Ch. 15 - Retailing

     Retailers ring up over $4 trillion in sales annually, about 40% of the gross domestic product. That's an overwhelming amount of money for any company. Retailing helps companies sell certain product(s), make profit in certain areas of the brand, generate popularity to certain consumers and show them what the company is about while selling most of their products on a daily basis. 


Adidas is a successful retailing company and they have developed chain stores all over the globe. One of Adidas main focuses are retailing even though they thrive in that area they plan to continue to push their success.  




 The picture above is of one of The Adidas Group dynamic retailing stores in Soho in lower Manhattan, New York City. Over the past five years, The Adidas Group has evolved into a dominant retailer, they have operated 2,270 stores for the Adidas and Reebok brands worldwide. For the future Adidas has simplified their chain stores, by clustering it into three different formats, by brand centers, core stores and factory outlets. Which falls into Adidas Group business plan for the future called "Route 2015". 

• Brand centers, such as large stores carrying the full range of each of our adidas sub-brands under one roof, are the bold and powerful statements about their strength, breadth and depth. This format will be kept to a limited number and only in exclusive locations.


• Core stores are the commercial engine for sales and profit across the Group’s retail organisation, upholding and accentuating each brand’s reputation. There will be adidas brand core stores, Originals core stores and Reebok core stores and, depending on their size, they will be categorised and clustered into A, B or C.


• Our factory outlets will facilitate the controlled sale of excess stock returned from our wholesale key and field accounts, franchise partners, e-commerce as well as own-retail stores. Through improved management of regional inventory and limited planned production, we want to improve and balance our product offering and therefore further increase our profitability. 

In 2011 The Adidas Group revenued 2,973 trillion dollars in Retailing worldwide which is amazing to any company but The Adidas Group is not satisfied they seek to bring up their retailing strategies by opening more stores and doing things to attain more consumer interest. Also they plan to focus on production on every single one of their retailing stores. Adidas as a franchise is a successful retailer and thrives to do more, they are efficient in level of service, product assortment, and price. Retailing is a huge part of the U.S. Economy, companies like Adidas keep it nice & dandy. 

Ch. 6 Consumer Decision Making

      Understanding consumer behavior is very important for companies who plan to make any sort of profits. Consumers product and service preferences are constantly changing, to market consumers effectively you must study and understand these desires in order to succeed in a well defined market. Adidas looks far into consumers and focus on certain things such as wants, desires, comfort level, and the stimulus cycle which includes the 5 senses sight, smell, taste, touch, and hearing. 

Remember when Adidas launched the originals and consumers went crazy demanding for the all white low tops and then to keep then interested Adidas released the originals in a variety of colors and styles which helped Adidas develop a name for itself. (Here are the Adidas originals below) 

Consumer wants and need are not the only factors that Adidas considers. Culture and values are also taken in consideration by Adidas. Cultural backgrounds influence the Consumer Decision Making process because consumers of a distinct background tend to have similar needs and identical consumption patterns.  It is Adidas' job to adapt to the various surrounding and to ever evolving and changing needs of  consumer. Not only attracting consumers in their birth place of Germany, Adidas also generates consumers interest in the United States, China, Russia and Mexico. 

The goal for Adidas Group is to lead the sporting goods industry with brands built upon a passion for sports and a sporting lifestyle. Inspired by our heritage, we know that a profound understanding of the consumer and customer is essential to achieving this goal. To anticipate and respond to their needs, we continuously strive to create a culture of innovation, challenging ourselves to break with convention and embrace change. (By focusing on Diversity; Diversity is huge in today's market, not only diverse consumers but diverse needs and wants down to the smallest details) 

Diverse brand portfolio

Consumers want choice. Whether it is the athlete looking for the best possible equipment, or the casual consumer searching for the next fashion trend, Adidas is inspired to develop and create experiences that engage consumers in long-lasting relationships with its brands. To maximize the consumer outreach, Adidas has embraced a multi-brand strategy. This approach allows it to tackle opportunities from several perspectives, as both a mass and a niche player, providing distinct and relevant products to a wide spectrum of consumers. In this way, each brand is able to keep a unique identity and focus on its core competencies, while simultaneously providing for Adidas Group with a broad product offering, increasing in its leverage in the marketplace. 

Presentation of Route 2015

In November 2010, the Adidas Group unveiled its 2015 strategic business plan named “Route 2015”. This plan is the most comprehensive the Adidas Group has ever prepared, incorporating all brands, sales channels and Group functions globally. Based on our strong brands, premium products, extensive global presence and our commitment to innovation and the consumer, we aspire to outperform total market growth (both GDP and sporting goods market) and to grow our bottom line faster than our top line. In addition, the Group plans to lay the foundation for leadership in the sporting goods industry by outgrowing our major competitor over the next five years. The plan aims at growing the revenues of the adidas Group by 45% to 50% currency-neutral from 2010 to 2015. In addition, the Group targets a compounded annual earnings growth rate of 15% and aims to reach an operating margin of 11% sustainably by 2015 at the latest. To achieve these goals, we have made strategic choices and will prioritise our investments under our six key strategic pillars.

Results from UIE's studies show that the online buying process acts as a sieve, where customers are inadvertently filter out at each stage of their decision-making process

Above is a chart of how consumers think and evaluate their product before purchasing it and what happens after the purchase, even though the chart shows a consumer going threw the process of buying a new computer, Adidas consumers go threw the very same process while picking and choosing sneakers and athletic gear. They go by deciding the size, style, color, comfort level, high or low top and the overall experience is shared with other potential consumers and then you receive more attention to your brand as shown before by the Adidas Originals.  

Ch.5 Developing a Global Vision

      Developing a global vision for your company is extremely important, Having a global business can have huge positive effects. In the present day global revolutions effect all of us disregarding what part of the globe you live in, some ways you can feel the effect is management, politics, communications, and technology. Global marketing ha become imperative in the United States, referring to boundless mobility and competition in social, business, and intellectual arenas. Here is a fact that shows why global marketing is important; Over the past two decades, world trade has climbed from $200 billion a year to over $11 trillion. Crazy isn't it ?

Even though Adidas is not an American company, The company still operates in many global markets starting from where they originated in Germany expanding to North America, Australia, across Germany's borders and in China And India who are big targets for global trade and production. Now a days the internet makes it really easy for companies to go global by simply setting up an e-business. Anybody around the world can view the site and purchase what they like, delivery is made easy by shipping companies such as UPS, FedEx, and DHL which helps solve international e-commerce distribution. Setting up a global business personally includes contracts, trade agreements, exchange rates and a whole bunch of processes, but an e-business can put your company in the international marketplace just by creating a web-site; easy as 1 2 3.

The Following is the Adidas group global strategies and some ways how they plan to execute them:

Driving the long-term development of adidas and Reebok

To secure long-term sustainable growth for the Group, Global Brands is focused on driving the development of the adidas and Reebok brands. The overall strategic goal is to achieve qualitative, sustainable growth by building desirable brands in consumers’ and customers’ perception. In 2010, Global Brands played a central role in the creation of Route 2015, the adidas Group’s five-year strategic business plan. The adidas and Reebok brands are expected to deliver 90% of the targeted growth for the Group in that period. Areas within adidas and Reebok that were identified as key contributors and game changers for the adidas Group include: 

• Gaining sales and market share in the key global categories running and basketball with adidas Sport Performance


• Expanding adidas Sport Style into fast fashion with adidas NEO


• Establishing Reebok as the leading fitness and training brand


• Leading the industry in the fields of customisation and interactivity across categories.

The Map you see below are locations of The Adidas Group Global Market environment .

   

     The Adidas Group markets globally from all these main locations, marketing sports such as Basketball which is becoming a phenomenon in America, over seas in Europe and Asia. Adidas also markets high in Soccer (futbol)  and Tennis.

•  Herzogenaurach
•  Amsterdam
•  Portland
•  Canton
•  Carlsbad
•  Hong Kong
•  Panamá

Ch.4 The Marketing Environment

   


While marketing a product or a company there are many factors that marketing managers have to consider and evaluate before they begin to reach out to the customers and advertise products. These factors may include  location, attitude, style, values and social factors which is huge in the marketing environment. Lifestyle is also a important factor to consider while choosing your target market; for example the lifestyle in the United States is totally different than the lifestyle overseas such in France or China and you would approach each of them differently considering their way of life and social values. 

Adidas does well in choosing their marketing environment and approaching them with distinction, such as their basketball and soccer campaigns. Adidas uniquely advertises basketball with the games biggest stars such as Chicago Bulls point guard, Derrick Rose who is the youngest MVP in leagues history. His campaign involves light weight features so he can move fast and at the same time has ankle support so he can use his speed to dominate defenders wit speed and precision that's what the Adidas Adi Zero Crazy Lights bring to basketball, Derrick Rose, and millions of fans and ballers. 







From the Adidas website you can see their target markets and strategies for the company such as below : 

Adidas Sport Performance – play to win

No other brand has a more distinguished history or stronger connection with sport than adidas. adidas is everywhere where the best meet the best, like the FIFA World Cup or the NBA All-Star Game, but also everywhere else around the globe where sports are simply played, watched, enjoyed and celebrated.

Everything at adidas Sport Performance reflects the spirit of our founder Adi Dassler. The main objective is simple: make athletes better. Therefore, innovation is at the core of all adidas Sport Performance products.

The target consumers of the sub-brand are clearly those consumers who call themselves athletes, are active in sport, or simply are inspired by and love sport.
While we have a pivotal strength with the 20- to 29-year-olds, going forward a clear focus will be the high school athlete and the 14- to 19-year-olds.
adidas Sport Performance offers products in most sports categories. The key focus categories are: 

• Football


• Basketball


• Running


• Training


• Outdoor

Furthermore, adidas Sport Performance is focusing on interactive and customisation as key growth drivers across categories. A perfect example of this is adidas miCoach, which is the world’s first web-based personalised training service. It combines state-of-the-art training with a personalised web service and real-time audio coaching.
It is compatible with all MP3 players and is available as an application on various smart phones such as iPhone and Blackberry. miCoach is a clear highlight of our focus on innovation to help make athletes better and “fit for performance”

      Adidas has a huge impact in the game of soccer they have taken over soccer globally, from Russia, France, Italy United Stated Adidas has made their soccer products efficient and effective. Recently Adidas took over The FIFA World Cup by providing all teams with official merchandise sponsoring the sport. Below is The National Spanish Soccer Team who is sponsored by Adidas and the soccer environment for Adidas Markets all over the globe

 


Social factors are huge in the marketing environment for example Adidas knows how popular soccer is overseas, just like Americans love football countries overseas love Soccer with passion that's why Adidas has a huge Soccer market overseas. 

Ch.3 Ethics and Social Responsibility

      What is ethics? It has been said that ethics is something everyone likes to talk about but something that nobody can define. Well ethics are the moral principles or values that govern a group or company. Each company has its own ethics or moral values as for Adidas they follow good business practices such as a employee code of conduct, rules that protect their customers and behaviors of their employees. 


The Following is an Interview of Frank Dassler, Adidas Group General Counsel, explains how the company manages business risks through good corporate management:

Frank, what does good corporate management mean for the adidas Group?

     As a company we do not operate in isolation. We are part of a global economy and society and have to follow various legal rules. But we do not leave it there. We have set ourselves standards of ethical behaviour. These reflect our values, our corporate culture and good business practices.

Could you tell us a little more about your standards?

One of the adidas Group's core values is Integrity. For us this means acting according to our values with all our stakeholders. So we have an Employee Code of Conduct, rules around protecting our customers' data and the Group's Workplace Standards for our suppliers.

The adidas Group Code of Conduct is the cornerstone of ethical behaviour for our employees in their day-to-day work. It covers issues such as how to treat business partners, handling information, complaints and also special rules for dealing with financial matters.

How do you make sure that all employees are aware of this code and adhere to it?

The Code of Conduct is supported with mandatory online training available in 10 languages. This ongoing training is aimed at raising awareness of ethical and social behaviour as well as promoting compliance with data protection requirements and other policies. We received very positive comments on the code of conduct training from our people around the world. By the end of 2009 more than 80% of the global workforce had been trained in the code.

Are you tracking complaints or cases of non-compliance with the code?

Yes, we are. We have compliance managers worldwide and the works council at our headquarters is also involved. A whistle-blowing system allows employees to submit complaints anonymously, which is important because they must trust the system fully. Otherwise it won't work.

Frank, you said that data protection is an important element of the Group's compliance programme. What does this mean?

Ensuring privacy around data is very important. Our data protection system aims to ensure personal information is handled, stored and processed according to applicable laws and internal policies globally.

We provide online training on the Do's and Don'ts to all employees and special training to departments that manage sensitive data, such as marketing departments.

Frank, last question: What are the next steps for the compliance programme?

We will be expanding our whistle-blowing programme by reaching out to every employee - especially in our own retail business, which is our direct face to the consumer.

And to keep track of complaints we are developing a system within our global intranet to address, manage and follow up claims.

        Social responsibility is an integral part of our brand values, and adidas-Salomon has a tradition of requiring its suppliers to conform to social and environmental standards. In 1998 further steps were taken to ensure that there are acceptable working conditions in the factories which supply adidas-Salomon products. The corporate Standards of Engagement (SOE) were sent to suppliers confirming the policy on minimum requirements for labor, health, safety and environmental issues at all adidas-Salomon facilities and those of our suppliers. The SOE is based on the World Federation of the Sporting Goods Industry model Code of Conduct and states that adidas-Salomon will not conduct business with suppliers who use forced labor or child labor and do not comply with the employment laws of the country concerned. It has been translated for display in factories into the languages of the contries where products are sourced.


Adidas working through the World Federation of the Sporting Goods Industry supports the child labor project in Pakistan which is succeeding in providing education opportunities for children and thus alternatives to stitching balls. A similar project is being developed in India and both involve local sporting goods manufacturers, the UN's International Labor Organization, Save the Children, UNICEF and local non-governmental organizations.

Ch.2 Strategic Planning for Competitive Advantage

        


           Every company at a certain time has to develop a strategic plan that can put them over the top, or help them be more successful than their competition. Companies take part in strategic planning for a competitive advantage which directly relates to their mission statement. As seen in the last post; Adidas aims high towards being the very best in the sports business as they try to out compete their rival Nike. 

Basketball: increasing global footprint

Adidas is committed to strengthening its position in basketball by expanding its footprint in the critical North American market and capitalising on the growing popularity of the sport in the emerging markets. To achieve this, adidas Basketball strives to build brand equity by leveraging its status as the official NBA outfitter, capitalising on relationships with some of the most promising stars of the NBA such as Derrick Rose and Dwight Howard, and building the best product in the game.

In the current season, adidas Basketball is focusing in particular on the “faster” franchise. With the introduction of the NBA Revolution 30 Uniforms, the lightest we have ever made, and the adiZero Rose shoe, adidas has positioned itself as the basketball brand that makes the lightest products in the game.

In 2011, the NBA All-Star Game in Los Angeles will be a key platform to showcase the latest innovative technology stories. 

The images above you are of the Adidas AdiZero Crazy Light one of the lightest basketball shoes ever made at only 9.8 oz. This shoe is worn by NBA's Chicago Bulls  Point Guard Derrick Rose and through innovative engineering the shoe features Synthetic leather upper offers lightweight and durability. Welded frame provides lightweight support and breathability. Sprintframe adds stability and speed through geometry to create a lightweight and supportive basketball chassis. Removable insole. Internal EVA midsole gives cushion, fit and comfort. Non-marking rubber outsole with variable height engineered traction pattern delivers ultimate grip. Additional comfort insole included. 

 

With a holistic offering in products and communications, adidas Originals is focusing on 16- to 24-year-old high school and college kids.
To address the needs of its diverse consumer groups and maximise business opportunities, adidas Originals takes a three-tier strategy to brand and product marketing:

• First, the brand invests and innovates in new concepts, whether it’s street fashion collections, such as those designed by Jeremy Scott, or entering new market segments such as the snowboard community in alliance with one of the leading brands in this segment, Burton.


• Second, this permanent creation of newness and creating buzz around the Originals brand then allows us to broaden our messages and expand into wider business segments such as denim, skate or our women’s offensive Sleek.


• Third, we commercialise the sub-brand to the widest audience with concepts such as adicolor, where the consumers can find their most-loved footwear and apparel silhouettes in a variety of colours and materials, and appealing seasonal themes such as Star Wars and Mega.

To stay connected to its core teenage consumers, adidas Originals uses a constant stream of digital content to keep them interested 365 days a year. On digital media such as Facebook, adidas Originals meanwhile has over 7 million fans. This is an area where adidas Originals is currently a leader in the digital marketplace.

adidas Sport Style – style your life

What once started as a niche business has developed into a significant contributor to the Group’s top-line development. To best tap the potential of the sports fashion market, adidas Sport Style is targeting that market with a clear multi-label strategy.

Y-3: pioneering The “Y” stands for Yohji Yamamoto, the “3” represents adidas’ three signature stripes and the “-“signifies the link between the two. Y-3 targets a sophisticated, forward-thinking fashion consumer and has enabled adidas to enter the premium sports fashion market segment. Celebrating its tenth anniversary in 2011, it will remain the pioneering sportswear label that fuses sport and avant-garde design. Yohji Yamamoto’s signature design aesthetic is combined with traditional Japanese tailoring in each collection.
Growing demand from consumers has led Y-3 to open its own mono-branded stores, and today it has stores in major cities such as New York, Los Angeles, Miami, Las Vegas, Paris, Milan, Dubai, Singapore, Shanghai and Beijing. 2011 will see the opening of additional Y-3 stores in other influential cities in the USA, Asia and Europe and it will expand its business by launching the global e-commerce site Y-3store.com.

Adidas SLVR: smart design In February 2009, adidas introduced the adidas SLVR label to expand its presence among mid-price-point consumers. adidas SLVR is the smart fashion sportswear label within adidas Sport Style. At adidas, we believe that there is a need in the market for sophisticated, classic, yet fresh and confident sportswear that lasts longer than one season. The adidas SLVR label fulfils this need.

Since launching adidas SLVR, adidas has opened mono-brand stores in New York and Bangkok. adidas SLVR is also carried in all major adidas brand centres in Berlin, Paris, Moscow and Beijing as well as in adidas online stores in the USA and Europe. In terms of third-party distribution, we have taken a conservative approach, working on a pilot phase with some leading department stores such as Harrods, Selfridges and Bloomingdales over the past 12 months. From the second half of 2011, we will broaden distribution including the addition of franchise stores in China.

Adidas NEO label: fast and fresh The adidas NEO label is targeted to appeal to the fashionable teen (12- to 16-year-old) who is fully engaged in life, be it through social networking, family, friends, outdoor or sporting activities. The NEO label brings stylish products for the more price-conscious consumer who is looking for seasonal fashion items with a sports-casual flavour, constant newness, expressing their personality and reflecting their lifestyle and values.
Incorporating footwear, apparel and accessories, adidas NEO label focuses more on accessible price points, however maintaining a premium to competitors. From a gender split, we are targeting primarily the girls, which should account for two-thirds of the business over time. In further expanding the label, a vertical business model is considered the most effective way to approach the target group, taking into account the competitive environment and future demands of successful fashion brands and retailers. Therefore, we have to focus on creating retail solutions consisting of both own retail and controlled space with wholesale distribution partners. 

Strengths 

• In many invents is the biggest sponsor 
•  Strong management team
•  Brand recognition and reputation
•  Diversity and variety in products offered on the web 
• Strong control over its own distribution channel
•  No bad reputation like child labor or environment pollution
• In the Soccer industry, Adidas has a stronghold
• Sponsoring various sports and events like Olympic, streetball, tennis etc
•  Adidas have verity of products like shirts, shoes; bags etc. and many of them are available on its own site

Weaknesses

• High prices in some products
• Online customer service not "helpful" or easy to find 
• Adidas if One Step Behind Nike
• Poor customer service 
• Most of the shoes manufacture by Adidas is of very low quality

Opportunities

• Increase female participation in athletics 
•  Expanding international market 
• Retail 

Threats

• Amount of competitors increasing day by day 
•  Global economic crisis 
• Nike

 

The Adidas Group, a global leader in the sporting goods industry, has signed agreements with planning specialist provider Maple Lake to implement a comprehensive corporate merchandise and assortment planning application for its global retail operations and will continue to thrive by producing newer products in sports especially basketball which is growing rapidly through Adidas putting tons of pressure on Nike.

Ch.1 Company History and Mission Statement

        

            Everywhere you go this famous three striped logo will catch your eyes, from sweat suits, to sneakers and professional sports this German sports company has been providing the globe with sports equipment, sports or casual apparel, gear and other goods since 1948. Adidas was founded by Adolf Dassler who's older brother developed Puma which became an early rival of Adidas. Adidas is currently based in Herzogenaurach, Germany. Adidas has global corporate headquarters in Germany, and many other business locations around the world such as Portland OR, Hong Kong, Toronto, Taiwan, England, Japan, Australia, and Spain. Mainly sold in the U.S., Adidas makes lots of assets from these countries and is expanding to more oversea countries.

The company's clothing and shoe designs feature three parallel bars, The "Three Stripes" were bought from the Finnish sport company Karhu Sports in 1951.

Adidas hit the big time during 2009 as the company revenue was listed at  €10.38 billion and the 2008 figure at €10.80 billion. Much of these profits include their ability to provide such products as comfortable Running shoes, Soccer shoes/cleats and equipment, Tennis gear, Cricket, Lacrosse, Rugby, Gymnastics, Skateboarding, and field hockey. Major profits resulted from Golf, Baseball, football (soccer) and Basketball. Adidas supports many professional and amateur athletes around the world, including The NBA, NFL, FIFA, NHL, PGA and many NCAA college athletics and some high schools also. 

Short Company Time-Line 

In 1997, Adidas AG acquired the Salomon Group who specialized in ski wear, and its official corporate name was changed to Adidas-Salomon AG because with this acquisition Adidas also acquired the Taylormade Golf company and Maxfli, which allowed them to compete with Nike Golf.

In 1998, Adidas sued the NCAA over their rules limiting the size and number of commercial logos on team uniforms and apparel. Adidas withdrew the suit, and the two groups established guidelines as to what three-stripe designs would be considered uses of the Adidas trademark.

In 2003, Adidas filed a lawsuit in a British court challenging Fitness World Trading's use of a two-stripe motif similar to Adidas's three stripes. The court ruled that despite the simplicity of the mark, Fitness World 's use was infringing because the public could establish a link between that use and Adidas's mark.

In September 2004, top English fashion designer Stella McCartney launched a joint-venture line with Adidas, establishing a long-term partnership with the corporation. This line is a sports performance collection for women called "Adidas by Stella McCartney" and it has been critically acclaimed. The acquisition of Reebok would also allow Adidas to compete with Nike worldwide as the number two athletic shoemaker in the world.

On 11 April 2006, Adidas announced an 11-year deal to become the official NBA apparel provider. They will make NBA, NBDL, and WNBA jerseys and products as well as team-coloured versions of the "Superstar" basketball shoe. This deal (worth over $400 million) takes the place of the previous 10-year Reebok deal that was put in place in 2001.

Adidas Mission Statement 

"Adidas-Salomon strives to be the global leader in the sporting goods industry with sports brands built on a passion for sports and a sporting lifestyle.

We are consumer focused. That means we continuously improve the quality, look, feel and image of our products and our organizational structures to match and exceed consumer expectations and to provide them with the highest value.

We are innovation and design leaders who seek to help athletes of all skill levels achieve peak performance with every product we bring to the market.

We are a global organization that is socially and environmentally responsible, creative and financially rewarding for our employees and shareholders.

We are committed to continuously strengthening our brands and products to improve our competitive position and financial performance.

In the medium term, we will extend our leading market position in Europe, expand our share of the US footwear market and be the fastest growing major sporting goods supplier in Asia and Latin America. The resulting top-line growth, together with strict cost control and working capital improvements, will drive over-proportionate earnings growth. 

Adidas Impossible is Nothing 

Adidas Were All In