||| Contents |||

||| Background |||

adidas AG is a German sports apparel manufacturer, part of the adidas Group. It registered as adidas AG on 18 August 1949 !ith lo!er"case lettering# $adidas$%. &he compan' !as named after its founder, Adolf Adi % Dassler, !ho started producing shoes in the 19()s in *er+ogenaurach, near ,urem-erg, !ith the help of his -rother .udolf /assler !ho later formed ri0al shoe compan' 123A AG. &he compan'4s clothing and shoe designs t'picall' include three parallel stripes of the same color, and the same motif is incorporated into adidas4 official logos.

adidas plans to -ecome the leader in the organised sports foot!ear and sports!ear market.

||| adidas in India |||

adidas first entered India in 1989 through a licence agreement !ith Bata. adidas later re"entered India for the second time in 1995 through a 6oint 0enture !ith 3agnum International &rading Compan' 7td !ith an initial in0estment of 8(.9 million to form adidas India% &rading 10t. 7td. adidas holds a 1)) percent stake in the compan'.

&he compan' launches e0er' si: months -et!een 5)) and 8)) ne! designs in foot!ear and -et!een 1,9)) and (,))) ne! designs in apparels. &he apparel

range is priced -et!een .s(;9 and .s(;)), !hile the foot!ear is priced -et!een .s499 to o0er .s1(499. adidas4 products in India are sold through 14) o!n outlets e:cluding multi"-rand outlets%.

&he compan', !hich is kno!n for foot-all and running shoes, introduced its cricket gear in India in ())4.

&he compan' adheres to strict <ualit' and design specifications and uses the manufacturing unit of 7akhani =oot!ear to manufacture the locall' produced adidas range in India.

Around >)"4) percent of the components are locall' sourced.

||| Industr' ?cenario |||

as of ())>")4% =oot!ear -rands dre! up am-itious plans targeting a larger audience and higher market share.

3,C -rands like .ee-ok and Adidas launched tele0ision commercials after a gap of four 'ears and -rand shops !ere filled !ith a fresh and upgraded product line"up.

&he ne! distri-ution strateg' focused on e:tending the reach rather than e:clusi0it' and at -road"-asing distri-ution through tie"ups !ith -randed retailers and setting up shop in shopping malls.

=or adidas, sales of higher priced foot!ear recorded strong gro!th in ())>"())4 and the compan' e:pected to close the 'ear !ith a >) percent gro!th.

1re"199;, adidas had tied up !ith Bata and @oodland and first -egan e:ploring multi"-rand outlets and retail malls.

.ee-ok !as slated to gro! -' almost >) percent against (( percent in ())(")> and focused on its glo-al 1erformance .ange products. Bata started retailing other -rands like .ee-ok, ,ike and 7ee Cooper.

As of ())9")5, the current premium sports goods market in India !as 0alued around .s 9)) crore. @ithin this market, adidas en6o's considera-le -rand e<uit' and is considered among the leading international -rands in the countr'.

||| ?cope of ?tud' |||

Aur group has selected the Indian =oot!ear Athletic% as 1roduct Categor'. &he main multinational pla'ers in this industr' are ,ike, 1uma, =ila, adidas B .ee-ok. Indian pla'ers include Action ?hoes 7td., 7i-ert' =oot!ear Co., and Bata India 7td. &his report !ill mainl' consider ,ike B .-k .ee-ok% as competitors for adidas. B' !a' of research, !e ha0e conducted a consumer sur0e', as !ell as spoken to a fe! retailers of the > top -rands in the industr'.

||| Consumers |||

In 1999, !hen adidas entered the Indian market, it introduced the cheapest range of shoes it had e0er sold. &he ne! line took into account the importance of afforda-ilit' in the Indian market, and the compan' e:pected the mo0e to e:pand their customer -ase -' ()C. But toda', the customer has changed. Andreas Gellner, 3/ of adidas India, tells us# D&oda'Es Indian customer is a!are of international fashion and technolog' and he cares a-out them. *e is also a -ig sports enthusiast. @e ha0e also noted the need for constant changeF!hich implies faster turnaround for designs and therefore ne!er products. An the other hand, the -u'ing e:perience is -ecoming crucial. &he retail scenario in sports!ear is changing accordingl'Fmarketers are focusing on shop design and ser0ice and on -rand consistenc' across outletsG the' are pa'ing a premium on technolog' and inno0ation. &his has also -een impacted to a large e:tent -' the mall mania and the gro!th of the high street.H =rom our meeting !ith adidasE marketing e:ecuti0es !e gathered information a-out ho! the' defined their target demographic. &he' target the 19">9 age group, -oth males and females, !ith a monthl' income of o0er .s19))). &he consumer is t'picall' an image"conscious sports fan, -ut not necessaril' a sportsman.

||| Consumer Beha0iour |||

Aur market research del0es into the customer mindset, tr'ing to assess the population and coming up !ith demographic details as to !ho our target customer is. &his is -eing done -' a t!o"pronged strateg' of reaching out to the 'oung !orking class on the one hand in and around ,C.% and also -' assessing the student strata !ho are pursuing their post"graduation I3&, /?I, =3? etc%. &his !ould lea0e us !ith roughl' 1() separate assessments on -u'er -eha0iour on !hich !e plan to -ase our studies.

Status so far: .espondents# 118 /ates of response# (;")8"())5 to 1;")9"())5 /emograph'# ?tudents post"graduate J 1);, 'oung !orking class J 11% 3ethod of sur0e'# Anline

Some of our observations so far: Anl' around >C of the total respondents cited 1rice as the num-er one factor influencing their purchase decision, and another <uestion sho!ed that comfort, !eight and st'ling of the shoe !ere important elements of the shoe. &his initiall' seems to indicate that the Indian customer no longer fits the price"sensiti0e stereot'pe, -ut a closer look at the results sho!s a different picture. &he sur0e' also sho!ed that 5(.9>C -udgeted less than .s. ())) for their sports shoes.

&his sho!s that !hile 1rice is almost ne0er the most important factor for most respondents, it is certainl' a 0er' important consideration. 3ore respondents o!n a .ee-ok pair than adidas second place% and ,ike third%, -ut !hen asked !hich -rand the' !ould like to o!n, ,ike topped list, follo!ed -' adidas and .ee-ok. &his sho!s that .ee-okEs Indian pricing has managed to attract more market share than its ri0als, -ut ,ike still has the highest -rand e<uit' and percei0ed 0alue. ,ike -eing the !orld"!ide leader does !ell on ad0ertisements and 0ie!erKcustomer attention"catching and carries the -est image of the > top -rands. It is the -rand that people !ant to o!n. &he sur0e' also re0ealed that customers felt that ?ales ?taff ?er0ice !as the most important part of the -u'ing e:perience. @ith 91.45C, it -eat the other 4 factors -' a long !a'.

||| In0ironmental Anal'sis |||

=I=A @orld Cup ())5 and other =oot-all &ournaments
&he @orld Cup4s glo-al &L and @e- audience !as -igger than the Al'mpics4 or the ?uper Bo!l4s "" >8 -illion in"home 0ie!ers !orld!ide. Adidas !as an official sponsor and paid for the rights to shut ,ike out of &L ad0ertising in the 2.?. for all 54 games. &he retailers !e spoke to ackno!ledged that the @orld Cup caused a sharp spike in sales, -oth of the foot-all &eamgeist% and foot!ear B 6erse's. Glo-all', -' end"Mune ())5, adidas had alread' sold 81.9 -illion !orth of foot-all products this 'ear o!ing to the then ongoing @orld Cup. =oot-all"related sales !ere e:pected to sta-ilise at slightl' a-o0e 1.) -illion euros in ()); -efore rising again in ())8, !hen the foot-all Iuropean Championships take place. It had alread' sold a record three million replica 6erse's in the !ake of the foot-all e0ent, including 1.9 million 6erse's of the German national team. At the pre0ious @orld Cup in ())(, the compan' sold 1.9 million federation 6erse's and (9),))) German 6erse's. It has also sold more than 19 million of its $&eamgeist$ @orld Cup match -alls, compared !ith 5.) million of the replica -all for the ())( tournament.

Adidas is an official sponsor, supplier and licensee of the @orld Cup and is sponsoring si: national teams in the tournament, including host countr' German'. &hree teams sponsored -' Adidas " German', =rance and Argentina " reached the <uarter"finals and =rance !ent through to the finals. Adidas estimated its glo-al share of the soccer foot!ear market rose -' 1"( percentage points to >9">5 percent at the end of the first <uarter. &he compan' also announced that it has signed a long"term partnership to -e the glo-al sponsor for Iuro ())8, !hich !ill take place in Austria and ?!it+erland. It has also e:tended its partnership !ith the 2I=A Champions 7eague to -ecome the official -all supplier until ())9.

B1A Boom
&his -ooming industr' has emerged as a -oon for the hundreds of thousands of 6o-"hunting Indian 'outh and aims to gro! into .s.1)),))) crore industr' generating o0er 1.1 million 6o-s -' ())8. As !e shall e:plain later, the Call Centre Crowd is characterised -' high disposa-le income, !hich is spent on lifest'le products. &herefore, this constitutes a segment of increasing importance for adidas.

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||| .etail |||

@e 0isited retailers of leading foot!ear -rands in ?aket ?outh /elhi%, and !e gained an insight into the !orkings of the retail -usiness. 1eriodical meetings are held, !here the compan' sho!s samples of its 0arious models and products to the retailers. It is up to the retailers to decide !hich products the' !ill stock in their shops, ho! and !hen the' !ill put them on displa' and !hen the' !ill -e put up for sale. &hus, retail outlets of the same -rand might !ell ha0e different stocks of different products at the same time. ?ales staff is another important factor. &he .ee-ok retailer told us that .ee-ok does not allo! retailers to hire their o!n sales staff !ithout compan' appro0al. All sales staff must pass the compan'Es test -efore getting the 6o-. &he same does not appl' to adidas though. .etailers for this compan' are allo!ed to hire salespersons the' feel !ill -e effecti0e. &raining for salespeople, ho!e0er, happens across the -oard. .ee-ok -elie0es that in0esting in salespeople is a cause for their higher sales, and !ill -e a source of sales gro!th in the future. Area ?ales 3anagers A?3s% are in constant touch !ith their retailers and acti0el' take their feed-ack and suggestions.

adidas

mentioned that the'

occasionall' emplo' mystery shoppers to get a -etter feel of the customerEs perspecti0e. &he dNcor and am-ience of the stores is under the control of the retailer, -ut still guided -' the compan'Es direction. &he num-er of posters !ithin the store, the t'pe of music, etc. generall' conforms to compan' polic'.

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||| Competitors |||

,ike
,ike, Inc. is a ma6or American manufacturer of athletic shoes, apparel, and sports e<uipment. It is !ell kno!n for its strong sponsorship agreements !ith athletes, leagues and federations, as !ell as man' of the !orld4s top foot-all clu-s and national teams, including 3anchester 2nited, Arsenal =.C, Bra+il and e0en India. ,ike is the leading -rand in sports foot!ear !orld!ide. In India, !e ha0e seen that although its -rand image is good, its sales are not. ,ike products donEt compromise on <ualit', and are al!a's full"price. &he' do not ha0e post"season discount sales on foot!ear unlike adidas and .-k. @hile no -rand can neglect the highl' price"sensiti0e consumer, ,ike certainl' does not target them. &he' use their higher percei0ed 0alue to charge a premium for their products.

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.ee-ok
Also kno!n -' its contraction .-k, .ee-ok International 7imited is an Anglo" American =ortune 9)) compan', no! su-sidiar' of Adidas AG, and producer of athletic foot!ear, apparel, and accessories. =ounded in 1899, the famil'"o!ned -usiness proudl' made the running shoes !orn in the 19(4 ?ummer Al'mpics -' the athletes, *arold A-rahams and Iric 7iddell cele-rated in the film Chariots of =ire. In August ())9, one of the compan'4s largest ri0als, Adidas, announced that it !ould ac<uire .ee-ok for 8>.8 -illion. &he ac<uisition !ould increase adidas4 market share in ,orth America and allo! it to pose a serious threat to the !orld4s -iggest maker of sports apparel, ,ike. &he deal !as completed in Manuar' of ())5. @e gathered from the retailers that in India, adidas and .ee-ok are still 0er' much in competition !ith each other. Both are tr'ing to get to the O1 position presuma-l' to garner as much market share as the' can, and in the process take some from ,ike as !ell.

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||| ?egmentation |||

=or adidas the market segments in consideration are -ased on demographics, ps'chographics and -eha0iour. &he demographic segmentation is -ased on age, gender, income and occupation. &he market is segmented into three main categories -ased on age. &hese segments are age groups 1"19 'ears, 19">9 'ears and a-o0e >9 'ears. Based on monthl' household income the market is segmented into -elo! .s.19))) pm, .s.19))) to .s.9)))) pm and a-o0e .s.9)))) pm. &he market is also segmented -ased on gender and occupation !hich leads to differential disposa-le incomes%. 1s'chographic segmentation is of great importance for the sport shoe industr'. &he higher income groups are classified -ased on their tendencies into four ma6or categoriesG the inno0ators, thinkers, achie0ers and e:periencers. As for the groups !ith lesser resources, the' are categori+ed into -elie0ers, stri0ers, makers and sur0i0ors. 2nder -eha0ioral segmentation an important user group is the sports and fitness conscious population. &his segment is further su-di0ided into g'm regulars, professional and amateur athletes and e0en dra!ing"room sports enthusiasts.

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||| &argeting B 1ositioning |||

Based on information gathered from retailers and adidas e:ecuti0es, it is e0ident that the ma6or demographic segment targeted -' adidas is the age group of 19" >9 'ears. Ler' fe! foot!ear products are aimed at the female market. adidas targets households !ith monthl' incomes greater than .s. 19,))). *ouseholds !ith incomes -et!een 19,))) and >),))) rupees per month donEt -u' a ne! pair as often as higher income -rackets. &his is primaril' -ecause the' use shoes as shoes and not as st'leKimage products. It is important that !hen this group enters the market !ith an intention to -u', the' should -u' from adidas. &o ensure this, adidas should sell dura-le, comforta-le shoes at a reasona-le price to this group. A crucial segment adidas has identified is the Call Centre Crowd. &his segment is su-stantial in the metros and is e:pected to continue its rapid gro!th. It consists of image"conscious 'outh !ho are earning -ut are not 'et independents. &his means that their entire income is disposa-le. adidas seeks the highest share of !allet from these consumers. 2nder ps'chographic segementation, adidas targetsP I:periencers# 'oung, enthusiastic, impulsi0e people !ho seek 0ariet' and e:citement.

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?tri0ers# &rend' and fun"lo0ing people !ho are resource"constrained -ut fa0our st'lish products that emulate the purchase of those !ith greater material !ealth.

Image /ri0ers# &he !ealth' fe! !ho set the trends in their social circle. &his is the segment responsi-le for the selling out of the .s.1(499 adidas Ane " adidasE most e:pensi0e shoe in India.

&he compan' targets -eha0ioural segments also# &he sports and fitness conscious population is further su-di0ided into g'm regulars, professional and amateur athletes and e0en dra!ing"room sports enthusiasts. adidas has specific products for each of these su-"categories. Cross"training shoes, running shoes, etc. are aimed at g'm regulars and runners. ?hoes are designed specificall' for sports like cricket, foot-all, -asket-all and no! e0en ad0enture sports like rock"clim-ing. @e can take a particular segment !hich !e call Hardcore football. It refers to 'oung foot-allers, passionate a-out pla'ing the sport, !ith the means to pa'. A good e:ample here !ould -e adidasE D1redatorH, !hich sets the standard for foot-all studs. adidas rightl' sees themsel0es as the !orld leaders in foot-all shoes. &his is the onl' sport market in !hich the' lead ,ike. &he -rand has -een s'non'mous !ith foot-all e0er since Adi /assler in0ented the first ad6usta-le ru--er scre!"on studs. An interesting fact# I0er' @orld Cup !inning team -efore ())5 !ore adidas foot-all -ootsQ

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?port"inspired designs are incorporated into adidasE lifest'le products for the sports enthusiast. =or e:ample, there is a shoe that is designed like an =1 dri0erEs shoe. &he heel is molded to fit into the floor-oard of an =1 car and the sole is made of Good'ear ru--er J the same ru--er that =1 t'res are made ofQ /espite the effort put into design and manufacturing of the shoe, it is still meant to -e a lifest'le product.

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||| .ecommendations |||

After anal'sing the data, !e find that although adidas has a greater market share than its arch"ri0al ,ike, it still lags -ehind in -rand image. &o tackle this pro-lem, !e !ill no! sho! 'ou !hat 0er' fe! Indians ha0e seen. Glo-all', adidas sells products under > di0isions. !!!.adidas"group.com pro0ides us !ith a clear definition of these di0isions. Divisional Strategy
&he di0isional strateg' has -een de0eloped to pro0ide three distinct consumer segments !ith product and marketing concepts that fulfill their uni<ue needs and desires. &he three di0isions are#

Sport Performance Division

Innovate to perform. &his di0ision is completel' focused on the athlete !ho demands performance first and st'le second. I0er' sport is important, -ut the main categories of running, foot-all, -asket-all, as !ell as the !omenEs segment, are the primar' focus in terms of -oth foot!ear and apparel.

Sport Heritage Division

Celebrate Originality. &his di0ision looks to our past for inspiration and direction for the authentic and contemporar' products of the future. &hese are foot!ear and apparel products that clearl' ha0e a foundation in sport -ut are meant for lifest'le and street !ear.

Sport Style Division

odern Sports!ear. &he ne!est di0ision is directed at the st'le and fashion conscious consumer !ho still desires the look and attitude of sport -ut in a ne!, more sophisticated interpretation. It is the foundation in sport that adidas and this consumer share that makes this di0ision so e:citing and full of potential for -oth foot!ear and apparel.

adidas can claim the prime position in the elite ?IC, capturing share of -oth mind and heart if the' introduce adidas Ariginals also kno!n as *eritage% and adidas ?t'le. &hese are e:tremel' up"market products# *igh profile designers of

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the likes of ?tella 3cCartne' and Roh6i Ramamoto com-ine cutting"edge technolog' !ith uni<ue st'ling and passion for sport. &his !ill ena-le adidas to target the Achievers ps'chographic segment, i.e. Dsuccess, goal"oriented people !ho focus on career and famil' and fa0our premium products that demonstrate success to their peers.H Sotler B Seller% After ac<uiring a stagnating .ee-ok for >.8 -illion pounds, adidas must pro0e the deal !as more than a market share gra- and integrate the companies smoothl'. Considering that adidas themsel0es admitted that the female market is not catered to properl' -ut still has great potential for gro!th, !e think that .ee-ok should -e used to tackle the relati0el' untapped !omenEs sport shoe market. It could additionall' tackle the price"sensiti0e market. .ee-ok has pre0iousl' gro!n on the -ase of an ur-an, street, hip"hop image. &his image does not conflict !ith an' of adidasE target markets and should thus -e e:ploited to the full. adidas could -enefit from taking a leaf out of .ee-okEs retail -ook. .ee-ok does not allo! retailers to hire sales staff. All sales staff ha0e to ha0e passed a centralised test. &his ensures that .ee-ok hires emplo'ees that are e<uipped !ith the right kno!ledge and attitude to!ards ser0ice that is re<uired to succeed in the Indian market. @e kno! that ser0ice at the point of sales is a crucial element of the buying experience -ecause 91.45C of the respondents of our sur0e' marked it as the single most important element.

||| Appendi: |||

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Consumer ?ur0e'
Age "#$%" &' ()).#%*+ %%$%) &) ()&.,-*+ %&$%, . (-.,.*+ /%, ' (%.&)*+ Gender ale .# (,&.)%*+ 0emale %# (%).&.*+ /o 'ou o!n a pair of sport shoesT 1es """ (#).2,*+ 3o , (&.#'*+ If 'es !hich BrandKsT 'ou can chose more than one% 3i4e '# (%%.#)*+ Adidas )' (%&.%#*+ 5eebo4 ). (%..%)*+ Puma ) (%.'&*+ Po!er "' (,.-&*+ Ot6er %' ("'.&'*+ =or ho! man' 'ears do 'ou use a pair of sport shoesT "$% ,' (-"..-*+ %$' %' ("#.)#*+ '$) , (&.#'*+ )$& ' (%.&)*+ /& "% ("2.",*+ @hat is the highest price range that 'ou are !illing to keep as a -udget !hen -u'ing sport shoesT &22$### '2 (%&.)%*+ "222$")## %' ("#.)#*+ "&22$"### %" (",..2*+ %222$%)## "& ("%.,"*+ %&22$%### # (,.-'*+ '222$'### # (,.-'*+ /)222 "" (#.'%*+

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@hich is the most important factor to 'ou !hile purchasing sneakersKsport shoesT Price ) ('.'#*+ Durability "- ("'.&-*+ Comfort &. ()#."&*+ 7oo4s and styling '2 (%&.)%*+ 8rand image - (&.2.*+ Ot6er ) ('.'#*+ @hat elements of the shoe are important to 'ouT 'ou can mark more than one% Sole )& ("%..%*+ Inside cus6ioning &# ("-.."*+ 9eig6t of t6e s6oe ," (%2.%'*+ 7aces , (".##*+ aterial ). ("'.-.*+ Styling -& ("..&%*+ Color &' ("&."2*+ Ot6er ' (2..&*+ @hich -rands ad0ertisements do 'ou like the mostT Adidas )) (',.%#*+ 3i4e )' ('-.))*+ 5eebo4 %, (%%...*+ Ot6er ) ('.'#*+ @hich -rand of shoes !ould 'ou like to o!nT Adidas )2 (''.#2*+ 3i4e )& ('..")*+ 5eebo4 %& (%"."#*+ Ot6ers . (-.,.*+ @hich aspect of -u'ing e:perience do 'ou consider most importantT S6op Design ") ("'.''*+ Service &' (&2.).*+ Ambience ") ("'.''*+ S6op 7ocation "# (".."2*+ Ot6ers & ().,-*+ .espondents# 118G largel' from I3& Gha+ia-ad, /elhi ?chool of Iconomics, Ma!aharlal ,ehru 2ni0ersit', =3? and 3ICA. U note# the -ar graphs are not actual representations of the figures -esides them

?ur0e' designed on createasur0e'.com and circulated online

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