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||| Background |||
adidas AG is a German sports apparel manufacturer, part of the adidas Group. It registered as adidas AG on 18 August 1949 (with lower-case lettering: "adidas"). The company was named after its founder, Adolf (Adi) Dassler, who started producing shoes in the 1920s in Herzogenaurach, near Nuremberg, with the help of his brother Rudolf Dassler who later formed rival shoe company PUMA AG. The company's clothing and shoe designs typically include three parallel stripes of the same color, and the same motif is incorporated into adidas' official logos.

adidas plans to become the leader in the organised sports footwear and sportswear market.

||| adidas in India |||
adidas first entered India in 1989 through a licence agreement with Bata. adidas later re-entered India for the second time in 1996 through a joint venture with Magnum International Trading Company Ltd with an initial investment of $2.5 million to form adidas (India) Trading Pvt. Ltd. adidas holds a 100 percent stake in the company.


000 new designs in apparels. Around 30-40 percent of the components are locally sourced. while the footwear is priced between Rs499 to over Rs12499. 3 . The apparel range is priced between Rs279 and Rs2700. The company. which is known for football and running shoes.The company launches every six months between 600 and 800 new designs in footwear and between 1.500 and 2. The company adheres to strict quality and design specifications and uses the manufacturing unit of Lakhani Footwear to manufacture the locally produced adidas range in India. introduced its cricket gear in India in 2004. adidas' products in India are sold through 140 own outlets (excluding multibrand outlets).

Nike and Lee Cooper. adidas had tied up with Bata and Woodland and first began exploring multi-brand outlets and retail malls. For adidas. Pre-1997. Bata started retailing other brands like Reebok. 4 . Reebok was slated to grow by almost 30 percent against 22 percent in 2002-03 and focused on its global Performance Range products. The new distribution strategy focused on extending the reach rather than exclusivity and at broad-basing distribution through tie-ups with branded retailers and setting up shop in shopping malls. MNC brands like Reebok and Adidas launched television commercials after a gap of four years and brand shops were filled with a fresh and upgraded product line-up.||| Industry Scenario ||| (as of 2003-04) Footwear brands drew up ambitious plans targeting a larger audience and higher market share. sales of higher priced footwear recorded strong growth in 2003-2004 and the company expected to close the year with a 30 percent growth.

Fila. This report will mainly consider Nike & Rbk (Reebok) as competitors for adidas. ||| Scope of Study ||| Our group has selected the Indian Footwear (Athletic) as Product Category. 5 .. Indian players include Action Shoes Ltd. The main multinational players in this industry are Nike.. we have conducted a consumer survey. Within this market. By way of research. Liberty Footwear Co. adidas enjoys considerable brand equity and is considered among the leading international brands in the country.As of 2005-06. the current premium sports goods market in India was valued around Rs 500 crore. adidas & Reebok. Puma. and Bata India Ltd. as well as spoken to a few retailers of the 3 top brands in the industry.

with a monthly income of over Rs15000.||| Consumers ||| In 1999. 6 . We have also noted the need for constant change— which implies faster turnaround for designs and therefore newer products. the buying experience is becoming crucial. On the other hand. He is also a big sports enthusiast. Andreas Gellner. But today. when adidas entered the Indian market. they are paying a premium on technology and innovation. tells us: “Today’s Indian customer is aware of international fashion and technology and he cares about them. The new line took into account the importance of affordability in the Indian market. The retail scenario in sportswear is changing accordingly—marketers are focusing on shop design and service and on brand consistency across outlets. and the company expected the move to expand their customer base by 20%. both males and females.” From our meeting with adidas’ marketing executives we gathered information about how they defined their target demographic. the customer has changed. This has also been impacted to a large extent by the mall mania and the growth of the high street. it introduced the cheapest range of shoes it had ever sold. They target the 15-35 age group. MD of adidas India.

The consumer is typically an image-conscious sports fan. young working class – 11) Method of survey: Online Some of our observations so far: Only around 3% of the total respondents cited Price as the number one factor influencing their purchase decision. ||| Consumer Behaviour ||| Our market research delves into the customer mindset. This would leave us with roughly 120 separate assessments on buyer behaviour on which we plan to base our studies. but not necessarily a sportsman. and another question 7 . DSE. trying to assess the population and coming up with demographic details as to who our target customer is. This is being done by a two-pronged strategy of reaching out to the young working class on the one hand (in and around NCR) and also by assessing the student strata who are pursuing their post-graduation (IMT. FMS etc). Status so far: Respondents: 118 Dates of response: 27-08-2006 to 17-09-2006 Demography: Students (post-graduate – 107.

46%. Nike topped list. This initially seems to indicate that the Indian customer no longer fits the price-sensitive stereotype. followed by adidas and Reebok. The survey also revealed that customers felt that Sales Staff Service was the most important part of the buying experience. it is certainly a very important consideration. 2000 for their sports shoes. More respondents own a Reebok pair than adidas (second place) and Nike (third).93% budgeted less than Rs. This shows that Reebok’s Indian pricing has managed to attract more market share than its rivals. With 51. but when asked which brand they would like to own. but a closer look at the results shows a different picture. weight and styling of the shoe were important elements of the shoe.showed that comfort. but Nike still has the highest brand equity and perceived value. The survey also showed that 62. Nike being the world-wide leader does well on advertisements and viewer/customer attention-catching and carries the best image of the 3 top brands. 8 . It is the brand that people want to own. it beat the other 4 factors by a long way. This shows that while Price is almost never the most important factor for most respondents.

both of the football (Teamgeist) and footwear & jerseys.38 billion in-home viewers worldwide.5 million jerseys of the German national team.||| Environmental Analysis ||| FIFA World Cup 2006 and other Football Tournaments The World Cup's global TV and Web audience was bigger than the Olympics' or the Super Bowl's -.000 German jerseys. The retailers we spoke to acknowledged that the World Cup caused a sharp spike in sales. for all 64 games. 9 . Adidas was an official sponsor and paid for the rights to shut Nike out of TV advertising in the U. Globally. when the football European Championships take place. the company sold 1. At the previous World Cup in 2002. including 1. Football-related sales were expected to stabilise at slightly above 1. by end-June 2006. adidas had already sold $1.5 million federation jerseys and 250.S. It had already sold a record three million replica jerseys in the wake of the football event.0 billion euros in 2007 before rising again in 2008.5 billion worth of football products this year owing to the then ongoing World Cup.

1 million jobs by 2008.0 million of the replica ball for the 2002 tournament. which will take place in Austria and Switzerland. supplier and licensee of the World Cup and is sponsoring six national teams in the tournament.Germany. 10 . Adidas is an official sponsor. BPO Boom This booming industry has emerged as a boon for the hundreds of thousands of job-hunting Indian youth and aims to grow into Rs. Three teams sponsored by Adidas . Adidas estimated its global share of the soccer footwear market rose by 1-2 percentage points to 35-36 percent at the end of the first quarter.reached the quarter-finals and France went through to the finals. including host country Germany. compared with 6.It has also sold more than 15 million of its "Teamgeist" World Cup match balls.100. The company also announced that it has signed a long-term partnership to be the global sponsor for Euro 2008. It has also extended its partnership with the UEFA Champions League to become the official ball supplier until 2009.000 crore industry generating over 1. France and Argentina .

which is spent on lifestyle products.As we shall explain later. this constitutes a segment of increasing importance for adidas. Therefore. 11 . the Call Centre Crowd is characterised by high disposable income.

and will be a source of sales growth in the future. how and when they will put them on display and when they will be put up for sale. retail outlets of the same brand might well have different stocks of different products at the same time. The Reebok retailer told us that Reebok does not allow retailers to hire their own sales staff without company approval. Reebok believes that investing in salespeople is a cause for their higher sales. adidas mentioned that they occasionally employ mystery shoppers to get a better feel of the customer’s perspective. however. Training for salespeople. and we gained an insight into the workings of the retail business. where the company shows samples of its various models and products to the retailers. Sales staff is another important factor. Periodical meetings are held. 12 . Thus. It is up to the retailers to decide which products they will stock in their shops. happens across the board. All sales staff must pass the company’s test before getting the job. Area Sales Managers (ASMs) are in constant touch with their retailers and actively take their feedback and suggestions. The same does not apply to adidas though.||| Retail ||| We visited retailers of leading footwear brands in Saket (South Delhi). Retailers for this company are allowed to hire salespersons they feel will be effective.

The number of posters within the store. They do not have post-season discount sales on footwear unlike adidas and Rbk. Nike products don’t compromise on quality. Arsenal F. In India. Brazil and even India. ||| Competitors ||| Nike Nike. including Manchester United. Inc. It is well known for its strong sponsorship agreements with athletes. as well as many of the world's top football clubs and national teams.The décor and ambience of the stores is under the control of the retailer. Nike certainly does not target them. and sports equipment. but still guided by the company’s direction. we have seen that although its brand image is good. and are always full-price. Nike is the leading brand in sports footwear worldwide. 13 .C. is a major American manufacturer of athletic shoes. While no brand can neglect the highly price-sensitive consumer. its sales are not. apparel. etc. They use their higher perceived value to charge a premium for their products. the type of music. generally conforms to company policy. leagues and federations.

Reebok International Limited is an Anglo-American Fortune 500 company. We gathered from the retailers that in India. The acquisition would increase adidas' market share in North America and allow it to pose a serious threat to the world's biggest maker of sports apparel. announced that it would acquire Reebok for $3.Reebok Also known by its contraction Rbk. and accessories. and producer of athletic footwear. the family-owned business proudly made the running shoes worn in the 1924 Summer Olympics by the athletes. apparel. Nike. Harold Abrahams and Eric Liddell celebrated in the film Chariots of Fire. Both are trying to get to the #1 position presumably to garner as much market share as they can.8 billion. adidas and Reebok are still very much in competition with each other. 14 . In August 2005. Founded in 1895. one of the company's largest rivals. Adidas. and in the process take some from Nike as well. The deal was completed in January of 2006. now subsidiary of Adidas AG.

Psychographic segmentation is of great importance for the sport shoe industry. gender. Under behavioral segmentation an important user group is the sports and fitness conscious population. they are categorized into believers. psychographics and behaviour. Based on monthly household income the market is segmented into below Rs.50000 pm and above Rs.||| Segmentation ||| For adidas the market segments in consideration are based on demographics. The higher income groups are classified based on their tendencies into four major categories. income and occupation. achievers and experiencers. Rs. professional and amateur athletes and even drawing-room sports enthusiasts. the innovators. The demographic segmentation is based on age. These segments are age groups 1-15 years.15000 pm. makers and survivors. As for the groups with lesser resources. The market is also segmented based on gender and occupation (which leads to differential disposable incomes). strivers. The market is segmented into three main categories based on age. 15-35 years and above 35 years. thinkers.15000 to Rs. This segment is further subdivided into gym regulars.50000 pm. 15 .

they should buy from adidas. 16 . Households with incomes between 15. It consists of image-conscious youth who are earning but are not yet independents. adidas targets households with monthly incomes greater than Rs. it is evident that the major demographic segment targeted by adidas is the age group of 15-35 years.||| Targeting & Positioning ||| Based on information gathered from retailers and adidas executives.000 and 30. Very few footwear products are aimed at the female market.000 rupees per month don’t buy a new pair as often as higher income brackets. 15. adidas should sell durable. This is primarily because they use shoes as shoes and not as style/image products. To ensure this. This segment is substantial in the metros and is expected to continue its rapid growth. This means that their entire income is disposable. A crucial segment adidas has identified is the Call Centre Crowd. comfortable shoes at a reasonable price to this group. adidas seeks the highest share of wallet from these consumers. It is important that when this group enters the market with an intention to buy.000.

adidas has specific products for each of these subcategories. The company targets behavioural segments also: The sports and fitness conscious population is further subdivided into gym regulars. Cross-training shoes. It refers to young footballers. • Image Drivers: The wealthy few who set the trends in their social circle. basketball and now even adventure sports like rock-climbing. etc. Shoes are designed specifically for sports like cricket. running shoes. are aimed at gym regulars and runners. • Strivers: Trendy and fun-loving people who are resourceconstrained but favour stylish products that emulate the purchase of those with greater material wealth. which sets the standard for football studs. with the means to pay. A good example here would be adidas’ “Predator”. We can take a particular segment which we call Hardcore football. This is the segment responsible for the selling out of the Rs. 17 . passionate about playing the sport. enthusiastic.Under psychographic segementation. football. adidas targets… • Experiencers: young.12499 adidas One . impulsive people who seek variety and excitement. professional and amateur athletes and even drawing-room sports enthusiasts.adidas’ most expensive shoe in India.

there is a shoe that is designed like an F1 driver’s shoe. An interesting fact: Every World Cup winning team before 2006 wore adidas football boots! Sport-inspired designs are incorporated into adidas’ lifestyle products for the sports enthusiast. it is still meant to be a lifestyle product. This is the only sport market in which they lead Nike. For example.adidas rightly sees themselves as the world leaders in football shoes. The brand has been synonymous with football ever since Adi Dassler invented the first adjustable rubber screw-on studs. 18 . The heel is molded to fit into the floorboard of an F1 car and the sole is made of Goodyear rubber – the same rubber that F1 tyres are made of! Despite the effort put into design and manufacturing of the shoe.

The newest division is directed at the style and fashion conscious consumer who still desires the look and attitude of sport but in a new. Globally. are the primary focus in terms of both footwear and apparel. To tackle this problem.adidas-group. it still lags behind in brand image. Divisional Strategy The divisional strategy has been developed to provide three distinct consumer segments with product and marketing concepts that fulfill their unique needs and desires. The three divisions are: Sport Performance Division Innovate to perform. football.||| Recommendations ||| After analysing the data. It is the foundation in sport that adidas and this consumer share that makes this division so exciting and full of potential for both footwear and apparel. but the main categories of running. These are footwear and apparel products that clearly have a foundation in sport but are meant for lifestyle and street wear. we find that although adidas has a greater market share than its arch-rival Nike. capturing share of both mind and heart if they introduce adidas Originals (also known as 19 .com provides us with a clear definition of these divisions. adidas sells products under 3 divisions. www. basketball. adidas can claim the prime position in the elite SEC. we will now show you what very few Indians have seen. This division is completely focused on the athlete who demands performance first and style second. Sport Style Division Modern Sportswear. Every sport is important. as well as the women’s segment. This division looks to our past for inspiration and direction for the authentic and contemporary products of the future. Sport Heritage Division Celebrate Originality. more sophisticated interpretation.

All sales staff have to have passed a centralised test. These are extremely up-market products: High profile designers of the likes of Stella McCartney and Yohji Yamamoto combine cutting-edge technology with unique styling and passion for sport. This ensures that Reebok hires employees that are equipped with the right knowledge and attitude 20 . Reebok has previously grown on the base of an urban. This will enable adidas to target the Achievers psychographic segment. street. goal-oriented people who focus on career and family and favour premium products that demonstrate success to their peers.e. adidas must prove the deal was more than a market share grab and integrate the companies smoothly. This image does not conflict with any of adidas’ target markets and should thus be exploited to the full. “success. we think that Reebok should be used to tackle the relatively untapped women’s sport shoe market. i. It could additionally tackle the price-sensitive market. Reebok does not allow retailers to hire sales staff. Considering that adidas themselves admitted that the female market is not catered to properly but still has great potential for growth.”(Kotler & Keller) After acquiring a stagnating Reebok for 3. adidas could benefit from taking a leaf out of Reebok’s retail book.Heritage) and adidas Style.8 billion pounds. hip-hop image.

86%) 2-3 23 (19.46% of the respondents of our survey marked it as the single most important element.65%) Other 23 (13.94%) Adidas 43 (25.53%) For how many years do you use a pair of sport shoes? 1-2 73 (61.54%) Gender Male 89 (75.54%) >5 12 (10.24%) Puma 4 (2.07%) No 7 (5.towards service that is required to succeed in the Indian market. We know that service at the point of sales is a crucial element of the buying experience because 51.58%) Do you own a pair of sport shoes? Yes 111 (94. ||| Appendix ||| Consumer Survey Age 19-21 53 (44.92%) 22-24 54 (45.42%) 1000-1499 23 (19.42%) Female 29 (24.78%) >27 3 (2.49%) 3-4 7 (5.35%) Power 13 (7.80%) 21 .93%) If yes which Brand/s? (you can chose more than one) Nike 39 (22.49%) 1500-1999 21 (17.17%) What is the highest price range that you are willing to keep as a budget when buying sport shoes? 500-999 30 (25.29%) Reebok 48 (28.93%) 4-5 3 (2.76%) 25-27 8 (6.

2000-2499 2500-2999 3000-3999 >4000 15 (12.63%) 9 (7.63%) 11 (9.71%) 9 (7.32%) 22 .

Which is the most important factor to you while purchasing sneakers/sport shoes? Price 4 (3.29%) Nike 43 (36.19%) Others 8 (6.48%) Ambience 14 (13. largely from IMT Ghaziabad.10%) Other 3 (0.90%) Nike 45 (38.76%) Respondents: 118.33%) Shop Location 19 (18.88%) Other 4 (3.68%) Styling 65 (18.52%) Color 53 (15.82%) Inside cushioning 59 (16.56%) Comfort 58 (49. Delhi School of Economics.39%) Which brand of shoes would you like to own? Adidas 40 (33.08%) Other 4 (3.78%) Which aspect of buying experience do you consider most important? Shop Design 14 (13.39%) Durability 16 (13.14%) Reebok 25 (21.33%) Service 53 (50. * note: the bar graphs are not actual representations of the figures besides them Survey designed on createasurvey. Jawaharlal Nehru University.99%) Material 48 (13.15%) Looks and styling 30 (25.23%) Laces 7 (1. FMS and MICA.10%) Others 5 (4.com and circulated online 23 .44%) Reebok 27 (22.85%) Which brands advertisements do you like the most? Adidas 44 (37.39%) What elements of the shoe are important to you? (you can mark more than one) Sole 45 (12.42%) Brand image 6 (5.81%) Weight of the shoe 71 (20.

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