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Five Forces Threat From Competitors Marketing Essay

2076 words (8 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Adidas has its biggest competitor, Nike in the current market as it has similar product range and Nike holds a strong customers base. Other competitive threats may be considered as following –

Adidas is much developed brand and customers have faith towards brand so Adidas would not be affected by new entrants. After all, new entrants needs much resources to compete Adidas.

New entrant may lack in customer loyalty

New entrants would not have that much established distribution channel as of Adidas

Threat of substitute products (Low)

Adidas products are much satisfied to customers with its existing products and their innovation of product avoids substitution.

Power of buyers (High)

Adidas products are tending to be much expensive this creates a huge impact on customers buying. Adidas needs to bring effectiveness to their productivity to avoid bargaining of buyers.

Buyers are seeking full information.

Customers are Conscious about their spending.

Competition differentiation.

Power of suppliers (Low)

Suppliers may be changed.

Other sources of getting material.

COMPETENCE 

The brand has a tuff competition in current market. At present, Nike is leading brand  in the sports industry.

➢Multi-Brand Approach 

A multi-brand approach leads the firm with main competitive advantage and additional business opportunities related to single firm strategy. It can influence the control of its company in much defined and meaningful method, utilizing the strong strengths of all to compete for increased percentage of market, wraping a huge number of constomer needs, and demographics.

➢Broader distribution

better collaboration with retailers can improve the in-store practice for the product. Developing shop-in-shop system or retail partnerships are case where firm is leading the industry. These co-operations can be mainly effective in current markets which are dominated through price and lacking in differentiation.

➢Cost leadership

Reebok acquisition has created major opportunities to decrease and optimize costs, by scale benefits, reverse workplace consolidation and combined funds expenditure planning.

3.3 – Competitive Advantages

It has been challenging to Adidas to take competitive advantage as other competitors have solid existence in current market for producing sportswear like Nike, New balance, Puma and others. Besides, the fact that a company may obtain competitive advantage by added value so Adidas requires to put more efforts on manufacturing qualitative products for its customers.

3.4 – Product Offering

Adidas Group offers wide range of products as follows –

ADIDAS – Athlete sportswear includes shoes, clothing, accessories and apparel like Tennis ball, basketball, Football, cricket bats, bags, watches, etc.

Reebok – Adidas acquisition over Reebok brand held in 2005. Reebok has similar product offering as of Adidas.

TaylorMade-Adidas Golf – this is third core of segment of adidas for golf industry. TaylorMade golf sells adidas brand footwears, golf clothing and accessories.

Adidas Golf produces following products

Clothing,

Footwears,

accessories for men ,women and youths.

3.5 – Distribution Strategies of Adidas

Source: Adidas Group (Annual report 2011)

Global Sales Strategy

Adidas has a vast global sales strategy which includes three distinctive channels

Wholesale

Retail

eCommerce

By considering above mentioned business models, Adidas group aims to serve their customers with potential and developing effective marketing policy to control business at global level.

Improved distribution channels for efficiency in business.

Introducing more stores in most populated countries like India, China etc to increase market share of the company. This is estimated that market shares will increase upto 45 % by 2015.

Wholesale strategy

The wholesale strategy of adidas aims to be leading organization in providing sportswear and according plan route adidas wants business expansion in areas of India and China.

Franchising

All time availability of product.

Standardization and Harmonization processes to make use of leverage

Sales team development

Adidas segmentations and customers to develop market potential

Faster manufacturing and distribution system

Innovation in existing product to increase marketing effectiveness.

Retail strategy

Expanding the size of brands – establishing brand centre

Promoting distribution in areas lacking wholesale structurcture.

Creating different cost-effective distribution channel

Factory outlets.

Potential for consumers

Obtaining operational excellence

ECommerce Strategy

The ecommerce strategy of Adidas has different priorities in taking plan route into consideration –

Company is using ecommerce as their 3rd pillar for increasing the sale of company and promoting their customers for electronic shopping;

Implementing new policy of distribution to balance ecommerce and wholesale activities.

Reaching to single customer through brand, shop and customized sites.

improved technology platform

generating more and effective e-marketing capabilities

(Source: Adidas group annual report 2011)

Marketing Strategy

4.1 – Objectives

The Adidas would consider following objectives to launch their new product, Formal shoes.

Highlighting the product through different channels and launching it successfully only after analyzing the current market situation

Formal shoes should be supportive in making retailing business as leading distributers in coming years.

4.2 – Segmentation, Targeting and Positioning for new product

Demographic Segmentation

Production according to Age group 15-50.

Income of customers to be taken into consideration- income above 15000.

Considering Gender- male, female and youths.

Behavioral Segmentation

Businessmen

Professionals

Students

Customers with Brand potential

Image seekers

Geographic Segmentation

Urban and semi-urban cities

Targeting – Usually, Adidas produces sports and casual shoes and these products are much attractive to consumers and consumers have faith in adidas brand so its easy for adidas to launch formal shoes. Adidas has a global reach so the product can be distributed to every corner of the world. Global reach is helpful for Adidas to target market for formal shoes according to different market segmentation. The Adidas has customer target towards urban youth with company’s offer ‘competition to lifestyle’. The principle expenditure centres namely the metrosare is also a prospective target market.

Positioning – Positioning market is helpful in determining the prices of the product. Prices can only be determined after seeking the competition and opportunity. So Adidas has both the advantages of competition and opportunity which is supportive in launching formal shoes.

Diagram – positioning of Formal shoes

Lee cooper

High Quality

Low Quality

New balance

Other brands

Adidas

High Price

Low Price

Product positioning strategy for formal shoes reflects that shoes can be sold at high prices because Customers have faith in Adidas brand in terms of quality. Product positioning of formal shoes seems to beneficial for Adidas as retailing sector would be gaining for more sales.

4.3 – Strategy

Ansoff Matrix strategy is helpful to coperate level in making decisions about market and product growth strategies. This matrix is helpful in developing product and brand in current market

Product/Service

New

Existing

Market

ExistingMarket Penetration

New Product and Service

NewMarket Development

Diversification

Adidas brand image is its market penetration and launching formal shoes is the part of diversification .

4.4 – Marketing Mix

Adidas would consider 7p’s of marketing mix for introducing their new product into the current market

Product – Formal shoes of adidas should be qualitative concerned with distinctive features of durability , conformability and product should updated with latest trend of professionalism.

Price – Price mix of marketing deals with the earnings of company. For this purpose company has to take following considerations

Brand Value : Adidas is reputed company so formal shoes of Adidas would be benefited and can be sold at high prices.

Targeted customers : Adidas has selected professionals as targeted customer and age group 15 to 50.

Competitors : prices are fixed on the market analysis of other competitors who are offering similar types of shoes.

Place

The fact that Adidas has a global reach but it still needs to introduce its product at right place. Adidas would be launching formal shoes outlets to commercial streets, Malls etc. and distribution areas –

Location

Market coverage

Internet coverage for ecommerce

Distribution Channel

Distribution channel would be profitable for new product.

Promotion – Adidas would give its first priority to promotion as it helps in people to reach the product. Following activities are part of promotion for adidas to launch formal shoes –

Advertising

Media

Online advertisement

Offline advertisement

These promotional activities are helpful in successfully realizing formal shoes as their new product.

People – The company would hire some skilled employees to sell out the new product. People are not aware of formal shoes adidas as it’s a new product so employees needs to demonstrate properly. It includes –

Managers

Salesperson

Workers team

Process – This marketing mix deals B2C and B2B. while launching new product B2C has to be taken into consideration because the company needs identify their consumers and their expectation from the brand.

Product Driven

Maximize volume of transaction

Huge target market

Single step buying process, shorter sales cycle

Brand image

purchase activities

Emotional buying decision based on status, desire or price

(Murphy Debra 2007)

Physical evidence – Adidas has its own solid existence in market. Its easy for adidas to sell formal shoes as new product. After all product is ready to enter the market and it is readily available to consumers and it is attractive to all kind of customers.

4.5 – Marketing Research

Adidas has a wide range of products of clothing and footwear and this new product, formal shoes will increase range of products. People would be excited to expect formal shoes from a reputed brand. Adidas has been divided into three groups –

Adidas performance

Adidas original

Style Essentials

Adidas performance was designed look after the athlete dressings and footwear. Adidas original has to focus on life style and Style essential has to deal with every type of production in the company. Formal shoes will be part of Adidas original. Adidas would much beneficial in raising its market shares and revenue. Market research helps in finding advantage and disadvantage launching new products. Advantage of market research helps in raising market shares and it also shows the future of new product and its sustainability.

4.6 – Financial matters

Adidas requires huge finance to manufacture and launch new product. But its not difficult for Adidas because it has strong financial position as earnings per share increased by 18% to GBP 3.20 in 2011. The process of launching new products includes vast investment. This involves expenditures like manufacturing cost, distribution cost, and expenses for promotion of product.

Controls

The control measure of marketing plan has to deal with maintenance of organization and its product. It is concerned with maintaining the quality of product to attract more and more customers. This measure is as well important for launching new product and implementing strategies to make this product successful in current market plan. The control measure includes two factors –

Implementation

Organizational growth

Conclusion

The marketing plan is necessary to all organizations to launch new product as it reflects the outcomes of new product. This market plan is helpful in analyzing current market for launching formal shoes of Adidas brand. The market plan has produced different strategies to launch new product. Adidas has wide ranges of product and their innovation like formal shoes would be advantage to customers to enjoy different variety Adidas. This marketing plan has objective of expanding business of Adidas.

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