Supporting Document 1

Proceedings of the 2023 International Conference on Management Research and Economic Development DOI:

10.54254/2754-1169/23/20230346

Analysis of the Marketing Strategy of Adidas

a. [email protected]
*corresponding author
Xinyu Li1,a,*

1
University of Exeter, Stocker Rd, Exeter EX4 4PY, United Kingdom

Abstract: A well-developed and well-executed marketing strategy is important for a

company, especially for Adidas in the highly competitive sporting goods industry. Therefore,
this essay analyzes Adidas’ marketing strategy with the help of the 4Ps marketing theory and
proposes relevant strategy optimisation. The result shows that Adidas’ current marketing
strategy focuses on incorporating sustainability to drive product innovation. This marketing
strategy is beneficial in helping the company to engage consumers and build a credible brand
image. However, this marketing strategy also faces problems with product innovation lacking
competitiveness, product quality and pricing. Therefore, Adidas could optimise both its
product strategy and its pricing strategy. Specifically, Adidas could focus on product
innovation, drive digital transformation and increase its control over suppliers in order to
expand its product strength and optimise its product strategy. At the same time, Adidas could
optimise its pricing strategy by increasing its sensitivity to changes in competitors’ prices,
consumers and market demand.

Keywords: Adidas, marketing strategy, digital transformation, sustainability, The Marketing

Theory of 4P

1. Introduction
Marketing strategy is one of the most important components of a business. A successful marketing
strategy will help a company to build good relationships with consumers, increase sales and gain a
competitive advantage through the identification of target markets and the right mix of marketing
channels. As one of the world’s leading manufacturers of sporting goods, Adidas became the second
largest manufacturer of sporting goods in the world after Nike in 2018 [1]. Currently, there are some
studies on Adidas’ marketing strategy through SWOT analysis, comparative analysis with its
competitor Nike, and by investigating the factors that influence consumers’ purchasing decisions. For
example, Mahdi, H. A. A., Abbas, M., Mazar, etc., in their comparative analysis of Adidas and Nike,
point out that Adidas and Nike have similar strategies but different priorities, with Adidas focusing
more on cost reduction and market expansion than Nike, which focuses on marketing and innovation
[2]. In this essay, the main focus is on the strengths and areas of improvement of Adidas’ marketing
strategy in recent years through The Marketing Theory of 4P. At the same time, optimisation is
proposed in terms of Adidas’ product strategy and pricing strategy. This study will help Adidas, its
competitors and other companies in the same industry to expand their competitive advantage and
succeed in the marketplace by driving product innovation and development in line with changing
consumer needs, while maintaining sustainable development in the digital era.
© 2023 The Authors. This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0
(https://creativecommons.org/licenses/by/4.0/).

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2. Background of Adidas
Adidas AG is a German sports brand founded by Adolf Dassler in 1949 and based in Herzogenaurach,
Germany, which produces sports shoes and sportswear [1]. Meanwhile, Adidas sells its products
under the Adidas and Reebok brands mainly through retail shops, department stores, franchised
distributors and online retailers [3]. Moreover, Adidas’ global operations are mainly located in
Europe, the Middle East, Africa, North America and Greater China. According to Adidas’ financial
statements for 2019 to 2021, it can be seen that although Adidas was more affected by the pandemic
in 2020, it was able to recover in 2021 and Adidas’ gross profit and revenue has been growing steadily
[4].
3. Marketing Strategy of Adidas
Adidas is committed to “owning the game” as part of its marketing strategy to guide the company
through 2025 [5]. “Owning the Game” guides Adidas in putting the consumer at the heart of its
marketing strategy. At the same time, Adidas’ marketing strategy is not only focused on strengthening
connections with consumers, social media and partners through digital channels, but also on
enhancing the consumer experience, improving brand credibility and driving sustainable growth
through personalization and product innovation.
3.1. Products
Firstly, the product itself is the most direct reason why customers choose a brand. At the core of
Adidas’ business has always been the design and production of products that meet the needs of our
customers and help them perform better. The proper design and innovation of the product not only
help to increase Adidas’ revenues, but also its competitiveness and brand influence among sports
brands. Meanwhile, product quality is also a direct factor affecting Adidas’ economic performance.
3.1.1. Innovation
Innovation is the foundation that drives Adidas’ success. Product design has a greater impact on
purchasing decisions than product quality and price [6]. Adidas applies innovative thinking to all
levels of its business. To begin, Adidas’ product innovation is centered on developing advanced
performance products with core technologies to provide consumers with more comfortable,
personalized products. For example, in collaboration with its partner BASF, Adidas has developed
BOOST™, a cushioning material that creatively combines contradictory performance benefits to
enable users (especially athletes) to experience a new way of running while exercising [7]. The
innovation of BOOST™ not only enhances consumer comfort, but also provides the basis for
innovation in performance footwear in the running industry. Secondly, Adidas is committed to product
innovation to meet the changing needs and preferences of consumers. With the development of the
times, consumers and investors are placing more and more emphasis on the environmental protection
and sustainability of the company. Adidas adheres to the motto “Through sport, we have the power
to change lives” and continues to promote sustainability through innovation [5]. For example, since
2015, Adidas has been working with Parley for the Oceans to innovate to protect the marine
environment, and by the end of 2020, Adidas will have recycled and used more than 60% of its
polyester and worked with partners to develop vegetable leathers, such as the Adidas Stan Smith,
which is a vegan version [8]. All of these contribute to improving the reputation of the Adidas brand,
winning the hearts and minds of consumers and increasing the competitiveness of the brand. Thirdly,
Adidas uses digital technology to improve the customer experience and enable faster product
innovation. This includes using virtual reality (VR) solutions to enable customers to customize their

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products, and providing an online platform that allows customers to track their orders in real time.
However, Adidas’ focus on strategic product innovation also suffers from a high cost of investment
and the assumption of innovation failure. For example, the closure of the Speed Factory was a famous
case of innovation failure for Adidas, and its shutdown led to a waste of the construction and
operational costs invested by the company, which not only caused financial losses but also affected
the brand’s innovative image. Meanwhile, Adidas’ product innovation had to face fierce competition
from companies in the same industry. For example, Nike and Under Armour are both strong rivals of
Adidas. Specifically, Nike has innovated its design to improve product performance and reduce
waste, and Under Armour is constantly introducing new and advanced products [9]. However, Adidas
has not developed innovative technologies and designs that could outperform its competitors, which
is not conducive to long-term market competition.
3.1.2. Product Quality
Adidas outsources close to 100% of its production to independent third-party production partners [3].
The most important advantages of outsourcing production include cheap overseas labour [9]. By
outsourcing production, Adidas could reduce the costs associated with production and increase
efficiency. Meanwhile, a skilled workforce in production outsourcing could facilitate Adidas’
flexibility to face market changes and improve its ability to meet customer demands. However, Adidas
has little control over product quality due to its over-reliance on third-party suppliers [3]. In addition,
if third-party manufacturers fail to meet specified quality standards, Adidas may be liable for losses
resulting from product recalls and production interruptions as a result. Furthermore, the over-reliance
on outsourcing production may increase the bargaining power of suppliers. Specifically, both supplier
defaults and strikes can lead to an incomplete supply chain for the company and affect Adidas’ normal
operations. For example, the epidemic caused the factory in Shanghai to not be able to open normally,
which led to disruptions in the supply chain and was detrimental to Adidas’ normal operations.
3.2. Pricing
Product price can have an impact on consumers’ purchasing decisions. According to research,
Adidas’ target audience is mainly young people and athletes between the ages of 20 and 30 [6].
Compared to Nike, Adidas needles take advantage of low costs to adopt a market-predatory pricing
strategy [2]. Although Adidas’ pricing is well accepted in the market and lower than Nike’s pricing,
Adidas’ prices are high compared to other sports brands. For example, Adidas’ basic shoe models are
typically priced between £85 and £100, while Nike’s basic models are typically priced between £110
and £135. Under Armour, meanwhile, has a wider choice of prices for its products, with shoes
focusing on prices between £30 and £140. Adidas’ pricing ignores lower income consumers, which
not only leads to the loss of a segment of consumers, but also makes it easier to lose pricing
advantages to competitors. With the number of brands available to consumers, they can easily switch
between brands because of the price. Adidas also adopts a skimming pricing strategy, which means
that the value of a product decreases when it becomes obsolete. This strategy is good for relieving
inventory pressure, but the presence of high prices for new products and late price reductions may
not be conducive to higher sales of new products in the first instance. As well, it may lead to lower
satisfaction among consumers who purchased the product at its original price.
3.3. Promoting
For a sports brand, the trademark is one of the most valuable assets it owns [10]. Adidas is commonly
referred to as “the brand with three stripes” due to its famous and recognisable brand logo [1].
Moreover, Adidas pays great attention to the protection of the brand’s trademark. Adidas regularly

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monitors products for any potential infringements and they are proactive in taking legal action against
companies that are found to be infringing their trademarks. In addition, Adidas enforces strong
protection of their trademarks in their contracts with suppliers and distributors. Adidas’ high level of
trademark protection helps to make it easier for consumers to identify the authenticity of products
and avoid the proliferation of counterfeit goods. It also helps Adidas to protect the high recognition
of their brand and to maintain the value of their trademark. However, Adidas’ use of litigation to
protect its trademarks may not be popular. Specifically, it could easily be perceived as trademark
bullying, which is detrimental to Adidas’ brand image within the sports industry. Moreover,
protecting the intellectual property rights of trademarks is costly and Adidas needs to invest a
significant amount of capital and labour each year to protect and prevent infringement of its
trademarks.
Advertising as a promotional tool is also an important marketing strategy for Adidas. Packaging
could be considered a type of advertising. According to research, Adidas’ interesting packaging is
more appealing to consumers than Nike’s [11]. Moreover, Adidas incorporates strong slogans into its
advertising to help motivate consumers to shop and increase their liking for the brand. However,
Adidas is not as successful as Nike in terms of advertising. Firstly, consumers are not as receptive to
Adidas’ slogans as they are to Nike’s [11]. Furthermore, compared to Nike, which has exclusive
contracts with famous athletes (such as Michael Jordan), Adidas has not chosen to invest in getting
spokespeople to endorse its products [2]. While this has helped Adidas to reduce costs and invest
money in improving product performance, it has resulted in a less relatable, smaller and less
recognisable advertising campaign than that of competitor Nike.
The collaboration between Adidas and celebrities is also one of the promotion tools. Firstly, by
collaborating with celebrities, Adidas could leverage the celebrity effect to increase the exposure of
the brand and increase the sales of related products. For example, Adidas collaborated with artist
KANYE WEST to launch the Yeezy line, which directly created a global consumer wave and became
a sought-after and high-volume product line. However, collaborations between Adidas and celebrities
may also be influenced by the partner’s own image.
4. Optimisation and Improvement
Overall, Adidas has now established a credible sports brand image. There is a large potential market
for Adidas as people pursue a green lifestyle and the demand for sports goods increases. However,
Adidas also faces serious competition from rivals Nike and Under Armour. Therefore, Adidas can
optimize both its product strategy and pricing strategy to drive the company’s growth and capture
more market share.
4.1. Product Strategy Optimisation
Firstly, Adidas should focus on developing new and innovative products to meet the needs and
preferences of their customers, which will help them stay ahead of the competitive market. As
environmental awareness grows, Adidas could continue to focus on innovation in sustainable
materials, which would help to attract potential consumers who are environmentally conscious and
enhance the brand image. It is also important to innovate on product types. Adidas’ main product
focus is on football, so Adidas could add sporting goods for basketball, baseball and other sports to
its product innovation.
Secondly, Adidas could extend its differentiation advantage by focusing on product
personalisation while driving digital transformation. Adidas could do this by investing in modern
technology development, such as artificial intelligence and big data analytics. This will not only help
to drive Adidas’ digital transformation, but also to improve the customer experience. Specifically,

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customers could increase their interaction with the brand by trying it on online through a programme
provided by Adidas. For example, the Adidas app is currently only available on iOS, so Adidas can
accelerate its efforts to make the app available on other systems to better serve consumers.
Meanwhile, Adidas could take advantage of data to better understand customer preferences and
behaviours and create personalised experiences for customers. In addition, Adidas could expand its
use of digital channels. Adidas can use social media to interact with customers, increase brand affinity
and improve brand loyalty. For example, Adidas could launch a poll on INS to select the most popular
athlete among consumers to be the brand’s spokesperson.
Thirdly, it is also important for Adidas to improve control over its suppliers. To start with, Adidas
could increase competition by increasing the number of suppliers and distributors. In studies, it has
been found that when competition between suppliers or distributors is increased, the total supply
increases [12]. Also, increased competition among suppliers helps to reduce production prices and
costs and improve product quality. In addition, efforts to maintain symmetry between suppliers and
distributors also contribute to the efficiency of the supply chain [12]. Furthermore, Adidas could
enhance the regulation of its suppliers. Specifically, Adidas could randomly send different employees
to inspect the production status of suppliers.
4.2. Pricing Strategy Optimisation
The optimisation of pricing strategies could help Adidas to better stimulate customers’ purchasing
decisions. Firstly, Adidas could pay attention to the product prices of competitors such as Nike and
compare them. Secondly, Adidas could use big data to analyse the consumer behaviour of its target
customers and set prices that are attractive to its target market. Simultaneously, Adidas should
monitor price trends in its industry to stay aware of market changes. In addition, Adidas could offer
discounts and promotional offers to drive sales based on customer and market changes. At the same
time, Adidas could improve the disadvantage of skimming priced products by extending the time to
reduce the price of new products. Meanwhile, Adidas can choose product price reductions according
to product cycles and product characteristics, and implement flexible pricing. In addition, for some
classic models, Adidas can reduce the frequency of discounting.
5. Conclusion
Overall, Adidas’ marketing strategy is analyzed in terms of product, price, and promotion, and it can
be seen that Adidas has established a mature and credible image as a sports brand. Some suggestions
are also made for optimizing the future development of Adidas in a climate where environmental
protection is valued. Adidas’ current marketing strategy focuses on incorporating sustainability to
drive product innovation, focusing on a younger consumer segment in the middle and upper tiers, and
protecting its brand image. This marketing strategy is beneficial in helping the company engage
consumers and build a credible brand image. However, this marketing strategy also faces problems
with product innovation lacking competitiveness, product quality, and pricing. Therefore, Adidas
could optimize both its product strategy and its pricing strategy. Specifically, Adidas could focus on
product innovation, drive digital transformation, and increase its control over suppliers to expand its
product strength and optimize its product strategy. At the same time, Adidas could optimize its pricing
strategy by increasing its sensitivity to changes in competitors’ prices, consumers’ preferences, and
market demand. Overall, Adidas could maintain and expand its competitive advantage by improving
its product competitiveness and while adhering to the premise of sustainable development. In the new
digital age, Adidas’ adherence to sustainability and digital transformation will help the company
remain competitive and successful in the highly competitive market of the future. These
recommendations may not be new to Adidas and other competitors in the sports industry.

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Furthermore, this paper lacks an analysis of Adidas’ distribution strategy and global development,
which is an area it will concentrate on in the future.
Acknowledgement
I wish to express my sincere gratitude to the teachers and professors who provided me with valuable
guidance and feedback throughout the research and writing of this thesis. In addition, I would like to
thank my friends and family for their encouragement and emotional support. Their unwavering faith
and constant motivation have been an indispensable source of strength throughout my journey.
Reference
[1] García, Justin D., PhD. ‘Adidas (company)’, Salem Press Encyclopedia, 2022.
[2] Mahdi, H. A. A., Abbas, M., et al. A Comparative Analysis of Strategies and Business Models of Nike, Inc. and
Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive
Environment. International Journal of Business Management and Economic Research, 6(3), 167-177. 2015.
[3] ‘adidas AG SWOT Analysis’ 2022, Adidas AG SWOT Analysis, pp. 1–7, Retrieved https://search-ebscohost-
com.uoelibrary.idm.oclc.org/login.aspx?direct=true&db=bth&AN=160532752&site=eds-live&scope=site.
[4] Adidas group 2022, Adidas Financial Report https://www.adidas-group.com/en/investors/financial-reports/#/
2021/.
[5] Adidas group 2023, About Strategy,https://www.adidas-group.com/en/about/strategy-overview/.
[6] Simatupang, S., Candra, V., et al. Product Quality Ability, Price and Product Design Influence Adidas Shoes
Purchase Decision. International Journal of Multi Science, 2(07), 1-14, 2021.
[7] Adidas group 2013, BOOST™ Changes Running Forever, https://www.adidas-group.com/en/media/ news-
archive/press-releases/2013/boost-changes-running-forever/.
[8] Adidas group 2020, Adidas: In 2021, For The First Time, More Than 60 Percent Of All Products Will Be
Made With Sustainable Materials,https://www.adidas-group.com/en/media/news-archive/press-releases/2020/ad
idas-2021-first-time-more-60-percent-all-products-will-be-m ade/.
[9] Strain, M. 2019, Advantages and Disadvantages of Outsourcing Production. Chron.
https://smallbusiness.chron.com/advantages-disadvantages-outsourcing-production-18244.html
[10] Katie Brown et al. An Empirical Examination of Consumer Survey Use in Trademark Litigation, 39 LOY. L.A. ENT.
L. REV. 237, 241. 2019.
[11] Matović, V., Stanić, M., & Drinić, I. Impact branding on consumer preference towards buying a certain product:
Comparative analysis of brands Nike and Adidas. Ekonomika, 65(3), 35-44. 2019.
[12] Adida, E & DeMiguel, V. Supply Chain Competition with Multiple Manufacturers and Retailers’, Operations
Research, vol. 59, no. 1, pp. 156–172, 2011.

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 Supporting Document 2
Hussain A. Ali Mahdi et al | International Journal of Business Management and Economic Research(IJBMER), Vol 6(3),2015,167-177

A Comparative Analysis of Strategies and Business

Models of Nike, Inc. and Adidas Group with special
reference to Competitive Advantage in the context of a
Dynamic and Competitive Environment
Hussain A. Ali Mahdi1, Mohammed Abbas2, Taher Ilyas Mazar3
1,2,3
MBA Student,
University of Bahrain, Kingdom of Bahrain

Dr. Shaju George4

4
Assistant Professor,
Department of Management & Marketing
College of Business Administration
University of Bahrain
Kingdom of Bahrain

Abstract:
Strategy is about the most crucial and key issues for the future of organizations. Strategy is also important to
explore several strategic options, investigating each one carefully before making strategic choices. The study
incorporates a rigorous and systematic effort to uncover the strategies and its impact on the company’s
performance by analysing case studies, articles and the annual report of Nike Inc. and Adidas Inc. The study
attempts to find out the relevance of the strategies adopted by these companies, which are globally successful
athletic apparel companies in the context of Bahrain. The findings of the study highlight Nike’s strategies which
focus on innovation and emphasis on its research and development department, provision of premium pricing for
its customers, broad differentiation strategy, market Segmentation Strategy and Closed-Loop strategy. The Adidas
strategies focus on the broad differentiation, innovation, trying to produce new products, services and processes in
order to cope up with the competition. It embraces a multi-brand strategy, emphasis on expanding activities in
the emerging markets, continuously improving infrastructure, processes and systems, foster a culture of
challenging convention and embracing change, foster a corporate culture of performance, passion, integrity and
diversity. These strategies coupled with its resources and unique capabilities form the basis of sustainable
competitive advantage for both the companies.
Key words:
Strategy, Sustainable Competitive Advantage, Product Portfolio.

INTRODUCTION:
The strategy is a path towards achieving the optimum goals of individuals, groups and organizations. In
addition, it leads to a best use of companies' available resources and it also guides the company to stay in a
business successfully and continuous improvements for its processes.
The definition of strategy could be differ from one author to another, but the most common definition is that the
strategy is long term plans and approaches towards the intended visions and objectives. It is a general
framework that specified the organizations' plans, policies and approaches to meets its objectives, goals and
end results.
The way an organization used to shape its strategies could be differentiate from other organizations in order to
make its products unique and remarkable. Globally, companies formulate their strategies based on their visions
and reaching the satisfaction of customer's needs, requirements and expectations. Subsequently, they use
those strategies as a baseline to compare their actual performance with planned ones, to evaluate the end
results and ensuring the continuing organizational excellence.
There are many kinds of strategies that are pursued by the companies; Such as cost leadership, differentiation
and the focus strategies (Porter, 1985), services strategies, growth strategies. Based on the goals, the
companies form those strategies and they rank them upon the priorities.
It is more than important for any organization to put strategies and not any strategies; the correct strategies
which are formulated after a long time of studying and after numerous number of brainstorming among the top
management members.
Therefore, those strategies then to be implemented by converting the organization's plans and policies into real
actions through the best use of available resources such as: human resources, budgets and technological
advance; in order to enhance the organization's performance, productivity and sustainability.

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The organization's continuous evaluation and controlling of its strategies is an aid to make ensure that the goals
and objectives have been met and the appropriate strategies have been selected. Therefore, those successful
strategies should be documented and retained to use them in the future's goals. But, since the goals haven't
been met so the current strategies should be revised and corrected by the top management.

LITERATURE REVIEW
Definition of Strategy:
Strategy has been studied for years by business leaders and by business theorists. Yet, there is no definitive
answer about what strategy really is. One reason for this is that people think about strategy in different ways.
The strategy is a configuration and formation of available resources for an organization towards meeting the
needs, requirements and expectations of markets and stakeholders. It is also a long run direction and scope of
an organization that determines the visions and goals (Gerry Johnson & Kevan Scholes, 2008).
In addition, it is a plan leads an organization towards competitive advantage. Further, it is a pattern in actions
over time and it is a position that reflects decisions to offer the organization's products or services in particular
markets (Henry Mintzberg, 1994).
In some cases, the strategy is the pattern of decisions in a company that determines and reveals its objectives,
purposes and goals. Also, strategy produces the principal policies and plans for achieving those goals. It
defines the range of business the company is to pursue, the kind of economic and human organization intend to
be (Kenneth Andrews, 1980).
Strategy is about decisions taken by top management to reach a company's stability and sustainability.
Moreover, it refers to basic directional decisions, that is, to purposes and missions. Strategy consists of the
important actions necessary to realize these directions, and it is also the end that the company wants to reach
after selecting the proper directions (George Steiner, 1979).
In reality, not all business decisions are belong the strategic circle; the strategic decisions are those which
doing something ‘differently’ from competitors and that difference make a sustainable advantage. Even, the
activities that are used to increase productivity are not strategic since they can be easily imitated by others (M.
E. Porter, 1996)
Generally, Strategy is a framework that provides guidance for actions to be taken and, at the same time, is
shaped by the actions taken, and it has nine possible driving forces: Products offered, Market needs,
Technology, Production capability, Method of sale, Method of distribution, Natural resources, Size/growth,
Return/profit (Benjamin Tregoe & John Zimmerman, 1980).

Business Model:
The business model is a new concept in management literature and practice. It describes the logic by which an
organization can makes, keeps up and conveys esteem for its partners (Alexandru & Loan, 2013). This term is
getting to be progressively utilized among scholastics and professionals. It is a rising concept in management
and strategy literature, with fast development after the year 1995 (Ghaziani & Ventresca, 2005; Zott et al.
2011).
In addition, it is a structural layout that depicts the organization of a central company's transactions with all of its
external constituents in factor and product markets. It has been brought to the cutting edge of strategic
management considering, and has turned into an especially essential new possibility figure through recent fast
advances information and communication technologies specifically, Internet and broadband advancements that
have encouraged new sorts of innovation intervened between financial specialists (Geoffrion & Krishnan, 2003).
The study of business model is an important topic for strategic management research because it influences
firms' conceivable outcomes for value creation and value capture (Amit & Zott, 2001). A newly focused business
model together with ahead of schedule section into a business sector has a constructive outcome on execution
(Zott & Amit, 2007).
The contrast between business models and strategy is that business models are a coordination framework,
coordinating the parts of a business, while the strategy organizes the competitive struggle (Magretta, 2002).
Baden-Fuller and Morgan (2010) considered that this concept can furnish managers and researchers with
significant approaches to grow their comprehension of business phenomena by building generic categories and
the advancement of perfect sorts. Subsequently, it helps directors to catch, envision, comprehend, convey and
share the business logic.
Each organized effort in planning and executing a certain business model incorporates the hierarchical, as well
as the departmental level, particularly to those organizational units that are most discriminating to a proper
determination and blend of business components whose relationship and interdependence structures the scope
and depth of the focused capability of any enterprise. In this connection, business modelling is a procedure as
opposed to a state, transcendently because of the required changes, transformational or value-based, that
shape the methodology of overseeing it (Drakulevski & Nakov, 2014).

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Business Strategic Perspective:

Strategy has different perspectives and points of views most of them lies in the concepts of (cost leadership,
differentiation and focus strategies) or a combination of them. Porter (1980) suggested the cost leadership
strategy for the first time. The aim of this strategy is to reduce costs throughout the value chain and reaching
the lowest cost structure possible. A cost minimizing enterprise tends to make products with an acceptable
quality and very few standard features available in order to gain competitive advantage and to maximize its
market share. This kinds of strategy tries to attract a wide group of customers. Cost leadership focus on the
minimization and elimination of costs in fields such as Research and Development and additionally advertising.
Furthermore it emphasis certain concepts such as economies of scale, cost reduction efforts through the
experience curve, strict control over costs and overhead costs (Sumer, 2012).
Differentiation strategy aims to develop and market unique products for different customersegments. Usually
employed where a firm has clear competitive advantages, and can sustain an expensive advertising campaign
(http://www.businessdictionary.com, n.d.).
Because differentiation is a broad concept, this strategy should be discussed with various dimensions. We can
consider the strategies related to differentiation under two groups.
The first group is market differentiation. In this strategy, innovations are carried out in marketing activities
instead of the product. In order to have a positive product image, intense advertising and promotional activities
are so important. The objective is to make a difference in issues such as post-production service and customer
service. Furthermore, it aims to maximize the sales by analyzing, planning, implementing and controlling
Salesforce activities (Sumer, 2012).
Some of the market differentiation strategies mentioned in earlier studies are market penetration and market
development (Ansoff, 1965) market differentiators (Kim & Lim, 1988), differentiation/follower (Chang et al.,
2002), customer service differentiation (Powers & Hahn, 2004).
The second group is innovation differentiation. In this category of differentiation strategy the focus is to enhance
product quality, performance and design. Furthermore, enterprises attempt to operate above the industry
average by manufacturing a product regarded as unprecedented in the sector, charging a premium price that
the customer will agree to pay because the feeling they have that the product worth paying this premium
(Sumer, 2012).
Some of innovation differentiation strategies mentioned in earlier literatures are product development and
diversification (Ansoff, 1965), quality differentiation and design differentiation (Mintzberg, 1988).
The focus strategy differs from the other strategies that in the differentiation and cost strategies the strategy is
applied in a wide range of customers, whereas the firms that follow a focus strategy will apply it to a certain
geographical area or a certain fraction of customers which we call market niche. Focus strategy identifies the
market segments where the company can compete effectively. The strategy matches market characteristics
with the company's competitive advantages to select markets where a focus of the company's resources is
likely to lead to desired sales volumes, revenues and profits. (Chronicle, 2015).

Business Model Perspective:

The term ‘business model’ has become part of everyday language and increasingly used in these days. In spite
of the fact that there is an increasing interest in the term business model by academics and business leaders,
there is no common definition has been accepted by the business community (Shafer et al., 2005).
The business model is “a conceptual tool that contains a set of elements and their relationships and allows
expressing the business logic of a specific firm. It is a description of the value a company offers to one or
several segments of customers and of the architecture of the firm and its network of partners for creating,
marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue
streams”. Because a business model is not restricted to a single firm, it might be also subject to imitation.
Competitive advantage is the exclusive position a firm is able to develop in a market as a consequence of
resource utilization. To have a competitive advantage the development of a successful business model is not
sufficient, as barriers for imitation are often low. (Steininger)
However, most researchers investigate business model in a set of questions such as: How do firms create
value? How are customers made to pay for that value? How are payments transferred into profit through firm-
internal processes and operations? (Teece, 2010; Morris et al., 2005).
It is clear that the topic of business models led to a lot of publications and literatures. It is discussed from
various dimensions, such as e-business, information systems, strategy, and management. (Osterwalder &
Pigneur, 2005)
Mansfield & Fourie (2004) present the business model as the link between a firm’s resources, functions, and
environment.

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OBJECTIVES OF THE STUDY:

1. To examine the product portfolio of Nike Inc. and Adidas Group.
2. To identify the strategies adopted by Nike Inc. and Adidas Group.
3. To identify the business models of Nike Inc. and Adidas Group.
4. To compare the strategies of Nike Inc. and Adidas Group.

METHODOLOGY:
The information and secondary data of Nike and Adidas were collected from published books, case studies,
annual reports and academic journals. Further, this exploratory study is based on case studies of Nike Inc. and
Adidas Group. Archival data from company annual reports was also researched to gather information of the
companies.

BACKGROUND OF NIKE & ADIDAS

Nike, Inc. is an American multinational corporation that is engaged in the design, development, manufacturing
and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. The company
is headquartered near Beaverton, Oregon, in the Portland metropolitan area (USA). It is one of the world's
largest suppliers of athletic shoes and apparel and a major manufacturer of sports equipment, with revenue in
excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it employed more than
44,000 people worldwide. In 2014 the brand alone was valued at $19 billion, making it the most valuable brand
among sports businesses.
Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently
also make shoes, jerseys, shorts, cleats, baselayers, etc. for a wide range of sports, including track and field,
baseball, ice hockey, tennis, association football (soccer), lacrosse, basketball, and cricket. Nike Air Max is a
line of shoes first released by Nike, Inc. in 1987. Additional product lines were introduced later, such as Air
Huarache, which debuted in 1992. The most recent additions to their line are the Nike 6.0, Nike NYX, and Nike
SB shoes, designed for skateboarding. Nike has recently introduced cricket shoes called Air Zoom Yorker,
designed to be 30% lighter than their competitors'. In 2008, Nike introduced the Air Jordan XX3, a high-
performance basketball shoe designed with the environment in mind.

Adidas Group, was founded in a small town in Bavaria, Germany after first steps 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 best possible equipment. Gold medals in Amsterdam (1928, Lina Radke) and Berlin (1936,
Jesse Owens) were first rewards and milestones.
On August 18, 1949, Adi Dassler started over again at the age of 49, registered the “Adi Dassler Adidas Sports
chuhfabrik” and set to work with 47 employees in the small town of Herzogenaurach.
Today, Adidas is a global public company and is one of the largest sports brands in the world. It is a household
brand name with its three stripes logo recognized in markets across the world.
The company’s product portfolio is vast, ranging from state-of-the-art sports footwear and clothing to
accessories such as bags, watches, eyewear and other sports-related goods and equipment. Employing over
46,000 people worldwide, the Adidas Group consists of around 170 subsidiaries including Reebok, TaylorMade-
Adidas Golf, Rockport and CCM-Hockey. The Group's headquarters are in Herzogenaurach, Germany. In the
third quarter of 2014 the Group’s revenue was €4.118 billion.

Competitive environment of the Nike & Adidas

In order to scan the competitive environment of Nike and Adidas we will go through Porter’s forces. The main
competitors include Nike, Adidas-Reebok, Puma, and Fila where all of them operate in the athletic footwear
industry. They also need to be aware of newer competitors such as Under Armour which founded in 1996 and
that might give an indicator of the difficulty to enter the footwear industry where no major entrants during the
last two decades. However, some companies might be considered as threat of substitutes such as Crocs
company when they are formed an alliance to sell Crocs shoes in professional teams colours
(http://www.studymode.com, 2014).
Adidas and Nike uses private contractors as suppliers in low wages countries such as Indonesia and Thailand
and China, and therefore, they have a great deal of power over these factories and can easily switch between
them. For example, Nike does not produce its own sneakers but they use private contractors in Vietnam to
produce the sneakers. On the other hand, customers in the footwear industry have power because they can
switch between brands easily for several reasons such as (better price, higher quality, new style etc.). However,
the consumer may loss this power when they are loyal to a certain company and want only to buy their products
(KINETICS, 2015).

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STRATEGIES OF NIKE & ADIDAS

Strategies of Nike:
Nike follows many strategies in order to become the world’s leading designer, marketer and distributor of
athletic footwear, apparel and accessories. One of its strategies is continuous focus on innovation and
emphasis on its research and development department and they do their best to produce footwear, apparel and
athletic equipment that reduce or eliminate injury, help in athletic performance and maximize comfort and
enjoyment. (Dermesropia et al., 2004).
According to Nike, Innovation is at the heart of Nike’s business growth strategy and it uses this innovation in
order to become more sustainable company and to keep up with the competition and customer demands
(nikeandunderarmour.com, 2015).
The second strategy is Nike’s premium pricing strategy (Best cost provider strategy) which targets the
customers who develop a special kind of intimacy with the product that ultimately leads to the development of
loyalty. Since the loyalty has been established between the company and consumers; Nike takes the advantage
to associate their consumers with their price. Therefore, Nike knows that consumers will be ready to pay for the
product that bears the Nike Logo (sales-management-slides.com, 2007).
At the same time, Nike pays a noticeable concern towards a broad differentiation strategy. Based on that
strategy, Nike produces its products for athletics in three ways. Firstly, it manufactures for three different
segments of people: men, women and children. Secondly, differentiates its products by offering a variety of
accessories and apparels like shoes, gym bags, gloves and skates. Thirdly, Nike has the licensees to
manufacture and sell Nike brand products aside from athletic products like school supplies, electronic media
devices and timepieces (Dermesropia et al., 2004).
Similarly, Nike follows Market Segmentation Strategy, which assists Nike in advertisement of its products by
entering into the sponsorship agreements with celebrity athletes, professional teams, and apart from the college
athletic teams. It was in the year 1982 that Nike for the first time came live for national television ads during
broadcast of the New York Marathon. As a result, Nike attracts many consumers to pay their attention towards
buying Nike's products (nikeandunderarmour.com, 2015). In addition, Nike hires the famous basketball players,
some of popular football scorers and golf superstars in order to make an emphasizing campaign for its products
around the world (bizjournals.com, 2015)
A worthily strategy pursued by Nike called Closed-Loop Business Model which aims to move closer to
achieving zero waste by completely reusing, recycling and composting all materials. In such strategies, the
products can be manufactured using materials reclaimed throughout the manufacturing process and at the end
of a product's life. Thus, Innovators will create new ways to recycle and reuse waste and turn that into new
products in order to become environmentally friendly. (Nikebiz.com, 2009).

Strategies of Adidas:
Adidas focuses more on the broad differentiation strategy. The corporate level strategy of Adidas focuses on
innovation, trying to produce new products, services and processes in order to cope up with the competition. In
2014 centralised Sales Strategy & Excellency team was created to support all market across the globe and
managed by the Global Sales function. The group's multi-brand portfolio gives them an important competitive
advantage. This created a global sales function which were responsible for commercial activities and a global
brands function which were responsible for the marketing of both brands. The global sales function was also
split into two departments, wholesale and retail, which catered to the various needs of both these business
models. This was done in order to sustain their corporate level strategy for the long run so that these divisions
could emphasize and work hard in their respective departments in order to make the most of their efforts. (AG
Strategy-overview, n.d.)
They implemented a multi-brand strategy by having a diverse brand portfolio which allowed them to cater all
segments of the market from players to almost everyone. This helped them to keep a unique identity and
concentrate on their core competencies.
Adidas focused their investments in the best marketing and distribution channels in different countries by
critically evaluating the consumer buying behaviours and their constant struggle to secure prime shelf space.
They have also embraced e-commerce in order to become more efficient and appeal to more customers and
make purchasing much more easily accessible for them. Their supply chain is closely communicated and hence
it helps them to customize their products which appeal to a wide range of customers. The organizational
culture of Adidas group obligates employees to be innovative. This culture forces them to produce goods which
are highly innovative and with the use of the latest technology their products have a very good quality. To
become a sustainable company they find the right balance between shareholder interests and the needs and
concerns of their employees, the workers in their suppliers’ factories as well as the environment.
Based on information in Adidas-Salomon (2004a) with the use of latest technologies they produce products
which enhances performances of players and they focus on sports such as football, tennis, basketball and even
training shoes which are used by anyone with the ability to run. They updated the running shoes with

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ClimaCool, a system designed to ventilate, and a3, an energy management technology for footwear that guides
and drives an athlete’s foot through each stride.

[IMAGE SOURCE : http://www.adidas-group.com/media/filer_public/2b/2f/2b2fd619-5444-4ee8-9c07-

baa878d658c4/2014_gb_en.pdf ]

(Adidas Group FINANCIAL REPORTS, 2015)

BUSINESS MODEL OF NIKE & ADIDAS

Nike Business Model:

Nike has been the dominant leader in sports apparel industry for several decades. They achieved this position
by taking an aggressive approach towards building relationships with celebrity athletes. Most notably, the
company secured an exclusive contract with Michael Jordan, which generated a rapid growth in sales for their
core product line of sneakers and apparel. The success of this campaign has resulted in increased demand for
common stock ownership. (Nike's New Business Model, 2010) Nike shifted from traditional media and spending
more money into social media. For athletes, Nike is heading off to focus in on athletes who can show a high
ROI as measured by the quantity of Facebook fans and Twitter followers they have. For teams, Nike is
concentrating on those that show the most activation and engagement with the most number of core fans via
social media. The FuelBand, a $150 electronic bracelet that measures your movements throughout the day,
whether you play tennis, jog, or just walk to work. The device won raves for its elegant design and a clean
interface that lets users track activity with simple colour cues (red for inactive; green if you have achieved your
daily goal). The FuelBand is the clearest sign that Nike has transformed itself into a digital force. The other
innovation is the Flyknit Racer, feather light shoes vibe more like a sock on a sole. Made from knit threading
rather than multiple layers of fabric, it required a complete rethink of Nike's manufacturing process. The result is
a shoe that is more environmentally friendly and could reduce long-term production costs (CARR, 2013).

Adidas Business Model:

Adidas business model is highly focused on creating innovative products designed to meet consumer needs.
Rather than investing in product endorsements, the company attempts to demonstrate its value by creating a
high performance product line based on the specific needs of athletes and consumers. Further it focuses on
faster product creation and production by continuously improving the infrastructure, processes and systems.
Additionally they also emphasize on significantly reduced complexity on a group level by streamlining the global
product range, consolidating the warehouse base as well as harmonising above market-service. The ambition
to deliver the best branded shopping experiences at all consumer touch points. Innovative speed models in
supply chain to respond quickly to consumer needs. This strategy has motivated investors from around the
world to purchase Adidas common stock and the company has shown consistent growth for many years. The
public ownership structure of each company has been an integral part of sustaining growth over the long run.

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COMPARISON AND ANALYSIS OF STRATEGIES AND BUSINESS MODELS OF NIKE & ADIDAS
Nike and Adidas are the two most popular companies that deal with sporting equipment in the world. Nike and
Adidas are the largest sellers of sports and athletic footwear in the world. Adidas is the second largest sporting
goods manufacturer after Nike all over the world (Joachimsthaler, 2000).
Nike is more popular than Adidas because of its various celebrity sponsorships, with main target being
basketball players. Thus, their main market is in the States, but it has recently expanded globally. Adidas
targets people involved in football and tennis. They have a major market in European countries, while being
represented internationally (Joachimsthaler, 2000)
Over a period of several years, Nike has shifted its focus to football with the aim of gaining the international
recognition, just as Adidas dominates the world football market. The football market is usually considered to be
the “World Sport” (Marketing Strategy for Adidas vs. Nike, 2015).
The products of Adidas and Nike are divided into categories. Adidas sports products are divided into three main
categories, with the first involving Adidas performance shoes, eye wear and perfume. The next category
includes Adidas original superstar sneakers, and Vintage clothing. The third category has bags, belts, hand
gloves and style caps (Hollister, 2008). On the other hand, Nike products have the first category that includes
sport shoes and sunglasses by Nike. The second category includes products for body care, clothes, caps,
bags, perfumes (wikivs.com, 2015).
Prices of products of both Nike and Adidas are high, and Nike products’ price are overall higher than Adidas.
Pricing strategy used by Adidas is that of market skimming strategy. Adidas products’ prices are dependent on
looks and color. An example is where a pair of Adidas white color shoes is usually more expensive comparing
with another pair of shoes of the same quality, but in a different color (Hollister, 2008).
Nike use it uses the value based pricing and price leadership strategies, where the price of the product is based
on the value that is placed on that particular product by the consumer. In order to remain relevant in the market,
Nike uses the competitive and different pricing strategy from those of Adidas. Pricing strategies of Nike are
based on premium segments as their target customers (Aaker & Joachimsthaler, 2000).
The placing distribution strategy that is used by Adidas is that of concentrating most of its products and
resources in places, where there are clusters of customers. This explains why it has opened many of its shops
in various parts of the world. A trend developed by Adidas is where its products sold online. The company is
concerned with offering the customer a satisfying service at a place, where the customer cans buy the product
(Joachimsthaler, 2000).
Nike, on the other hand, employs distribution strategies similar to Adidas. It explores new and developing
markets around the world and sets up its shops in different countries all around the world. Distributors of the
company are independent, as well as subsidiaries and licenses. It also offers online shopping for its products.
However, although there is intense competition, both Adidas and Nike have continued to experience a
substantial growth over the last two decades. Furthermore, the growth of these two companies is being
attributed to the e-commerce and Internet. Online selling have boosted the performance of these firms, resulting
in the increased sales and at the same time reducing the operational cost.
Promotional strategies used by both companies are aimed at promoting their products as there is adoption of
endorsement, use of magazines. Both Adidas and Nike have a unique brand promotion. Customers have in
their minds that if they want to wear light weight sporting shoes, they need to go for Adidas. This explains why
most basketball shoes are manufactured by Adidas. Generally, basketball players wear shoes that are of
unique design and also light (Hollister, 2008).
Customers view Nike as being innovator and creative, since the company comes up with new innovations and
designs of new shoes styles. Therefore, the major target audience is the football players and athletes, who are
instilled with the competitive idea to improve their performance.
For the companies to place barriers for entry of new competitors in the market they are able to control the cost
of their products; therefore, they can have a competitive advantage over the potential rivals tending to enter to
the industry. They use enticing promotional programs such as making their online websites attractive for online
shoppers. Both companies offer a wide range of products, including footwear, sporting equipment and apparel.
They also have strong distributions channels that they control. Furthermore, both companies are creative in the
design of their products. (theguardian.com, 2015)
Sometimes, the two companies charge high prices associated with the provision of technological services.
Strong competition is another challenge that the companies are forced to bear (Fisk, 2010). Nike and Adidas
use celebrity advertisement, which can sometimes lead to the creation of negative images, especially when the
celebrity engaged in unethical behaviors. It may also lead to distress, when the company grows beyond
expectations and capabilities.
In conclusion, Nike and Adidas brand images are outstanding, but Nike has a slightly higher competitive
advantage when compared to Adidas. The competitive advantage enjoyed by Nike is related to its innovation
and reputation for quality. When it comes to footwear, both companies promise their customers products that

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will provide them with the durability and comfort. Nonetheless, the difference is that the products created by
Nike have higher cost, while those of Adidas cost less (Marketing Strategy for Adidas vs. Nike, 2015).

Financial Comparison

The profitability indicators show that Nike is performing better than Adidas. The net profit margin and return on
equity of Nike is higher than Adidas.

Earnings per share for both companies reach $3 by 2014. Although for the previous periods in 2013 and 2012
Nike has higher Earnings per share than Adidas.

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Additionally, Nike shows better liquidity than Adidas. The current ratios of Nike over the last 3 years are about
the double of Adidas.

Adidas has higher financial leverage than Adidas, which indicates that Adidas depends in debts more than
Nike. Nike depends on Internal funding more than external funding. The chart below summarize the comparison
of three years ( FactSet Fundamentals, 2014).

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The graph above shows a comparison of the movement of stock prices for Adidas and Nike from the period
from 2010 onward. As shown in the graph both stock were moving in same direction from 2010 to 2014 where
Nike moves upward drastically and there was a negative movement in Adidas during this period which means
the stockholders of Nike was rewarded positively in comparison to Adidas which has a negative movement of
25% (Yahoo Finance, 2015).

RESEARCH FINDINGS, COMMENTS & RECOMMENDATIONS

Strategy is fundamental to the success and sustainability of any organisation it helps the organizations to
understand their core capabilities, identify and address weaknesses, mitigate risks and understand the trends
going to impact on their business and their industry, and how they are going to respond to them. It streamlines
their business and ensures every dollar and minute they spend on the business is in the direction of their
sustained success. Therefore the success or failure of the organization depends on the strategies its follows. To
survive in today’s competitive business environment it is must to plan innovative and differentiation strategies.
Nike and Adidas strategies helped them to survive and sustain their positions in the market. Both of companies
have quite similar strategies. Adidas always challenges the world market leader Nike in sports championships.
Nike strategies focus on design innovation and marketing, whereas Adidas strategies focus on reducing the
production cost and time, expand its market, enhance attractiveness in terms of sports shoes and equipment.
Nike is the market leader in sport footwear and apparel.

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 Supporting Document 3

BCP Business & Management PGMEE 2022

Volume 35 (2022)

Marketing Strategy Analysis and Evaluation for the Adidas

Yinghan Sun*
Faculty of Education, University of Northampton, Northampton NN15PH, England
*Corresponding author: [email protected]
Abstract. Adidas dominated the sports market during their childhoods and one of the reasons might
be the lack of performance of China’s local brands. How Adidas succeed in making positive progress
while having cutthroat competition is a subject worthy of study. By applying the k-means model and
a social experiment, this paper explores how products and marketing strategy affects the market
shares by focusing on the marketing strategy, market share, product rating, and product price.
Keywords: Adidas; Marketing strategy; Sport Supply Group.

1. Introduction
The fitness industry has grown in the last decade as most people take sports more seriously as a
career with the increasing need of a healthy lifestyle (Thompson, W2018). This has led to the rise in
demand of the fitness product manufacturers such as Adidas, Nike and Puma. This report is thus
designed to explore the success of the Adidas. The company, a multinational company located in
Germany, is one of the most successful companies in the sports sector (Jayawardhana, 2016). The
company has over 50, 000 employees and has revenue of over € 20 billion in 2018 (Wright, 2019).
The success of the company is attributed to many factors. Thanks to an effective marketing strategy,
the company expand to the US and even in Asia. According to the famous American marketing expert
Professor Philip Kotler, Based on 11P marketing concept-Product, Price distribution, Place,
government Power, Public Relations ,Probe, Priority, Partition and Position,which is put forward by
American marketing professor Philip Kotler, the paper analyses the marketing strategy of Adidas in
the sporting goods market. The first part evaluates the marketing strategy of the Adidas while the
second part discusses the marketing mix of the Adidas 4F FWD shoes.

2. Evaluation of the current marketing strategy (PESTLE)

Adidas being one of the leading companies in the fitness clothing brand adopts a marketing
strategy that makes the company competitive in the market. The company has managed to attain a
stable market share across the world because of its effective marketing strategy.

Figure 1. PESTEL analysis

Source: Duong (2019)

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2.1 Political factor

The most pressing issues for Adidas is the different taxation rates in differentbranches . For
example, the tax rate in China is at 25% while in the UK is19%. In Germany where Adidas was
founded, the rate is 15% (Wright, 2019). This kind of variance affects the pricing of the company and
thus requires for different pricing policies that may affect the performance of the company in different
countries. As a result, the company seeks to outsource its manufacturing to the developing countries
which helps to reduce the cost of manufacturing (Zhu, 2021). Currently many countries are facing
inflation challenges due to the tension in Europe following the invasion of Russia to Ukrain. The
invasion has led to political instability in the region which may affect the sales of the company (Lang
and McKee, 2022). This may impact the company’s ability to set target sales duringthe political
unrest.
2.2 Economic factor
One of the economic factors that may affect the performance of the Adidas is the inflation that is
currently expanding across the world due to the covid-19 pandemic. The economic slowdown
makes it difficult for consumers to retain their spending power (Guo, et al, 2022). The drop in the
consumer spending power and the high unemployment rate across the world have led to a drop in
demand of the Adidas products . The products are classified as leisure products. Guo, et al (2022)
note that most consumers prioritize products such as food with their disposable income, so
thatpurchase of other products such as the fitness products has reduced.
2.3 Social factor
Most of the consumers of the target countries such as the US, UK, China have recently shown a
desire to lead a healthy life. According to Chatterjee, et al. (2021) the wellness market has grown
with a 6.4% rate in 2020. This shows that most of the consumers are eager to engage in activities
such as going to the gym and running for a healthy lifestyle. As a result, the demand for the fitness
products has gone high creating a large market for the Adidas products. Majority of people in
countries such as the UK, USA, Germany and even in China have embraced the need to educate their
citizens on the need for an active lifestyle and the growth of the demand of the fitness products
(Chatterjee, et al., 2021). The company recently has seen a growth of the consumers who are not
professional players or sports persons due to the rise in the demand for a healthy lifestyle. The
company thus has increased the design of trendy and fashionable fitness products to meet the needs
of the consumers.
2.4 Technological factor
The growth of technology has led to changes in the consumer behaviors. The rise of the internet
and the digital marketing has affected the purchase behavior and even the marketing behavior of the
consumers (Sönmez, 2018). Most of the consumers across the world now have access to the internet.
Shipunova, et al., (2022) note that in 2022, nearly 59.5 % of the population have access to the internet
and are active users worldwide. This means that the digital consumers have increased. Most of the
consumers prefer to make online sales. In2020 and 2021 when the pandemic forced companies to
lock down, Adidas seen an increase in the online sales. Zhu (2021) notes that the Adidas e-
commerce in 2021 increased by 13% compared with a 10% increase of 2019. The B2C has
contributed to the sales growth of the company and has also increased the consumer base as the
company cannot reach a wider range of consumers across the world.
2.5 Legal and environmental factors
The success of Adidas gives credit to many aspects and one of them is the adherence to the legal
procedures of the different countries. Besides, the company has focused on patenting its properties
andprotecting its legal rights, which reduces the chances of infringement (Wright, 2019. In addition,

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the patent has helped reduce the overflow of the counterfeit problems that would lead to lowered sales.
listed as one of key companies conducting sustainable business, the company has been a champion
in using recycled materials to make some of its products. (Wright, 2019).

3. Customer identification and key drivers

The process of segmentation refers to the identification of the key consumers that a company
targets. Adidas has used the demographic segmentation process (Sande, 2019). This method of
segmentation divides the consumers based on people-based differences such as age, gender, marital
status, income, and even education level. The company intends to target the young people who are
active in the sports. In most of the cases, these consumers fall in the age gap of 16- 35 (Hertrich and
Mayrhofer, 2015). However, with the rise of the health lifestyle and demand of the trendy fitness
products, the company has also found that age group between 35-50 is a highly potential target
consumer. The company has also applied the concept of psychographic segmentation where it targets
the consumers that have a similar motive and preferences (Madara, 2019). Most of the target
consumers of this company are people who like to engage in games and sports and people who are
pursue a healthy lifestyle. Although this may override the demographic aspect, Hertrich and
Mayrhofer, (2015) note that the company primary target is the young people and that is why they use
figures such as Lionel Messi, a highly famous sports individual among the young people, as
spokesperson. However, this does not block the older consumers who are into sports and games and
this calls for application of the psychographic segmentation.
The company has also chosen the right positioning strategy to help win the target consumers.
Positioning is the position of the brand in the minds of the consumers and it helps attract the right or
the target consumers as it does help the product be unique (Hertrich and Mayrhofer, 2015). The
company provides high-quality products to the consumers and consumers identify the company’s
products as premium. The company cares for the consumers and commit to creating quality products
that are durable and trendy. This has thus made the company attract the high-end consumers who can
comfortably afford the products of the company. The premium products and the passion for the sports
and games as well as healthy lifestyle make the company target the class of consumers that can easily
its products. The urban upper and the middle class who have a large disposable income are willing to
afford the products sold by the company (Madara, 2019).

4. Competitor’s analysis
Companies must seek to ensure that they establish a unique competitive ability to beat competitors.
The major competitors to Adidas are the Puma and Nike who are known to provide some of the high-
quality fitness products in the market. As it is indicated by Mahdi, Abbas, Mazar and George, (2015)
Nike is one of the major competitors of Adidas and it has a 27% market share globally while Adidas
has a 25% market share. Puma competes with Adidas fiercely as the company also has a 23% share.
Although these market share keeps fluctuating based on the product on sale, Jayawardhana (2016)
explains that these three companies are all strong and have competed for a long time. In order to attain
a large consumer loyalty, Adidas applies the unique selling point which is creation of trendy fitness
products of high quality. Zhu (2021) notes that the company has determined to make light and
convenient fitness products to attract the target consumers. The comfort of the products as well as
the strong brand reputation are the major unique selling points that the company has used to beat the
competition. Mahdi, Abbas, Mazar and George, (2015) note that Adidas , as a very famous brand
among consumers, makes it easy for the consumers to remember therefore attaining a constant market
share. This may not be a compelling USP since companies such as Puma and Nike have similar rating
and strong brand identity in the market. Dadrasmoghadam, et al., (2021) thus note that one of the
factors that has made Adidas remain competitive in the market is the fact that the company has the
unique design of the products. Other competitors in the industry may provide same quality,while the

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company with unique fashionable designs stands out and get popular. For example, the running shoes
for the company are made of recycled material that help the runners to feel steady and avoidankle
injury when running (Dominguez, 2020).

5. Marketing evaluation of Adidas 4D FWD shoes

5.1 Product
The 4D FWD shoes are among the newly developed products from Adidas. The products are made
from the recycled product with a 4D midsole that helps to absorb the impact of running. This
designalso provides support of gait while running and makes the process of running easier. The foot
is further made with a lattice structure that is slightly angled, and this helps to redirect the energy of
the foot strike into a forward motion thus helping the runner move faster (Sicoli, Bronzetti and Baldini,
2019). This product is made after increasing research of data collected from runners who have
informed the company of the needs to be fulfilled. The applied technology of using recycled material
plays an important role as it helps reduce environmental pollution. Therefore, not only the product is
high-quality, comfortablewith a unique design but its process of making protects the environment.
One of the reasons for the design of this product as discussed by Ang and Rusli (2018) is not only to
meet the needs of the consumers but also to play a role in sustainability business practices.
5.2 Price
The price of this product is largely affordable at the retail cost of $200. The company has used
available recycled materials to make an affordable product that can meet the needs of most middle
class and upper class people. This price is to help the company attract the fitness enthusiast as they
are not set as high as the products for professional players and people in sport (Ang and Rusli, 2018).
The prices however can also be described to be competitive compared to to what other competitors
have offered in the market. This helps Adidas not only make profit but also remain in a leading
position in the market. In addition, this competitive and affordable price help the company retain the
customer loyalty while at the same time attracting the new consumers. Even though the prices are
affordable, Wright (2019) notes that they still lean to the premium side and this shows that the
company has still retained its quality of the product. Ang and Rusli, (2018) note that Adidas has to
ensure that it retains premium prices so that the high quality impression can still remain.
5.3 Distribution
The digital marketing has played a very crucial role in the promotion of products from Adidas.
Since the onset of the pandemic, the company has embarked on widening the online sale from the
website of the company. This has helped the company reach to a wider range of the consumers across
the world with increasing sales. As explained by Zhu,(2021) the B2C strategy of reaching the
consumers from Adidas has not only led to a growth of the sales but also a growth of the consumer
base. This has helped transverse the limitation that comes with the physical boundaries. In addition,
the company has also provides the product in the stores near the target consumers. This helps the
company easily access the target consumers who are not fond of making the online purchases. There
is a need to ensure that companies maintain a balance beween the traditional modes of distribution
and the modern forms of distribution. The physical stores not only create a constant image on the
minds of the consumers but also create a space of brand ownership among the consumers when they
are making the shopping (Wright, 2019).
5.4 Promotion
This new product by the company is promoted by following a number of strategies. To start with,
the company has focused on the use of the online promotion as the quickest form through which
Adidas contacts a high number or consumers. This includes the use of the social media and the google

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ads for the company to reach wider range of the internet users. Byun (2015) notes that there is a need
for companies to embrace the use of the social media marketing as this strategy helps reach a wide
range of consumers. The other method that is applied by the company is the spread of mass media,
one of the traditional yet still very effective mode of communication. In this method the company
intends to reach to the consumers who are above the age of 40 and enthusiastic of the healthy life
style (Sande, 2019). The age group above 40 are more likely to focus on the mass media advertisement
compared to the lower age group. The combination of two strategies have made the product become
popular among the users and has made high volume of sales (Madara, 2019).

6. Identification of the appropriate marketing strategies

One of the best marketing strategies that helps promote the product 4FD is the use of the social
media influencers. In the contemporary marketing activities, most of the companies have collaborated
with the social media celebrities to promote their brands and influence the sales. Mahdi, et al., (2015)
most of the young people on the social media have trust on the social media personnels that they
follow. Therefore, brands should constantly partner with such celebrities to increase the sales. These
social media influencers should be properly coached about the product to ensure that they understand
the product that they sell. This will not only help create a large volume of sales, but also establish
a long-lasting relationship with the consumers who follow the influencers. A trust on the influencers
is a trust on the brand as well. Dadrasmoghadam, et al., (2021) note that when using the social media
influencers, a company is able to attain more trust from the consumers by selecting the influencers
that they trust.
Another strategy that would be beneficial to the company and would lead to growth of the sales is
through sponsorship of events that help the consumer learn about the product. For example, the
company can sett seminars with the topic of a health lifestyle while launching the products teaching
the consumers how to live a healthy life. In thhis way, the companycreate a need and an urgency, and
also make people who attend the seminar want to buy the product (Dadrasmoghadam, et al., 2021).
This will be different from what the company has always done as it has largely focused on partnering
with the major sports companies such as footballs teams in the past. Now shifting focus to the
individual consumers helps widen the scope of the consumers and this translates to high volume of
sales.

7. Conclusion
This report identifies that Adidas has attained a high level of success following the proper and
effective planning of its marketing strategies based on the existing environmental factors. The
growing demand of a healthy lifestyle is one of the factors that has helped to increasedemand for the
products of the company as well as the availability of opportunity for digital marketing. However,
inflation and political instability has shaken the sales of the company. The company focuses on use
of demographic and psychographic segmentation which helps reach the middle- and upper-class
consumers. To compete with Nike and Puma, the company focuses on use of h unique designs of the
products. One advantage about the products of the company such as the 4D FWD is that they maintain
high quality with premium prices. To get the attention of more consumers,the company should focus
more on use of social media influencers.

References
[1] Ang, C., & Rusli, H. (2018). The Impact of Marketing Mix 4Ps and Consumer Behavior toward Purchase
Decision of Adidas Products. iBuss Management, 6 (2).
[2] Byun, J. W. (2015). Successful Global Brand of the Adidas: Porter’s 5 Forces and SWOT Analyses.
Journal of the Institute of Trade and Commerce, 15 (4), 141 - 167.

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[3] Chatterjee, A., Prinz, A., Gerdes, M., & Martinez, S. (2021). Digital Interventions on Healthy Lifestyle
Management: Systematic Review. Journal of medical Internet research, 23 (11), e26931.
[4] Dadrasmoghadam, A., Sahebkaran, M. A., Etezad, S. K., Khoshbakhti, J., & Barbaar, A. (2021). The
Optimal level of variation of Nike and Adidas Sporting Brands in Mashhad Sporting Stores. International
Journal of Psychosocial Rehabilitation, 25 (01).
[5] DOMINGUEZ, L. (2020). Nike vs. Adidas. International Relations Journal 2020, (39), 37.
[6] Duong, A. (2019). The PESTEL Model.
[7] Guo, F., Huang, Y., Wang, J., & Wang, X. (2022). The informal economy at times of COVID-19
pandemic. China Economic Review, 71, 101722.
[8] Hertrich, S., & Mayrhofer, U. (2015). Adidas, the running shoes market. HAL.
[9] Jayawardhana, A. (2016). Financial performance analysis of Adidas AG. European journal of business
and management, 8 (11), 74 - 82.
[10] Lang, T., & McKee, M. (2022). The reinvasion of Ukraine threatens global food supplies. bmj, 376.
[11] Lin, B., & Jia, Z. (2019). Tax rate, government revenue and economic performance: A perspective of
Laffer curve. China Economic Review, 56, 101307.
[12] Madara, D. (2019). International marketing strategy of Adidas. A critical evaluation. GRIN Verlag.
[13] Mahdi, H. A. A., Abbas, M., Mazar, T. I., & George, S. (2015). A Comparative Analysis of Strategies
and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in
the context of a Dynamic and Competitive Environment. International Journal of Business Management
and Economic Research, 6 (3), 167 - 177.
[14] V. D. (2019). Influence of Celebrity Athletes on the Sportswear Industry: An analysis of influencers’
impact on Nike and Adidas brand image (Doctoral dissertation).
[15] Shipunova, O., Berezovskaya, I., Kedich, S., & Popova, N. (2022). Indicators of Choosing Internet User’s
Responsible Behavior. In Proceedings of Sixth International Congress on Information and
Communication Technology (pp. 961 - 970). Springer, Singapore.
[16] Sicoli, G., Bronzetti, G., & Baldini, M. (2019). The importance of sustainability in the fashion sector:
Adidas case study. International Business Research, 12 (6), 4 1- 51.
[17] (2018). Technology acceptance of business intelligence and customer relationship management systems
within institutions operating in capital markets. International Journal of Academic Research in Business
and Social Sciences, 8 (2), 400 - 422.
[18] Thompson, W. R. (2018). Worldwide survey of fitness trends for 2019. ACSM's Health & Fitness Journal,
22 (6), 10 - 17.
[19] Wright, M. (2019). Strategic audit of Adidas.
[20] Zhu, J. (2021). Analysis on Adidas Marketing Strategies in 4P Model. Scientific and Social Research, 3
(5), 67 - 75.

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Porter's Generic Strategies

Adidas strategies likely goes with Porter's strategies which mainly on the cost of the product
and the differentiation of the product in different ways. With the sole aim of achieving profit,
these strategies help Adidas to face the competitors in terms of price, operate in specific
markets, gaining advantage of the product and finally making the most out of it.

Cost leadership strategy:

Adidas can use this strategy and it will be more beneficial for the company initially as the
price of the products are a bit higher than other brands and so if the price of Adidas, reebok
products are reduced, then there is a great opportunity for Adidas to reach more customers
and they can permanently turn loyal to them. As the global economic situation is currently
unhealthy, this may even attract more customers if Adidas brings down the prices of its
products in order to face the competitors who offer the similar type of products at a lower
price than Adidas. To withstand the competition from the companies' inferior in quality,
Adidas needs to think about this strategy.

Differentiation strategy:
The differentiation strategy would well fit Adidas to improve the market base as it has lot of
advantages with technology. As Adidas is already making use of e-commerce and the
customers can design their own products over the internet, the product management team can
do a lot of research with the new designs and release them into the market. Since Adidas is
being identified as a brand that is associated with a particular segment and also very
specifically to particular sports, it can use this as an added advantage in trying to be different
in targeting people who are into sports, athletics etc.

Focus Strategy:
When Adidas thinks of implementing the focus strategy, it can start focusing on different
segments apart from sports as the infrastructure is available with the company. It needs to add
up some more facilities, and try to focus on the entire foot wear segment suitable for all the
age groups like Bata. There are certain negative effects for this strategy as it is a time taking
process for the company to start its operations by focusing on a different market segment and
customers. In the long run, the new focus area may be over looked by the company due to
poor performance and the company will lose lot of money, time and more importantly, the
profits may come down and the cost will go up.