Adidas and Reebok Marketing Communication Strategies

2720 words (11 pages) Essay

3rd Jan 2018 Marketing Reference this

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Introduction:

This reported is presented with intent to draw would the comparison in the marketing communication strategies and mix adopted by the shoes brands Adidas and Reebok. The dual brands are functioning in a non-monopolistic global market environment which imposes the need to be market savvy and creative on the part of the business houses such as Adidas, Reebok and many other established brands to not only retain their existing market segment but also grow into new market on a local, national and international plane. There is a pre-existing need to modify strategies in context to pricing, advertising, product lines, product quality and marketing communication strategies. Failure to do so on the part of the business houses could adversely affect the sales of the product and lead the company and the product to an undesirable state of declination.

The fact cannot be denied that the athletic shoe brand market has been emerging to be extremely competitive and a few brand names such as Adidas, Reebok, Nike, Puma have successfully captured certain market segments. These brands recognise the need to retain their market position and work towards market growth in the process. Adidas and Reebok, for the sake of exemplification have proven the fact that besides high quality products, a good market communication strategy and mix is vital for survival and simultaneous growth in a market which is constantly driven by a competitive atmosphere.

I intent to utilize the following techniques to present a comparative analysis on the strategies adopted by Adidas and Reebok:

Primary Research:

Consumers would be interviewed and data compiled would be analyzed and inferences would be drawn on that basis.

Secondary Research:

Secondary Research would be gathering, analysing and segregation of data from websites, business journals and books.

Business Analytical Tools: S.W.O.T. Analysis, Marketing Mix

Market and Literature Review:

Adidas:

The German National Adolp Dassler could be credited with the creation of the phenomenal brand “Adidas”. His nickname “Adi” and the first syllable of his last name “Das” put together created the brand name “Adidas”. History states that Adolf was a shoe fanatic who spent several hours in his workshop designing shoes with intent to perfect it and to surpass anyone in this line of work. His dedication towards his cause led to the creation of this brand which in today’s day and age is the second best global athletic shoe brand commanding a market position of 33% internationally after Nike.

This brand came in to limelight with the 1926 Olympic Games wherein the sport star of the Games Jesse Owens wore Adidas shoes which performing at the Olympics. This led to instant recognition of this brand and soon the sales was reported to have gained huge momentum. The Olympic Games was the most crucial turning point in the history of the brand Adidas. From then on, Adidas, the Business house has been essentially sponsoring Global Sports Events, Olympic Games and many such events and has amassed mass popularity for their product lines. This strategy of the organization has helped the brand gain great worldwide media coverage for their product lines and the sales have been reported to grow in continuity.

Zidane, Beckham and Kaka are the celebrities who wear Adidas shoes while performing at the games. The dual effect of high media coverage and the celebrity wearing Adidas creates a celebrity of sorts of the shoe brand Adidas.

Today celebrity soccer players such as Kaka, Zinedine Zidane, David Beckham and many more are being sponsored by Adidas.

Adidas has been successfully in existence for around 80 years being an integral part of the sports world providing hi-tech sports footwear, accessories and apparel. At the moment the business house takes pride in commanding a world position in the athletic shoe brand market. Adidas products especially shoes are sold all over the globe being available in almost every country of the world with multiple retail outlet wooing the consumers proving the fact that the business house has carved a distinctive niche for itself in the global market.

Adidas has graduated from a small workshop in a little know German village to a world renowned global enterprise. (http://www.adidas-group.com/en/ourgroup/history/history.aspx)

The distinctive logo it possesses and the catchy advertising slogan “Impossible is Nothing” further consolidates the brand image and popularity.

Reebok:

Reebok’s United Kingdom-based ancestor company was started off to cater to one basic need which was to help athletes run with speed of lightning. Joseph William Foster in 1890s created one of the first known running shoes with spikes in them. By the period of 1895, Foster was in business handmade shoes by hand for the country’s top runners; and not before much time his fledgling company, J.W. Foster and Sons, created success by catering to an international customer of highly known athletes. The family-owned business house with pride created the running shoes which were used by athletes in the 1924 Summer Games celebrated in the film “Chariots of Fire.”

In 1958, Foster’s grandsons commenced a companion company that was christened by them as Reebok, named for an African gazelle. In 1979, Paul Fireman, who was a partner in an outdoor sporting goods distributorship, noticed Reebok shoes at an international trade show. Later on, he went on to negotiate for the North American distribution license and made a grand introduction of three running shoes in the U.S. that year. At the selling price of $60, Reebok was the most expensive running shoes on the market.

Currently, Reebok International is a highly marked player in the sports and fitness products market, with a particular emphasis on footwear. Its prime strengths lied in its size and massive brand awareness. While athletic shoes are clearly its core products, concerns are being brought up over its comparative lack of interest in the associated athletic apparel market, which is over double the dimensions of the footwear global market. (http://bostonjobsource.com/reebok.html)

Methodology:

The methodology to execute this report successfully was primary and secondary method techniques.

Primary method comprised of Consumer poll wherein a set of questions was asked to consumers of athletic shoes for their responses. The questionnaire comprised 10 questions based Reebok and Adidas drafted to draw answers which facilitated a comparative analysis

While carrying out the secondary research, books and websites and learning modules were studied and comprehended.

Employing the primary and secondary research techniques data compilation and analysis was carried out to draw inferences.

http://media.katu.com/images/060124adidas_reebok.jpg

Analysis and Discussion:

Core Competencies (Jobber 2004)

Adidas Core Competencies

– Technology

– Customer focus

– Brand recognition

– Supply chain

– Collaboratively competitive

Reebok Core Competencies

– Trend Identification

– Ability to market to a niche segment

– Women’s shoe design

– Design expertise

– Celebrity relationships

S.W.O.T Analysis: (Belch 2004)

A S.W.O.T Analysis in conducted of a business house helps us in understanding the strengths of the organization, the weaknesses it is confronted with, the opportunities the organization could avail of and the threats which present harm its growth, diversification and existence.

Adidas

Reebok

Strength

The prime strength of the organization is its 8 decades of existence in the global market. The employment of high end technology in the production process improves quality, precision and durability which are the most desired aspects by athletes. The organization has the largest international portfolio of celebrity sports ambassadors. The business house as a part of promotion sponsors football teams and has a high consumer brand loyalty mainly in U.S.A and India. Statistics and surveys indicate that Adidas has the maximum level of popularity and brand image in India.

Reebok presents growing sales revenue. ON account of a part of a strategy to expand quality market share, the company indulged in the process of investing in three key products and marketing platforms: Performance, RBK and Classic. Reebok International happens to be the second largest producer of athletic shoes in the US, following Nike. The Reebok brand succeeds in accelerating sales pushing it closer to huge competitors such as Adidas. Reebok prides itself in being the number two or number three brand in most of its global markets. It dominates on 10% of the global market. The business house succeeds in increasing profits even though retail conditions are challenging.

Weakness

The pricing strategy of Adidas for all its products including athletic footwear lacks flexibility and is highly rigid and this proves to be a weakness in a general price conscious economy. Adidas is hovered over with a close competitor in the form of Nike, Puma and many more in the global market. The Indian subcontinent, which in now identified as a potentially growing market with high potential of revenue, the brand has not been showing good revenue results.

The business has low market share in the apparel segment. Reebok has always focused on athletic shoes and not apparel. Here is where the business lags behind.

The apparel market is twice as large as the footwear market and the competitors such as Adidas and Nike take advantage of this and sell their apparel products which add on heavily to their annual global turnover

Opportunity

Adidas should avail the opportunity to explore new world markets in the global arena. Health consciousness among the people in general is creating a good need for athletic shoes which should be skillfully tapped by Adidas. Creative advertising employed in continuity could open up opportunities of market growth and sustenance.

The shoes are priced below average with a starting range of 45 dollars which is 15 dollars less than any other brand which sells at a basic 60 dollar price tag. Reebok could boost its price as it has a large consumer base worldwide and a price deviation is not expected to hinder sales but increase profitability.

The organization could work on creating a better brand awareness in order to increase volume of sales. The brand could employ the best of technology to add quality and precision to its products.

Threat

Statistics show that Reebok, a competitor of Adidas has a good market share and employs a higher sum for market communication strategies. This presents a threat which is growing for Adidas. New entrant brands such as GAP, CAT prove to be a threat as they are eating in on the market share of Adidas which it has created over a period of time

The brand is heavily reliant on footwear sales for its revenue input. This could pose a threat as there are continuous new entrants in the athletic footwear market. Reebok needs to diversify into other areas such as bags, sports equipments and fashion accessories to stay afloat in this highly competitive market which is unpredictable.

Adidas commands a global share of 16% while Reebok stands at 6%

Marketing Mix: (Pickton 2005)

Product:

ADIDAS: This brand has a huge product line of athletic footwear and apparels making it one of the most sought out brands besides Nike. The product is highly advertised through sports events where it gains good media coverage. Adidas uses cutting edge technology to offer comfort and style in their product which are light in weight. Undoubtedly, the products of Adidas have great value for money. Adidas shoes are known to have a grip which the sole provides and this is on account of good design and is useful especially in hiking. They go with ease on the legs and prevent any kind of twist or sprain.

Reebok: The product line of Reebok is limited to footwear. Reebok has a good line of women’s footwear. The brand has invested highly in technology to better its product lines. In the apparel sector the brand is lacking far behind from Adidas.

Place:

Adidas and Reebok have been selling in almost every nation of the world and they follows one level channel or an indirect channel to make their product reach out to the final consumer. The products are manufactured by the producer and it then reaches the retailer who in turn sells it to the final consumer.

Price:

Adidas shoes are priced higher than that of Reebok. Adidas can afford to charge higher than Reebok as Adidas is a far more established brand than Reebok. The quality of Adidas is known to be better than that of Reebok

Promotion:

Reebok: The promotional technique used by Reebok is basic advertising. The brand needs to develop better promotional strategies. New punch lines and slogan should be used by Reebok to create an impact on the consumers. It is observed that Reebok has the potential to closely compete with Adidas.

Adidas: Sponsoring large scale sports events, adverting through different forms of media.

Adidas have been constantly engaged in brand building programs. Adidas has joined in with the strategy of high fund allocation to boost sales and compete. Adidas with their innovative campaigns have proven to be at par and have to a large extent created the much desired impact which they set out to create at the onset of bringing about an improvisation of their promotional propaganda.

Conclusion:

It should be understood that footwear is no longer considered as a product that just offers a sense of protection for feet. What was hitherto taken as a ‘Want’ is at the present day a basic ‘Need’. Today, the footwear business is a widespread and dynamic global business operation comprising of huge economies of scale.

The athletic shoe segment is tremendously competitive in nature with the phenomenal players such as Nike, Adidas, Reebok and New Balance strategizing meticulously to retain their consumer market share and the small time players such as Puma attempting to gain large market share. The athletic footwear industry stresses branding more than any other competitive benefit. By the employment of advertisements, celebrity endorsements, varied promotions, and licensing agreements, the top enterprises or rather branded companies in this industry have allocated much of their resources to creating the much required brand recognition and loyalty.

Significant features of this highly competitive market segment are expensive and continuous advertising, celebrity endorsements, brand awareness techniques etc. Nike, Adidas, Reebok and a few more brands are the market leaders in the world due to their market communication and mix innovative strategies. (Bovee 2003)

Recommendations:

It is recommended that Reebok work on improving its promotional strategies. Reebok should also focus on the apparel segment which is a large and promising market. The business house has developed a good consumer base and can work on increasing the prices of their products as this would bring in higher revenue, part of which could be employed for advertisement and promotion expenditure.

Adidas should work towards improving market share and being at par with Nike which is currently the world leader in Athletic footwear. Adidas should focus on roping in more celebrities to endorse their products as celebrities are undoubtedly crowd pullers. It is also recommended that Adidas improve its product lines substantially as variation in products could lead to better and improved sales which form a major objective of any business organization. (Pettit 2003)

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