Term Paper on Marketing Management of Adidas PDF

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Term Paper on Marketing Management of Adidas Submitted by Boom-Al-Habibi MBA Program BUS-620 Sec: 04 North South University Submitted to Professor Dr.M.Mahmodul Hasan Date of Submission: April 02, 2016 Letter of transmittal April 2, 2016 Dr.M.Mahmodul Hasan Professor School of Business North South U...

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Term Paper on Marketing Management of Adidas

Submitted by

Boom-Al-Habibi MBA Program BUS-620 Sec: 04 North South University Submitted to

Professor Dr.M.Mahmodul Hasan Date of Submission: April 02, 2016

Letter of transmittal April 2, 2016 Dr.M.Mahmodul Hasan Professor School of Business North South University Subject: Term paper on Marketing Management of ADIDAS. Dear Sir, It is indeed a great pleasure for us as the student of MBA program to be able to hand over the result of our hardship of the Term Paper on Marketing Management of ADIDAS . This Term Paper is the result of the knowledge which has been acquired from the respective course BUS-620 and the kind hearted supervision of our honorable instructor Dr.M.Mahmodul Hasan. We tried our level best for preparing this Term Paper. Hope you will appreciate our hard work and excuse the minor errors. Thanking you for your sincere observation and humbly provide our respect to you to consider our hard work because all of us gave our hundred percent for making this report come together. We, fervently hope your cooperation. Sincerely Yours, Nazmin Sultana Nima

152 1771 660

Sazzad Hossain

142 1184 060

Md. Abu Bakar

142 1183 060

Ummehaney Shila

153 0899 660

Khudeza Shahrin Toma 153 0843 660

Acknowledgement With the completion of our project entitled “Marketing Management of Adidas”, We would like to extend our sincere gratitude and a word of thanks to the Almighty Allah and our great inspiration Professor Dr.M.Mahmodul Hasan who inspired us to think beyond and to always look for better stimulation. We would also like to take this opportunity to express our profound gratitude and deep regard to our Honorable faculty Professor Dr.M.Mahmodul Hasan, for his exemplary guidance, precious feedback and constant encouragement throughout the duration of the Term Paper on Marketing Management. His valuable suggestions were of immense help throughout our project work. His perceptive and continuous criticism kept us working to make this project in a much better way. Working under him was an extremely knowledgeable experience for us. We would also like to give our sincere gratitude to all the friends and group members who passed sleepless night and worked hard to make this thesis a success, without which this research would be incomplete. And last but not the least who acted the best way to support us to flourish this term paper in an wonderful manner is our family members. Supporting us in all means during preparing our valuable term paper. Thanking all for their devoted positive support toward us during this journey.

Executive Summary To know about the Marketing Management, this research will help a lot in greater understanding and utilizing this in future work. Here working on different marketing management parts of ADIDAS will help a lot for better understanding of marketing management and its possible analysis as well as how can we use the knowledge in practical life. For this research we have collected information from secondary source and of course our honorable faculty’s lectures. The Adidas group, headquartered in Herzogenaurach (Germany) was built on 18 th August 1920 by Adolf Dassler. The Adidas Group strives to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle. To stay competitive to Nike on the US-market, the company had taken over Reebok in 2006 and later Rockport and TaylorMAde. Based on the Group’s strong brands, premium products, extensive global presence and its commitment to innovation and the consumer, the Adidas Group aspires to outperform total market growth. Adidas has three sub brands under it namely Sports performance, Style and Originals. Under these brand Adidas introducing all the products of it. Adidas is organizing its marketing plan around these brands. Adidas is sports based company but they are also focusing beyond this by introducing Rockport brand. In this report we have also discussed about how can Adidas focus on fashionable products and as well existing product for all aged people. Overall this report is reflection of SWOT, PESTEL, Porter’s Five forces, Marketing strategy, Brand and Branding, Five M’s of Advertising, Marketing budget, pricing strategy etc. Adidas has competitive advantage. So it needs to take Short run and as well as long run marketing plan to promote its brand far beyond its sports image.

Table of Content

Content

Page No.

Definition

1

Mission

2

Vision

2

Business plan

2

Corporate strategy

3

SWOT Analysis of ADIDAS

4

PESTEL Analysis of Adidas

5

Porter’s Five Forces

7

Marketing Strategy & Core marketing concept And Market Segmentation of ADIDAS

9

Market segmentation of ADIDAS

13

Marketing mix

15

Alternate Marketing mix – 4 C’s of marketing of Adidas

19

Value Chain Analysis

21

Value Chain Model of ADIDAS

24

Total Quality Management of ADIDAS

25

Brand

28

Brand under Adidas Group

29

Branding

30

Different Branding Strategy of ADIDAS

32

Brand Elements

33

Brand Dynamic Pyramid

35

FIVE M’s OF ADVERTISING

38

Mass Communication

39

Marketing Budget and Expenditures ( $ in millions)

42

Pricing Strategies

43

Steps in Setting Price

44

Break Even Analysis of ADIDAS

47

Recommendation

49

Conclusion

50

References

51

Definition of Marketing Management (Theory 2000 – 2011) Marketing management is the art and science of choosing target markets and getting,

keeping,

and

growing

customers

through

creating,

delivering,

and

communicating superior customer value.

Definition of Marketing Management (Theory 2012 – 2016 ±) Marketing management depends on the size of the business and the industry in which the business operates. Effective marketing management will use a company's resources to increase its customer base, improve customer opinions of the company's products and services, and increase the company's perceived value.

{ Sazzad Hossain; ID: 142 1184 060} 1

Mission The Adidas Group strives to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle. We are committed to continuously strengthening our brands and products to improve our competitive position We are innovation and design leaders who seek to help athletes of all skill level achieve peak performance with every product we bring to market. We are consumer focused and therefore, we continuously improve the quality, look, feel, and image of our products and our organizations structures to match and exceeds consumer expectations and to provide them with the highest value.

Vision To be the most respected and successful enterprise, delighting customers with a wide range of products and solutions in the automobile industry with the best people and the best technology.

Business plan Based on the Group’s strong brands, premium products, extensive global presence and its commitment to innovation and the consumer, the Adidas Group aspires to outperform total market growth (both GDP and sporting goods market) and to continue growing its bottom line faster than its top line. In addition, the Group plans to lay the foundation for leadership in the sporting goods industry by outgrowing its major competitor in the next five years. The Group targets a compounded annual earnings growth rate of 15% and wants to reach an operating margin of 11% sustainably by 2015 at the latest. 2

Corporate strategy Adidas' mission statement testifies that "Adidas-Salomon strives to be the global leader in the sporting goods industry with sports brands built on a passion for sports and a sporting lifestyle" (Adidas-Salomon). According to numerous studies have shown that the main reason for the failure of a merger between the companies lack of cultural integration. In previous mergers, companies often ignore, rather than executing them, which often lead to the failure of their combination of cultural differences. Acquisition of a large company like Reebok, Adidas disadvantage is that although changes in management and infrastructure, or a combination of the new learning culture difficulties in the new merged company, its competitors are running at full speed. Just seven years ago, Adidas acquired Salomon and became the second largest sporting goods manufacturer in the world, behind Nike and ahead of Reebok. This recent experience of acquiring a company will ease the difficulty of acquiring Reebok.

3



strengths

SWOT Analysis of ADIDAS



Legacy & heritage: The brand was started in 1949 .



with varied range of footwear & accessories .



$4.3billions.



for their products available through different channels.



Diversified portfolio: Company has multiple product portfolio’s Strong financial position: With its 2400 store globally accounting

Distribution network: Adidas has an effective distribution system

Collaborations & memberships: Strong relationship within the sustainability area with organizations. Premium price range: High price range due to innovative technology & Production methods have made the brand affordable

Weakness



to limited customers only, especially in developing countries. Limited product line: Adidas along with the recently acquired Reebok brands



Changing Lifestyle: With the saturation of developed economies, changing taste & preferences, education & changing lifestyle of

opportunities 

developing economies Increasing demand of premium products: If we only consider the Indian market then there is a growth rate of 33% in demand of



premium products. Backward integration: This will be smart strategy if followed by Adidas as it will help Adidas to secure their patent rights & also integrate their R&D with the operational team in order to work in

 Threats



open system. Competition: Although Adidas is a global brand but it is facing fierce competition from other brands. Supplier Dominancy: Due to majority of its production being outsourced; Suppliers have more bargaining power then the company 4

PESTEL Analysis of Adidas Political Factors Adidas makes policies and monitor risky substance to protect human health and environment . and also it protects the rights of its employees by following labor laws on country special way. Adidas a multinational company need to consider the global political state as well as domestic political issue. It is important to monitor the government’s laws which affect the business of Adidas. Since the political arena has a many influence upon the regulation of government and private sector businesses, and the spending power of consumers and other businesses it has come necessary for Adidas react drastically and efficiency for these issues. The government enters in to any trade agreements Adidas needs to keep it on track since it may affect the business. Government taxation policy plays a major role in company’s profit.

Economical Factors Adidas as a multinational company sustaintain it’s strong economical growth year by year. In 2008, the Adidas Group again released a strong financial execution. The product sales and the profitability gowned up in line with management’s primary expectations. Currency-unbiased sales grown by 9%. And the double digits sales increase in Adidas segment had the maximum impact on this development. Adidas driven to decrease its production cost with improving the product quality by locating the factory plants in Asia. Social Factors There is no obstacle for Adidas products like raise, age, religion, and lifestyle, it is always in fashion with different design in any product. Adidas focus in people who like sports and athletes, close everybody beyond the boundaries.

5

Technology Adidas introduces new approaches to doing new and old things, Adidas join into technology by make up the world’s first “smart shoe”, adding a microchip inside the shoe and wireless mp3 player. Adidas uses hot decompose system of production which is environment friendly. And the packaging system, storage system and transportation of products are numerously advanced comparing to other companies. Environmental Building on different environmental implantation over the past years, in 2010, they developed a compatible environmental strategy for the Adidas group. The strategy carry the clear vision and mission and sets annual milestones which will qualify

the

achievement of the 2015 targets. These targets cover their entire value chain from product formation to sourcing and manufacturing and from their own activities to their stores and all other sale points. Their direction is to manage environmental issues as an undivided part of their daily operations, positively contributing to the Adidas groups in total business performance. An environmental strategy team driven by group social and environmental affairs (SEA) and consisting of delegates of all brands and interior operations, announcement to the Adidas group executive board. Legal The Adidas group patronize the United Nations proclamation of Human Rights, their company policies and procedures keep at to all applicable domestic laws and are compatible with core labor principles of the International Labor Organization (ILO).

6

Porter’s Five Forces Degree of Rivalry of ADIDAS Adidas is contending in the market with many rival firms including the world leaders Nike, PUMA, FILA etc. The rivalry among existing competitors is pretty high in the sports and footwear industry as compared to other similar industries. ADIDAS has adopted several strategic measures for their market growth such as acquisition of an subsisting competitor, building partnership etc. ADIDAS has onward into a world leader through several acquisitions; namely Sports Inc., Salomon AG, Reebok etc. In 2005, the ADIDAS acquired world’s third sports brand. The Company ADIDAS has also do good from the strategy of on-line sales. As ADIDAS deals with products of low product differentiation, the degree of rivalry is so high. Since the switching costs are low, the rivalry among competitors is very high. When trading with products of competitive nature, the firm have to be highly innovative and the technology used should be of very leading and sophisticated. This introduced the fixed cost high and in turn increases the degree of rivalry among the competitors. The diversity of rivals, that is; the rival firms like NIKE, PUMA are of different cultural, historical and philosophical backgrounds and so the rival inflection are very difficult to predict. Threat of Substitutes The substitutes of Adidas products such as NIKE, PUMA etc. is also affects the market growth of Adidas. The price of its substitute products often intuition the products of ADIDAS, either in a positive or a negative way. When the price of the substitutes is low, the demand for the Adidas product will be low, and vice versa. That is when switching cost is low there is a higher tendency to lose its customers. However in particular circumstances buyer’s choice exclusively influences the buying decision and its demand. The degree of threat of substitutes is low in the case of Adidas.

7

Bargaining Power of Buyers Bargaining power of Buyers of Adidas products oversee to be high these days. One of the reasons for this is that the buyers’ intentness is high, that means they buy large volumes. The ease of convenience of its substitutes is one of the major reasons of the high bargaining power. The low switching costs to its substitutes also makes high bargaining power of customers. Price impressibility and Product Differentiation also affects the bargaining power of buyers. Bargaining Power of Suppliers The suppliers for the Adidas products are available in enough and so the bargaining powers of suppliers are low. Suppliers are weak because of high supplier intentness, that is; suppliers are far more than what is required. The other reasons are the easy availability of close substitutes of inputs, low switching cost from on supplier to another, backward integration of suppliers, weak customers etc. Moreover, the Adidas apply a high power over the suppliers and is very demanding. Barriers to Entry The competition will become cut-throat when there is free market entrance. But such an established brand like ADIDAS will not be influenced much. The entry barriers to the sportswear market are relatively high. Any firm can freely enter into the market but survival in the market and to reach market leadership is quite difficult. When a new firm’s products are competing with such a huge brand name, it needed to be more careful and have to adopt high quality strategies to gain the market. There are some barriers like High initial investments and fixed costs, Controlled access to the raw materials by Adidas, reusable distribution channels by Adidas, Economies of scale, Government Policies and Protected Intellectual Property Rights like technical knowhow. { Khudeza Shahrin Toma; ID: 153 0843 660} 8

Marketing Strategy & Core marketing concept And Market Segmentation of ADIDAS Adidas is the biggest sportswear manufacturer of Europe & one of the biggest in the world. The Adidas group has four brands in its strong portfolio – Reebok, Adidas, Rockport & Taylor By emphasizing the value of quality products from a trusted brand Adidas is able to 





maintain its brand essence. The portfolio is divided as follows. Adidas-performance in Competitive sports, Reebok & Reebok classics in Active sports & casual sports, & Adidas originals, Adidas Fun, Rockport in Sports fashion. Core marketing concept of Adidas

Needs

Adidas believe that consumers want choice. Therefore, the group implemented a multibrand strategy, which allows them to capitalize on opportunities from several

9

perspectives, as both a mass and a niche player. Existence of unmet needs is precondition to undertake marketing activities in Adidas own marketing strategy. Marketing tries to satisfy needs of consumers. Needs are physiological in nature and create physiological tension that can be released by consuming/using products which particularly met by Adidas. Wants

In Adidas according to the branding and marketing policy, the brand is able to keep a unique identity and focus on its core competencies, whilst simultaneously providing the group with a broad spectrum of products. International marketing is crucial for the group in its quest to generate substantial profits; as survival depends on their established presence on the global world market. Wants in the ways are the options to satisfy a specific need of the consumer to satisfy trough Adidas products. Maximum satisfaction of consumer need depends upon availability of better options which Adidas have that quality to present in front of the consumers. Demand

Adidas tries to ...