Business Management

Internal Assessment

Standard Level

Should adidas change their marketing strategies after ending their

Word count: 950

Introduction
Swot Analysis for Adidas:
Marketing strategies:
Ways to improve their marketing strategies:
Conclusion:
Bibliography
SUPPORTING DOCUMENT 1:
SUPPORTING DOCUMENT 2
SUPPORTING DOCUMENT 3:
Supporting Document 4:
Introduction

Adidas started working in Bavaria, Germany and since that times Adi Dassler

started his mission to provide athletes with the best possible equipment. ¨Gold medals in

Amsterdam (1928, Lina Radke) and Berlin were first rewards and milestones – and only

the start of our story.¨(SD3). This is a clear example of a Big Company that started from ¨A

wash room and conquered the world”. (SD3)

However, in November 2022, Adidas. Faced first annual loss in three decades after

Kanye West split. Adidas split with Yee last October after he made several antisemitic

remarks on social media, resulting in the end of Yeezy-branded products. (sd1)

In this way the investigation Will answer the following research question: Should

adidas change their marketing strategies after ending their partnership with Kanye West?

This will be thought of by comparing their old and actual market strategies and a Swot

analysis.

3
Swot Analysis for Adidas:

A SWOT analysis will be carried out in order to decide if Adidas should change their marketing

strategies after ending their partnership with Kanye West. SWOT Analysis deals with the

Strengths, Weaknesses, Opportunities and Threats of a certain aspect so it will help us to

recognize which improvements should be done. Source?

• Strengths: Adidas is one of the leaders of sports market nowadays, and this is because

of many aspects. However there are some more important than others. For example

Adidas has existed since 70 years ago so its brand value is essential for adidas.“ With over

70 years in operation, the company has established a reputation for producing high-quality

goods and cutting-edge designs. According to Forbes, Adidas is one of the most valuable

sports brands in the world, worth over $16 billion as of 2021.” (SD5).

• Weaknesses:

“Slow Response To Fast Fashion Trends because of how quickly things move in the

fashion industry, businesses that fall behind their rivals risk losing market share. Adidas

struggles to react swiftly to shifts in consumer tastes, which might affect sales and

earnings.”(sd5). Adidas has slow response at fashion trends due to being focused at

sports market so not being that significant at fashion trends as its rival, generates an

enormous weakness at their market.

• Opportunities:

4
“Adidas can collaborate with many people to raise awareness and increase sales. As

such, the company expands its brand visibility and reaches a broader range of people.

Also, by collaborating with some brands, the company could create more innovative and

customer-appealing products”(sd5). Besides Kanye West, there still exist plenty of

famous people who can collaborate with a personal brand, so its ending is not as

important as it was shown.

•Threats:

“Adidas faces stiff competition. The sports apparel market is fiercely competitive, and well-

known companies like Nike, Puma, Under Armour, and Reebok are not taking it easy with

Adidas”(sd5). All these brands are producing their fashion segment in order to enter the

exclusive sports fashion market because nowadays it is one of the markets that is better

paid and more demanded.

5
Marketing strategies:
Adidas has been working since 70 years ago and their strategies emphasize on“quality,

innovation, diversification, and heavy-budget advertisements to stay as one of the best

brands in a competitive market”(sd5). Lets analyze their 4P’s.

Product: Adidas' product lines include a range of t-shirts, hoodies, shorts, sporting

equipment, etc apart from shoes. Their apparel includes sweaters, shorts, tracksuits,

jackets, swimsuits, sports bras, hoodies, and other items. (sd5)

To produce such products with good quality in a scalable manner, Adidas collaborates with

many researchers, creators, designers, and open source innovations to shape its sporting

goods. For example, Adidas partnered with Parley for the Ocean to use the plastic waste

from oceans and beaches for manufacturing shoes. (sd5)

Pricing

Adidas, even though it has premium pricing, indeed keeps in mind its major competition

across Puma, Nike, and other upcoming startups to price its products. It also follows the

skimming pricing strategy, where newly launched products are kept at premium prices,

and their value drops as they get out of fashion (sd5)

6
Promotion

The Adidas brand spends a ton of money on traditional advertising methods. This includes

billboards, TV, newspapers, magazines, etc. To compete with Nike, one of its strategic

growth areas is to leverage digital marketing with social media, influencer marketing, and

paid ad spending. (sd5)

Distribution Strategy

Adidas, with its high speed manufacturing prowess and production process, has more than

500 independent factories across 55 countries. All its products are available in its own

retail stores in malls, independent showrooms, other mega marts like Walmart, online

stores like Amazon/Myntra, and its own eCommerce store for direct purchases. (sd5)

Ways to improve their marketing strategies:

Adidas should generate more collaborations in order to have diversification, and exclusive

products. By this they will raise the price of the products and finally produce a new

segment of products.

7
 Conclusion:
To conclude it is notorious that adidas needs a change in their fashion sector if they

want to compete. As a measure, I believe that they should start looking for new celebrities

who would be interested in making a collaboration with the brand, and while they are

producing it, start using diversification and generating some sort of ¨hype¨ so when the

products enter the market, just fly.

However, they also should produce a special quantity of products in order to make it

more exclusive and give the product a higher price. By this adidas should raise their

position in the Sports fashion industry and start competing again.

Making reference to the partnership with Kanye west, they should finish selling the

products that were produced and not selled and finish their interrelationships in a positive

way in order not to produce social problems for adidas also.

The conclusion must include ideas already dealt with in the essay, and not include new ideas.

8
 Bibliography
Supporting documents:
Supporting document 1

https://www.insidethegames.biz/articles/1134604/adidas-faces-first-annual-loss

Supporting document 2
https://www.adidas-group.com/en/about/history/

Supporting document 3

https://boardroom.tv/yeezy-day-kanye-west/

Supporting document 4

https://www.insidethegames.biz/articles/1134604/adidas-faces-first-annual-loss

Supporting document 5

https://businessmodelanalyst.com/adidas-swot-analysis/

9
10
SUPPORTING DOCUMENT 1:

Adidas faces first annual loss in three decades after Kanye West split

German sportswear brand Adidas could be facing its first annual loss in three decades

after ending its nine-year partnership with Ye, the American rapper formerly known as

Kanye West.

Adidas split with Ye last October after he made several antisemitic remarks on social

media, resulting in the end of Yeezy-branded products.

It is reported that the Yeezy range accounted for eight per cent of Adidas' total sales in

2021 after generating $2 billion (£1.6 billion/€1.8 billion) that year.

Bjørn Gulden, the new chief executive of Adidas, said it had yet to decide what to do with

the unsold stock of Yeezy products which is reportedly worth around $1.3 billion (£1.1

billion/€1.2 billion).

If Adidas opts to dispose of the products, it could see the company’s profit drop by $500

million (£414 million/€468 million) and suffer its first annual operating loss in 31 years.

Other factors cited for the losses include Adidas’ decision to close its stores in Russia in

response to the war in Ukraine and a drop in sales of 36 per cent in China due to COVID-

19 restrictions in the country.

Adidas ended its partnership with Ye, the American rapper formerly known as Kanye West

last October following his antisemitic remarks on social media ©Getty Images

11
According to CNN, Adidas’ operating profit dropped 66 per cent year-over-year to $705

million (£584 million/€660 million), while its shares have slipped by around two per cent.

Adidas' chief financial officer Harm Ohlmeyer admitted it had been a "disappointing year"

for the sportswear giant.

"We definitely did not perfect as we should have performed," said Ohlmeyer.

Gulden said the company was in a "transition" year as it looks to return to profit in 2024.

"You will see us invest in more sport…because that is the DNA of this company," said

Gulden.

Chloe Collins, head of apparel at data firm GlobalData, told Sky News that Adidas was 4.8

per cent behind pre-pandemic levels.

"In Q4, despite Adidas's sponsorship of winning team Argentina, the presence of the FIFA

Men's World Cup was not enough to offset the negative impact of the Yeezy controversy

on the brand or the fact that its designs lag behind rivals Nike and Puma," said Collins.

12
SUPPORTING DOCUMENT 2

Adidas is a recognizable name to not just sports fanatics but everyone, right from children

to adults. Started as a shoe company in Germany, today Adidas owns a market cap of

more than 21 billion euros!

Venturing into sports equipment and sporting apparel brand has made it the fastest-

growing footwear lines. As of 30th June 2022, the company's sales were $24.559 billion.

Founded and headquartered in Herzogenaurach, Bavaria to sell soccer products to

athletes, today Adidas is one of the best sporting goods company that is competing for

neck-to-neck with Nike footwear in this monopolistic sportswear market.

In this article, we will understand how Adidas' manufacturing process and branding enable

the Adidas marketing strategy to build a company that has lasted for 73 years.

About Adidas company

13
Source - GamePlan

Adolf Dassler founded the firm at his mother's house for selling soccer products, where he

was joined by his elder brother Rudolf in 1924. Both the brothers split, post which Rudolf

created the famous Puma brand, while Adolf continued with Adidas.

The company acquired Reebok in 2005 and repositioned Reebok to align with Adidas'

brand values. A series of such acquisitions allowed Adidas to gain market share and

dominance in the sporting goods industry.

Adidas' marketing strategy

Adidas has worked for more than 70 years to build the brand that it is today. The Adidas

strategy for marketing emphasizes quality, innovation, diversification, and heavy-budget

advertisements to stay as one of the best brand in a competitive market.

Let's analyze the same using 4P marketing analysis:

Adidas Brand Target Market

For its marketing strategy, Adidas' target audience includes athletes and youth between

the age group of 20 to 30. Another target audience of the Adidas brand is 13 to 18-year-

old athletes as they believe the youth are the future generation of prominent athletes.

14
Source - Adidas

But overall, Adidas has taken an approach of broad customer development as a result of

which their target market includes people of any age or demographic passionate about

sports culture and being fit.

Product

Source - keishelleeadidas

Adidas' product lines include a range of t-shirts, hoodies, shorts, sporting equipment, etc

apart from shoes. Their apparel includes sweaters, shorts, tracksuits, jackets, swimsuits,

sports bras, hoodies, and other items.

To produce such products with good quality in a scalable manner, Adidas collaborates with

many researchers, creators, designers, and open source innovations to shape its sporting

goods. For example, Adidas partnered with Parley for the Ocean to use the plastic waste

from oceans and beaches for manufacturing shoes.

15
You can learn more about the innovation and watch documentaries - Adidas X Parley

shoes

Overall, the brand's product portfolio is well-rounded, offering outstanding options in many

vital areas.

To compete with Nike which had started to sell sporting equipment, Adidas too released its

collection of backpacks, sunglasses, goggles, and watches to capture the market. This

includes training equipment and yoga accessories too.

Source - Adidas Hardware

As mentioned, the Adidas marketing strategy also targets young audiences as a part of

diversifying its product portfolio. It has a dedicated collection called Adidas Neo that sells

casual footwear for young adults and children.

Pricing

Adidas, even though has premium pricing, indeed keeps in mind its major competition

across Puma, Nike, and other upcoming startups to price its products. It also follows the

16
skimming pricing strategy, where newly launched products are kept at premium prices,

and their value drops as they get out of fashion.

Promotion

The Adidas brand spends a ton of money on traditional advertising methods. This includes

billboards, TV, newspapers, magazines, etc. To compete with Nike, one of its strategic

growth areas is to leverage digital marketing with social media, influencer marketing, and

paid ad spending.

Adidas is also very actively involved in sponsoring sports teams, which includes big names

like Real Madrid, England, South Africa cricket teams, United Kingdom Football, etc. Many

professional athletes also form a part of its influencer campaigns.

Distribution Strategy

Source - Infinity Mall

Adidas, with its high speed manufacturing prowess and production process, has more

than 500 independent factories across 55 countries. All its products are available in its own

retail stores in malls, independent showrooms, other mega marts like Walmart, online

stores like Amazon/Myntra, and its own eCommerce store for direct purchases.

The two sportswear giants' competition - Adidas vs Nike

17
Adidas and its main competitor Nike have nurtured their own sports fans in a fierce

competition ruled by marketing spending. Consumers are loyal and both products are in

high demand, but looking at their marketing strategy, one can find many differences

stemming from their business ideology and country of origin.

Adidas has focused on tennis and soccer players, while Nike has focused on basketball

and runners as its target audience. Within their segments, both have diversified to make

sporting goods and equipment to cater to all their needs.

Their country of origin also plays an important role in how these brands market

themselves. Being a U.S-based Brand, Nike focuses on its domestic market and many of

its products are suited to American taste.

While Adidas, which is a German brand, has designed its products more suited to

European feet and weather conditions. Its speedy manufacturing processes and

production processes are enabled by German technology. Their German branding which is

known for product excellence is indeed a unique selling point that gains potential

consumers' trust across the world.

What makes Adidas' marketing strategy unique?

Building a company that lasts more than 70 years requires consistent branding efforts and

adaptive business operations. Some key aspects of the Adidas marketing strategy that

helps it stand out include:

Adidas digital marketing strategy

18
Source - SocialInsider

Adidas has its own eCommerce store is today one of its fastest growing revenue channel.

For targeting the younger crowd which is more online, it's even more important today to

maintain a strong digital marketing strategy. Its social media posts promote sustainability,

action, inspiration, and a modern outlook.

To achieve this, Adidas itself went into digital transformation to become a digital company.

Today, the company spends most of its marketing budget on digital campaigns and social

media - as per MarketingWeek digital analysis of the brand.

Strategic Cities

Adidas makes its presence strong in certain cities of strategic importance and that are

culturally influential. This includes prominent names like Paris, Tokyo, London, Shanghai,

Los Angeles, and New York.

It is known that these cities influence fashion trends across the world. Many other strong

competitor of Adidas also focus on these cities to ensure success there, post which they

distribute the product worldwide. This forms a concentrated marketing strategy that helps

reduce overall marketing efforts and budget if done right.

Memorable marketing campaigns by Adidas

19
Adidas' ads successfully create excitement and espouse inspiration to its viewers. They

have worked with several professional athletes, musicians, actors, and influencers who

align with its brand values. Some notable ad campaigns include:

Your future is not mine

This ad targets the younger generation, a customer segment that is of growing importance

for the Adidas company. With futuristic visuals, the ad inspires one to take the future into

your hands.

Muhammad Ali VS Laila Ali

The Impossible is Nothing campaign is a unique one, where they use technology to rework

Muhammad Ali's images from his real-life matches to compete against his daughter, Laila

Ali. This Adidas-created ad is a great use case of using AI for taking creative execution for

ads to another world.

20
Partnership with Kanye West

Source - Adidas

Adidas partnered with Kanye West to release branded footwear - Adidas Yeezy and

accessories that would appeal to his fans. Recently, due to Kanye's unfavorable behavior,

the company cut ties on this deal, though it will continue to sell its shoes.

Key takeaways from Adidas marketing strategies

If you're working on building a retail business, there is a lot to learn from the Adidas

marketing strategy and the founding story as well.

Here are some major takeaways:

Focus on building a quality supply chain

The Adidas company is successful today due to its strong focus on ensuring its product

quality is at par with what its upper middle class and above target market find appealing. If

you have good quality products, you can always sell, upsell and cross-sell across the

world. Adidas ensures its products are also consistently available worldwide.

Don't neglect digital marketing

21
Adidas started to lose its market share with Nike due to its lackluster digital presence.

Recently, it has vowed to regain its share by making digital as a key part of its overall

marketing strategy. In today's age, one cannot neglect to be a digital company, especially

post-pandemic.

Target the root cause of trend formation

Adidas smartly focuses on key cities that are responsible for fashion trends than doing any

spray-and-pray approach to sell across the world. Adidas works to ensure the people of

these cities use its products, while the rest gets taken care of via word of mouth.

Adidas is today's world's number 2 brand, just behind Nike. With its recent digital

transformation, the Adidas digital marketing strategy would again create fierce competition

in the sports retail market. If you enjoyed this case study, you can also get more retail-

marketing insights.

22
SUPPORTING DOCUMENT 3:

HISTORY

We started in a wash room and conquered the world. And in between, we’ve scored big

and sometimes struggled to reach our goals. We’ve done our best for the best. We’ve

improved and grown. Looking ahead to the future, always remembering where we came

from. This is our story.

THE EARLY YEARS

Every great story has a beginning. This one started in a small town in Bavaria, Germany.

After starting out in his mother’s wash kitchen, Adi Dassler registered the ‘Gebrüder

Dassler Schuhfabrik’ in 1924 and embarked on his mission to provide athletes with the

23
best possible equipment. Gold medals in Amsterdam (1928, Lina Radke) and Berlin were

first rewards and milestones – and only the start of our story.

The young Adi Dassler in his shoe factory

Adi Dassler, founder of adidas, in the Gebrüder Dassler Schuhfabrik.

Adi Dassler earned the athletes trust by listening to them. Lina Radke won a Gold medal

wearing Adi Dassler's shoes already in 1928 at the Olympic Games in Amsterdam.

Lina Radke wearing Adi Dassler's shoes.

Adi Dassler gathering feedback from athletes.

Being an avid athlete himself, Adi Dassler understood athletes and their needs.

Adi Dassler talking to athletes.

24
Supporting Document 4:

Adidas is a well-known company that creates and produces sporty and fashionable

footwear, clothes, and accessories. It was founded by Adi Dassler in 1949 in Germany,

and it has since grown to become one of the most renowned sportswear manufacturing

companies in the world. Adidas is highly respected for its premium goods and avant-garde

style.

The company has advanced significantly in its field of business throughout the years and

recorded various successes that have made it a force to be reckoned with. The brand’s

collaboration with some of the biggest names in sports, like Lionel Messi and James

Harden, among others, is one of its most illustrious accomplishments. This collaboration

has improved the brand’s recognition and appeal to sports fans worldwide. Innovating

constantly to improve the functionality and comfort of its products, Adidas is always at the

forefront of the industry.

Notwithstanding its achievements, Adidas nevertheless faces several difficulties. One of

the biggest obstacles is the fierce competition, with companies like Nike and Under

Armour battling for market dominance. Moreover, economic ambiguity and shifting

consumer tastes may impact the brand’s performance.

Below, there is an in-depth Adidas SWOT analysis to determine its strengths,

weaknesses, opportunities, and threats. When making strategic decisions and identifying

25
areas for improvement, this analysis can offer insights into the company’s internal and

external issues, current position in the market, and future possibilities.

Strengths

Adidas owes its massive success in the global market to quite several factors. Below,

there are some of them:

Brand Value

When buying, customers consider a brand’s reputation because they enjoy associating

with particular brands. Why? They want to be sure they will get high-quality products, one

of Adidas’ strengths. Adidas enjoys widespread brand recognition and a positive

reputation. With over 70 years in operation, the company has established a reputation for

producing high-quality goods and cutting-edge designs. According to Forbes, Adidas is

one of the most valuable sports brands in the world, worth over $16 billion as of 2021.

Innovation

One of any brand’s greatest assets is its ability to creatively and consistently improve the

customer experience through product development and research. Adidas understands this

well and uses it to its advantage. The company is renowned for making cutting-edge

products, which keeps it one step ahead of its rivals. With a focus on developing goods

that satisfy the needs of its consumers, the company makes significant investments in

26
research and development. This is reflected in its several innovative technological

advancements, such as BOOST and Primeknit, which have boosted sales and

strengthened its market value.

Diversified Product Portfolio

Adidas is a well-known sporting goods company with a broad product line that appeals to

different sports market segments. The business makes sports and leisure-related clothing,

footwear, and accessories. Adidas has connected with a wider customer base thanks to its

diverse product offering, including seasoned athletes and newcomers. This broad product

portfolio reduces the company’s reliance on a specific product. Besides, the sports sector

needs various items since consumers have varied wants and needs. A large selection of

items also aids Adidas in maintaining market dominance and attracting more consumers.

Also, Adidas’ broad range of products has helped it grow its global clientele. Adidas has

successfully dominated a significant portion of the worldwide sports market thanks to

different products tailored to various geographic needs.

Strategic Partnerships and Endorsements

Customers would choose to purchase from brands with which they are more closely

associated. They would also do the same if a particular brand were associated with their

preferred celebrities, influencers, or other brands. Adidas forges strategic alliances with

well-known sports organizations, athletes, and celebrities, increasing its brand recognition

27
and boosting revenue. By working with influencers and developing creative marketing

initiatives, Adidas has also taken advantage of the power of social media.

Global Presence and Distribution Network

Sporting needs and preferences span countries and continents, rather than being limited

to a single geographic region. These requirements must be satisfied, and Adidas is doing

so. The company has a solid international presence and conducts business in more than

160 countries. It has a robust distribution network comprising relationships with

independent retailers, e-commerce platforms, and brick-and-mortar locations, making it

acquire customers in many markets and geographic areas.

Digital Presence

Any business would be wise to evolve with the world as it does. Adidas has already

adapted to the new technologies emerging daily, especially with e-commerce becoming

increasingly popular among consumers and manufacturers. Adidas has a significant

internet presence and an online storefront for customers. Additionally, the business uses

social media to interact with customers and foster a feeling of brand community. To

improve the client experience, Adidas has also adopted cutting-edge technology like

augmented and virtual realities.

Social Responsibility and Sustainability

Customers are turning to eco-friendly items as they become more conscious of the

environment and concerned about keeping it clean, clear, and carbon-free. Adidas is a

28
well-known international company that acknowledges sustainability and CSR significance.

The company has made several efforts to lessen its environmental impact. Adidas has

committed to employing entirely recycled polyester in its products by 2024, one of its most

significant sustainability initiatives. Sportswear frequently contains polyester, produced

using non-renewable resources like petroleum, which pollutes the environment. Using

recycled polyester, Adidas can reduce its carbon footprint and save natural resources.

Adidas has also pledged to become carbon-neutral by 2050. By 2030, the corporation

wants to cut its greenhouse gas emissions by 30% compared to the baseline year of 2017.

Adidas is also investing in sustainable energy sources like solar and wind energy to lessen

its reliance on fossil fuels.

Financial Performance

Adidas has steady revenue growth and profitability, contributing to its financial

performance. In 2020, the business recorded €23.8 billion in revenue, an increase of 2%

from the previous year, and €1.4 billion in net income. Adidas can invest in R&D and keep

innovating its products and services because of its stable financial situation.

Weaknesses

While Adidas has stunned both competitors and consumers with its stellar market

performance, it is not without its drawbacks. Below, there are some of Adidas’

weaknesses:

29
Supply chain shortage

Many disruptions, including delays in the delivery of raw materials or components, natural

catastrophes, trade disputes, or other unforeseen events, can result in supply chain

shortages. Like many other businesses, Adidas depends on a complicated global supply

chain comprising vendors and subcontractors based worldwide. Any break in this supply

chain could result in severe issues for Adidas, such as production delays, decreased

output, and higher costs, ultimately impacting profitability.

Small Product Line

When businesses offer various products, they typically draw a wider group of customers,

increasing their sales. Although it has a wide variety of items, Adidas has a smaller

product lineup than some of its rivals, which might limit its appeal to customers who want

more choices.

Growing Operating Expenses

A corporation may have rising operating costs as it expands, including higher labor costs,

marketing and advertising costs, and administrative costs. This affects Adidas as the

company spends much more, even making more money. Profitability could suffer if these

costs increase faster than revenue growth.

Dependence On The Sports Market

30
In the past, Adidas has concentrated on the sports sector, which is cyclical and susceptible

to shifts in customer preferences. Adidas can experience a reduction in sales and revenue

if the sports market experiences a slump.

Outsourced Manufacturing

Adidas outsources much of its production to plants in nations with cheaper labor prices.

Although this approach may result in cost savings, it also exposes the business to risks

related to poor working conditions, violations of labor regulations, and supply chain

interruptions.

Intense Competition

Other major international companies like Nike, Under Armour, and Puma fiercely rival

Adidas. If Adidas cannot distinguish itself from its rivals, this competition may result in

price wars and decreased profitability. Adidas may need to consider expanding its product

line to appeal to a broader range of customers to stay competitive.

Slow Response To Fast Fashion Trends

Because of how quickly things move in the fashion industry, businesses that fall behind

their rivals risk losing market share. Adidas struggles to react swiftly to shifts in consumer

tastes, which might affect sales and earnings.

Limited Presence In Emerging Markets Of Developing Countries

Adidas’ weak presence in underdeveloped nations’ growing marketplaces may limit its

potential for expansion. These markets have much room for growth but also present

31
special difficulties, like fluctuating currencies, unstable governments, and divergent

cultures. If Adidas wants to establish a market in these regions, the company must find a

way to flourish regardless of the difficulties.

Expensive products

Adidas is a well-known company associated with top-notch athletic gear. The brand has a

reputation for making high-quality, stylish footwear and clothing, but this reputation comes

with a premium price tag. Some clients constantly search for the most terrific deal in a

cutthroat marketplace. Adidas’ items may lose market share and sales when more

affordable competitors are frequently accessible and produce the same high-quality sports

gear. It might also consider providing more economical solutions to appeal to a larger

audience. If Adidas refuses, its brand acceptance can suffer, as even the most prosperous

businesses can lose ground from failing to adapt to shifting market conditions.

Opportunities

Although Adidas has done well, there is still more room for improvement. Here, there are

some opportunities in the market Adidas can take advantage of or strengthen its position

in:

E-commerce

32
Technology advancements have made things relatively easier for many in this time and

age. One of the things that have been made more accessible is shopping. The trend of

online shopping is at an all-time high, especially with everyone wishing to handle their

business remotely. Even though Adidas has an e-commerce presence, it can milk the

opportunity further by partnering with more e-commerce platforms to drive more sales and

profits and reach a broader range of people. They can also use these online platforms to

understand their consumers’ preferences better.

Gender Neutral Collection

Consumer preferences continuously change depending on trends in societal values,

among other things. A preference shift leads to a high demand for gender-neutral clothes

and shoes. These demands are barely met, leaving a sizeable fertile land for Adidas to

tap. Recently, the company struck a deal with Beyoncé to create gender-neutral

collections. There is a massive opportunity for more sales if Adidas can grow its gender-

neutral collection.

Growing Sportswear Industry

The need to participate in sports and remain fit keeps rising; it is not restricted by territory.

This need has also led to an increase in the demand for sportswear items and

accessories. By figuring out where the demand for these sportswear items and

accessories is emerging, Adidas can supply products to fulfill these demands and increase

sales.

33
Demand For Premium Products

Usually, people want what is best whenever they shop and try as much as possible to get

premium products. The only reason they don’t is that they lack the means and purchasing

power to do so. However, with the improved economic situation in developing countries

comes a better standard of living for consumers. This means that as their buying power

increases, people now demand luxury and premium products like the ones produced by

Adidas. In light of this, Adidas can target consumers under this category in all geographical

areas, especially developing countries, and meet the demand for premium sportswear

clothing and shoes.

Using Smart Material

The road to fitness is not often easy — as people ply this road, usually by participating in

sports, they want to feel as comfortable and functional as possible. Many sportswear

manufacturers make the mistake of producing sports clothing and shoes using

uncomfortable designs or materials. This problem allows Adidas to use smart materials

and technology to make sports gear more convenient, comfortable, and functional. This

would further consolidate Adidas’ position as a global leader in the industry.

Expanding To Emerging Markets

There is a potential market for Adidas in India, Brazil, and most of Africa. These markets

have not been explored or touched by any sportswear manufacturing company. The

34
interest in sports in these countries is also increasing, so Adidas can grab this opportunity

to enter these markets.

Product Diversification

Adidas can begin to branch into new market categories that are not entirely different from

sports by expanding its product portfolio. The company should not depend entirely on

sportswear. Consumer preferences change regularly, and there might be a time when

sports will not be the main big thing. They would be ready for such shifts by branching out

to other categories.

Collaborations.

Adidas can collaborate with many people to raise awareness and increase sales. As such,

the company expands its brand visibility and reaches a broader range of people. Also, by

collaborating with some brands, the company could create more innovative and customer-

appealing products.

Sustainability

People are continuously becoming aware of their environment and how much damage has

been done to it. To save their environment and the earth in general, people are trying as

much as possible to do away with activities that negatively affect the earth and embracing

eco-friendly activities and products. Adidas can also dig deeper into this idea of

sustainability by using recycled materials for manufacturing their products and designing

35
products that can easily be recycled. This way, Adidas will be a significant player in the

circular economy and can build a thriving business.

Sporting Equipment Production

Although Adidas and its rivals are well-known for their sportswear collections, diversifying

into the manufacture of other athletic goods might be a wise step for the company. Sports

enthusiasts have a high demand for sporting goods like basketball hoops, tennis rackets,

golf clubs, and soccer balls. Adidas would have a competitive edge if they could

manufacture and market these goods before their rivals. This also allows Adidas to

diversify its revenue streams and increase its product line. As such, it would better

withstand economic downturns or changes in consumer tastes. Also, sporting goods

typically have a higher profit margin than sportswear, which could improve the businesses’

bottom lines.

Threats

Here, there are some of the threats Adidas faces:

Competition

Adidas faces stiff competition. The sports apparel market is fiercely competitive, and well-

known companies like Nike, Puma, Under Armour, and Reebok are not taking it easy with

Adidas. Adidas finds distinguishing items in the market challenging due to these brands’

similar products and potential market value overlap. Asides from these well-known brands,

36
Adidas also faces competition from small and medium-sized firms that can now compete

because of technological advancements and globalization. Adidas must constantly

develop its products and marketing approaches to keep ahead of the competition. It risks

losing market share and having lower profits if it doesn’t.

Supplier Dominance

Adidas obtains its raw ingredients and finished goods from a vast network of suppliers.

Dependence on suppliers puts the business at risk of supplier domination, which can

increase costs, disrupt the supply chain, and result in lower-quality products. Since there

will be more rivalry among suppliers due to provider dominance, prices may rise, or other

clients may get priority. In addition, it should be noted that Adidas works with various

manufacturers to create its products, giving the manufacturers more negotiating leverage

than the business. Adidas must make sure that it maintains solid connections with its

suppliers and periodically evaluates its performance to reduce this risk. Better still, Adidas

can produce its raw materials.

Fake Products

Counterfeit goods may significantly impact the reputation of Adidas’ brand and financial

results. Since they are of low quality, they harm the brand’s reputation, diminish client

loyalty and hurt sales. Adidas must take decisive action to stop creating and distributing

fake goods. This entails strengthening supply chain controls, collaborating with law

37
enforcement to track down and prosecute counterfeiters, and raising public awareness of

the dangers of purchasing fake goods.

Economic Downturns

Consumer spending on luxuries like sports gear and shoes decreases during economic

downturns, affecting Adidas’ sales and profitability. Adidas must diversify its product

offerings and markets to lessen its dependency on one market. Also, it must be flexible

and responsive to economic changes, adjusting its pricing and marketing plans

accordingly.

No Recognized Trademark

Adidas’s brand is one of its most valuable assets. However, in some markets, the

company’s trademark is not protected, exposing the company to the risk of intellectual

property theft. In 2019, it lost a suit over its tri-strip logo, meaning they do not have a right

over it.

Changing Consumer Preferences

To be relevant and competitive, Adidas must stay ahead of the changes in consumer

tastes. If not, its brand loyalty and sales may suffer. Adidas must spend money on market

research and analysis to identify trends and modifications in consumer preferences.

However, it must be flexible and sensitive to these changes, modifying its product lineup

and marketing tactics.

38
Lawsuits

Adidas was sued in 2021 by Nike for allegedly utilizing the Flyknit technology to produce

shoes without a license. Due to these allegations, a full investigation of the brand is now

necessary. Such lawsuits may significantly harm Adidas’s finances and reputation. These

lawsuits will cost Adidas a lot for legal counsel, and even more, if they lose the case.

Lawsuits can result from many things, such as contract violations, trademark infringement,

and product faults.

Adidas must employ efficient risk management measures, such as contract management,

product quality assurance, and adherence to legal and regulatory standards.

Conclusion

Adidas is a market leader in sportswear, boasting a solid brand identity, cutting-edge

products, and a significant global footprint. The business has been operational for over 70

years and has established a strong reputation for performance, quality, and innovation.

Since it was founded by Adi Dassler and his brother, Rudolf Dassler, it has developed into

one of the world’s most well-known and admired brands.

Adidas has also created several incredible items over the years, such as the Ultraboost

running shoe, which is well-known for its comfort and performance, and the Superstar

sneaker, a cultural symbol in hip-hop. The company has also contended with issues

including fierce rivalry from other sportswear manufacturers, shifting consumer tastes, and

39
COVID-19’s effects on the world economy. Adidas has a solid basis with a legacy of

invention, quality, and performance.

To stay ahead of its rivals, expand, and maintain its success, the company must adapt to

shifting market conditions, prioritize innovation, and uphold its brand image.

40
Supporting document 5:

Courses
Products
Free Tools
About
Contact
Login
SWOT ANALYSIS EXAMPLES

Adidas SWOT Analysis

41
Adidas is a well-known company that creates and produces sporty and

fashionable footwear, clothes, and accessories. It was founded by Adi Dassler in

1949 in Germany, and it has since grown to become one of the most renowned

sportswear manufacturing companies in the world. Adidas is highly respected for

its premium goods and avant-garde style.

The company has advanced significantly in its field of business throughout the

years and recorded various successes that have made it a force to be reckoned

with. The brand’s collaboration with some of the biggest names in sports, like

Lionel Messi and James Harden, among others, is one of its most illustrious

accomplishments. This collaboration has improved the brand’s recognition and

appeal to sports fans worldwide. Innovating constantly to improve the

functionality and comfort of its products, Adidas is always at the forefront of the

industry.

Notwithstanding its achievements, Adidas nevertheless faces several difficulties.

One of the biggest obstacles is the fierce competition, with companies like Nike

42
and Under Armour battling for market dominance. Moreover, economic

ambiguity and shifting consumer tastes may impact the brand’s performance.

Below, there is an in-depth Adidas SWOT analysis to determine its strengths,

weaknesses, opportunities, and threats. When making strategic decisions and

identifying areas for improvement, this analysis can offer insights into the

company’s internal and external issues, current position in the market, and

future possibilities.

Contents

Strengths
Brand Value
Innovation
Diversified Product Portfolio
Strategic Partnerships and Endorsements
Global Presence and Distribution Network
Digital Presence
Social Responsibility and Sustainability
Financial Performance
Weaknesses
Supply chain shortage
Small Product Line
Growing Operating Expenses

43
 Dependence On The Sports Market
Outsourced Manufacturing
Intense Competition
Slow Response To Fast Fashion Trends
Limited Presence In Emerging Markets Of Developing Countries
Expensive products
Opportunities
E-commerce
Gender Neutral Collection
Growing Sportswear Industry
Demand For Premium Products
Using Smart Material
Expanding To Emerging Markets
Product Diversification
Collaborations.
Sustainability
Sporting Equipment Production
Threats
Competition
Supplier Dominance
Fake Products
Economic Downturns
No Recognized Trademark
Changing Consumer Preferences
Lawsuits
Conclusion

Strengths

44
Adidas owes its massive success in the global market to quite several factors.

Below, there are some of them:

Brand Value

When buying, customers consider a brand’s reputation because they enjoy

associating with particular brands. Why? They want to be sure they will get high-

quality products, one of Adidas’ strengths. Adidas enjoys widespread brand

recognition and a positive reputation. With over 70 years in operation, the

company has established a reputation for producing high-quality goods and

45
cutting-edge designs. According to Forbes, Adidas is one of the most valuable

sports brands in the world, worth over $16 billion as of 2021.

Innovation

One of any brand’s greatest assets is its ability to creatively and consistently

improve the customer experience through product development and research.

Adidas understands this well and uses it to its advantage. The company is

renowned for making cutting-edge products, which keeps it one step ahead of its

rivals. With a focus on developing goods that satisfy the needs of its consumers,

the company makes significant investments in research and development. This

is reflected in its several innovative technological advancements, such as

BOOST and Primeknit, which have boosted sales and strengthened its market

value.

Diversified Product Portfolio

46
Adidas is a well-known sporting goods company with a broad product line that

appeals to different sports market segments. The business makes sports and

leisure-related clothing, footwear, and accessories. Adidas has connected with a

wider customer base thanks to its diverse product offering, including seasoned

athletes and newcomers. This broad product portfolio reduces the company’s

reliance on a specific product. Besides, the sports sector needs various items

since consumers have varied wants and needs. A large selection of items also

aids Adidas in maintaining market dominance and attracting more consumers.

Also, Adidas’ broad range of products has helped it grow its global clientele.

Adidas has successfully dominated a significant portion of the worldwide sports

market thanks to different products tailored to various geographic needs.

Strategic Partnerships and Endorsements

Customers would choose to purchase from brands with which they are more

closely associated. They would also do the same if a particular brand were

associated with their preferred celebrities, influencers, or other brands. Adidas

forges strategic alliances with well-known sports organizations, athletes, and

47
celebrities, increasing its brand recognition and boosting revenue. By working

with influencers and developing creative marketing initiatives, Adidas has also

taken advantage of the power of social media.

Global Presence and Distribution Network

Sporting needs and preferences span countries and continents, rather than

being limited to a single geographic region. These requirements must be

satisfied, and Adidas is doing so. The company has a solid international

presence and conducts business in more than 160 countries. It has a robust

distribution network comprising relationships with independent retailers, e-

commerce platforms, and brick-and-mortar locations, making it acquire

customers in many markets and geographic areas.

Digital Presence

Any business would be wise to evolve with the world as it does. Adidas has

already adapted to the new technologies emerging daily, especially with e-

48
commerce becoming increasingly popular among consumers and

manufacturers. Adidas has a significant internet presence and an online

storefront for customers. Additionally, the business uses social media to interact

with customers and foster a feeling of brand community. To improve the client

experience, Adidas has also adopted cutting-edge technology like augmented

and virtual realities.

Social Responsibility and Sustainability

Customers are turning to eco-friendly items as they become more conscious of

the environment and concerned about keeping it clean, clear, and carbon-free.

Adidas is a well-known international company that acknowledges sustainability

and CSR significance. The company has made several efforts to lessen its

environmental impact. Adidas has committed to employing entirely recycled

polyester in its products by 2024, one of its most significant sustainability

initiatives. Sportswear frequently contains polyester, produced using non-

renewable resources like petroleum, which pollutes the environment. Using

recycled polyester, Adidas can reduce its carbon footprint and save natural

49
resources. Adidas has also pledged to become carbon-neutral by 2050. By

2030, the corporation wants to cut its greenhouse gas emissions by 30%

compared to the baseline year of 2017. Adidas is also investing in sustainable

energy sources like solar and wind energy to lessen its reliance on fossil fuels.

Financial Performance

Adidas has steady revenue growth and profitability, contributing to its financial

performance. In 2020, the business recorded €23.8 billion in revenue, an

increase of 2% from the previous year, and €1.4 billion in net income. Adidas

can invest in R&D and keep innovating its products and services because of its

stable financial situation.

Weaknesses

50
While Adidas has stunned both competitors and consumers with its stellar

market performance, it is not without its drawbacks. Below, there are some of

Adidas’ weaknesses:

Supply chain shortage

Many disruptions, including delays in the delivery of raw materials or

components, natural catastrophes, trade disputes, or other unforeseen events,

can result in supply chain shortages. Like many other businesses, Adidas

depends on a complicated global supply chain comprising vendors and

51
subcontractors based worldwide. Any break in this supply chain could result in

severe issues for Adidas, such as production delays, decreased output, and

higher costs, ultimately impacting profitability.

Small Product Line

When businesses offer various products, they typically draw a wider group of

customers, increasing their sales. Although it has a wide variety of items, Adidas

has a smaller product lineup than some of its rivals, which might limit its appeal

to customers who want more choices.

Growing Operating Expenses

A corporation may have rising operating costs as it expands, including higher

labor costs, marketing and advertising costs, and administrative costs. This

affects Adidas as the company spends much more, even making more money.

Profitability could suffer if these costs increase faster than revenue growth.

52
Dependence On The Sports Market

In the past, Adidas has concentrated on the sports sector, which is cyclical and

susceptible to shifts in customer preferences. Adidas can experience a reduction

in sales and revenue if the sports market experiences a slump.

Outsourced Manufacturing

Adidas outsources much of its production to plants in nations with cheaper labor

prices. Although this approach may result in cost savings, it also exposes the

business to risks related to poor working conditions, violations of labor

regulations, and supply chain interruptions.

Intense Competition

Other major international companies like Nike, Under Armour, and Puma fiercely

rival Adidas. If Adidas cannot distinguish itself from its rivals, this competition

53
may result in price wars and decreased profitability. Adidas may need to

consider expanding its product line to appeal to a broader range of customers to

stay competitive.

Slow Response To Fast Fashion Trends

Because of how quickly things move in the fashion industry, businesses that fall

behind their rivals risk losing market share. Adidas struggles to react swiftly to

shifts in consumer tastes, which might affect sales and earnings.

Limited Presence In Emerging Markets Of Developing

Countries

Adidas’ weak presence in underdeveloped nations’ growing marketplaces may

limit its potential for expansion. These markets have much room for growth but

also present special difficulties, like fluctuating currencies, unstable

governments, and divergent cultures. If Adidas wants to establish a market in

54
these regions, the company must find a way to flourish regardless of the

difficulties.

Expensive products

Adidas is a well-known company associated with top-notch athletic gear. The

brand has a reputation for making high-quality, stylish footwear and clothing, but

this reputation comes with a premium price tag. Some clients constantly search

for the most terrific deal in a cutthroat marketplace. Adidas’ items may lose

market share and sales when more affordable competitors are frequently

accessible and produce the same high-quality sports gear. It might also consider

providing more economical solutions to appeal to a larger audience. If Adidas

refuses, its brand acceptance can suffer, as even the most prosperous

businesses can lose ground from failing to adapt to shifting market conditions.

Opportunities

55
Although Adidas has done well, there is still more room for improvement. Here,

there are some opportunities in the market Adidas can take advantage of or

strengthen its position in:

E-commerce

Technology advancements have made things relatively easier for many in this

time and age. One of the things that have been made more accessible is

shopping. The trend of online shopping is at an all-time high, especially with

everyone wishing to handle their business remotely. Even though Adidas has an

56
e-commerce presence, it can milk the opportunity further by partnering with

more e-commerce platforms to drive more sales and profits and reach a broader

range of people. They can also use these online platforms to understand their

consumers’ preferences better.

Gender Neutral Collection

Consumer preferences continuously change depending on trends in societal

values, among other things. A preference shift leads to a high demand for

gender-neutral clothes and shoes. These demands are barely met, leaving a

sizeable fertile land for Adidas to tap. Recently, the company struck a deal with

Beyoncé to create gender-neutral collections. There is a massive opportunity for

more sales if Adidas can grow its gender-neutral collection.

Growing Sportswear Industry

The need to participate in sports and remain fit keeps rising; it is not restricted by

territory. This need has also led to an increase in the demand for sportswear

57
items and accessories. By figuring out where the demand for these sportswear

items and accessories is emerging, Adidas can supply products to fulfill these

demands and increase sales.

Demand For Premium Products

Usually, people want what is best whenever they shop and try as much as

possible to get premium products. The only reason they don’t is that they lack

the means and purchasing power to do so. However, with the improved

economic situation in developing countries comes a better standard of living for

consumers. This means that as their buying power increases, people now

demand luxury and premium products like the ones produced by Adidas. In light

of this, Adidas can target consumers under this category in all geographical

areas, especially developing countries, and meet the demand for premium

sportswear clothing and shoes.

Using Smart Material

58
The road to fitness is not often easy — as people ply this road, usually by

participating in sports, they want to feel as comfortable and functional as

possible. Many sportswear manufacturers make the mistake of producing sports

clothing and shoes using uncomfortable designs or materials. This problem

allows Adidas to use smart materials and technology to make sports gear more

convenient, comfortable, and functional. This would further consolidate Adidas’

position as a global leader in the industry.

Expanding To Emerging Markets

There is a potential market for Adidas in India, Brazil, and most of Africa. These

markets have not been explored or touched by any sportswear manufacturing

company. The interest in sports in these countries is also increasing, so Adidas

can grab this opportunity to enter these markets.

Product Diversification

59
Adidas can begin to branch into new market categories that are not entirely

different from sports by expanding its product portfolio. The company should not

depend entirely on sportswear. Consumer preferences change regularly, and

there might be a time when sports will not be the main big thing. They would be

ready for such shifts by branching out to other categories.

Collaborations.

Adidas can collaborate with many people to raise awareness and increase

sales. As such, the company expands its brand visibility and reaches a broader

range of people. Also, by collaborating with some brands, the company could

create more innovative and customer-appealing products.

Sustainability

People are continuously becoming aware of their environment and how much

damage has been done to it. To save their environment and the earth in general,

people are trying as much as possible to do away with activities that negatively

60
affect the earth and embracing eco-friendly activities and products. Adidas can

also dig deeper into this idea of sustainability by using recycled materials for

manufacturing their products and designing products that can easily be recycled.

This way, Adidas will be a significant player in the circular economy and can

build a thriving business.

Sporting Equipment Production

Although Adidas and its rivals are well-known for their sportswear collections,

diversifying into the manufacture of other athletic goods might be a wise step for

the company. Sports enthusiasts have a high demand for sporting goods like

basketball hoops, tennis rackets, golf clubs, and soccer balls. Adidas would

have a competitive edge if they could manufacture and market these goods

before their rivals. This also allows Adidas to diversify its revenue streams and

increase its product line. As such, it would better withstand economic downturns

or changes in consumer tastes. Also, sporting goods typically have a higher

profit margin than sportswear, which could improve the businesses’ bottom lines.

61
Threats

Here, there are some of the threats Adidas faces:

Competition

Adidas faces stiff competition. The sports apparel market is fiercely competitive,

and well-known companies like Nike, Puma, Under Armour, and Reebok are not

taking it easy with Adidas. Adidas finds distinguishing items in the market

challenging due to these brands’ similar products and potential market value

62
overlap. Asides from these well-known brands, Adidas also faces competition

from small and medium-sized firms that can now compete because of

technological advancements and globalization. Adidas must constantly develop

its products and marketing approaches to keep ahead of the competition. It risks

losing market share and having lower profits if it doesn’t.

Supplier Dominance

Adidas obtains its raw ingredients and finished goods from a vast network of

suppliers. Dependence on suppliers puts the business at risk of supplier

domination, which can increase costs, disrupt the supply chain, and result in

lower-quality products. Since there will be more rivalry among suppliers due to

provider dominance, prices may rise, or other clients may get priority. In

addition, it should be noted that Adidas works with various manufacturers to

create its products, giving the manufacturers more negotiating leverage than the

business. Adidas must make sure that it maintains solid connections with its

suppliers and periodically evaluates its performance to reduce this risk. Better

still, Adidas can produce its raw materials.

63
Fake Products

Counterfeit goods may significantly impact the reputation of Adidas’ brand and

financial results. Since they are of low quality, they harm the brand’s reputation,

diminish client loyalty and hurt sales. Adidas must take decisive action to stop

creating and distributing fake goods. This entails strengthening supply chain

controls, collaborating with law enforcement to track down and prosecute

counterfeiters, and raising public awareness of the dangers of purchasing fake

goods.

Economic Downturns

Consumer spending on luxuries like sports gear and shoes decreases during

economic downturns, affecting Adidas’ sales and profitability. Adidas must

diversify its product offerings and markets to lessen its dependency on one

market. Also, it must be flexible and responsive to economic changes, adjusting

its pricing and marketing plans accordingly.

64
No Recognized Trademark

Adidas’s brand is one of its most valuable assets. However, in some markets,

the company’s trademark is not protected, exposing the company to the risk of

intellectual property theft. In 2019, it lost a suit over its tri-strip logo, meaning

they do not have a right over it.

Changing Consumer Preferences

To be relevant and competitive, Adidas must stay ahead of the changes in

consumer tastes. If not, its brand loyalty and sales may suffer. Adidas must

spend money on market research and analysis to identify trends and

modifications in consumer preferences. However, it must be flexible and

sensitive to these changes, modifying its product lineup and marketing tactics.

Lawsuits

65
Adidas was sued in 2021 by Nike for allegedly utilizing the Flyknit technology to

produce shoes without a license. Due to these allegations, a full investigation of

the brand is now necessary. Such lawsuits may significantly harm Adidas’s

finances and reputation. These lawsuits will cost Adidas a lot for legal counsel,

and even more, if they lose the case. Lawsuits can result from many things,

such as contract violations, trademark infringement, and product faults.

Adidas must employ efficient risk management measures, such as contract

management, product quality assurance, and adherence to legal and regulatory

standards.

Conclusion

Adidas is a market leader in sportswear, boasting a solid brand identity, cutting-

edge products, and a significant global footprint. The business has been

operational for over 70 years and has established a strong reputation for

performance, quality, and innovation. Since it was founded by Adi Dassler and

66
his brother, Rudolf Dassler, it has developed into one of the world’s most well-

known and admired brands.

Adidas has also created several incredible items over the years, such as the

Ultraboost running shoe, which is well-known for its comfort and performance,

and the Superstar sneaker, a cultural symbol in hip-hop. The company has also

contended with issues including fierce rivalry from other sportswear

manufacturers, shifting consumer tastes, and COVID-19’s effects on the world

economy. Adidas has a solid basis with a legacy of invention, quality, and

performance.

To stay ahead of its rivals, expand, and maintain its success, the company must

adapt to shifting market conditions, prioritize innovation, and uphold its brand

image.

67
68