PROBLEM STATEMENT
Adidas is a successful manufacturer, supplier, and retailer of sports related goods. It is a wellknown brand and sponsors many soccer tournaments, teams, and players. Adidas competes primarily in the athletic shoe market. Traditional advertising has made the company successful in the past, but changing technology has created the need for improvement. Adidas has the opportunity to increase market share and beat competitors by implementing new advertising and promotional campaigns. The goal of the company is to become the “leading sport brand.” It also plans to increase brand awareness by implementing its “Brand in the Hand” concept.
Market trends and innovative technologies are creating new channels for Adidas to reach consumers. Mobile marketing and digital media marketing are innovative tools that give Adidas the opportunity to reach more consumers, create brand awareness, and increase market share.
ISSUES
Consumer Buying Decision Model
Adidas has to innovate when advertising because of time constraints and the gradual shift away from print media campaigns. Consumers were becoming harder to reach through advertising and clutter turned them off. Adidas already had established brand loyal consumers and wanted to create brand awareness and influence brand loyalty on a younger market of consumers.
The younger target market of consumers aged 12-24 years old usually determine the need for Adidas brand goods by what is socially acceptable and considered to be “cool” and “hip” among their peers. Alternative brands are considered before the consumer makes the purchase.
Most consumers would compare the Adidas brand to its close competitors which include Nike
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and Reebok. Other alternatives to Adidas would be to purchase non-brand name goods for the purpose of functionality and low cost instead of brand name. The consumer might evaluate the alternatives by cost, quality, and socially acceptable preference. The consumer can purchase
Adidas products through many channels which include bricks and mortar retail, online retail, and discount retail stores. There is low-risk post-purchase involvement because most Adidas products are refundable and are not extremely expensive.
Consumer Expectations
Consumers expect Adidas products to have good quality and to be affordable. They want to purchase a brand that is socially acceptable, sporty, urban, and cool. Consumers want to have many options for customization and interaction. Style and color are important aspects of the
Adidas image that many consumers are looking for. Consumers expect to have a positive experience and a long term connection with the brand.
Market Size and Trends
Adidas has a 16 percent market share in its industry in the United States. The desired target market for Adidas customers are males and females between the ages of 12-24 years old.
Although older customers have greater spending power, they are already brand loyal. Younger consumers can be influenced easier than older consumers when it comes to purchase decision making. The target market can be influenced to become brand loyal to Adidas while they are young and this will help to sustain brand loyalty in the future when they have greater spending power.
Mobile devices such as cell phones, video games, and the Internet are growing increasingly favorable among the target market. The digital media represents new ways for
Adidas to reach consumers. According to the case, “The Brand in the Hand: Mobile Marketing
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at Adidas,” the amount of digital media is increasing, “more than half of all media consumption would be digital by 2007.” This explains that it would be very beneficial for Adidas to shift its marketing from the traditional sources it used in the past to using digital types of marketing for the future to change with consumption trends. The case explains the interests of Adidas’ target market, “they devoted a large portion of their time to using online instant messengers, downloading music, and communicating with their friends via e-mail. This determines certain sources that Adidas should use to reach its target market.
Although youth spending on mobile media is less in the United States than in Europe and
Pacific Asia, it would still be beneficial for Adidas to pursue mobile media marketing in the
United States. By testing marketing strategies in Europe before implementing them in the
United States gives Adidas a great advantage. Most of the company’s mobile marketing attempts have been successful in Europe. Recent mobile media trends among the youth have included downloading ringtones, wallpaper, video games, and using test messaging. These “addon” activities for cell phones create new innovative ways for Adidas to reach its young target market.
“Urban Cool” is an important and growing idea to consider when marketing to the youth of the United States. Adidas desired to be considered “cool” and stylish among the youth.
Adidas partnered with MTV to reach and connect with its target market. MTV was considered
“cool” within the target market and provides a good channel for Adidas to reach more consumers. It also developed a strategy to use cell phones and the internet to reach basketball fans in a more personalized way and to takeover some market share from Nike. Adidas also recognized the growing demand for anything “hip-hop.”
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The company decided to implement marketing campaigns with hip-hop artists Run DMC and Missy Elliot to influence consumer purchases. According to the case, hip-hop was reaching an increasing amount of consumers, “By 2003, the hip-hop cultural phenomenon had reached 45 million Americans, who spent more than $10 billion on hip-hop music and related merchandise.”
The Missy Elliot campaign will be used to tailor products towards hip-hop fans and allow them to personalize and interact with different types of digital media, especially using cell phone downloads.
Adidas recognized the growing number of consumers who used the Internet. New technologies were developed including pop-up blockers and banner filters to remove advertisements from consumers’ computer screens. This made it difficult for Adidas to stand out and be noticed on the Internet. To solve this issue, Adidas decided to partner with Yahoo to reach a large number of Internet users. Yahoo is a web portal on the Internet that gets a lot of traffic from consumers. The ads that Adidas placed on the Yahoo were successful and reached many consumers which resulted in 5 million downloads.
SWOT Analysis
Strengths:
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Leading supplier of soccer footwear worldwide
 Launched the world’s first laceless basketball shoe
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Largest supplier of sportswear in Europe in 2001
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Successful at creating buzz from innovative billboards in 2002 and 2003 to reach consumers in Japan
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Spent more than its competitors on digital media marketing
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Reached a large amount of consumers when advertising on Yahoo
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Opt- in policy for internet and mobile advertising
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Used successful pricing strategies to give consumers added value and incentives when downloading media to cell phones
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Partnered with MTV to reach target audience
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Sponsorships of soccer events and teams
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Successful R2L campaign
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
Successful use of hip-hop campaigns which included Run DMC and Missy Elliot
Weaknesses:
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Inability to innovate in a timely fashion to keep up with the changing market and the competition
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Lack of advertising and promotion spending when compared to top competitors
 Euro 2004 applet didn’t appeal to the company’s target market
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Inability to reach consumers for sports other than soccer
Opportunities:
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To reach consumers on a more personal basis through digital media
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Creation of advanced mobile technology allows the company to reach consumers faster
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Advertising through mobile media could be used to target certain consumer groups more effectively
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To test new products and advertising campaigns in Europe before introducing them in the U.S.
 To create a virtual “Adidas world” on cell phones to create brand awareness
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To reach target market by creating a downloadable soccer game and Euro 2004
Java ticker applet for cell phones
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To use R2L website to deliver information to consumers in the U.S.
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To create an ADIDAS brand cell phone with add-on content options
Threats:
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Nike dominates Industry market share
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Nike spent $1.4 billion on advertising and promotion compared to Adidas’s spending of only $900 million
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Changing technology environment
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New technologies such as pop-up blockers and DVRs filtered ads
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High risks associated with switching from traditional advertising to digital advertising
 Traditional advertising didn’t bring in non-sports related consumers
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Traditional advertising was losing its appeal
Competitor Analysis and Strategies
Adidas has many competitors in the sports retail industry, but Nike and Reebok are two major competitors of Adidas. According to the case, in 2003, Nike holds 40 percent of the market share in the industry and Adidas is tied with Reebok at only 16 percent. Nike dominates the
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market is known as “the global leader in athletic footwear.” Nike has been very successful in the basketball shoe market and Adidas would like to compete with them.
Nike’s strategy to win over the basketball segment of the market was to sign Michael
Jordan and create a new line of basketball shoes with him called the “Air Jordan” line. This strategy was very successful and tremendously increased market share for Nike. The case states,
“By 2003, Nike’s share of the basketball segment was approximately 60 percent for Adidas and
15 percent for Reebok.”
Nike also wanted to compete directly with Adidas and its soccer products by sponsoring the Manchester United soccer team. Although Adidas was the long-time leader in Europe for soccer products, Nike’s strategies were more successful and increased its market share to 34 percent in Europe when Adidas earned only 30 percent.
Adidas was spending less than Nike on advertising and promotion expenses in 2004. The case discuses that, “in 2004 Nike spent a total of $1.4 billion on advertising and promotion, compared to approximately $900 million by Adidas.” In order for Adidas to increase market share and brand awareness among consumers, it needs to implement better strategies and increase advertising and promotion spending to compete with Nike.
ALTERNATIVES
Brand Evaluation and Strategies
Adidas already has been successful internationally in the soccer apparel and footwear industry.
The Adidas brand is well-known and the company holds a large percent of market share in its
Industry. The brand is positioned as being “cool” and having good quality and style. The brand seems to be doing well but it has many opportunities to reach more consumers and compete in
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other aspects of the market, such as U.S. basketball. Adidas has many options for which marketing strategies it should implement. The company could either stick with traditional advertising or move forward with digital interactive and mobile marketing. The company could also create more campaigns with athletes and hip-hop artists and continue to sponsor sports events, teams, and players.
Trends are showing that the company’s target market will be influenced tremendously by digital media in the near future. Adidas could increase advertising and promotion spending to implement the “Brand in the Hand” concept. An increasing number of young consumers rely on cell-phones for communication and entertainment. They love the innovative features of cellphones that involve interaction and customization.
Users can download ringtones, wallpaper, video games, and send and receive text messages. This allows Adidas to tailor and personalize its advertising directly to consumer groups. Traditional advertising has become “cluttered” and consumers are starting to lose interest and find ways to avoid it. The “Brand in the Hand” concept is a good strategy for
Adidas because it can help the brand stand out. The “Brand in the Hand” concept creates value to the brand and can attract many additional consumers. It makes it easy for Adidas to target specific consumers and this type of advertising is time-sensitive which allows Adidas to continually update its message.
Traditional advertising is a safer choice for Adidas than digital and mobile marketing.
Technologies are always changing and there is more risk when trying a new type of advertising.
If the company sticks with traditional advertising, it already has the background knowledge and expertise. If Adidas implements new digital marketing strategies, it is taking a risk. Although if
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Adidas were to stick with the same old traditional advertising approaches, the results would be the same and there wouldn’t be much change in the percentage of market share.
The Missy Elliot Campaign was a good strategy to reach young consumers. Hip-hop has evolved over the years and many young consumers can be influenced by the phenomenon.
Missy Elliot has a large number of fans and has a great influence on consumers when it comes to style. She gives the Adidas brand a “cool” position and creates high demand for her line of
Adidas products. The campaign can be easily marketed to consumers through many different types of media including cell-phones. Consumers can download ringtones and wallpapers that include Missy Elliot and the Adidas brand. This allows consumers to associate Missy Elliot with
Adidas and it creates value for the brand.
Adidas’ top competitor, Nike, was very successful when signing Michael Jordon to become a spokesperson and designer for Nike. Adidas could compete with Nike in the basketball market by signing a famous athlete to be a spokesperson and having him or her create a footwear line. It would be very expensive to sign an athlete, but it could help the brand become more respected in the basketball footwear market. It also would add credibility to the brand and would result in increased market share for Adidas. Adidas could create additional basketball lines to reach consumers. The company could use digital media to advertise the basketball line and allow downloads to let consumers interact with the athlete.
RECOMMENDATIONS
Adidas has the opportunity to try a new approach to advertising to reach its target market. It should implement its “Brand in the Hand” concept to innovate with new technologies. Adidas has a successful future if it decides to innovate and keep up with the interests of its target market.
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There are many advantages of digital interactive and mobile marketing for Adidas and it would be a good idea for the company to increase spending in these areas.
Young consumers never leave the house without a cell phone and mobile marketing would be a great strategy for Adidas to create a connection with consumers. Adidas should tailor its advertisements to individual consumers and allow the decision for them to “opt-in.” The company could send text messages to consumers that include dates and times of sports and alert customers of updated game scores. Downloads would also create value for the brand and keep the consumer interested.
Adidas should also try to improve and create new lines of basketball apparel and footwear to compete with Nike. The company is already well-known for having soccer products and it has the opportunity to increase awareness about basketball products to takeover market share. Signing an athlete would be very beneficial to the company because it would create value and increase market share in the basketball segment of the market.
As a plan B, Adidas could take little risk and stick with traditional advertising to sustain its success and percentage of market share. Trends are moving away from this type of advertising, but it is the safer choice and Adidas already has the expertise. The company should continue to reach the target market by keeping the position that it sells “the best” soccer products. It could create new lines of soccer products that are higher quality and more expensive to focus on quality versus cost. This could create additional value to the brand and allow consumers to purchase Adidas for specialty soccer products instead of from competitors.
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