Marketing Analysis of Adidas
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Adidas is a 2nd largest sport wear industry in the footwear market. Adidas is largely engaged with the sport industry, offering customers widespread selection of sport equipments. Adidas segmented its market into three main divisions Sport Performance, Sport Heritage and Sport Style. Company has its market extensive increase in Europe, US and Asia with approximately 150 continents (www.adidasgroup.com).
Adidas aim to get better their quality, look, feel, and representation of their product in order to surpass consumer expectations and to provide them with the highest value, thereby helping athletes of all kinds to achieve zenith performance in their various fields. Adidas mostly invest in the sport market and increasing its profitability. As a sport giant Adidas should not only invest in the sports market but also it should try the other product related to the sport but in different industry like food (Nutrition and energy) products.
Adidas is producing almost all kind of the product for the athletes, boxing, swimming, football, body building, golf etc, making all kind for products to give them comfort and confidence that they are wearing a reliable product. All of these sports consume high level of energy while their every day workout or during training session. As a highly reputed company if Adidas introduce such product then it will increase its market and an addition to it sport industry. New products will also be one of the most important factors in terms of success in the future (Blythe, J. 1998).
After an extensive analysis of the environment and the market analysis adidas has develop and launched ‘Adi food Supplement’. Adi food supplement is mainly for the football athletes who consistently move during the game, this requires constant bodily re-adjustment, made possible by immediate starts, stops, jumps, dashes and spins. All of these physical needs can negatively impact the body and make the athlete vulnerable injury, illness or a disease. The athletes must have a well developed skills, complete with enhanced coordination, healthy and flexible joints. The flexibility required for complex and specific soccer manoeuvres, and the ability to create unpredictable power on-demand. Playing soccer well, and at the level required for success and victory.
Adi food supplement will be reach in multi mineral & vitamins. During the game athletes sweat heavily and lose mineral & vitamins from the body. Regular dose of Adi food supplement will recover the lost minerals and the vitamin time to time and keep the athletes fit for the next game. This food supplement can be used in water, milk, juice etc to get the energy and for the taste it will be in different flavours to fulfil the need of the buyer.
Adidas marketing objectives are as follows:
- Increase its sales and market share
- Develop and launch a new product
- Improve its company and brand image
- Market development
Every organisation need to analyze the enviourment to know its position in current market and compare the product with the competitors. The model we will use to analyze the market will be PEST. Igor Ansoff, 1965 states that environmental concept should be continuous and should feed all concepts of planning. Marketing environment is made up of three main parts:
- Internal environment
According to the Food and Nutrition Policy 2007-2012 and UKAS, BS EN ISO 17025 law in Europe there are six main policies need to take care while producing a food products and follow the instruction to deploy the product in to any of the country which are under WHO European Action Plan.
- Biased healthy start
- Ensuring a secure, vigorous and sustainable food supply
- Detailed information and guidance to the consumer about the product
- Taking integrated action to tackle linked determinants such as physical motion, alcohol use, drinking water and the atmosphere
- Improving nutrition and food safety in health sector
- Monitoring, estimate and study
If we examine the football market than we will come to know that Western Europe specially United kingdom is a very huge market and have a very good economic stability in the market. Now days each person is concern about its health especially all the athletes of any sports, and they spend hugely just on to their training and diet. Adidas as a privileged brand image in the market and any product related to sports will be highly appreciated. Nutrition and health related products have a significant market share.
To launch the Adi Food Supplement Adidas required minimum of £ 130 million of initial investment to launch the product with significant and steady profit. In Europe technology factors are very favourable to ensure the product standards.
Corporate management’s first course of action should be a review of whether any opportunities exist for improving its existing businesses’ performance. Ansoff has proposed a useful framework for detecting new intensive growth opportunities called a product market expansion grid” (Philip Kotler, 2003).
Ansoff states that a company could expand using penetration strategy, market development strategy, product development strategy and diversification.
In the current situation, Adidas intention is to develop a new product of potential interest to its current market. It should be noted that Adidas is a global company with market all over the world including Cameroon. The critical factor for success in going down this road is the profitability of the customer group for which the product is being developed. Secondly given the fact that Adidas have a strong brand name that can comfortably applied to its products.
This strategy is used to develop new product for the existing market. Production of Adi Food Supplement in such a well developed market with a good competition will be of great advantage. Due to the competition the company gets chance to improve its product and make the best available for consumers. With the production of such kind of product Adidas will be able to fulfil the market gap and will be increasing its market share by getting an upper hand over the rivals. Kotler, P. (1994) states that “once a company has successfully segmented the market, chosen its target customers, identified their chosen needs, and determined its market positioning than it is better able to develop new products”.
Segmentation of the Market, Targeting and positioning of the Product:
Market segmentation is the process of splitting customers, or potential customers, within a market into different groups, or segment, within which customers have the same, or similar, requirement, (McDonald and Dunbbar, 1998).
Adidas being a global company was able to segment the UK market on the following bases.
Size – the population is 60.6 million of which 80% local community, 10% Welsh and Northern Ireland and rest 10% is rest of world communities.
Identity – Adidas was able to identify that more than the 50% of the population between 18 to 30 yrs were more engaged in athletics, which the rest of the youth population was interested in other sports such as volleyball, handball, rugby and others. Another group of the total population 20% of between 34-40years were interested in amateur footing in the morning while another 10% of the population between 41-60years were also running for the sake of keeping fit.
Relevance – Adidas found in their market research that their product features were relevant for the segment they were researching as sportsmen and women wanted to run for long time without stopping to drink water. They need any kind of supplement fluid that will sustain in the body for a long time.
Accessibility –Adidas can use different adverting strategies to the target audience, such as TV advertising, sport panorama, bill boards and youth magazines or sponsor the football match to tell people about the product.
Getting the segmentation of the market, company’s next step is to target the particular segment of the potential customers of the new product. A particular segment is said to be attractive if there is enough potential customers to aim at, it is likely to be profitable and very much accessible. According to Geof, L. and Lester (2006) encompasses the identification of diverse needs for specific groups or segment of customers, deciding which of these groups the organisation should target or serve and designing marketing mix programs so that the needs of these targeted groups are then more closely met.
In order to achieve the target market if we implement young and Rubican 4Cs model this can easily explain the segmentation of the market. This model can analyse user observation and help to determine their needs. After conducted common market research conducting interviews, focus groups, and questionnaires. They came to know that there are three main lifestyle groups which are based on cross-cultured buyer characterizations, which are constrained, the middle majority, and the innovators. It most likely found that the Middle Majority and the innovators are more concern about their health and spend some amount of the pay on their health products.
Product positioning is always a very important part of any organization to market its product. Adi Food supplement will be rich in vitamins minerals and rich in nutrition for the athletes who do work out most of the day to keep them fit for the game. Footballers keep training and burn a lot of energy and due to sweat they lose vitamin and minerals.
The biggest competitor of Adidas will be Maxi Muscles because has they market established but Adidas is the biggest name in the sports market and that brand image is their competitive advantage upon their competitor. Adi Food supplement will be a milk type product just add it in water or any other fluid and drink it with different flavours. It will consist of all necessary multi vitamins, minerals, protein, carbohydrate and amino Acids to recover energy and stamina quickly.
Product positioning took place in the buyers mind and it is very much important to consider the buyers point of view regarding price before position the product in the market. Consumer thinks of every aspect of the product before buying like, taste, price, quality, satisfaction etc and then he or she will buy the product. Adidas as a sport tycoon can ensure the quality and taste and the price of the product but satisfaction still remains with the buyer. TV media and promotion of the product plays a vital role in positioning brand in the minds of the target consumers (Trout et al, 1981).
According to the Aaker et. al (1992) we can achieve product position by seven different ways.
Product characteristics and customer benefits
To keep consumer attention for the product it very much necessary that product should have a very powerful slogan which expresses the product and the consumer demand. Adidas should develop a slogan like ‘Healthy Life with Adi Food Supplement’ and step into a different shade of the market.
To contend with the market for this product Adidas should keep the market price competitive with the other products in the market.
Launch of the product is very important part in the positioning strategy. If we look at the current market in London Olympics are going to be held in 2012. In Olympics, athletes will be coming all around the world and that product can be a big hit as a brand name of Adidas.
Consumer plays an important role in product positioning if product is associated with the consumer. It will be an extra edge if Adidas advertise its product with a well-known personality in the market.
Properly classify the product makes it easies for the consumer to understand and compare it with the different product and can notice the benefit of the product.
Logo / Symbol
Every product in the market has its special symbols. Adidas being a well known tycoon already have its three strips Logo and can also be set for the new product with minor adjustments.
A healthy competition is always beneficial for a new product because competitors like Maximuscles already created a space and position in the market. Adidas can use the same market reference point to launch its product and can easily penetrate in the market.
Marketing Mix of the Adi Food Supplement
Neil H. Borden, (1964) states that the marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market. Kotler (1994) says the set of controllable variables and their levels that the firm uses to influence the target market. Marketing mix is based on 4Ps which is the classification of the product
In marketing mix presentation of a product is a very important that how Adidas present its product for the consumer. It includes product competitive price, an attractive packing, and different flavours for the consumer. As a brand adidas it is very much important for the company to present its new product according to their image so consumer feels privilege when they buy Adi Food Supplement.
To penetrate in the market with a new product it is very important for adidas price the product with a very competitive price which should be affordable for all kinds of buyers in the market. Price should be determined after review the competitor’s price so the affordability should not be a problem for the product.
Promotion of the product plays a very important part in product marketing strategy. Promoting the Adi Food Supplement can be done via different ways like online marketing, TV ads, Sports Magazines, sponsoring the events, leaflets and more. As much Adidas send the information about the product to the customers will be better for the long run benefits.
Last but not least part of marketing mix is the place of the product where adidas will launch it, as we discuss before in marketing segmentation about the initial location of distribution is UK. Place involves all distribution channel, location of distribution and the method of the distribution and it is important to fulfil the availability of the product indifferent locations in UK for that Adidas can consult to their organised dealers and retailers for the product selling.
Investment cost on Adi Supplement and its Return
Before launching the product companies always go through from the cost analysis and the product price, it always a crucial role to determine the right price according to the market and the economic view of the company (Shipley, 1981).
Initially company will invest roughly around £ 130 million pounds to make the product successfully moving in the market.
As the product will be something that will be focused on a specific target group the price of the product will be reasonable and affordable, with each box containing 750g Powder based supplement and costing around £ 25.
The expected cost for the product is £ 25 per box and the contribution sales for next five years is as follows
Adidas should get return of its investment as follows
This product will cover its cost with in 3 years and 7 months. And margin of the product can be increase if the product will be launched before the Olympics games in 2012 in London.
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