Table of Contents
2.1 Adidas’s product line and brand.
2.2 Competitor (Nike)’ products, brand, and strategies.
2.3 Defining international markets for Adidas.
3.1 Adidas’s products’ positioning in global marketplaces.
3.2 Competitors’ positioning of global marketplaces.
3.3 Comparison between Adidas and its competitors’ positioning.
3.4 Market covered by Adidas.
3.5 Potential gaps in the product portfolio of Adidas.
5.1 Recommendations for Adidas.
5.2 How the competitors might react to the recommendations provided.
5.3 Recommendations for reaction to competitors.
This paper conducts an audit on Adidas’s brand positioning in comparison to its key competitor, Nike. Adidas is one of the leading brands as a sportswear manufacturer in the world. Adidas is now operating worldwide with five sub-brands that are Reebok, Runtastic, Ashworth, Matix, and TayorMade-Adidas. More than 55,000 staff are now working devotedly and dedicatedly for Adidas to continue its revenue and profits growth. Adidas gained €19.291 billion in revenue, 1.5 billion in operating income, and 0.72 billion in net income in 2016 (Adidas Annual Report, 2016). On the other hand, Nike, which is the key competitor of Adidas, is also leading that designs, develops, and manufactures footwear, sportswear, apparel, accessories, and markets and sales in the global market. More than 62,000 skilled and experienced workforces are now working hard for Nike to bring its success. Nike gained $30,601 billion in revenue, $4.175 billion operating income, and $3.273 billion net income in 2015 (Nike Annual Report, 2015). This paper first compares the product ranges and competitive positions of Adidas to its key competitors Nike. Then, the performance of Adidas business in different markets is evaluated and analyzed by comparing it with Nike’s performance. Finally, this paper provides recommendations for Adidas to continue its success in the global marketplace.
2.0Audit on Adidas
2.1 Market position
The study shows Adida’s revenue increased in the EU market by 17% from €4.539 billion in 2015 to €5.291 billion in 2016. In addition, gross profit increased by 9% from €2157 billion in 2015 to €2350 billion in 2016, and the operating profit increased by 5% from €909 billion in 2015 and €951 in 2016. The key sales increases were seen in football and training categories. The revenue of the Reebok brand increased to 18% in 2016. For this brand, double-digit sales growth was seen in classics and training categories. From a country perspective, double-digit revenue grew for both Adidas and Reebok brands in the UK, France, Germany, Spain, Poland, and Italy. The favorable product, pricing, and channel mix along with the lower cost of sale had a positive impact on the growth and performance of Adidas and its sub-brands. However, 3.1% of the decreased trend was seen in gross margin that dropped from 47.5% in 2015 to 44.4% in 2016. In addition, fluctuation in currency rate and 12% of increased operating expenses (from €1.248 billion in 2015 to 1.398 billion in 2016) affected the business performance.
The expenses mainly increased in logistic, marketing, and point of sale areas. Therefore, the margin of operating profit was down by 1.1% from 27.5% in 2015 to 26.4% in 2016 (Adidas Annual Report, 2016).
2.1 Adidas’s product line and brand
The Adidas brand has a long history and deep-rooted connection with sport. Its mission is to be the best sports brand in the world, helping athletes of all levels to make a difference – in their game, in their lives, in their world. This is anchored in our belief that through sport we have the power to change lives. The Adidas brand’s broad and diverse sports portfolio, from major global sports such as football and running, to regional heartbeat sports such as American football and rugby, has enabled the brand to transcend cultures and become one of the most recognized and iconic global brands. Driven by a relentless pursuit of innovation in sports product design, development, and manufacturing as well as decades of accumulating sports science expertise, the Adidas brand has a truly unique and comprehensive sports offering. Spanning footwear, apparel, equipment, and services, the brand caters for all, from elite professional athletes and teams to any individual who wants to make sport part of their lives. With this powerful platform, the Adidas brand is in a very strong position for profitable and sustainable growth.
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The consumer is at the heart of everything the Adidas brand does. By constantly developing desirable products and inspiring experiences, the brand strives to build a strong image, trust, and loyalty with consumers. Through Creating the New, the Adidas brand has refined its strategic direction, operational processes, and management incentive system, to foster a culture of consumer obsession in its organization. In March 2015. Adidas presented our new strategic business plan until the year 2020 named ‘Creating the New’. At the epicenter of Creating the New is our ambition to further accelerate growth by significantly increasing brand desirability. Creating the New, therefore, focuses on our brands as they connect and engage us with our consumers. Its consumer-centric approach is already driving significant improvements in the desirability of our brands and has increased our relevance with consumers around the globe. Adidas is gaining market shares in those categories, cities, and markets that we have identified as future growth drivers for our company Adidas Annual Report, 2016)
Diagram: Adidas’s strategy for creating the new Source: Adidas Annual Report, 2016)
n a nutshell I can say that Adidas has a strong brand position in the sportswear market. In spite of all the technology that supposedly goes inside a typical sports shoe, if you take away the logos, it’s almost impossible to differentiate between a Nike, a Reebok, and Adidas. So, Adidas has instead focused on differentiating themselves by converting their brands into cultural currency. Even non-athletic types have four pairs of sports shoes one for jogging, one for trekking, one for cross-training, and one for tennis. Since now-a-day the world is becoming a more technological base, Adidas should do something related to technology. They can make their product using more technology and the best thing is doing something by a joint venture with tech companies like Apple, Samsung, Google, etc. Which makes Adidas more strong in the global sportswear market.
2.2 Competitor (Nike)’ products, brand, and strategies
The athletic footwear, apparel, and equipment industry are highly competitive on a worldwide basis. Adidas compete internationally with a significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment companies and large companies having diversified lines of athletic and leisure footwear, apparel and equipment, including Nike, ASICS, Li Ning, lululemon Athletica, Puma, V.F. Corporation and Under Armour, among others. The intense competition and the rapid changes in technology and consumer preferences in the markets for athletic and leisure footwear and apparel and athletic equipment, constitute significant risk factors in our operations.
Nike is the primary competitor or Adidas that is the leading seller of athletic footwear, apparel, and equipment in the world. Important aspects of competition in this industry are a) Product attributes such as quality; performance and reliability; new product innovation and development and consumer price/value.; b) Consumer connection and affinity for brands and products, developed through marketing and promotion; social media interaction; customer support and service; identification with prominent and influential athletes, coaches, teams, colleges and sports leagues who endorse our brands and use our products and active engagement through sponsored sporting events and clinics; and c) Effective sourcing and distribution of products, with attractive merchandising and presentation at retail, both in-store and online. We believe that we are competitive in all of these (Nike Annual Report, 2016)…….