Individual Assignment Choose A Brand And Analyse The Brand By Answering The Questions..pdf

Adidas is among the leading sports shoe and apparel brands.. The sports shoe industry has grown highly competitive with Nike, Adidas and Under Armour leading the game.. The Adidas missio

INDIVIDUAL ASSIGNMENT Subject: MARKETING MANAGEMENT

Choose a brand and analyse the brand by answering the questions

Name: NGUYEN THI THUY DUONG

Class: Management of Quality and Innovation in English (EMQI63)

Student ID: 11211601

Ha Noi, 2023

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TABLE OF CONTENTS

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2 Look at the last 3 vears and explain of the ups and downs that the brand has been through

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4 What is the customers’ perception of the brand comparing to its competitors’ brand?

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Adidas is among the leading sports shoe and apparel brands The sports shoe industry has grown highly competitive with Nike, Adidas and Under Armour leading the game However, if we compare the performance of the largest two brands in recent years, Adidas is in an aggressive mood and all set to outperform Nike Competition between the two is growing all the more tense with time

Growth in the sports shoe industry is driven by several factors mcluding technological advancements, proliferation of marketing, sales and distribution channels as well as athleisure trends Rising health consciousness and enthusiasm for sports are also driving an increase in sales of sports shoes and apparel Adidas is ambitious to gain higher market share and is investing in research and development The company is growing its focus on product novation and sustainability to cater to the changing customer

demands

Industry Sports shoe & apparel

Headquarters Herzogenaurach, Germany

Competitors Nike, Under Armour, Puma, Fila, New Balance

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QUESTIONS

Which values does the brand provide?

The Adidas mission statement is "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." Therefore, Adidas committed to provide consumers those values:

Promoting an Active Lifestyle

Adidas places high esteem on an active lifestyle It encourages people to get into sports by offering a multitude of superior quality products that are suitable for a very diverse market Improving Sports

There is a very sports-focused mindset in the Adidas Group While Adidas does cater to the fitness needs of all customers, much of its efforts are directed on the athletically inclined market, particularly the youth Adidas engages in a variety of programs that are geared towards honing the skills of young aspiring athletes and presenting them with the best opportunities and equipment to improve their talents

Exceeding Expectations

The research and development team of Adidas works tirelessly to constantly improve its products, creating mnovative features never before seen in the market One of the company's goals is always to surpass the expectations of the customers and the competitors

Creating Innovative Products

Innovation and creativity are two of the most vital points of the Adidas team They are known for coming up with cutting-edge technology to create extraordinary products For instance, take the Boost technology that is now the distinguishing feature of Adidas running shoes It dramatically increased energy return with each stride, making it a precious tool to improve the competitive performance of runners everywhere

Look at the last 3 years and explain of the ups and downs that the brand has been through

201 | SUPPLY CHAIN MANAGEMENT GROWING OPERATIONG EXPENSE

Supply chain management of Adidas is | With growing prices of raw material and labor,

an important strength of the brand The | the operating expenses of Adidas have also kept brand needs good quality sustainable | growing The revenue of Adidas has increased material to make the products it sells | but so have its operating expenses The company

To obtain the raw material, it needs for | has grown its investment in marketing and it producing shoes and apparel, the | reflected m the form of higher other operating

company sources from suppliers

around the world It has managed its

large and global supply chain

responsibly

Adidas has also outsourced its

manufacturing to external

manufacturers Adidas works with total

700 independent suppliers who

manufacture Adidas products in more

than 50 countries The supply chain of

Adidas is global and multi-tiered and

includes both direct and indirect

contractors

130 manufacturing partners make most

of its products Out of these, 26 are

strategic partners and produce the

majority of its products in 82

manufacturing facilities Adidas offers

its suppliers continuous traiimg and

education It also carries out regular

audits to manage supplier performance

expenses Other operating expenses of the brand grew past €9 billion in 2018 and were more than

€350 million higher than the previous year Growing operating expenses can shrink profit margins and affect net income adversely

FOCUS UPON INNOVATION

As a sports shoe brand, Adidas invests

a major sum each year in research and

development Customer trends in the

shoe industry have changed fast and

competition has also grown stronger

This has resulted in growing need for

product imnovation Brands need to

keep bringing new and stylish products

to shelves to sustain the level of

demand im the market During the

recent years, Adidas has focused upon

bringing more and more sustainable

products to the market The new

products launched by Adidas generated

most of its sales m 2018 The

company’s investment in R&D was

however, lower in 2018 than 2017 In

2018, the company invested $153

million in R&D compared to $187

million in 2017 Moreover, the

company is focused on manufacturing OVERDEPENCE ON EXTERNAL

SUPPLIERS Adidas depends entirely on external partners for the production of the products it sells It has outsourced nearly all of its production to external suppliers located in Asia and other parts

of the world On the one hand, while it allows Adidas to focus on other aspects of business, on the other it adds to operating costs Adidas could bring costs down through backward integration

imnovation to grow its fast product

design and development capabilities

and to enable product imnovation

Another core focus of Adidas is

digitalization

FOCUS UPON MARKETING

Adidas has seen faster growth in the

last few years and one of the central

factors driving its growth is_ its

increased focus on marketing Nike is

its nearest competitor and is also

known for its heavy focus upon

marketing Adidas is also trying more

targeted and aggressive tactics for

marketing of its brand In recent years,

it has imcreased its investment in

marketing and promotion Its

marketing expenses in 2018 were 10%

higher compared to the previous year

The brand spent €3 billion on

advertising and promotions as

compared to €2.7 billion in 2017

Adidas is using several channels for

marketing However, digital marketing

and customer engagement is a core

focus in this area The company also

promotes its brand and _ products

through sponsorships, leading sports

personalities and major sports events

globally Leading events at which

Adidas promotes its products include

FIFA World Cup, UEFA Euro, the

UEFA Champions leagues, the

Olympic games, the Boston and Berlin

Marathons etc Apart from these, the

brand targets football fans by

sponsoring high profile football teams

and individual players like Lionel

Messi Adidas also tries to achieve the

best results from its marketing

investments and doing more by

investing less

202 BRAND VALUE

Adidas is considered a leading brand in

sports It is a favorite brand for all

sports lovers It is ranked the third

position according to Forbes, and its

brand value is about $6.8 billion

Adidas is one of the most valuable

brands in sports According to Forbes,

it is ranked at #3 position (Nike at # 1

and ESPN at # 2) with a brand value of

$12.9 Billion In 2020, Adidas was

ranked the 51st most valuable brand in

the world

CORONAVIRUS PANDEMIC WEIGHS ON ADIDAS’ PERFORMANCE IN 2020

In 2020, revenues decreased 14% on a currency- neutral basis In euro terms, revenues were down 16% to € 19.844 billion from € 23.640 billion in

2019 The main reason 1s because of Coronavirus pandemic weighs directly on Adidas’ performance in 2020 Currency-neutral footwear sales were down 15% in 2020 as a result of double-digit sales declines in both Sport Inspired and Sport Performance Cost of sales decreases in line with net sales - Cost of sales is defined as the amount we pay to third parties for expenses associated with producing and delivering our products In addition, own- production expenses are also included in the cost

of sales However, these expenses represent only

a very small portion of total cost of sales In

2020, cost of sales was € 9.990 billion, representing a decrease of 12% compared to the prior year level of € 11.347 billion This

reflects the shortfall due to the coronavirus pandemic

Net sales € inmilions

development mainly revenue

GAINS FROM DISCONTINUED

OPERATIONS AMOUNT TO €13

MILLION

In 2020, Adidas incurred gains from

discontinued operations of €13 million,

net of tax, mainly related to the

remeasurement of outstanding earn-out

components i connection with the

divestiture of the TaylorMade business

in 2017 (2019: gains of €59 million) LESS PRODUCT LINE

Adidas Group maintains only Adidas and Reebok brands in its portfolio This limitation has led to the brand restrict to only sports products Hence, when there is less demand for sports-related products, it is a risk for the brand Currency-neutral revenues for the Adidas brand decreased 13%, with double-digit sales declines

in both Sport Inspired and Sport Performance In euro terms, Adidas brand revenues were down 16% to € 18.095 billion compared to € 21.505 billion in 2019 Currency-neutral Reebok brand sales decreased 16% versus the prior year, as revenues declined at double-digit rates in both Sport and Classics In euro terms, Reebok sales

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decreased 19% to € 1.409 billion (2019: € 1.748 billion)

SHORTAGE OF SUPPLY CHAIN Adidas has outsourced its manufacturing of products to independent production suppliers that are mostly located in Vietnam, China, and Cambodia This outsourcing has put Adidas at risk of overdependence on other foreign supplies These suppliers are not able to match the increasing demand for mid-priced products and that resulted in sales reductions Financial mcome decreased 55% to € 29 million in 2020 (2019: € 64 million), while financial expenses were up 23% to € 204 million compared to €

166 million in 2019 As a result, the company recorded a net financial result of negative € 176 million, compared to negative € 102 million in

2019

OPERATING MARGIN DECREASES TO 3.8%

Operating profit declined 72% to € 751 million

im 2020 versus € 2.660 billion in 2019 The operating margin decreased 7.5 percentage points to 3.8% compared to the prior year level

of 11.3% This development was due to the gross margin decrease and the increase in other operating expenses as a percentage of sales

Operating margin’? in %

1 Opietatirg margin

STRONG BRAND RECOGNITION

AND A LARGE MARKETING

ADIDAS TO SCORE LARGE

SPONSORSHIP DEALS WITH

SPORTS TEAMS AND ATHLETES

The company has been FIFA and

UEFA’s sponsor for the footballs and

apparel used in major tournaments for ADIDAS’S OVERALL SALES RELY TOO

MUCH ON THE FOOTWEAR SEGMENT The segment is currently accounted for 60% of sales and it is expected to rise further in a near future However, the growth of footwear sales has slowed down significantly, from 23% im

2017 to only 3% in 2018 To avoid the negative effect of changing consumer taste on revenue, Adidas should diverse its revenue to apparel and

many years, a position that even Nike

cannot overthrow They are also the

main sponsor for Germany National

team, Manchester United, Real Madrid,

as well as famous footballers such as

Paul Pogba, Lionel Messi, and Gareth

Bale Adidas also secured a

sponsorship deal with the MLS (the

U.S professional national football

league) to expand the brand’s exposure

in the U.S market Apart from football,

Adidas also has sponsorships with

athletes in basketball (James Harden,

Donovan Mitchell), boxing, rugby, and

many Olympic teams

sporting equipment, or introducing new and innovative shoes to reignite the demand

INNOVATIVE AND TOP-QUALITY

PRODUCTS KEEP ADIDAS’S

SALES HIGH AND AFFIRM ITS

POSITION AMONG COMPETITORS

Collaboration with artists and other

celebrities, such as Kanye West and

Pharrell Williams, allows Adidas to

penetrate the premium casual fashion,

where the Yeezy 350 can be sold for

hundreds of dollars The company

constantly introduce new lines of

football boots with new designs and

features to suit the demands of their top

athletes, as well as improving and

refreshing current lines with new

colors Adidas is also in the race with

Nike for the carbon-sole running shoe

market, and its latest product received

positive reviews from professional

TOO LITTLE MARKET SHARES IN NORTH AMERICA EVEN THOUGH ADIDAS IS A GLOBAL FORCE

According to Euromonitor, Adidas only represented 5.9% of the U.S market in 2019, while Nike had 16.7% of it Adidas’s main sports, football, is not a popular choice among Americans and the company cannot win sponsorship deals with major professional leagues, such as the NFL and the MLB Adidas used to be the main apparel sponsor for the NBA, however, it lost the contract to Nike

Who are the brand's target customers?

Adidas intends to appeal to both the core segments of customers who have supported the business since its beginning and those who are passionate about health and fitness sports In order to

people between the ages of 20 and 30 who appreciate sports Adidas believes that athletes between the ages of 13 and 18 are the most crucial potential customer since they represent the brand's future athletes However, the business is also well known among those in the 40 to 65 age group

Because of this, they mostly serve high-end and upper-middle class clients Adidas also serves a smaller group of customers who are between the ages of 15 and 25 who do not engage im athletics but purchase footwear or clothing as a statement piece of fashion While the normal Adidas serves

to people who desire to participate in athletics, Adidas Originals offers limited-edition daily wear and cultural design clothing and footwear that are often more colorful but less athletic mn design Adidas can't appeal to every customer in such a vast and diverse market because if they do, their message will be jumbled and they will not be able to satisfy any of them

US and International

Urban locations and E-

commerce websites

15-50 age group

s and Females

Potential users’ and itchers

Determined and ambitious individuals

Upper- Middle class and upper classe

Customers who are ambitious

resigned, succeeder, explorer,

and aspirer

4 What is the customers’ perception of the brand comparing to its competitors’ brand?

Businesses like Adidas need to carry on taking care of their customers by adding value to their products so that they can keep on making profit Adding value also means that they would stand out from other competitive sports brands like Nike, Puma, There are some of the methods Adidas use to add value to their products

4.1 Advertising

Advertising is one of the ways Adidas add value to their products They make their advertisements look interesting to the consumer's eyes This then influences the consumers to