adidas strategic business plan

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With sport playing an increasingly important role in more and more peoples’ lives, both on and off the field of play, we operate in a highly attractive industry. Based on our deep understanding of our consumer and the authenticity of the adidas brand, we push the boundaries of products, experiences, and services. We do so according to our strategy, which allows us to fully capitalize on the acceleration of favorable long-term structural trends.  

‘OWN THE GAME’

‘Own the Game’ is our strategy that guides us through to 2025 – a plan rooted in sport. Sport is adidas’ past, present, and future. ‘Own the Game’ puts the consumer at the heart of everything we do and is brought to life by our people. Our strategic focus is on increasing brand credibility, elevating the experience for our consumer, and pushing the boundaries in sustainability. The execution of our strategy is enabled by a mindset of innovation across all dimensions of our business as well as our digital transformation. We own the game and will drive significant growth. 

Our consumers are at the heart of ‘Own the Game’. Consumers drive structural trends in our industry through their preferences and behaviors. They strive to live active and healthy lives, they wish to blend sport and lifestyle, and they are digital by default as well as sustainable by conviction. ‘Own the Game’ will be ready to capture those consumer-driven opportunities and carve out new ones for their benefit. In 2025, ‘Own the Game’ will not only have delivered overproportionate growth for adidas, but also deepened relationships with our consumer, as we continue to actively live our purpose ‘through sport, we have the power to change lives’.

OUR PEOPLE 

To successfully deliver on our five-year strategy, we will support our people to truly own the game. ‘Own the Game’ puts the consumer at the heart of everything we do and is brought to life by our people. It’s all about creating a culture and environment where our people can consistently thrive, be successful, feel they belong, and ultimately enjoy coming to work.  

We have developed the adidas People Promise to make it clear what we stand for as a company. The adidas People Promise will guide us as we strive to deliver our mission to be the best sports brand in the world and live our purpose – Through sport, we have the power to change lives. You will also see our attitude of ‘Impossible is Nothing’ reflected in our People Promise. 

Diversity, Equity and Inclusion underpins everything we do. It is the glue that spans every country, department and team. We want to ensure that through our people actions, we create an equal starting line for everyone within adidas.  

In addition to that, the people part of our strategy is built on 3 pillars:  

• Leadership : We will develop leaders to own the game and act as role models empowering all people to realize their possibilities.  
• Betterment  : We believe in a mindset of continuous learning and improvement and are committed to providing relevant learning opportunities to upskill and reskill for the future.  
• Performance : We build the best teams that play to win, recognizing and rewarding both individual and team performances.  

OUR STRATEGIC FOCUS AREAS 

CREDIBILITY 

We are a leading brand thanks to our credibility in both sport and culture. To continue to excite our consumers with innovative concepts that support our mission, we will sharpen our brand, refine our product offering, and leverage partnerships to further enhance our credibility with consumers. 

• Sport : We will focus on the most important sport categories: Football, Training, Running, and Outdoor. Football is the biggest sport in terms of viewership, while Running, Training, and Outdoor are the biggest participation sports. Our products in these categories are built for sport and worn for sport.  
• Lifestyle : To tap into the biggest commercial opportunity for our brand, we will sharpen our brand architecture by introducing a new consumer proposition called Sportswear. These products are born from sport and worn for style. At the same time, we will extend Originals, which is inspired by sport and worn on the street, into the premium segment through top-quality manufacturing processes and materials. 
• Women : We will execute on a cross-category plan to achieve product excellence and elevate the women’s experience through our membership program to become their indispensable sports brand. Our goal is to grow currency-neutral net sales for our Women’s business at a mid-teens rate per annum on average until 2025, thereby significantly increasing the Women’s share of our overall business. 
• Partnerships : We will amplify our credibility through our partnerships by leveraging their power, authenticity, and reach. We will expand our portfolio of partners, which already includes Beyoncé, Stella McCartney, and Pharrell Williams, all of whom will continue to play a significant role in wowing our consumer on the lifestyle side. Likewise, we will continue to leverage our partnerships with the biggest symbols in sport, be it with teams like Bayern Munich or Real Madrid, athletes like Lionel Messi or Mikaela Shiffrin, or events like the Boston and Berlin Marathons.  

EXPERIENCE 

To grow long-term relationships with our consumer, we excite and empower them by creating personalized experiences in both digital and physical spaces. With this in mind, we will accelerate our transformation into a direct-to-consumer-led (DTC-led) business built around membership. 

• Membership : With the launch of our membership program in 2018, we laid the foundation for offering personalized experiences to our most valuable consumers. We are now ready to take this to the next level with the goal of increasing our member base to around 500 million by 2025. Through membership, we reward engagement and purchasing activity by offering exclusive hype products, access to launches and special events, and more. 
• DTC-led : e-com continues to be our most important store. Both adidas.com and the adidas app will see enhancements across the entire consumer journey. By 2025, our e-com business is expected to account for between € 8 billion and € 9 billion of our company’s net sales. While e-com is the pinnacle of our retail strategy, our physical stores will continue to play a crucial role in creating a physical and emotional connection with our brand. Retail formats will be digitized with fully-fledged omnichannel capabilities. The DTC business, comprising our e-com as well as our physical stores, is projected to account for around half of the company’s net sales by 2025. We will also continue to leverage our strong relationships with strictly selected wholesale partners and ‘win-with-the-winners’ to ensure a holistic experience for the consumer no matter the point of sale. 
• Key Cities : We are building on our Key Cities portfolio of London, Los Angeles, New York, Paris, Shanghai, and Tokyo, by adding Mexico City, Berlin, Moscow, Dubai, Beijing, and Seoul. These cities represent the beating heart of our global consumer experience and exert influence on the rest of the world, while at the same time offering commercial opportunities as urbanization continues. 
• Strategic markets : We will double down on Greater China, North America, and EMEA to bring exciting consumer experiences to life, pursuing a tailored approach that appeals to local trends. Our ambition is to gain market share in all three strategic markets. 

SUSTAINABILITY 

Our commitment to sustainability is truly holistic and deeply embedded into how we have done business for over two decades. It’s rooted in our purpose that, ‘through sport, we have the power to change lives’. As we continue to pioneer in sustainability, we will move from strong stand-alone initiatives to a scaled and comprehensive sustainability program.  

• What we offer : We keep pushing the boundaries of our sustainable offering, so that our consumer will be able to choose from a uniquely comprehensive range. By 2025, nine out of ten of our articles will be sustainable. How we will do this revolves around how we expand and innovate our 3-loops: made from recycled materials, made to be remade, or made with natural and renewable materials. We define products as sustainable when they show environmental benefits versus conventional products due to the materials used or their respective production technologies. 
• What we do : We are committed to reducing the CO2 footprint of our product offerings as we work to reach climate neutrality by 2050. We will achieve this through initiatives such as driving zero-carbon within our own operations and promoting environmental programs along our entire value chain in close cooperation with our suppliers.  
• What we say : We will be vocal about our efforts that focus on creating low-impact products that are made to be remade. To guide our consumer to make more sustainable choices, we will also simplify our labelling strategy and scale up our product takeback program. 

OUR ENABLERS

INNOVATION AND DIGITAL

Two enablers will set us up for success. The first is applying a mindset of deep and broad innovation across all dimensions of our business. The second is using the speed and agility of Digital throughout our entire value chain. These enablers will be particularly powerful when it comes to executing on the three strategic focus areas – Credibility, Experience, and Sustainability – that support us in intensifying our focus on the consumer and driving growth.

To watch a recording of the 'Own the Game' presentation, which happened on 10 March 2021, or to access more strategy related resources, please  click here .

Own the Game 2025

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Three Stripes Business Model of Adidas

One brand that dominates the mindshare while consumers think of Hip Hop and sporty brands is Adidas. So much so that Adidas is now one of the most desirable sportswear brands. Adidas produces various sports equipment across different types of sports. But then the question is what is the business model of Adidas that is helping the brand rule the sportswear industry across all the sports (obviously next to Nike).

As of 2020, Adidas had a turnover of  €19.844 billion  and has approximately  62,285 employees  worldwide. From establishing itself as one of the best sportswear, it has also been working towards establishing itself as one of the best CSR companies globally (as of 2020).

How it all Began?

The foundation for Adidas was laid in  1920 by Adolf Adi Dassler , a 20-year old German who was an extremely passionate athlete. He started producing shoes outside his mother’s laundry room using limited materials available post WW1. Initially, he did not intend to sell sneakers and had completed his apprenticeship in a bakery before he started selling his sneakers to produce the best shoes for passionate athletes.

He understood the need for high-quality sports equipment and regularly visited the athletes to seek feedback on what these athletes truly desired. Such observations and a genuine desire to help athletes further encouraged Adolf to develop products that would better the consumers’ lives.

Currently, Adidas has products in the  following category  

• Accessories and Gear

In July 1924, the business was established as “Dassler Brothers Shoe Factory” (Gebrüder Dassler Schuhfabrik), which was later joined by his elder brother. It was only in 1936 that the brand found true success when Adi gifted shoes to the gold medallist Jesse Owen an American track-and-field star, who also made a world record in the 1936 Berlin Olympics. The business became quite successful and was selling 200,000 shoes each year until WWII hit.

After WWII in 1947, the brothers had a clash and they split. Rudolf formed another shoe company known as Puma, which is now considered one of the strongest rivals of Adidas.

Fun Fact: The complete form of Adidas is  ‘All Day I Dream About Sports.’ Initially, in 1949  the logo was a spiked shoe hanging in between the letter ‘d’

Adidas logo developed its famous three strips from the original founder Karhu Sports, who was short on capital post-WWII. The owners decided to sell the trademark of their logo for €1,600 and two bottles of whiskey. As per Economic Times , The three-stripes of the Adidas logo represent a mountain, pointing out challenges and goals people need to overcome.

It was only in 1971  that the brand unveiled the three-stripe Adidas logo in the form of a leaf called the “trefoil.” This version was later replaced in 1990 by the current logo, shaped like a triangle for the Equipment Line but later became the corporate logo, though the trefoil logo can still be found on some Adidas original products.

Adidas Business Model is based on integrating hip hop culture and sports

In 1970  the brand delivered its football for the 1970 World Fifa Cup and designed the ball in such a way that it would increase the visibility on the black and white screen, and this soon led to one of the most successful and famous partnerships of Adidas providing footballs to Fifa World Cup after that.

In 1986, the brand expanded and entered the hip-hop culture and soon became a household name and a lifestyle. Unknown to Adidas, the hip hop group Run DMC wrote a song about their shoes, “My Adidas,” and held up the 3-Stripes shoes during the concert in front of 40,000 fans – amongst which was an Adidas employee, and it led to an unexpected partnership.

It was the first time that sport and art were merging, which led to the brand’s growth over a much larger audience and customer base. This led Adidas to develop new ways of marketing, which was considered as of the critical areas of the company, which led to its success and allowed it to achieve a competitive advantage.

Adidas Marketing Strategy

One of the most famous taglines of Adidas is ‘ Impossible is Nothing,’  which focuses on the importance of fitness and the importance of striving for something that a person truly desires and is also one of the primary marketing strategies for the company.

Furthermore, it has also sponsored many world sports events such as FIFA, UEFA, NBA, Cricket & Olympics. At the same time, it is also known to provide the best products which are comfortable, long-lasting, and beyond the ordinary.

Moreover, it also takes advantage of 6 major cities, which helps shape the trend and the buying decisions of the targeted customers.  These cities are Los Angeles, London, Shanghai, New York, Tokyo, and Paris. In the UK, it primarily focuses on selling soccer products, whereas it focuses on basketball and baseball in the US. Adidas ensures that the marketing strategy meets the needs of consumers globally.

The collaboration of Adidas with various athletes and significant-tech companies has allowed it to enhance innovation with branding and marketing. This has led to the development of a more vital relationship with the customers ensuring customer loyalty. It also collaborates with celebrities which includes music and fashion icons. Thus, the strategy is to build must-have designs that reach out to more than just sports fanatics.

This can be seen when Adidas created Yeezy with Kanya West. It turned out to be one of the fastest-growing footwear lines and, in 2021, was valued between $3.2-$4.7 bn. This has allowed it to expand the customer base and reach out to those customers who are not sports fans.

Yeezy is worth as much as $3 billion, according to a Bank of America valuation. Kanye West made about $147 million from Yeezy shoe royalties last year. That's more than his entire music catalog is worth – valued at $110.5 million by the Valentiam Group. https://t.co/YJ90ZOvIbA — Kim Bhasin (@KimBhasin) April 27, 2020

Nike also has a powerful marketing strategy. Do check out!

Adidas’ powerful distribution network

Another competitive advantage that Adidas has is its distribution channel. Globally it has around 2500 stores. The global supply chain of Adidas extends to various tiers from manufacturing partners to raw materials such as cotton, leather, and natural rubber and the use of technology.

The majority of the products are produced by 132 manufacturing partners worldwide. At the end of 2020, 61% of the strategic suppliers had worked for more than ten years, and 30% worked for more than 20 years.

As of 2020, it outsources most production and has 500 independent factories globally that manufacture products in more than 49 countries. Its supply chain has different types of business partners and also has multiple layers. As of 2020, the top 4 countries in terms of sourcing volumes were:

How Adidas is adding sustainability to its business model

Back in 2015, Adidas collaborated with Parley for the Oceans, an environmental organization. One of the primary goals of Adidas is to double the number of recycled sneakers. In 2021, Adidas aims to produce 17 million pairs of shoes with recycled plastic waste collected from beaches and coastal regions, after more than 15 million in 2020.

Sustainability is an integral part of the Adidas business philosophy. We have continued to invest in sustainability initiatives during the coronavirus pandemic, and we will significantly expand our range of sustainable products in 2021. Adidas chief executive officer Kasper Rorsted in a press release.

Furthermore, it is also currently focusing on eliminating the use of fur and focusing more on using plant-based leather, recycled cotton, and eco-friendly shoes to achieve by 2050 complete global neutrality.

As per the company’s press release , six out of ten Adidas articles are made from sustainable materials. By 2025, nine out of ten will be sustainable as the company expands and further innovates its 3-loop system: recycled loop (made from recycled materials), circular loop (made to be remade), or regenerative loop (made with natural and renewable materials). adidas has been researching fully recyclable or biodegradable materials for some time already and aims to only use recycled polyester in every product from 2024 onward.

Moreover, the sustainability bond amounting to €500 million was issued in September 2020, which was five times oversubscribed. The proceeds from the offering are planned to be used in targets like achieving recycled materials, investing in renewable energy production, and supporting underrepresented communities.

Adidas 2021 Business Strategy- Own The Game

In 2021 Adidas released its next five-year strategic cycle where ‘ Own the Game ‘ puts higher preferences to the consumer than everything else by acknowledging the role they have in shaping the trends in the industry. The “Own The Game” strategy of Adidas centers around a shift towards a DTC-led business model.

As part of the new strategy, Adidas aims for its direct-to-consumer business to account for half of its total sales by 2025 and contribute more than 80 percent to the company’s targeted revenue growth until then. By 2025, Adidas aims to triple its members to around 500 million, all while doubling its e-commerce sales to around $10 billion. In addition, Adidas’ own retail stores will be digitized with fully-fledged omnichannel capabilities.

Furthermore, the successful delivery will also ensure brand credibility, improve the consumers’ experiences, and push the boundaries of sustainability. Another aim of this strategy was to begin the formal process of divesting Reebok, which was needed to ensure the independent growth of each other and exploit its capabilities.

In conclusion, Adidas surely has blended the culture of hip-hop and sports and has successfully captured the interests of the consumers, giving comfort its highest priority. Adidas has built a business model that observes consumer trends and maintains high-quality manufacturing and innovative materials. Adidas has already pledged to strengthen its innovation mindset across all areas of the company over the coming years in order to continue to enable ground-breaking innovations.

-AMAZONPOLLY-ONLYWORDS-START-

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Nike doesn’t sell shoes. It sells an idea!!

Nike has built one of the most powerful brands in the world through its benefit-based marketing strategy. What is this strategy and how Nike has used it?

Domino’s is not a pizza delivery company. What is it then?

How one step towards digital transformation completely changed the brand perception of Domino’s from a pizza delivery company to a technology company?

Why does Tesla’s Zero Dollar Budget Marketing Strategy work?

Touted as the most valuable car company in the world, Tesla firmly sticks to its zero dollar marketing. Then what is Tesla’s marketing strategy?

Yahoo! The story of strategic mistakes

Yahoo’s story or case study is full of strategic mistakes. From wrong to missed acquisitions, wrong CEOs, the list is endless. No matter how great the product was!!

Apple – A Unique Take on Social Media Strategy

Apple’s social media strategy is extremely unusual. In this piece, we connect Apple’s unique and successful take on social media to its core values.

-AMAZONPOLLY-ONLYWORDS-END-

Kashish M is an Undergraduate student from the Middle East. Apart from listening songs and learning new languages and exploring different culture over time she developed interests in writing and gained interest in exploring different parts of the accounting/finance world.

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People Strategy

At adidas, we believe that our people are the key to the company’s success. Their performance, well-being and knowledge have a significant impact on brand desire, consumer satisfaction and, ultimately, our financial performance. Through the delivery of our People Strategy, we focus our efforts on four fundamentals: the attraction and retention of the right talents, role model leadership, diversity and inclusion, as well as the creation of a unique corporate culture.

PEOPLE STRATEGY ENABLES A CULTURE FOR DELIVERING ‘CREATING THE NEW’

As an integral part of our corporate strategy ‘Creating the New’, the People Strategy is a testament to thinking that our strategic business plan can only be executed if we speak to our people on all levels and win both their hearts and minds. The People Strategy consists of four pillars that serve as a basis for creating the culture and environment for our people in order to successfully support ‘Creating the New’.These four pillars also serve as a tool for prioritization, sense-checking and measuring our HR actions and initiatives. The People Strategy is implemented through a portfolio of projects which will directly deliver into each of the four pillars. In 2019, we made good progress in all of these pillars.

The four pillars of our People Strategy

Measuring the success of our people strategy.

Our HR function measures the success and the effectiveness of the company’s efforts with regard to its people initiatives through a set of chosen KPIs. We use two people KPIs: employee experience as an internal measure and employer rankings as an external measure.

Employee engagement

We have set ourselves the goal of becoming the best sports company in the world by becoming a truly consumer-centric organization and putting our people at the heart of everything we do. When it comes to measuring whether we are living up to these ambitions, our consumers and people are the best data sources. We are convinced that our employees’ feedback will play a crucial role in our pursuit of creating a desirable employee experience and continuing to attract and retain top talent. We can only tell if we are successful by asking our people and hence empower them to share their feedback on a regular basis. In support of this thinking, we launched ‘People Pulse’ – our approach and system platform for measuring the level of employee satisfaction with the experience adidas provides as an employer – for all office employees with an email account.

People Pulse allows for the measurement of employee Net Promoter Score (eNPS).  SEE INTERNAL MANAGEMENT SYSTEM The calculation logic of the eNPS score is identical with brand NPS: Based on the main question ‘On a scale of 0 – 10, how likely are you to recommend adidas as a place to work?’, the total share of detractors (responses below 7) is deducted from the total share of promoters (responses scoring 9 and 10), producing the eNPS score. This approach as well as a focus on collecting open-comment feedback from employees on a regular basis allowed the reduction of the questionnaire to a short pulse check of seven questions maximum, with the eNPS question at the center.

The People Pulse cadence is made up of two components:

• The eNPS question, which is asked in every survey to allow for tracking of the results over time.
• Changing focus topics which are directly derived from the company’s strategic agenda as well as the Leadership Framework and the 3Cs .

In 2019, we saw the quarterly People Pulse continue to be leveraged as an important feedback channel from corporate employees to the company. In March, we reached similar levels to the all-time high response rate of the previous year, with 67% of employees responding. On average, our eNPS remained stable in 2019 compared to the previous year. Reports with detailed results and scores were provided to the Executive Board and leaders down to Board –4 level. Employees have access to the overall company results via our global intranet. Result recipients continued to review, cascade and openly discuss the results and drive action on identified areas of improvement.

We not only leverage People Pulse for general feedback on the employee experience at adidas, but also as a tool to gather employee insights regarding important elements of our strategy, such as consumer obsession.

HR FOUNDATIONS FOR OUR PEOPLE STRATEGY

In 2019, we continued to roll out a new HR cloud-based system platform that aims to further enhance the HR system landscape by driving standardization, digitization and automation of currently potentially time-consuming processes across all HR areas. We are convinced that this will allow the HR function to pro-actively manage the workforce, improve the employee experience, and enable the entire organization to make more data-driven decisions.

After successful consolidation of our HR Shared Services in 2019 into a cross-functional global business service, Global Business Services (GBS), operation centers are currently set up in Porto, Dalian and Portland. All employee queries related to topics of an administrative nature, such as compensation, benefits, time management and HR systems, are centrally channeled and managed through GBS. As a result, our HR Partners are enabled to fully focus on their core business, supporting line managers and employees on strategic topics such as career counseling, people management and coaching.

Net Promoter Score (NPS)

A survey-based measure of how likely people are to recommend a brand. The survey is based on one single question to consumers: ‘How likely are you to recommend this brand to your friends?’, which can be answered within a scale from 0 to 10. Promoters are consumers giving the brand a 9 or 10 rating, while detractors are those between a 0 and 6 rating. The NPS is the difference between promoters and detractors measured in percentage points.

Leadership Framework

The Leadership Framework is based on the three company behaviors creativity, collaboration, confidence (the ‘3Cs’) and articulates the particular behaviors that are expected of leaders at adidas. The framework was developed jointly with employees worldwide who provided feedback on what great leadership within adidas looks like to them. It provides a global and universal language that is inclusive, reduces the need for local interpretations and outlines concrete behaviors that serve as a measure of leadership effectiveness. It is built into the way we hire and promote as well as rate performance.

The ‘3Cs’ stand for creativity, collaboration and confidence. It is adidas’ goal to develop a culture that cherishes creativity, collaboration and confidence as well as high performance – the behaviors we deem crucial to the successful delivery of our corporate strategy. In fact, our culture and people serve as the foundation and a key enabler of the ‘Creating the New’ strategy.

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Digitalization in the sports business: More VR, fewer showrooms, retailers as consultants

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What does the future hold for the sports business and sales? What requirements will there be in the future for the sporting goods industry and specialty sports retail? The subject of digitalization is becoming increasingly important, and Adidas wants to be the number one in this field, too. Adidas  Executive Board Member with responsibility for Global Sales Roland Auschel explains in an interview why showrooms will be a thing of the past soon, how virtual reality is being implemented in B2B, what role retail is taking on, and which retailers are facing existential challenges in the field of digitalization.   

Adidas Sales Director Roland Auschel in an interview

Roland Auschel has worked at Adidas since 1989, and has been a member of the Executive Board and responsible for Global Sales since 2013. In the first part of his interview with ISPO.com, Roland Auschel explained 

• how Adidas is at the forefront in digitalization. Examples: the Speedfactory in Ansbach, Germany and the new Futurecraft 4D.
• what this means for production and processes
• how Adidas aims to increase e-commerce revenue to 4 billion euros
• if and where Adidas even needs its own sports stores anymore
• how the world’s largest sports network is helping companies like Adidas with digitalization with ISPO Digitize and the Digital Readiness Check

Part 2 of the interview is about digital transformation and its consequences. Roland Auschel says: “The sporting goods industry needs to wake up and face digitalization.” He explains what this means for sports retail and the industry here.

Adidas: New B2B platform by the name of “Click”

Mr. Auschel, how do you see the future of sales? Completely surprising: digital. Just think of the enormous range of options we already have today when communicating with consumers on all the e-commerce platforms. There are many things that we’re already testing with consumers and can then bring into our B2B division. Right now we’re building a digital order platform by the name of “Click” – a self-service portal for specialty retail. There, our customers can download information, find out what they want to know, leave orders and see where they are – all for the purpose of transparency. Read here: 4 billion euros revenue with e-commerce – that’s Adidas’ plan

Adidas is focusing on VR, not showrooms: Faster and more affordable

You’re convinced that there are going to be fewer showrooms in the future, right? Instead of relying on Excel lists, catalogs or samples, we’re going to implement a new digital form of presentation with the “Virtual Reality Sell-In Tool.” People can then view products in high-resolution 3D quality in a virtual world, take them off the shelf and rotate them 360 degrees. In addition, things like displaying article numbers, segmentation, price overviews and videos will also be possible. In other words: Our regional showrooms can thus be digitized. Why should a retailer still have to drive to a remote showroom when we can bring everything to them in a single box? Nowadays, we transport hundreds of thousands of products throughout the world – that’s something we can save on. And it be done faster. For the customer and for us.

Roland Auschel: Digital Readiness Check shows the truth

To what extent is retail positioned for these changes; how ready is it for transformation? After all, this is the result of a survey conducted as part of ISPO’s Digital Readiness Check – only one in three retailers has their own social media account, and one in three still doesn’t have their own website. Isn’t Adidas going too fast for retail? The Digital Readiness Check by ISPO definitely produced some unpleasant and definitely undesirable truths for one or two retailers. We’re still far from having everybody on board. We’re convinced that we will continue to do business with the right customers.

Adidas: Better business with fewer customers – why not?

Does that mean that you’re expecting a major retailer death? It’s not about the number of customers for us. If we can do the same or even better business with fewer customers – why fight it? But we also say that we as a market leader have a shared responsibility for how a market develops in the future. And that it’s definitely also part of persuading our retail partners to engage constructively with the subject of digitalization. It’s not our approach to say: Rest in peace; we at Adidas have a lot of alternatives in e-commerce . We helped shape and design the market. And that’s why we also take some responsibility for it.

“The retailer should take on a consulting role”

To ask provocatively: What place is there left for retail? The Internet doesn’t reach consumers alone. It’s fast-paced and extremely hectic. And there’s a deluge of information. The retailer should take on a consulting role : I’ve scoured the market for you, dear consumer. I’m well-informed. I can give you a recommendation – and a recommendation from a good retailer is, to a certain extent, security. Provide security, assume the role of a consultant, be a service partner – the retailer can and must do all of this. However, to achieve this, it is also necessary to face the challenges of digitalization and see them as an opportunity.

“Market leader Adidas always takes responsibility”

You know the complaints of some retailers – for example, let’s take the promotion with the World Cup jersey that Adidas initially sold exclusively in its online store. We discussed this with our customers far in advance. We also aren’t saying that we’ll have to do it again next time. But we are convinced that we need to try out new things to see what the consumer wants. Partnership also needs to exist if you’re treading new paths.

That said: How can digitalization be managed for all retailers ? Once again: A market leader like Adidas always take responsibility. But it’s a foregone conclusion that our industry is going to change. We have the opportunity to redefine the rules of the game. And for that, we need partners. The associations and large customers are just as challenged as our competitors. We don’t have the exclusive right of determination here. The sporting goods industry needs to wake up and face digitalization.

We opened numerous new stores in the past. The question today is: How many of these stores will we as a brand really need in the digital future? Roland Auschel, Adidas Sales Director, in part 1 of the interview

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Our ambition is to become a more sustainable company.

Our commitment to sustainability has been embedded into our business practices for over two decades and is rooted in our purpose that ‘through sport, we have the power to change lives.’ To underline this commitment, in 2021, we have further sharpened our focus on sustainability and defined a roadmap for 2025 and beyond that allows us to create – and drive – positive impact. As we continue to pioneer in sustainability , we will continue to move to a comprehensive, consumer-facing sustainable article offering at scale, expand our circular services and work towards achieving climate neutrality (GHG) across our entire value chain. We will continue to empower our employees to become sustainability ambassadors, just as we invite our consumers globally to engage and connect with us on the topic of sustainability. Lastly, we aim to uphold the highest standards also of social compliance across our supply chain.  

We believe that achieving our sustainability targets will set us up for future success, yet we know that we cannot achieve these alone. We will leverage our long-term relationships with suppliers to ensure they continue to move with us in alignment with our decarbonization efforts and work closely with our partners to scale innovative materials and recycling technologies.  

Being a sustainable business is about striking the balance between shareholder expectations and the needs and concerns of our employees, consumers, suppliers, the workers in our supply chain and the environment. We truly believe that acting as a responsible business – one which is fully committed to respecting human rights – will contribute to lasting economic success. 

Our targets for 2025 and beyond 

We have a clear roadmap, with clear targets for 2025 and beyond. These targets focus on the topics that are most material to our business and our stakeholders. Highlights include:  

By 2025, nine out of ten adidas articles will be sustainable:  We keep pushing the boundaries of our sustainable offering, so that our consumers are able to choose from a uniquely comprehensive range. By 2025, nine out of ten adidas articles will be sustainable. We define articles as sustainable when they show environmental benefits versus conventional articles due to the materials used, meaning they are – to a significant degree – made with environmentally preferred materials. We further aim to reduce GHG emissions per product by 15% by 2025.  

• By 2050, adidas will be climate neutral:  We have committed to a set of stretch targets that will pave the way to climate neutrality across our entire value chain by 2050. By 2025, we will achieve a GHG emissions reduction of 15% per product, measured against 2017, and achieve climate neutrality (GHG) at our own operations. We will also reduce a bsolute GHG emissions across our entire value chain by 30% by 2030, measured against 2017.  We will achieve this by promoting environmental programs along our entire value chain in close cooperation with our suppliers, using innovative materials and technologies, increasing the use of renewable energy and implementing energy efficiency measures.
• We care about people and the planet: As part of our broader risk management processes, we will increase the scope and application of Human Rights and Environmental Due Diligence (HREDD) efforts. By 2025, we aim to have a system in place to identify and manage high risk human rights issues across the entirety of our value chain. 

The following tables below provides an overview of the targets we have set for 2025, supporting our drive for positive environmental and social impact.  

Target Year 2025

Target years beyond 2025.

1 According to US Bureau of Labor Statistics code.  2 The S-KPI measures a set of social indicators, such as accident rates, worker satisfaction and worker empowerment. The target seeks to achieve 100% adherence to/90% overachievement against these foundational social impact measures, with 3S being the minimum expected supplier performance.  3 The fair wage benchmarks include industry wages, minimum wages and living wages. These benchmarks are set and tracked through a 'Fair Labor Association’ Fair Compensation Tool, which has broad industry adoption and is being rolled out progressively to strategic Tier 1 supplier partners.  4 The measurement of wage parity for production line workers and their immediate supervisors (i.e. line leaders) forms part of a broader gender strategy rollout to applicable Tier 1 strategic partners who complete self-assessments to identify and then close gender gaps in operating practices and procedures.   5 In conducting due diligence we seek to identify, prevent, or mitigate potential adverse human rights or environmental impacts, with priority given to addressing the most severe impacts. 

Annual Report 2022 | Sustainability

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Business Model of Adidas ~ Business Plan, Revenue Model, SWOT Analysis

Introduction

Adidas  AG is a German multinational corporation, founded and headquartered in Herzogenaurach, Bavaria, that designs and manufactures shoes, clothing and accessories. It is the largest sportswear manufacturer in Europe, and the second largest in the world, after Nike. The business model involves business plan, Revenue model, Competitors, SWOT Analysis and many more.

The company was started by Adolf Dassler in his mother’s house; he was joined by his elder brother Rudolf in 1924 under the name Gebrüder Dassler Schuhfabrik. The three stripes are Adidas’ identity mark, having been used on the company’s clothing and shoe designs as a marketing aid.

Adidas sells a range of clothing items, varying from men’s and women’s t-shirts, jackets, hoodies, pants and leggings.

Competitors

Adidas competitors include:

Revenue Streams

Adidas has two revenue streams:

Product Sales  – Revenues generated from the sale of sports shoes, clothing, and accessories

License Fees  – Revenues generated from the licensing of the right to use the Adidas, TaylorMade, and Reebok brands to third parties

SWOT Analysis

• Legacy & heritage:  With decades of heritage & legacy, Adidas has travelled a long way to establish itself as a youthful brand. The brand was started in 1949 and has travelled a long way since then. Adidas has a long legacy of prestigious heritage, and the company has inspired different cultures and ears in different periods across the world.
• Diversified portfolio:  Company has multiple product portfolio’s with varied range of footwear & accessories under brand name Adidas (premium segment) & Reebok (mid range). The portfolio of the company isn’t limited to sportswear products only. Adidas offers a diverse range of products to its customers like footwear, sportswear, apparel, and hardware accessories.
• Strong financial position:  With its 2400 store globally accounting $4.3billions, the company is in strong financial position.
• Distribution network:  By selling it from online stores to company owned stores to supermarket stores, Adidas has an effective distribution system for their products available through different channels.
• Branding by creating touch points with the community:  Celebrity endorsements & sponsoring major sports organizations such as FIFA, UEFA, NBA & Olympics has increased the awareness of Adidas in the market & hence it has increased the highly targeted customer base as well. Brand value means the financial position of the company in terms of customers’ perception that how much they’d be willing to pay for the product.
• Collaborations & memberships:  Strong relationship within the sustainability area with organizations such as International Labour organization, International Finance Corporation has given the company an edge over competitors so that they can have a sustainable business. Adidas is the most favorite brand among teenagers. The demographic comprises teenagers and young people falling between the age of 18 to 24. The reason behind this is that Adidas is very cautious about the quality of its product, that’s why it’s very popular among youngsters.
• Premium price range:  High price range due to innovative technology & Production methods have made the brand affordable to limited customers only, especially in developing countries. Adidas has adopted premium pricing strategy and it makes products less affordable for middle-class consumers and in underdeveloped regions.
• Outsourced manufacturing:  Adidas has 93% of production outsourced to 3 rd  party manufacturers (largely to Asia) to avail of low labour cost & easy availability of resources. They are running a risk of over dependency on outsourcing especially in Asian markets. Also, the overall quality of products perceived by the consumers of developed economies is a major concern as far as brand is concerned.
• Limited product line:  Adidas along with the recently acquired Reebok brands, has got only 2 brands under their group although they have got deep assortments within these brands. Thus, there is more scope for product line expansion.

Opportunities

• Changing Lifestyle:  With the saturation of developed economies, changing taste & preferences, education & changing lifestyle of developing economies, there is a steep rise in the demand of premium goods & services.
• Market development:  Entering into new markets will be the only way to succeed in the future because developed economies are already having high competition. There are no define ends of technological advancement as it is an integrated process from design to shelves.
• Expansion in product line:  Expanding its product line will open a new set of opportunities while at the same time it can differentiate itself from the competitors by following this strategy. Besides improving its existing  product line , Adidas should also focus on production line expansion to increase market share and at the same time differentiate itself from competitors.
• Increasing demand of premium products:  If we only consider the Indian market then there is a growth rate of 33% in demand of premium products. This tells us the future business opportunity & expanding market size of developing economies.
• Backward integration:  This will be smart strategy if followed by Adidas as it will help Adidas to secure their patent rights & also integrate their R&D with the operational team in order to work in open system.
• Competition:  Although Adidas is a global brand but it is facing fierce competition from other brands like Nike which is No.1 brand and Adidas being in 2 nd  Position in this premium segment. Besides this, there is regular competition from local players, substitutes and market penetrators. Though Adidas is one of the most leading brands in the world but still the brand is facing strong competitors like Nike, Under Armour and PUMA in sports footwear and apparel.
• Supplier Dominancy: Due to majority of its production being outsourced; Suppliers have more bargaining power then the company. Most of the Adidas production is outsourced. According to The supply chain structure, in more than 55 countries there are almost 800 independent factories manufacture Adidas products.
• Government Regulations:  With its 35% products manufactured in China & 93% of production happening in Asia, Import regulations, duty & tariffs plays a critical role in the pricing and success of the company. Compliance with Governmental regulations and laws key threat to Adidas. Asian countries are manufacturing 68% products of Adidas.

Adidas achieved global dominance, eventually producing 200,000 pairs a day and generating half a billion in annual sales. Much of its success was due to Adi’s innovative designs.

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Business Strategy of adidas Group

Business strategy of adidas.

Business strategy has a very important role in the making of any market-leading brand. The 21st-century marketplace is highly competitive and to stay ahead of others you need a strong business strategy. Changes happen fast in the business world. However, strategy is at the foundation of everything you need to excel in a highly competitive and fast-changing business environment. In this article, you will read about the business strategy adopted by Adidas for market growth.  In recent years, Adidas has made several changes to its business strategy for achieving faster growth worldwide.

Nike is currently dominating the market, but the sales of Adidas have grown fast. The brand is gearing up for a high jump in the near future. Its new business strategy encompasses several things from changing the company’s strategic focus to creating more sustainable products and technological innovation. Adidas is aiming to become the first true fast sports company in the world. Speed is a very important element and at the core of its new business strategy. It also aims to leverage its scalable operating model to grow its income faster and derive better financial and operational results.   The financial results of 2017 prove that these changes have started bearing results better than expectations and if Adidas can sustain the momentum, it could reduce the gap between itself and Nike faster.

An overview of the Sports shoe industry:

The US Sports shoe industry is being shaped by athleisure trends. It is seeing fast growth and high level of competition. In 2017, it achieved a growth of 2% in terms of unit sales and generated $19.6 Billion in sales. Looks like ladies have been shopping the most because the ladies footwear category was the one to have achieved the highest growth in sales of around 5% compared to the previous year. Men’s and Kid’s sports shoes saw a growth of 1% each.   Sports leisure is now the largest category in US athletic footwear. Among the best-selling brands in the U.S. market were Nike/Jordan, Adidas, Skechers, Under Armour and New Balance. While Nike and Jordan continued to rule the top ten best sellers in the U.S. market, Adidas also made it to the list. Two of Adidas models made it to the top ten. However, in terms of sales, Adidas achieved the highest growth.

The global sports shoe industry has also seen similar changes happening at a fast rate. In 2015, the global footwear industry was valued at 75.2 Billion dollars . However, it is expected that by 2023, this value would have crossed the $115.6 Billion mark. One central factor supporting fast growth of sports shoe industry worldwide is the rising health consciousness. Globally, the population of millennials is highly health-conscious. Apart from fitness trends, growth in gym and sports infrastructure across the urban areas, has supported the growth of this industry. The two markets that are leading in terms of overall sales are Europe and North America. However, a large proportion of sales are also coming from the fast-growing Asian economies. Nike has steadily continued to dominate the sports shoe and apparel market. However, Adidas has also made a strong return, by growing financial investment in innovation and digital technology. 2017 financial performance of Adidas tells an exciting story of fast growth and exceptional financial performance. Its higher focus on innovation, digital technology and sustainability has started paying off and one can expect Adidas to perform better in future.

Key Elements in Adidas Business Strategy:

• – Corporate Strategy – Creating the new.
• – Focus on Sustainability
• – Investment in Digital
• – Marketing for higher impact
• – Effectively managing the supply chain
• – Focus on key urban markets

Corporate Strategy – Creating the New

Adidas’ mission is to be the best sports company in the world. Being the best means making best in class products and serving the customers in the best manner possible. Its new strategic business plan is termed “ Creating the new”. At the core of this plan is Adidas’ ambition to drive top and bottom growth further by increasing the brand desirability significantly. The focus therefore, is how the brands connect and engage with the customers. However, to achieve its new business plan, the brand has also focussed on the creation of a performance culture. The new strategic plan of Adidas is built around three strategic choices – speed, cities and open source.

Brand desirability at Adidas begins with customers. The customers are at the centre of everything it does and focuses on saving them in the best possible manner.   However, this also includes speeding things up so the consumers can find fresh and desirable products where and when they want and a   matchless shopping experience. This requires Adidas to be able to anticipate consumers’ desire and to react fast to it. Speeding things up and being fast to react to consumers’ demand will enable it to grow faster by giving it . There are three Pillars of the Speed program which are never out of stock, planned responsiveness and in season creation. Since the creation of this program the coverage has been expanded continuously. Now, it has completely onboarded all the markets and programs and the brand has started capitalising on the benefits of all the SPEED Programs. The net sales share of products supported by the SPEED program has also continued to rise. Apart from speeding things up in the existing supply chain of Adidas, the brand is also exploring new disruptive business models and technologies.

World’s biggest cities contribute to the largest part of the world’s GDP. It is why Adidas has focused specifically on major cities. It started from London, Los Angeles, New York, Paris, Shanghai and Tokyo. It aims to create an end to end ecosystem connecting consumers with relevant products. These key cities also provide platforms for the activation of ADIDAS brands. Some of the major successes in this area include ‘Green Light Run’ in Tokyo, receiving six Cannes awards, as well as the Parley ‘Run for the Oceans’ in New York City and the launch of our new football footwear franchise Nemeziz in London. Apart from generating excitement in the respective cities, these events also got excellent social media coverage all throughout the globe. Focusing on consumer experience in these cites has helped brands find growth faster. In 2017, these cities made an above average contribution to the overall growth of the company and its market share. 

Open Source:

The focus of ‘Open Source’ is to let consumers enjoy higher participation in the products Adidas makes. This part is about learning and sharing and inciting conversations between the brand, external experts and consumers. Three strategic initiatives started for Open Source are creative collaboration, athletic collaboration and partner collaboration. Creative collaboration focuses on increased partnership between the brand and outside creative thinkers. Athlete collaboration focuses on partnering with athletes so that the two can shape the future of sports together. Partner collaboration on the other hand focuses on sharing resources and expertise with the best in other fields. In order to accelerate its ‘Create the New Plan’ Adidas introduced a few new initiatives. The first major initiative taken in this regard was to update the portfolio and focus only on the core areas of sports shoes and apparel. Another important strategic initiative was focused upon North America and making it a strategic priority since this is the largest market for Adidas that represents around 40% of total share in the sporting goods industry.   However, another important dimension of this plan is to align the efforts of the entire business and therefore One Adidas. While Adidas is continuously working to achieve operational excellence, it is also focusing on bringing higher alignment throughout the entire organization. In this regard it has focused on three important pillar that   include brand leadership, marketing effectiveness and operational efficiency. ‘Creating the New’ plan cannot catch pace without investing in digital. Its digital transformation plan is also one important part of its new business strategy.

– Focus on sustainability:

Sustainability has become a key focus for all the big brands of the world including Adidas. The brand is smartly investing in this area and has formed some important partnerships that will enable it to achieve higher efficiency while having a lower environmental impact. It formed a strategic partnership with Parley for The Oceans. It is now producing shoes using the Parley ocean plastic. In 2017, it continued to reduce its use of virgin plastic and made more than a million pairs of shoes using Parley Oceans plastic. Moreover, 99% of the cotton that the brand sourced from around the world was better Cotton. It has integrated sustainability in most aspects of its business from supply chain to product creation and store concept development. The brand has also decided to keep its offices plastic free and for that  it implemented a plan that will avoid the use of at least 40 tons of single-use plastic every year.  However, that is not all because the brand is focusing on more eco-innovative technologies and processes that reduce its dependence on harmful products and minimize its environmental impact. Not just Adidas but Reebok is also focusing on production using sustainable raw materials. It has announced Cotton & Corn sustainable products initiative. This initiative intends to bring plant-based products to the market by 2018. These shoes will have an upper part made up of organic cotton and a base made from industrial grown corn. For this initiative Reebok has partnered with DuPont Tate & Lyle Bio Products, a leading manufacturer of high-performance bio-based solutions. In this way Adidas & Reebok have continued to raise their investment in sustainable products and processes.

Investment in Digital:

Digital technology is changing many things in the business world and there is a strong reason that every brand must have and follow a digital strategy. Consumers want personalised and better experiences from the businesses.  However, digital is also helping brands manage their supply chains, distribution networks and inside-the-store experiences better. Adidas has also invested in digital technology to drive its productivity high. In 2017, Adidas founded the digital leadership team whose responsibility was to start digital initiatives across the entire company and support the various functions with decision-making in this area. This team has set its digital priorities and also set a clear digital roadmap for the future. Adidas is crafting a new digital experience for its customers which starts from Adidas and Reebok websites. the brand has set a target of 4 Billion revenues in terms of e-commerce revenue for itself. In 2017, it also introduced new features and technologies on its e-commerce channels such that the customers can have a great online shopping experience.

2017 also saw the launch of Adidas app. Its e-commerce channels are also the fastest growing of its all sales channels which achieved 57% growth in 2017.   Digital experiences shape the perception of consumers towards a brand and as such digital is now an essential part of a brand’s business strategy. However, digital extends deeper in Adidas’ system than shopping and marketing. The brand is forming fresh partnerships to extend the impact of digital in its entire system. It has adopted the digital light synthesis which eliminates the need for traditional prototyping or holding in the making of athletic footwear. Apart from that Adidas and Siemens announced a collaboration that is aimed at minimising the time it takes to bring a product to the market. The two are going to undertake research and development programs together which will enable the Adidas speed factory to grow capabilities that will aid fast, transparent and individualised production. Siemens is a leader in digital factory automation and simulation solutions, and the expertise it brings will offer greater flexibility and higher manufacturing efficiency to Adidas.

Marketing for higher impact:

Both Adidas and Reebok are trying to achieve more from their marketing efforts. Adidas focuses on creating inspirational and innovative marketing concepts driving consumer advocacy as well as brand equity.   Adidas uses its marketing activities to build trust among its customers. Apart from that, it uses its marketing efforts to maintain the iconic status of its key franchises, making it more reasonable for buyers to buy from these brands. A large part of its marketing investment is spent on partnership assets. However, Adidas plans to decrease this investment from around half of its total marketing investment to only 45%. In this regard, it has partnered with high profile events, teams and individuals. through key events like FIFA, UEFA, French open and Boston Marathon it has continued to build its products to the biggest stages throughout the world. Similarly, it has been using high profile teams and individual football stars like Leonel Messi and Paul Pogba for the marketing and promotions of its brands.   Apart from these the brand has also struck a large number of partnerships like that with Kanye West and Pharrell Williams as well as several top designers and design studios.

Similarly, Reebok has focused on creating an emotional connection with its customers. It has created a ‘Be More Human’ platform especially for consumer connection. To give its marketing strategy a more authentic feel, the brand has created a series of partnerships. It is building partnerships with fitness instructors and currently more than 100,000 fitness instructors globally are a part of its network. Its digital channels are the main channels for communication and marketing initiatives as well as from a   commercial perspective. On its website, its focus is on improving usability, speed and consumer experience. 2018 has brought further enhancements to its digital ecosystem.    

Effective management of the supply chain:

A large and complex global network cannot operated without an efficient   supply chain. The effectiveness of the entire brand depends upon the effectiveness of its production system. Adidas has managed its supply chain excellently. Its global operations channel takes care of the supplier relationships and works in tandem with strategic supply chain partners for improving the process of manufacturing. The Global operations function is delivering against there strategic focuses that are :

• To make Adidas the first true fast sports   company which involves speeding things up.
• Creation of a seamless consumer experience that has the customer at the centre.
• T ransforming the manufacturing process.

While the number of total Adidas suppliers is around 800, the Global Operations function worked with 296 of them and 109 of them are strategic supply partners that have worked with the brand for more than 10 years. A very large part of its suppliers are located in Asia which is to minimize the costs of manufacturing since the raw material and   labor are cheaper there. 97% of Adidas’s footwear production took place in Asia in 2017. China is its largest supplier of apparel followed by Cambodia and Vietnam. The Global Operations function plays a central role in managing the supply chain. The brand is especially focusing on speed in its supply chain and therefore created Speed-factories. These speed factories combine technology with art to better cater to customer demand. The first of these speed factories was opened in Germany.

In this way, Adidas has used a multi-pronged strategy for getting faster growth. Apart from focusing on increased technological efficiency through investment in digital technology, the brand has also focused on operational efficiency. Increased focus on the supply chain has led to smarter management of the manufacturing processes. Marketing is also a critical focus that is being reshaped through the use of digital technology and by designing new and improved consumer experiences. To start with, it focused on six key megacities and which has helped it find publicity as well as better sales. Last year’s financial performance is an indication that Adidas might be very well poised to grow faster at a global scale.

Adidas Annual report 2017

Marketing Strategy of Adidas | Adidas Target Market

Marketing strategy of adidas and adidas target market.

“CREATING THE NEW” tHats the mantra “Adidas” – The second largest Sportswear manufacturer in the worlds lives by. The brand believes that, through sport, they have the power to change lives.

In this article we not talk about how big “Adidas” is, what is its net worth, how did it got its name .. blah blah blah…. one can use Wikipedia for that

This article will give you unearth some interesting facts as to how well the brand has performed in the past, how it managed to ward off its competitors like Pune, Nike and what has been the strategy, be it the business strategy or marketing strategy of Adidas, that made it come out stronger than ever. Also, what is Adidas competitive advantage and what is the primary Adidas target market?

ON A CLEAR MISSION – Adidas Competitive Advantage

There are times when companies don’t have a clear vision or a mission they tend to drift apart. Thankfully that’s not the case with Adidas.

Adidas wants to be the best sports company in the world. Best in the products they design, the service they provide and the experience they offer to their customers, partners, etc.

Having a clear mission and a strong plan to make it happen is what is the Adidas competitive advantage.

WITH A SOLID PLAN

A good mission and vision is nothing without a solid plan and this is where ‘Creating the New’ comes in. It is not only the attitude that leads the company into the future, but it is also the name of Adidas strategic business plan to accomplish the mission. “Creating the New” in essence is what differentiates it from the rest and it Adidas competitive advantage.

The core of “ Creating the New ” is the ambition of the company to drive top- and bottom-line growth by significantly increasing brand desirability. a

To achieve this business strategy Adidas followed a plan that is based on three strategic choices:

• Speed – Keeping customers at heart of everything the company does, Adidas ensures that its customers find their desired products where and when they want them.
• Cities – Owning to the target market of Adidas, the company zeroed down the six key cities in which they want to over-proportionally grow share of mind, the share of market and share of the trend: London, Los Angeles, New York, Paris, Shanghai, and Tokyo.
• Open Source – Collaboration and Innovation – This is a major leg which led to the success of Adidas. Lets put a pin on this for now and we will discuss later how the company successfully partnered with Athletes, partners to co-create the future of sports and sports culture.

The razor-sharp business strategy and clear future plans to achieve that strategy/mission is the main Adidas competitive advantage.

WHO IS ADIDAS’ TARGET MARKET TODAY?

After the company’s strategy and mission, comes the target market the company wants to focus on for the efforts that it wants to put in.

With a long history of providing high-quality athletic sportswear for athletes, Adidas target market is sports participants, including those at the highest level of their sport, as well as non-athletes who are inspired by or really love sports.

Adidas target market falls within the 20- to a 29-year-old age group who are athletes or are passionate about sports and this segment is considered as the strongest consumer market. The company is focused on targeting and strengthening its brand with the next generation of athletes in the 14- to 19-year-old age group. Adidas believes this target group is the most influential consumer group in the world.

Check out the positioning of adidas

WHAT IS THE MARKETING STRATEGY OF ADIDAS?

After discussing the business strategy of Adidas, Adidas target market and Adidas competitive advantage comes the Marketing Strategy of Adidas.

Collaboration:

Adidas backed powerful endorsement contracts with some powerful non-athlete superstars like Kanye West and Pharrell Williams and managed to very well captialize of these names by promoting them left right and center.

This Marketing strategy of Adidas worked so well for the brand that its competitors like Puma followed the same suite and signed-in famous personalities include popstar Rihanna for their line of sportswear.

Innovation:

Adidas, ranked No. 3 in global sales in the Apparel/Accessories category in  Forbes  World’s Largest Public Companies  list, behind only Christian Dior/LVMH and Nike, just announced that by 2024 it would use only recycled plastics in all its shoes and clothing.

The strategy to move to use recycled plastics for their shoes and clothing is because of the company’s vision to get rid of virgin polyester overall by 2024.

This strategy is not just going to have an impact on Adidas but also have profound implications in the overall fashion industry.

A New Strategy: Limiting Supply

Popular Adidas shoe models such as the “Stan Smith” and “Superstar” have been major contributors to Adidas’ massive revival over the past few years, which have been supported by the aforementioned endorsements and innovative marketing campaigns.

While other styles such as the Ultra Boost are gaining market share at a massive rate, Adidas is actually limiting the availability of popular shoes (the two flagship sneakers just mentioned), and two models that many consider “evergreens” in Adidas’ portfolio.

The prices go up when the demand is high but the supply is low – Simple economics rule we all studied in school but Adidas applied it in their growing years. 🙂

This kind of move, which has already worked well for Adidas in the past, has the potential to help Adidas’ merchandise margins, which have already been significantly expanding recently. As reported in the past earnings release, Adidas’ gross margin has increased by a few hundred basis points, and the recent moves may indicate an attempt to push margins even further if Adidas’ supply limitation strategy works.

However, the decision to limit the supply of some sneakers may also be a proactive move to avoid overexposure and excessive discounting of Adidas’ products. The number of discounts on Adidas products has increased recently, and the decision to limit the supply of some key products may be a response to the growing pricing pressures generated by excessive supply.

Social media:

Social media has been the focus of attention for the brand when it comes to interact and connect with the customers. Adidas remains active through the traditional channels, its own website as well as the social media.

Adidas has active Facebook and Youtube channels where it uploads thousand of promotional videos for its products.

On Twitter too, the brand has several accounts active including Adidas original, Adidas US and Adidas football that it uses to stay connected with its fans and followers. The core focus of all its marketing efforts is to bring energy to sports and help athletes achieve.

However, now that it has revamped its strategy and focused its efforts on key areas, results have started coming in the form of financial success. While this could mean an increased challenge for both Nike and Under Armour, Adidas still has a long way to go to achieve its mission.

This concludes the marketing strategy of Adidas, Adidas Target market and Adidas competitive advantage.

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