Advertising Strategy of Adidas: A comparative Study ADVERTISING STRATEGY OF ADIDAS A COMPARATIVE STUDY

Prepared As a course Requirement of (Advertising and Public Relation-mkt 424)

M. Atiqur Rahman
Patuakhali science and Technology University Bangladesh atik.bdpalo@yahoo.com www.pstu.ac.bd
Copyright : group-1bbapstu Term Paper (8th Semester) Page-1

Advertising Strategy of Adidas: A comparative Study

EXECUTIVE SUMMARY
Adidas Inc. is a marketer of sports apparel and athletic shoes. The German manufacturer, through its marketing strategy which rests on a favorable brand image, has evolved into a large multinational enterprise. In keeping with the brand image is its association with the distinctive logo and its advertising slogan, "Impossible is Nothing." In order to maintain and sustain this image, the company makes huge investments in advertising and brand promotion. At the critical time of global economic crisis, Adidas will react to the consumers pessimistic attitude and stressful emotion during this period. It may become a good chance for Adidas because it can take advantage of its previous advertising way of Impossible is Nothing campaign by sponsoring sports stars to express the corporate philosophy of grit, determination, passion and humor, giving people more courage and psychological comfort in face of economic crisis. But besides that, we also focus more about family function especially in Asian countries which emphasize a lot on family, which can provide caring emotional communication. Therefore, from both strong-willed hero worship and water-like fork environment, customers can easily link Adidas image with not only strength, but also warmth. The preferred media we choose are TV, specific magazines, outdoor and internet.

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-2

Advertising Strategy of Adidas: A comparative Study

1.1 INTRODUCTION
Adidas was formed by German sports apparel by the founder Adi Dassler during the 1920s. While Dassler was in his mothers wash room he decided to begin an athletic shoe. After he made the shoe he had help from his brother and twelve other people to produce around 50 handmade shoes per day. These athletic shoes were made for running and training. For over 80 years, Adidas has been part of the world of sports on every level, delivering stateof-the-art sports footwear, apparel and accessories. Today, Adidas is a global leader not only in the shoe industry, but also in the sporting goods industry. Shoes from the Adidas are available in virtually every country of the world. Oddball is proud to carry quality large size Adidas, (www.oddballshoe.com). Recently Adidas and the NBA joined forces and made The Brotherhood. The Brotherhood consists of Tracy McGRady of The Houston Rockets, Dwyane Wade of The Miami Heat, Tim Duncan of The San Antonio Spurs, Chauncey Billups of the Detroit Pistons and Gilbert Arenas of the Washington Wizards. When it came down to it Adidas and the NBA came up with the slogan called Basketball is a Brotherhood. The main focus of The Brotherhood was Adidas to sponsor the NBA. The way these six players were selected was by their athletic ability which is why they are also known as all stars. Then these six players decided to form a series that would help kids to discover their dream by playing with NBA Stars. A strong advertising and public Relation events makes adidas as a worldwide recognized brand and it would be more sustainable in the world market.

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-3

Advertising Strategy of Adidas: A comparative Study

1.2 HISTORY OF ADIDAS
The company Adidas was founded in the early 1920s as Gebruder Dassler Schuhfabrik, in Herzogenaurach in Germany. Adolf Dassler designed a pair of sport shoes in 1925 and few years later he and his brother Rudolph were selling special shoes for tennis players and began design specific shoes for different sports. The family company split in 1948. After the split, Adolf (Adi) Dassler founded Adidas and his brother Rudolph founded Puma. The three-stripe logo was designed in 1941 by Adi Dassler and he registered it as a trademark for Adidas after the split. The strength of Adidas was its product innovation. Adi Dassler registered more than seven hundred patents. Adidas began selling its shoes in the United States after 1968 and in few years the company dominated the American market. The most important marketing breakthrough was the active promotion of global sporting events, especially the Olympics. The connection of Adidas to the Olympics has a rich heritage. At the 1972 Olympic game in Munich, every official wore Adidas. Activities: manufacture and distribution of textiles, shoes and appliances for sport and related products. Adidas has 107 subsidiaries in 20 countries, and exports to 160 countries. Exploitation of the registered trademark Adidas is made where ever it is an opportunity. Activities of the company and its subsidiaries are directed from Adidas-Salomon AG's headquarters in Herzogenaurach, Germany. Products: Adidas - Footwear, apparel, and hardware such as bags and balls. Salomon Winter sports incl. skis, snowboards, snowblades, ski boots and bindings, inline skates, hiking, apparel. Mavic -Cycle components, Bonfire Snowboard apparel. Arc'Teryx - Outdoor apparel, climbing equipment, Clich - Skateboard equipment, footwear and apparel, Taylor MadeAdidas Golf - Golf equipment, golf apparel, golf shoes and finally, Maxfli - Golf balls, irons and accessories. In 1990, Adidas was holding on to just a two to three percent share of the U.S. market. Between 1988 and 1992 Adidas total sales dropped from nearly $2 billion to $1.7 billion. In the same period, Nikes sales went from $1.2 billion to more than $3.4 billion. From being the U.S. market leader in the late 1970s, Adidass market share dropped to 3 percent in 1992. The European market shares dropped while Nikes shares grew. Adidas also have had problems with the upstream value activities in their value chain. Traditionally, the company have their own factories and wholly owned subsidiaries. What happened in the '70s and forward, during the Adidas recession, was that Adidas was unable to ship products when it was needed, and they had a long supply chain - it took 18 months to get a new shoe into the market. Copyright : group-1bbapstu Term Paper (8th Semester) Page-4

Advertising Strategy of Adidas: A comparative Study

2. SITUATION ANALYSIS
Adidas AG (pronounced [AH-dee-'dahs]; often in English, FWB: ADS) is a German sports apparel manufacturer and part of the Adidas Group, which consists of Reebok sportswear company, Taylor Made-adidas golf company, and Rockport. Besides sports footwear, the company also produces other products such as bags, shirts, and other sports and clothing related goods. The company is the largest sportswear manufacturer in Europe and the second biggest sportswear manufacturer in the world, to its US rival Nike. The company's clothing and shoe designs typically feature three parallel bars, and the same motif is incorporated into Adidas's current official logo. The company revenue for 2008 was listed at 10.799 billion and the 2007 figure was listed at 10.299 billion, or about US$15.6 billion. The situation analysis consists of the market trend analysis and competitor analysis.

2.1 Market Trend Analysis

Adidas earn from EU 877 million in worldwide sales to EU 9.2 billion in the ten years between 1988 and 1998. The market demand from teenagers who should be Adidas and most important target market increased very fast and Adidas started to expand its targeting market to younger consumers because of its severe competition with Nike and Reebok. Therefore, since the late 1980s, Adidas has worked to transform itself from a brand of sneakers to a product integral to the sports culture. During this stage, the Adidas brand has become so strong as to place it in the rarified air of recession-proof consumer branded giants, in the company of Coca-Cola, Gillette and Proctor & Gamble. Consumers are willing to pay more for brands that they judge to be superior in quality, style and reliability. A strong brand allows its owner to expand market share, command higher prices and generate more revenue than its competitors. With its Impossible is Nothing campaign and strong product, Nike was able to increase its share of the domestic sport-shoe business from 18 percent to 43 percent.

Chart-1: Adidas Net Sales data in Euro (million) 2002-06 (Source-www.adidas.com)

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-5

Advertising Strategy of Adidas: A comparative Study

2.2 Competitor Analysis
Adidas has two lager competitors Nike and Rebook. Besides that it would have several small competitors. A SWOT analysis would be helpful to understand the competitive environment.

SOWT Analysis:
A SWOT analysis comprise of strength, Weakness, Opportunity and Threats. This four trends are analyze below.

Figure: Adidas expence to advertising (billion Euro), (Source-www.wekipedia.org) STRENGTHS

Largest International portfolio of sport ambassadors. Sponsors football teams with maximum fan following in India and USA. Highest brand image in India according to our survey.
WEAKNESSES

Rigid pricing structure. Our survey shows Nike behind Reebok & Adidas in market share in India. Has not do well in Indian subcontinent market.
OPPORTUNITIES

Has a great opportunity to expand international market. Increasing demand on the sportswear. Positive and increasing market trends can increase through the effective advertising. Adidas larger competitor Nike has a grater market share and having a big budget in marketing activity. The newly born several brands like CAT, GAP has increase their advertising budget in recent years. Amount of competitors increasing day by day. Term Paper (8th Semester) Page-6

THREATS

Copyright : group-1bbapstu

Advertising Strategy of Adidas: A comparative Study

2.3 Comparative Analysis Trough The Equity Model
Review of the equity model Lets make a short review to remind the reader what the separate blocks or keywords mean in the equity model. See figure below. Brand Equity Brand Awareness
Perceived Quality Brand Associations

Brand Loyalty

Brand equity can be defined as the brand assets linked to a brands name and symbol that add to a product or service. This asset can be created and analysed trough the four dimensions, brand awareness, perceived quality, brand associations, and brand loyalty. Brand awareness is the base to affect the consumer perception and even taste. People like the familiar and are prepared to ascribe all sorts of good attitudes to the items that are familiar to them. According to D. Aaker perceived quality is a special type of association, partly because it influences brand associations in many contexts and partly because it has been empirically shown to affect profitability as measured by ROI (Return On Investment) and stock return. Perceive quality, is basically how the customer perceive the brands quality status. Brand associations can be anything that connects the customer to the brand. It can include user imaginary, product attribute, use situations, organizational associations, brand associations, and symbols. Brand loyalty is at the hart of any brands value. The concept is to strengthen the size and intensity of each loyalty segment. Comparative analysis Nike centred their brand equity model on the platforms, the endorsement focus strategy, creating a dominant media presence, development of Flagship stores, NikeTown and subbranding. The Adidas strategies were based on, endorsement focus strategy, advertising, sponsorship programs focusing on major global events, sports associations, and teams, and sub-brands. To create brand awareness both companies have been using endorsement strategies in their brand-building programs. What differs is that Adidas focuses on sponsorship of teams and events e.g. national teams and big sport events like the Olympic Games and different World Championship events. This will help them to create awareness with help from different types of media. In contrast Nike has their focus on individuals like M. Jordan and T. Woods and their success stories. About the second strategy, advertising. Nikes advertising strategy was to create dominant presence in media. Nike created media presence in several trend setting United States cities. TV ads linking Nike to a city were used, but real drivers were huge oversized billboards and murals on buildings that blanketed cities with messages featuring key Nike-sponsored athletes, not products. Adidas took up the competition with Nike through raising their advertising budget to a level that made it possible to compete with Nike on the same

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-7

Advertising Strategy of Adidas: A comparative Study

conditions and the same strength as Nike did to capture the consumer interest. Adidas did not just spend more money; they made an impact with brilliant executions. They made TV and other advertising campaigns. The company communicate their heritage of innovation, technology and big success stories with personalities like Emil Zatopek, Mohammad Ali. Adidas tried to spread meanings like We know then- we know now and There is nothing between you and success, so exceed your own expectations and limitations and Earn it. The success was obvious and after hard work and striving toward a top position in the industry Adidas was back in 28.24 business. 30
25.29 25 Nikes third strategy was to develop, flag ship stores, Nike 20 Town shops in bigger citys, first 13.53 national, and then abroad. Nike 15 was the first company to establish 7.65 10 flagship stores and it turned out to 2.35 be a sensation. Adidas choice was 5 to experiment with sport events, 0 with which they made great Nike adidas Reebok Pow er Puma Others success. Examples of that is the Adidas Streetball Challenge a local three-person team basketball tournament, this event started out as a trail in Berlin in the beginning Chart-03: Adidas market Share comparison of the 1990s as one time occasion. (Source-www.adidas.com) In the mid 1990s it had become a huge sport event with about 500.000 participants all over the bigger cities in Europe. In the finals in Germany it attracted 3200 players and 40.000 spectators. Adidas made hereby a brand-building success. 22.94

The Nike customer associated the Nike brand with words like sports, attitudes and life style. Reasons for that is one can relate to or identify one self to Nikes marketing campaigns like Just do it and the companies front athletes like Michael Jordan and Tiger Woods. For Adidas one image study of consumers found the brand very trendy, modern and cool. The survey was made in late 1990s. All marketing actions that both companies are implementing will hopefully result in loyal customers. Adidas introduced a subbrand in 1990 to serve the high-end products for all categories of shoes and apparel. The Equipment subbrand would represent the best, whatever the product was. The low-end products, for the normal consumer still have a high technology and level of innovation because of their inheritance of the older innovations and technology from the Equipment line. This strategy made the Adidas brand take on a different meaning; it still meant participation, emotion and performance. This was a success strategy for Adidas so successful that Nike copied their idea and introduced their own line, the Alpha line, based on the same idea. Nike advanced from $1 billion dollars in 1986 to $ 9.9 billion in 2002, Adidas advanced from $1.7 billion in 1992 to $4.8 billion in 1998. According to sales figures for the both companies, it seems that both Nike and Adidas companies have succeeded to create a brand loyal customer who perceives the Nike and Adidas products as top quality.

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-8

Advertising Strategy of Adidas: A comparative Study

3. ADVERTISING METHOD & MEDIA SELECTION
The media that was used of The Brother Hood will be television, magazines and Internet.

3.1 Core Advertising Consideration

The core advertising factors of Adidas are as follows. Besides that a huge amount of data about Adidas advertising related activities. As a multinational company Adidas have separate advertising strategy in different area of the world.

3.1.1 Media Vehicles:

The media vehicles that were used for television will be ABC basketball games, TNT basketball games, ESPN basketball games and ESPN 2 basketball games and ESPNs Sports Center. The media vehicles that were going to be used for magazines were Sports Illustrated and ESPN Magazine. The media vehicles that are use for Internet were ESPN website (www.espn.go.com), NBA website (www.nba.com), Adidas website (www.shopadidas.com), Sports Illustrated website (sportsillustrated.cnn.com).

3.1.2 Advertising unit:

When it came to the advertising unit for television Adidas only runs: 30 seconds ads since most of these ads are played during NBA games. The ads in magazines are full page. When it came to the Internet ads are a top banner. For example, on page five you will see the ad which it a top banner.

3.1.3 Seasonality:
Since The Brotherhood is made up of The NBA the seasonality will be during the fourth quarter. The reason for this is that the basketball season begins in October which is in the fourth quarter. The time of day in which The Brotherhood would be run on television is during the evening while the NBA is holding their regular games. When it comes to the Internet The Brotherhood is advertise daily and at all times.

3.1.4 Target Audience:

When it came to any product the audience is very important. You need to know who are going to be interested in the product. When it came down to this The Brotherhood is mostly for boys ages 8-20 and for older males. For example, on page four you will see TMAC jersey for boys 8-20 and older males.

3.1.5 Advertising Media Consideration

The reason that this media was selected was because television, magazines and Internet were the best way in which Adidas were able to show there customers their products. As you see below the picture on the third page that says Adidas NBA Shop, in order for Adidas to promote the The Brotherhood they had to come up with a slogan in which they called it NBA is a Brotherhood. Besides Adidas have several technique in media selection which have discussed in the following sections.

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-9

Advertising Strategy of Adidas: A comparative Study

3.2 Advertising Media
Commercial advertising media can include wall paintings, billboards, street furniture components, printed flyers and rack cards, radio, cinema and television adverts, web banners, mobile telephone screens, shopping carts, web pop-ups, skywriting, bus stop benches, human billboards, magazines, newspapers, town criers, sides of buses, banners attached to or sides of airplanes ("logo-jets"), inflight advertisements on seatback tray tables or overhead storage bins, taxicab doors, roof mounts and passenger screens, musical stage shows, subway platforms and trains, elastic bands on disposable diapers, stickers on apples in supermarkets, shopping cart handles (grabertising), the opening section of streaming audio and video, posters, and the backs of event tickets and supermarket receipts. Any place an "identified" sponsor pays to deliver their message through a medium is advertising. One way to measure advertising effectiveness is known as Ad Tracking. This advertising research methodology measures shifts in target market perceptions about the brand and product or service. These shifts in perception are plotted against the consumers levels of exposure to the companys advertisements and promotions. The purpose of Ad Tracking is generally to provide a measure of the combined effect of the media weight or spending level, the effectiveness of the media buy or targeting, and the quality of the advertising executions or creative. Adidas use several advertising media to promote their product in the marketplace. Different advertising media use in the in the market like commercial advertisement, Print media advertisement, covert advertising, Infomercials, Celebrities advertisement, Online advertisement, Public transport advertisement, e-mail etc.

3.2.1 Covert advertising

Covert advertising is when a product or brand is embedded in entertainment and media. For example, in a film, the main character can use an item or other of a definite brand, as in the movie Minority Report, where Tom Cruise's character John Anderton owns a phone with the Nokia logo clearly written in the top corner, or his watch engraved with the Bulgari logo. Another example of advertising in film is in I, Robot, where main character played by Will Smith mentions his Converse shoes several times, calling them "classics," because the film is set far in the future. I, Robot and Spaceballs also showcase futuristic cars with the Audi and Mercedes-Benz logos clearly displayed on the front of the vehicles. Adidas also use this advertising technique.

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-10

Advertising Strategy of Adidas: A comparative Study

3.2.2 Television commercials
The TV commercial is generally considered the most effective mass-market advertising format, as is reflected by the high prices TV networks charge for commercial airtime during popular TV events. The majorities of television commercials feature a song or jingle that listeners soon relate to the product. Virtual advertisements may be inserted into regular television programming through computer graphics. It is typically inserted into otherwise blank backdrops or used to replace local billboards that are not relevant to the remote broadcast audience. Adidas has a large amount of TV commercial advertisements in the worldwide TV network like BBC, CNN etc.

3.2.3 Infomercials
There are two types of infomercials, described as long form and short form. Long form infomercials have a time length of 30 minutes. Short form infomercials are 30 seconds to 2 minutes long. Infomercials are also known as direct response television (DRTV) commercials or direct response marketing. The main objective in an infomercial is to create an impulse purchase, so that the consumer sees the presentation and then immediately buys the product through the advertised toll-free telephone number or website. Infomercials describe, display, and often demonstrate products and their features, and commonly have testimonials from consumers and industry professionals. Adidas arrange several infomercials in the sports based program.

3.2.4 Celebrities
This type of advertising focuses upon using celebrity power, fame, money, popularity to gain recognition for their products and promote specific stores or products. Advertisers often advertise their products, for example, when celebrities share their favorite products or wear clothes by specific brands or designers. Celebrities are often involved in advertising campaigns such as television or print adverts to advertise specific or general products. Adidas use David Bekham as their brand ambassador and many more celebrities in every region to promote their product.

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-11

Advertising Strategy of Adidas: A comparative Study

3.3 Advertising approaches
The positive impact on the market of the adidas Originals communication approach makes adidas Originals continue their successful new creative marketing tonality. The Fall/Winter 2005 campaign is, as the one from Spring/Summer 2005, photographed by Karl Lagerfeld and underlines adidas Originals lifestyle relevance. To Celebrate Originality, and in a playful opposing manner to last season, adidas has switched from the black and white SS05 executions, highlighted only by the iconic blue Trefoil, to bright and energetic colours in FW05 ads; an engaging creative idea supervised by adidas Global Creative Director Michael Michalsky and Visionaires Stephen Gan. The shooting took place at Karl Lagerfelds studio in Paris. The frame of the ads shows humour and translates the freshness of the High Energy High Style concept. The result is a new advertising campaign that clearly communicates adidas Originals street relevancy. Adidas Originals contemporary street wear collections are inspired by the brands historical anecdotes. The Fall/Winter 2005 ads will break globally in July 2005 issues of key lifestyle and fashion publications such as Kult, Pulp and Black book as well as magazines such as Arena Home Plus and Teen Vogue. All adidas Originals marketing communication efforts will evolve around three pillars in 2005: to energize, globalize and contemporize adidas Originals.

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-12

Advertising Strategy of Adidas: A comparative Study

CONCLUSION
Both Adidas and Nike have used the same theoretical systems to create their brand building programs. The companies are benchmarking each other, using the techniques from each others successes, when Nike launched their subbrand product Alpha line which was benchmarked on Adidas already launched subbrand of the Equipment product line for the elite of sports men. We can find many similarities like endorsements strategies and the companies advertising strategies. What differs in the endorsement strategies is that Adidas focuses in sponsoring teams and global events, while Nike have their center of attention on stars in specific sport like basketball and Michael Jordan or in golf and Tiger Woods. About advertising do both companies have about the same scale and scoop of advertising but they try to communicate different messages. These messages from Adidas is; the only one you compete with is your self whereas Nike communicate a provocative, aggressive winner attitude which can be related the American sports attitude You dont win silver, you lose gold. As we can understand the two companies are aiming at nearly the same targeted customer group but with a slightly differentiation of attitude. Adidas stand for a competing and winning over your self-attitude, and Nike stands for a winning over everyone attitude. We in the group think this differentiation is based on the differences in culture between the two companies and between Europe and USA. As an overall reflection one can see that Adidas had to overcome, that the both companies had the same target group. Adidas choose a brand-building strategy that built on the same theoretical criterias as Nike. But they created a differentiation in identity of the brand (see comparing analysis in the Kapferer Prism Model above) compared to Nike. Adidas had the same strategy within creating equity value to their brand. They challenged Nike in endorsement strategy, and in advertising, but with a slight difference in communicated message, by doing it trough the same medias. To differentiate them self and make totally own awareness activities, events like Adidas Streetball Challenge was created. Events like those communicated the Adidas brand around the world. According to the results and positions the brand-building programs have given both Adidas and Nike in the sport industry, one can say that branding have been a totally determining factor. On top of that they made it so good that they are used as models in higher education.

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-13

Advertising Strategy of Adidas: A comparative Study

REFERENCES
http://www.press.adidas.com/en/ Retrieved 7th June 2008 http://www.jdsports.co.uk/whatsnew.aspx?id=5375 Retrieved 7th June 2008 http://www.press.adidas.com/en/DesktopDefault.aspx/tabid-4/79_read-8621/ Retrieved 7th June 2008 http://www.fashiontrendsetter.com/content/fashion_events/2008/Adidas-Denim-byDiesel-in-store-event-p1.html Retrieved 7th June 2008 http://www.jdsports.co.uk/whatsnew.aspx?id=5508 Retrieved 7th June 2008 http://www.champion.ie/ "Adidas Orginals - Extended House Party Film". http://www.adidas.com. Adidas. 200902-25. `http://www.adidas.com/campaigns/originalsss2009/content/#/lifestyle/full-length-film. Retrieved on 2009-03-20.

Copyright : group-1bbapstu

Term Paper (8th Semester)

Page-14