory AM4SH is inspired by Shanghai and is ideal for running
and cross-training. The shoe is designed with waterproof uppers for rainy weather
typical of Shanghai (Ismael, 2018.)
Technology Advanced Footwear
Adidas has used technology to develop innovative footwear that addresses consumer
needs. There has been specific attention of implementing running shoe innovation so that Adidas
can fight for the attention of consumers that are runners. These product innovations have
consisted of tracking devices and Boost foam technology. Boost technology has revolutionized
running shoes since its development in 2013 with its cushioning and energy return. Adidas
continues to improve Boost technology it is now used in a wide variety of its sneakers making up
97% of all Adidas shoes sold on its site (Woolf, 2018.) This technology developed for running
shoes is now being used in basketball sneakers, football cleats, lifestyle sneakers and even in the
brand classic Superstar and the currently popular Yeezy shoe. Nike has developed foam sole
technology as well with the Nike React Foam. In order to stay competitive Adidas will continue
to keep its attention on Boost and how improvements and additions with the technology can
continue to place it ahead of competition.
Business Goals
Business goals include accelerating footwear sales and capturing market shares from key
athletic footwear competitors. These goals will be met through advancing technology in
products, increasing speed to market, and focusing on key global cities that are influencers in the
market.
Adidas has a business goal to achieve 40% of sales from speed-enabled products. The
purpose of manufacturing speed enabled footwear closer to the consumer in speed factories is to
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bring top-selling products to the shelves more quickly, so consumers can purchase faster than
traditionally manufactured products. Benefits to the company will include not having to make
large amounts of up-front products, less premade up-front products which equal less unsold
products, and sold-products can be replenished quickly. These benefits allow for less waste and
faster sales that can enable higher profit margins for the company.
Another business goal is the focus on 6 key global cities: London, Los Angeles, New
York, Paris, Shanghai, and Tokyo. This goal of targeting these cities can be seen in products,
production, and marketing. The following reason has been identified as to why Adidas is
focusing its efforts on these 6 cities: “With 50% of the global population living in cities and 80%
of global GDP generated in metropolitan areas, these urban centers play a key role in creating
trends, shaping global brands and building brand desirability.” (Adidas Group Provides Further
Details on its Three Strategic Choices, 2016.) This decision develops products and invests
marketing and retail experiences in these cities to outperform competitors, capture market share,
and build brand advocacy (Hobbs, 2016.)
Branding Strategy Issues
The footwear that is specific to Speedfactory production is marketed under the Adidas
brand name, however, product footwear names will include “Speedfactory” to differentiate them
from other sold footwear. As more Adidas footwear is designed through this method, the
company will be able to brand itself as being the fastest sports company. This will reshape the
brand and brand image making it highly competitive with the ability to become a leader in the
athletic footwear industry.
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Section 6: Pricing Strategy
Current pricing strategies across Adidas Footwear includes skimming pricing,
competitive, and premium pricing strategies that vary by product type.
Competitive pricing: used in normal product launches where competitors are
releasing similar products.
Skimming Pricing: used when products are launched that can’t be compared to
competitor’s offerings. These products will be priced high at first but lowered in
price over time to attract more consumers.
Premium Pricing: used on products with performance technology because the
higher price encourages favorable perceptions by consumers.
Premium product brands are finding that full-price sales are attainable because 52% of
weekly or monthly retail promotions have been offered when the customer would have still paid
full price (Pretro, 2018.) This is especially true of the millennial target market where there is a
willingness to pay higher prices for what they view as a quality product. Speed-enabled and
technology innovative products are designed with an emphasis on the consumer and needs and
therefore positions these products to meet consumer expectations with quality and innovation.
With the goal of 40% of sales coming from speed-enabled products by 2020, it is
expected that a premium pricing strategy that uses full-price sales compared to the regular range
will be achievable due to the appeal of up-to-date products and products that customers want
(Adidas Group Management Report, 2015) Speed design shoes will have a premium price of
20% higher than the regular range (Hobbs, 2016.)
Another business goal of speed-enabled products is to reduce the amount of pre-made
footwear with more up-front footwear. This will cut down inventories, lessen the need to reduce
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pricing because of overstock, and cut shipping and other related expenses. While Adidas is not
100% at a full-price sales strategy, the eventual goal is to reduce the need to skim prices of
speed-enabled footwear by reducing the number of unsold products. This strategy will make it
possible to increase total sales and enable higher profit margins for the company. Speed-enabled
products are made to the highest standards through quality, availability, and delivery that will
increase customer satisfaction and the willingness to pay a premium price. This ability to
increase speed and deliver quality footwear at premium pricing will positively impact Adidas’
profitability in the athletic footwear market.
Adidas is focusing on customer satisfaction in its products and services because there is
an association between overall customer satisfaction and the customer’s willingness to pay
premium prices (Mittal, 2016.) American Marketing Association quotes a study based on the
American Customer Satisfaction Index that showed “A 1% increase in customer satisfaction
should be associated with a 0.60% decrease in price sensitivity.” (Mittal, 2016.) Customer
satisfaction can provide the company with a competitive advantage and lead to profitability.
As more products are designed and converted to become speed enabled the goal of 40%
of sales can be met. In the interim, other products currently sold by Adidas will be making up the
difference. These products will continue to use premium pricing and skimming pricing. It also
requires competitive pricing for products that are run of the mill products that have more
competition due to other athletic brands selling similar products. As new products and product
series are added to Adidas’ product portfolio, it may require an evaluation of older products to
decide which ones need to be removed from the market and which one’s need be improved for
consumer attraction.
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Section 7: Distribution Strategy
Adidas focuses on several things to ensure smooth consumer experience with their
channel strategies:
Efficient inventory checks for all stores
Service allowing online purchase that can be picked up in store
Service that allows customers to buy online and return to stores
Partnership that allows consumers to purchase products at wholesale stores
System that allows consumers to have access to a wider range of products
Adidas app allows a premium shopping experience
Adidas uses a chain of suppliers to deliver their products through 5 categories:
1. Main suppliers: A direct agreement with Adidas for export or domestic market
consumption for supply of products
2. Subcontractors: Manufacture products that the main supplier is unable to do in the
facility
3. Material and other service providers: Do not have direct business with Adidas but
supplies products to the main suppliers
4. Licensees: Independent companies that create designs, produces and distributes
specific products under Adidas
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5. Agents: Independent companies that source and manufacture products, also
finished products to the company (Woolmers, 2016).
As discussed, Adidas is utilizing their mobile app to capture more of their target market;
the millennial. They are doing so by using social media platforms to advertise and gain leads
from mobile users. Adidas also has speed factories that distribute their high in demand products
at a faster time. They replenish their products on the shelves and maintain fresh products to be
shipped to customers quickly. The current channel is sufficient as they recently added a second
speed factory in 2018 in Atlanta, GA. The speed factories were an addition to all their other
manufacturing factories to give a new improved service to consumers.
Section 8: Marketing Communication Strategy
Unique value proposition: is to sell Adidas high performance footwear, to sports lovers
and their target market of millennial.
Marketing communication objectives:
1. Objective 1 to Reach Millennial Target Market: Grow Adidas mobile app users by
50% by the year 2020.
2. Specific objective 2: Adidas plans to achieve 40% of their sales from speed-
enabled products by 2020.
AIDA model for Adidas:
Attention: The color and design of Adidas footwear tends to attract consumer’s eyes.
When athletes are playing sports the design of the footwear needs to appeal to consumers.
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Interest: Adidas boosts consumer’s attention by linking them with famous athletes or
celebrities. Once their attention is gained, the interest in purchasing the footwear is present.
Desire: Consumers who see athletes in the footwear desire to perform just as good in
their sport. For example: Houston Rockets basketball player James Harden launch a campaign
about “Creators never follow,” its importance is to display the best sports brand. Also,
encouraging everyone to define their own path and celebrate every moment while playing sports
(Adidas News Stream, 2015).
Action: After the advertisement the target market is interested in purchasing new
footwear. The speed of the delivery will be displayed to the target market either on the mobile
app or on TV advertisements.
Marketing communication mix consists of the channels Adidas will use to reach the target
market:
Online advertising on social media
Offline advertising on print media, TV and billboards in metropolitan cities
Direct marketing
Events
Sponsorships
Annual sales promotion
Branding elements used:
Website
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Mobile app
Social media platforms
Direct marketing campaigns
Advertising campaigns
The Big Idea that captures the unique selling proposition is to increase sales through
speed enabled, custom-designed, and technology advanced footwear and grow consumer
engagement through mobile app platform. The strong message Adidas sends is: “To become the
best and fastest sport company in the world.”
The marketing communication objectives will use advertisement to measure the success
of the objectives.
The schedule for first year’s marketing communications for objective 1: The goal is
to increase the reach of the target market by utilizing social media to promote and gain mobile
app users. Metrics that will be measured:
• The number of mobile app downloads
• Website visits from social media shares
• The number of leads or sales from advertisement on social media platforms
(Dragilev, 2018)
• Mobile app purchases
These metrics will determine the success of objective 1, timeline below:
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Mobile app launch date: App first launched in 2015
Launch app to: France, China, and Japan by 2019
Amount of users of 30 million to be reached by June 2020
Therefore, launching the app in France, China, and Japan will enable the mobile growth
goal, as Adidas focuses on Shanghai, Paris, and Tokyo for cities they share their trend, mind, and
market. As it is the first year, 30 million mobile users should be attainable as these countries
make up a lot of their sales.
The schedule for first year’s marketing communications for objective 2: The goal is
for Adidas is to increase the reach of sales of speed-enabled. Metrics that will be measured are:
• Sales from the speed factories
• The amount of footwear being replenished daily
• Which footwear are highest in demand
• How the speed-enabled products were purchased
These metrics will determine the success of objective 2, timeline below:
Sales increase of 25% in the first year from speed-enabled products by reaching
more mobile app users
Launching mobile app in France, China, and Japan by 2019
Replenishing the products that are highest in demand
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Adidas can reach more sales from their speed-enabled footwear by understanding what
products are highest in demand, and how they are being purchased. Reaching more mobile users
will help increase the sales of speed-enabled products as well.
Section 9: Marketing Program
Customer service is more than being courteous and answering product related questions;
customer service is developing long lasting relationships that improve brand awareness.
Advancements in technology has made customer service a 24/7 job, through Twitter, Instagram
comments section, and direct messaging customers have a consistent connection to companies.
Adidas has utilized the advancements in technology and social media to it benefit by implanting
their five-year plan Create the New. The five-year plan objective is to boost brand desirability
though ecommerce and digital content creation (Ismall, 2015). Creating the New is driven be
three major strategic choices: speed, cities, and open source; though these three objectives
Adidas hopes to increase eCommerce business to 2 billion users by 2020 (Ismal, 2015).
Herbert Hainer, CEO of Adidas group, announced: “Our new strategy is built on speed,
focus and openness. As a result, we will accelerate our growth story and deliver superior returns
to our shareholders. I am very much looking forward to ‘creating the new’ together with the
adidas Group’s more than 53,000 employees across the globe.” Adidas’s will be focusing on six
cities: London, New York, Shanghai, Tokyo, Paris and Los Angles (Ismal, 2015). Focusing on
these three cities allows for the company to have a keen connection to the changing trends in the
industry. The selected cities have a dynamic platform for enhancing brand recognition and
producing trends. Speed for Adidas is ensuring customers are always offered exactly what they
want, whenever they want it, and however they want it (Friedman, 2018). Changes to ‘speed’
include shifting their production from Asia to closer main markets, this change will hopefully
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minimize delivery time for ecommerce customers. The move will also allow the company to
have a quicker response to fast changing trends helping them stay relevant (Friedman, 2018).
Currently Adidas has created two Speedfactories near their two biggest markets Atlanta, Georgia
and Ansbach, Germany. In 2017 adidas Speedfactories developed a customer driven project
called Adidas Made For a series of individually crafted shoes (Friedman, 2018). As for the Open
Source strategy, Adidas will be collaborating with pop culture, social media, and sports
influencers to increase brand expansion. Some of the influencers include Stella McCartney,
Kanye West, and Real Madrid Soccer club.
Investing in digital presence is Adidas’s objective to increase brand loyalty and customer
engagement. Digital is having a fundamental impact on the way Adidas is transforming into a
technically advanced company. Introducing the Adidas ecommerce app resulted in the fastest
growing distribution channels with 1.7 million downloads and a 57% production growth
(Freidman, 2018). The app includes exclusive deals and product release information that solely
available to Adidas members. The app also includes personalized features that are dictated by
customer input, figure 1 showcases one of the app’s personalized customer features (Freidman,
2018). The Adidas app also includes real-time product suggestions to enhance customer
engagement and brand communication. Internally Adidas has added some changes to ensure their
customer delivery is up to par. In 2017 the company introduced RFID as a solution to improve
stock accuracy and on-floor availability (Binns, 2017). RFID is an information technology that
specialized in inventory organization, inventory accuracy, and timeliness. The IT program has
fixed the basics of stock accuracy and on-floor availability increasing in-store speed of service
(Binns, 2017).
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Section 10: Financial Plan
Adidas’s five-year marketing strategy “Creating the new”, which was presented in March
2015, has elevated brand desirability resulting in strong improvements in sales and profitability.
Adidas has driven all direct sales through the company’s e-commerce platforms. Revenue from
www.adidas.com and www.reebok.com are projected to increase to $4 billion by 2020 (Adidas
Annual Report, 2017). Marketing expenditures is the focal point for driving brand desirability
and growth sustainability, which has inherently made it one of the largest operating expenses for
Adidas. Adidas utilizes a top-down/bottom up approach to capital expenditure, which is an
information processing system where financial management decisions are delegated from top to
bottom, and the finally transported back up top for final decision making (Adidas Annual Report,
2017).
In 2017 Adidas invested in Speedfactories in Atlanta and Germany to provide fast
delivery to consumers, the strategic investment increased net sales by 28% in 2017. By 2020,
Adidas plans to generate 40% of its net sales with “speed-enabled products,” improving the share
of full-price sales across all speed ranges by an estimated 20% over the next five years (Vitone,
2016). Adidas has over-invested in mega cities New York, Los Angeles, Paris, Shanghai, London
and Tokyo; some of the major success to contribute to brand awareness was the 2017 “Green
Light Run in ‘Tokyo and Run’ for ‘The Ocean in New York’ (Adidas Annual Report, 2017).
Through intense social media coverage both events increase brand awareness by making
consumers the focal point of their events. The brand also made investments in remodeling stores,
building new stores, and in-shop presentations, which accounted for 48% of total capital
expenditures. In 2017Adidas invested a total of 2 million in marketing and advertisements
(Pratap, 2018).
http://www.reebok.com/
http://www.adidas.com/
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Proposed Marketing Expenditures Budget
This budget is based on previous years marketing expenses. This includes marketing
investment and marketing overhead. The expenditures from marketing speed-enabled products
and increasing app users are included in the budget under marketing investments. Additionally,
no new Speedfactories will be developed by the year 2020 so expenses from this development
are not necessary to include in the marketing budget.
Expenditure for Marketing Investments: 2,141 million Euros ($2,437 million US dollars)
Promotion
Communication
o Promotion contracts
o Advertising
o Events
o Communication activities
Expenditure for Marketing Overhead: 748 million Euros ($851 million US dollars)
Total Marketing Budget: 2,889 million Euros ($3,300 million US dollars)
Section 11: Marketing Metrics
For Adidas to reach its goals, there needs to be performance and marketing metrics to
validate the level of success or failure of the marketing plan to be implemented to cut into more
of Nike’s market share and potentially become the market leader within the athletic footwear
industry. Growth in e-commerce sales, cost per lead, social media visits and leads and traffic by
device are good metrics to measure real-time performance and finances. The financial and
performance metrics that can be used are listed below:
Financial metrics:
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E-commerce sales- Measuring the e-commerce sales can help grow the mobile app. This
will help manage how well the mobile app is doing. The numbers, if good can help expand the
mobile app into new countries as it is an objective for Adidas to grow their mobile app users by
50% by year 2020.
Cost per lead- Managers can track the success from the leads being generated and consider what
is working and what is not. The marketing strategies include different campaigns to increase the
sales growth and market share.
Performance metrics:
Social media visits and leads- This metric tracks shows how well social media marketing
is impacting the number of visits or sales being driven to Adidas site. Managers can consider
how many social media campaigns is created based on the success, and a new allocated budget
can be determined. This can help meet the marketing objective of growing speed-enabled sales
by 40%, by advertisement on social media for most of the target market to view.
Traffic by device- This metric increases the chances of customers going mobile (Mindful
Metrics, 2017). The marketing strategy here is to monitor the customer’s preference. This can
give an overview, and help create a specific web design, products, and campaigns. This can help
increase the mobile users up to 50% also.
These financial and performance metrics will help to evaluate the performance and
success of the marketing plan. The overall success of the plan will reflect in the company’s
revenues, net sales, market share, and growth gross margin.
Total revenue helps to determine the overall level of sales worldwide for Adidas. Net
sales of the product category of footwear will be the focus and this will measure the sales growth
yearly. Market share is important to determine how much of total sales within the athletic
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35
footwear belong to Adidas, measured in percentage terms. It’s also an effective measuring tool
when comparing from year to year against its closest competitors Nike and Under Armour. It can
help determine whether the gap is closing between Adidas and Nike or the gap is widening
between Adidas and Under Armour and other market followers, including Puma, Fila, and New
Balance.
Gross Margin will also show how successful Adidas has been when it comes to
undertaking its marketing effort. Gross margin is measured in percentage terms and is
determined by the following formula: total revenue subtracted by costs of goods sold, all of
which is divided by total revenue. Adidas determined that a marketing plan contingent upon
three strategic choices that included speed, cities, and open source would make the brand more
enthralling, enticing new customers so they’ll find the brand and its products more desirable. As
a result, they should be able to experience gross profit expansion, along with top line/market
share growth, and operating leverage (Adidas Group, 2018).
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36
Exhibits
Exhibit 1: Adidas’ Footwear Sales Past Three
Year
s
2017.0
2016.0
2015.0
0 2 4 6 8 10 12 14 16
14.09
11.49
9.48
Adidas Footwear Sales 2015-2017
Global Netsales U.S. Dollars (Billions)
Year
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37
Exhibit 2: Competitive Analysis Worksheet
Company/Product
Name
Criteria 1
Annual Sales
Criteria 2
Number of Employees
Criteria 3
Market Share
Adidas/ Athletic
Footwear
$14.09 billion 56,888 11.3%
Nike/ Athletic Footwear
$21.1 billion 74,400 34.7%
Under Armour/ Athletic
Footwear
$1.0 billion 11,787 2.4%
Competitive Positions* Company/Product Basis for Position
Market Leader Nike/ Footwear Innovation
Market Challenger/Follower Adidas/Footwear Product Leadership
Market Follower Under Armour/Footwear Size of the company
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Exhibit 3: Adidas SWOT Analysis
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39
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https://blogs.wsj.com/cfo/2018/03/15/adidas-would-revamp-its-supply-chain-in-face-of-u-s-tariffs-cfo/
Running head: STRATEGIC MARKETING PLAN GROUP PROJECT PART 1 & 2
47
SWOT Analysis
Section 3: Target Market
Section 4: Strategic Marketing Plan Objectives
Section 5: Product Strategy
Section 6: Pricing Strategy
Section 7: Distribution Strategy
Section 8: Marketing Communication Strategy
Section 9: Marketing Program
Section 10: Financial Plan
Section 11: Marketing Metrics
Exhibits
References
