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Adidas relies chiefly on an efficient market system and product improvement. Marketing communication plays a crucial role in successful market performance as it influences brand image and product recognition. For Adidas, effective marketing communication depends upon effective marketing system and ability to evaluate target market and economic conditions.
- Political /Legal factors. UK government exercise control over its nation's economic development by passing protectionist laws and regulations. On the other hand, it does not restrict or limit communication strategies and activities provided by foreign companies like Adidas, so UK market proposes a favorable environment for Adidas.
- Economic Environment The UK economy is marked by stable development. Great Britain belongs to G-7 group of the high-income countries. Low inflation rates, exchange rate stability, government budgets and the record of growth are the main advantages of UK. Economic indicators show that UK market proposes a great opportunities for Adidas to employ marketing communication activities with little economic risk.
- Social/demographic Their target market is validated. The changes in the environment are changed the demand, but they do not have a significant influence on customers' purchasing power. Life style and values are similar to those in the USA. In the UK people are used to go in for sport and consider professional sport good as an important part of their life and holiday.
- Technological factors/resources Innovation in production technologies and computerized system of supply chain is the main opportunity for Adidas marketing communication. Internet is another tool which will help Adidas to reach its potential buyers without additional spending on promotion and advertising. The threat is that investment in new technologies requires additional finance. Intellectual property and licensing protect business operations. (Adidas UK, 2006).
Adidas UK has maintained high-speed growth constant technological innovations ands service improvement the help to increase market share. New entrants to an industry bring new capacity, a desire to gain market share and position, and, new approaches to serving customer needs. Higher volume generally confers greater scale economies in purchasing whereas larger product market share confers greater pricing power over customers. Adidas has 36% of market share being leading sports wear companies around the world. In general, "Adidas has a market capitalization of about $8.4 billion, and reported net income of $423 million last year on sales of $8.1 billion" (Kiley, 2005).
Background of Adidas (SWOT)
Adidas operates on the dynamic market where the main objective is to maintain successful marketing communication strategies, implement high service quality and develop strategies to improve these services. The purpose of Adidas marketing communication is to get and keep a customer. The strength of Adidas is that it employs effective communication strategies and communication mix for the brand creating a unique image of its goods. Taking into account opportunities of Adidas it is evident that the company reaches a widely dispersed target market which will help it to present the message in a very personalized way, offer the opportunity of informing consumers in details about the complete range offered. Effective marketing communication will help to sustain high growth and profitability of the company, assess and develop new communication mix in order attract wider target audience. The threats include: too many advertising and PR campaigns provided by competitors of Adidas which reduce the impact of marketing communication. The message reaches the target audience and may be understood but still may not induce the recipient to take the action desired by the sender. Weaknesses can prevent Adidas from rapid growth and effective communication with customers. The effectiveness of the message is impaired by "noise" which means external influence such as competitive advertising, other sales personnel, and confusion at the receiving end. These factors can detract from the ultimate effectiveness of the communication.
A major strength of Adidas market segmentation is that it can generate specialization. At the same time, segmentation involves costs, risks, and possible weaknesses in some cases, especially where accessibility is not easy. In export marketing a common way of defining and describing markets is in terms of export countries. Adidas market segmentation is based on behaviour and psychographics characteristics. Adidas focuses on whether or not people buy and use its goods, as well as how often, and how much they consume. Also, marketing communication is based on psychographics characteristics which group people in terms of their attitudes, values, and lifestyles. (Adidas UK, 2006).
Adidas uses the following variables to segment the market. Each of the factors plays a role in determining the nature and development of marketing communication. But the relative importance of each depends upon the product/service category Adidas is dealing with. The main values are a sense of belonging, fun and enjoyment, warm relationships, self-fulfillment, being well-respected, excitement, a sense of accomplishment, security, and self-respect. Specific application areas for this schema, as well as others, include environmental scanning, product introduction and positioning, and advertising.
In order to provide effective marketing communication, Adidas identifies groups of consumers with similar wants and needs. In general, targeting is the act of evaluating and comparing the identified groups and then selecting one or more of them as the prospect with the highest potential.
The first group involves ell educated, median age of 32, with average affluence and employment; this group concentrates on the process of buying. Brand Loyalists involves 30% of the target market and can be characterized as the least affluent, median age of 36, with average education and employment. The thirds group of potential buyers involves high income segment. Using marketing communication mix, Adidas attracts high-income customer group in order to increase revenue and create brand loyalty, sustain strong market position and compete with potential competitors. This group seeks prestigious brands and includes buyers who are the most educated, and affluent shoppers, with the highest proportion of executives and other professionals. The forth group involves sports professional who are brand loyal and seeks high quality professional products proposed by Adidas. A specialized product range, namely sports wear necessitated a clear identification of target market. The original mission had made it clear that it was in the relatively unexploited 'adult' sector that Adidas saw its clearest opportunity for innovation. (Adidas UK, 2006).
Positioning in Relation to the Market
Within rapidly changing environment, strong positioning ensures that long-term survivors are those firms who are more competitive and are better able to satisfy consumer needs and adapt to the new competitive environment.
Taking into account current situation, it is possible to say that Adidas operates in the shadow of Nike, its direct competitor. Positioning is used by Adidas as a communication strategy based on the notion of mental 'map.' Positioning refers to the act of locating a brand in the customers' minds over and against other products in terms or product attributes and benefits that the brand does or does not offer. The conceptual foundation of international positioning is that a set of products can be viewed as different collections of attributes which can provide benefits to the buyer/user. When targeting specific market segments the marketer tries to develop those product attributes that generate the benefits matching the requirements of a targeted segment.
Promotion and communication by Adidas is tied intimately to consumer and buyer behavior. But not all consumers will necessarily respond to marketing promotion in the same way, following the same sequence with respect to hierarchy of effects in the dimensions of attitude and behavior - cognitive, affective, connative. Most buyers are driven by success and bran prestige, brand loyaly and qugh quolities of the products and services. Marketing communication has a direct impact on buyer behaviour. Adidas markeing communication appeals to rational choice of consumers proposing high quality goods. Adidas bases its stratgy on a rational approach appealing to logic and speak to the customers intellect.
Role of Branding
Strong brand image of Adidas helps the company to establish trustworthiness, confidence, and competence for customers. This strategy will be supported by the buying process and the pricing, and as the most important this positioning strategy helps the customers to have product within their minds. Marketing communication allows Adidas to create a complex bundle of images about its products in the customer's mind. Adidas represents a promise about a high quality sports gods; it is a sort of quality certification. Branding is crucial for Adidas because it enables customers to better organize their marketplace experience by helping them seek out and zero in on particular sports products. An important Adidas brand function is to differentiate Adidas offering from all others. Using marketing communication techniques Adidas creates brand equity, which represents the added value that accrues to a product as a result of a company's prior investments in the marketing of the brand. (Fashion scores as Adidas, 2006).
Evaluation of Communication Strategy
Marketing Communication strategy of Adidas is based on on-line and offline advertising and promotion. Development of informative web site is the top priority for Adidas. On the one hand, it helps Adidas to sustain brand image and deliver better services to customers. As Adidas competes in a progressively fiercer market place for a larger wallet share of an increasingly discerning and diverse customer base, they become ever more communication-dependent. This is very important because consumers are becoming increasingly demanding and sophisticated in their requirements and expectations, and able to defend their bargaining stance/purchase position. On-line promotion involves banner ads and on-line community, current information about new products and new services, and as the most important support activities.
Communication mix is Adidas can be described as a choice between alternatives. Therefore, for maximum penetration Adidas selects primary (first choice) media that interlock and cross support each other. As the most important, Adidas uses repetition in promotion campaign because it is as important as the promotion itself. Using brand celebrities is a very effective technique used by Adidas to popularize its goods. It helps the company to develop a certain image of Adidas brand and create a core of loyal supporters.
In any case, press advertising in professional journals takes an important place informing potential customers about new products. Also, coupons, advertise sales and measure the response help Adidas to reach its target audience and increase sales in the UK. The armory of communication techniques at the organization's disposal, which might be used singly or in combination, are blended together into an effective and persuasive communications mix. (Adidas UK, 2006).
Market data shows that communication mix is successful because it helps Adidas to sustain strong market position and compete on the market with its direct competitor, Nike. "Adidas is the global market leader in football products, with an estimated 35% share of the market, just ahead of Nike with 33%. Its ambition is to have extended that lead by the end of the World Cup" (Fashion scores as Adidas launches its custom boot, 2006).
To some extent, Adidas follows the strategy of its competitors, Nike and Reebok, and sponsored sport events around the globe. Customers integrate all their experiences of observing, using, or consuming a service with everything they hear and read about it. Information about Adidas comes from a variety of sources and cues, including advertising publicity, sales personnel, and packaging. Brand equity can also be thought of as an asset representing the value created by the relationship between Adidas brand and customers over time. (McDonald, Christopher 2003).
Traditional advertising provides Adidas immediate access to a market of potential consumers. The potential customer base is not limited by the number of catalogs or brochures that are printed and mailed, but strong brand image and core of word-to-mouth strategy. This results in economically efficient outcomes helping to attract millions of new jobseekers and improved service for customers.
Socialization, and influences that shape social behaviour in a particular social settings determine Adidas orientations. To be socially responsible Adidas uses different ways of advertising, as well as variations of influence in the business environment. Adidas proposes to its customers exceptional services and atmosphere in its site, providing a high level of customer loyalty.
Rivalry keeps the market dynamic and creates continual pressure to improve and innovate. Adidas rivalry forces other firms including to develop new services, improve existing ones, lower costs and prices, develop new technologies, and improve quality and service. Adidas has to fight not just for market share, but also for employee talent, and prestige in the UK market. (The UK Sports Market 2001).
Many customers do not have time to read press or listen to the radio, so in-store
Demonstrations and street advertising will be the main tool to attract new customers. The aim of the message is to appeal to consumers' mind with unique selling proposition. Bill boards and transport ads should be as the main tool to attract diverse target audience appealing to emotions of consumers and creating a unique image of Adidas product lines (Griffin, Mcarthur, 1997).
Also, Adidas should create an environment which encourages the creativity of Customer Relationship Strategy, and enables everyone to work without feelings of insecurity, and without insult. Adidas should use CRM as one of the most important communication technique to deliver customer value and maintain high service quality.
The aim of the advertising should be to get a message into the heads of most people at the lowest possible cost. Over next 12 months Adidas can use "image" advertising to enhance the public's perception of a company, create goodwill, or announce a major change such as a merger or acquisition. It is based on emotional and aesthetic appeal and ahs an impact on consumers' imagination. (see Appendix for Summer Campaign). The propose design of brand communication mix should be repeat each season with new product line and message according to the season.
Adidas should start advertising campaign based on new promotion mix. It will include transport ads and direct mail, radio advertisement and PR campaigns. Online community is one of the most successful tools used by companies to establish trustworthy relations with consumers, so Adidas should create on-line community to be closer to its customers, and support on-line sales and traditional brand relationships. Lately, brand-based online communities will the potential benefits of dialogue flowing between consumers via two utilities: real-time 'chat' taking place in 'chat rooms' and discussions that play out over days, weeks, and even months in discussion forums or bulletin boards.
Adidas should divide its campaign into four parts: summer, spring, autumn, winter. The slogan campaign will be - "Enjoy your Walking with Us (Adidas)". The recognition of brand is very important. And the clients will wait impatiently for the next season to see something new. Every season the colours can be changed: spring is green and yellow, summer is red, etc. Advertisements should be placed in the Press, on TV or radio and consumers are encouraged to seek for something new. The advertisement used must be informative enough to enable existing customers to make a decision to buy new goods.
Adidas UK. 2006. Retrieved from: www.adidas.com/uk/
Griffin, T., Mcarthur, D.N. (1997). A Marketing Management View of Integrated Marketing Communications. Journal of Advertising Research, Vol. 37, p. 19.
Kiley, D. Reebok and Adidas: A Good Fit. (2005). Retrieved from: http://www.businessweek.com/bwdaily/dnflash/aug2005/nf2005084_8340.htm
Fashion scores as Adidas launches its custom boot. (2006). The Sunday Times January 29. Retrieved from: http://www.timesonline.co.uk/article/0,,2095-2014130,00.html
The UK Sports Market 2001: a UK Market Briefing. (2001) Retrieved from: http://www.biz-lib.com/ZKY80286.html
McDonald M., Christopher M. (2003). Marketing: A complete Guide. Palgrave Macmillan.