TABLE OF CONTENTS

1. Introduction and company overview 1

2. Marketing environment forces2-4

Political forces2
Economic forces2
Sociocultural forces3
Technological forces3
Legal forces4
Environmental forces4

3. References 5

4. Appendixes 7
1.0 INTRODUCTION AND COMPANY OVERVIEW

Adidas AG is the holding company for the Adidas Group. Adidas AG is a

multinational company, founded and headquartered in Herzogenaurach, Germany. The
business sector of Adidas AG is the sportswear and apparels (Adidas Group 2013). The
founder of the company is Adolf Dassler (Appendix 1) and he was joined with his elder
brother Rudolf in 1924. In 1949, Adolf established Adidas, while Rudolf created Puma due to
the breakdown of their relationship. Adidas Group products are traditionally marked with a
logo of three stripes. Adidas Group is a global company and it has many subsidiary
companies around the world (Adidas Group 2013). Adidas (Malaysia) Sdn. Bhd. (Adidas) is
one of the subsidiary companies which was incorporated on October 18, 1994 in Malaysia,
with headquarter in Petaling Jaya, Selangor (Adidas 2019). Besides, the mission statement of
Adidas Group is “to be the best sports company in the world” and the guiding principles are
as shown in Appendix 2(Adidas Group 2013).

There are two brands under Adidas Group which are “Adidas” and “Reebok” (Adidas
Group 2018). Besides, there are two sub-brands under “Adidas” which are Adidas Originals
and Adidas Neo (Appendix 3) (Adidas 2019). All brands offer a wide range of products such
as sport shoes, casual sports clothing and accessories, and each type of products consist of
several categories. In the line of sport shoes, there are shoes of running, football, baseball,
basketball, cricket, golf, gymnastics, skateboarding and tennis. In the line of casual sports
clothing, there are t-shirts, jackets, hoodies, coats, socks, leggings and pants. Additionally, in
the line of accessories, there are watches, caps, bags and eyewear (Adidas 2019).

As there are two brands under “Adidas”, Adidas Originals will be chosen to be
discussed in this assignment. I would like to choose the line of sport shoes as the main
product line for the PESTLE analysis.

2.0 MARKETING ENVIRONMENT FORCES

 Under the political forces, the political issue for Adidas is the implementation of
standard operating procedures (SOP) by government due to the Covid-19 pandemic during
the Recovery Movement Control Order (RMCO) which is slated to run on 10 June 2020
(Malaymail 2020). Individual shops in shopping malls are now allowed to be opened by
complying with SOPs such as wearing masks, social distancing, only 20 people are allowed
within each store at a time and shops will have to record customers’ information (Malaymail
2020). The number of customers visit to Adidas’ retail shop is declined as compared to before
due to the restriction of those SOPs (Argyllscott 2020). The total sales of Adidas have
dropped as there are high operations and maintenance costs and the costs of to implement
those SOPs. However, the sales and profitability is tends to be increased in short-term future
as Adidas has stable online operations in their own websites and they are providing their best
customer service to win back the customers (Adidas 2019). For instance, Adidas will
compensate by providing free delivery for all the customers’ orders if there is late delivery
for their online orders during this critical period (Appendix 4) (Adidas 2017).

Under the economic forces, there are four stages (prosperity, recession, depression
and recovery) of business cycle reflect the fluctuation of economy. The economic downturn
that caused by the Covid-19 pandemic may be lead Malaysia’s economy turn recession and it
is longer than expected (Chong 2020). During the economic downturn, businesses tend to
reduce their labour costs to cover their operations costs (Rojakdaily 2020). Hence, it
contributed towards an increase in unemployment. The unemployment rate in Malaysia rose
to 3.9% in March 2020 whereas in April it spiked to 5%, the highest it has been since the last
30 years and expected to continue at 5-7% thereafter (Appendix 5) (Tradingeconomics 2020).
This factor has somehow made an impact on purchasing power and spending patterns of
people although there is an economic stimulus package is provided to them (The Malaysian
Reserve 2020). As a result, the buying trend of people during the critical period is more
towards necessity items as they have to manage their spending wisely due to the reduction of
their income (NST Online 2020). Unfortunately, Adidas’ products are classified as leisure
items and not as necessity items. Therefore, it has somehow affected the Adidas performance
and profitability.

Under the sociocultural forces, Adidas needs to consider attitudes, preferences and
trends to promote the brand in Malaysia. Firstly, as the Covid-19 pandemic has changed the
attitudes of people towards their lifestyle by stimulating their health awareness. The attitudes
of health conscious consumers lead to a rise of demand for sports apparels (EY 2020).
Therefore, Adidas has received overwhelming amount of online orders during RMCO;
thereby the sales of Adidas have increased.

Moreover, the preferences and trends of different races in Malaysia will bring impact
on the marketing activities of Adidas. Recently, Adidas was opened Adidas Originals
flagship store in Pavilion Kuala Lumpur on 30 June 2020 (BURO 2020). Adidas has
collaborated with the Malaysian artists to add a local flavour to its design of the store. The
Adidas logo that embodies the tradition of Malay - wau bulan (Appendix 6) is erected at the
storefront itself (Appendix 7) (BURO 2020). Besides, the store decked out in batik designs
which were mainly showcased on a wall piece and large carpet (Appendix 8). The design is
attract local consumers to visit the store as well as enhances the brand image of Adidas which
further affects its revenue (JUICEOnline 2020).

Under the technological forces, the present market in Malaysia is pushing for the
digital transformations such as 3D-printing technology in manufacturing and big data
analytics (The Star Online 2020). Firstly, the 3D-printing has influenced the production of
Adidas as it digitized the production process with 3D-printing technology for the high-speed
manufacturing. It helps Adidas to expand the opportunities for e-commerce as it enables
Adidas to meet the high demand received through online sales during the RMCO period by
improving Adidas’ productivity (The Star Online 2020).

Additionally, the big data analytics is pushing Adidas to quickly adopt and adapt in its
marketing activities. Adidas has collaborated with Engine-Digital to create Run Genie
(Appendix 9) (Digital Agency Network 2020). When Run Genie’s pods attached to their
shoes, it will analyse the foot and visualized with Run Genie’s tablet app to make product
recommendations for customers (Appendix 10). It is also used to serve as continue educated
product discussion with customers after they visited the store via email (Enginedigital 2017).
Thus, there are repeat visits of customers to Adidas as they are inspired by Run Genie about
the new products that fit specially with their athletic profile (Digital Agency Network 2020).

Under the legal forces, the legal framework establishes the acts for business and those
acts will regulate the business activities. For example, Personal Data Protection Act 2010
(PDPA) is an act that was gazetted in June 2010 to regulate the processing of personal data in
regards to commercial transactions to prevent the accidental loss or damage and unauthorized
or unlawful processing of consumers’ personal data (Malaysia.gov.my 2019). Adidas
business will definitely be affected as business processes are required to be refined to comply
with the PDPA requirements, otherwise there are penalty of RM100 000 to RM500 000
and/or between 1 to 3 years imprisonment (Crown Records Management 2017). If Adidas fail
to comply with PDPA, it will not only be charged by the court, but also lost its reputation and
customers trust. For instance, Adidas has to ensure the confidentiality and protection of
consumers’ personal data that are collected by Run Genie, a big data analytics technology.
The responsibility of Adidas to consider the concerns over their customers’ privacy by
complying with the PDPA has been listed in their Privacy Policy which is published on their
websites to make customers aware that they are safeguarded by the policy (Appendix 11)
(Adidas 2019).

Under the environmental forces, the Malaysia government was implemented

intervention regarding the issue of increased pollution of plastic such as encourages
businesses to develop recyclable polymers with plastic waste by offering the Investment Tax
Allowance (ITA) for sustainable waste management practices of business premises
(Mida.gov.my 2019). The increased plastic pollution and government intervention have
affected the marketing activities of Adidas as it has to develop practices to support the
environmental sustainability (Adidas 2019).

Firstly, Adidas has partnered up with Parley-for-the-Oceans by using Parley Ocean

Plastic as an eco-innovative material for the replacement materials of sportswear (Appendix
12) (Color and Trim Factory 2016). Furthermore, Adidas first running shoe made entirely
from recycled materials, which is known as Futurecraft Loop, is expected to hit stores in
2021 (Appendix 13) (Engadget 2019). Adidas is also committed to using only recycled
polyester as materials across its entire range of shoes by 2024 (Adidas News Site 2019). As
they consider the environmental impact of the materials they use in their products, it helps
Adidas to expand its core business into the market of environment concerned consumers
(Researchgate.net 2020).

(1500 words)
REFERENCES

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Adidas 2017, Delivery – Adidas Group?, viewed 5 July 2020,

<https://www.adidas.com.my/en/delivery.html>. Title is - Delivery Inquiries
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<https://www.adidas.com.my/en/help-topics-privacy_policy.html>. Title - Privacy
Notice
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<https://www.adidas.com.my/en/sustainable>. Title - Sustainable
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group.com/en/group/history/>. Title - History
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<https://www.adidas.com.my/en/sustainable>. Title - Sustainable
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group.com/en/brands/adidas/>. Title - Brands
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originals-st.html>.
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strategy-of-adidas/>.
Engadget 2019, Adidas Futurecraft Loop recycled running shoes, viewed 5 July 2020,
<https://www.engadget.com/2019-04-17-adidas-futurecraft-loop-recycled-running-
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APPENDIXES

Appendix 1: Adidas’ founder, Adolf Dassler

Source: Adidas Group 2013, Profile – Adidas Group, viewed 5 July 2020,
<https://www.adidas-group.com/en/group/profile/>.

Appendix 2: Guiding principles of Adidas Group

Source: Adidas Group 2013, Profile – Adidas Group, viewed 5 July 2020,
<https://www.adidas-group.com/en/group/profile/>.

Appendix 3: The logo of Adidas, Adidas Originals and Adidas Neo

Source: Adidas 2019, Adidas Malaysia, viewed 5 July 2020,
<https://www.adidas.com.my/en>.

Appendix 4: Terms and conditions of delivery

Source: Adidas 2017, Delivery – Adidas Group, viewed 5 July 2020,

<https://www.adidas.com.my/en/delivery.html>.

Appendix 5: Statistics of unemployment rate in Malaysia

Source: Tradingeconomics 2020, Malaysia unemployment rate | 1998-2020 Data | 2021-
2022 Forecast | Calendar, viewed 5 July 2020,
<https://tradingeconomics.com/malaysia/unemployment-rate>.

Appendix 6: The wau bulan Adidas logo that are created by Malaysian artists, Jun Ong

Source: BURO 2020, Malaysian light artist Jun Ong on landing the Adidas Originals gig
(and what it could have been), viewed 5 July 2020,
<https://www.buro247.my/culture/insiders/malaysian-light-artist-jun-ong-adidas-
originals-st.html>.

Appendix 7: Adidas Originals flagship store in Pavilion KL

Source: BURO 2020, Malaysian light artist Jun Ong on landing the Adidas Originals gig
(and what it could have been), viewed 5 July 2020,
<https://www.buro247.my/culture/insiders/malaysian-light-artist-jun-ong-adidas-
originals-st.html>.

Appendix 8: Batik designs on a wall piece and a large carpet in Adidas Originals flagship
store that are designed by Malaysian artists Jaemy Choong

Source: JUICEOnline 2020, Malaysian artist decks Adidas Store at Pavilion in batik design
& it looks cool, viewed 5 July 2020, <https://juiceonline.com/msian-artist-decks-
adidas-store-at-pavilion-in-batik-design-it-looks-cool-af/>.
Appendix 9: Run Genie’s pods that will interpret consumers’ data to take the guess for
consumers to get the right shoe

Source: Digital Agency Network 2020, 6 things you should know about Adidas’ digital
marketing strategy, viewed 5 July 2020, <https://digitalagencynetwork.com/digital-
marketing-strategy-of-adidas/>.

Appendix 10: Run Genie’s tablet app

Source: Enginedigital 2017, Adidas digital in-store experience, viewed 5 July 2020,
<https://enginedigital.com/work/adidas-digital-retail-experience>.

Appendix 11: Privacy Policy of Adidas on their official website

Source: Adidas 2019, Privary policy – Adidas Malaysia, viewed 5 July 2020,
<https://www.adidas.com.my/en/help-topics-privacy_policy.html>.
Appendix 12: Eco-innovative material, a fabric called “Biosteel”
Source: Color and Trim Factory 2016, Adidas and Parley for the Oceans made with Eco
Textile, viewed 5 July 2020, <https://www.cntfactory.com/2016/08/09/adidas-parley-
oceans-made-eco-textile/>.

Appendix 13: Fully recyclable shoes - Futurecraft Loop

Source: Engadget 2019, Adidas Futurecraft Loop recycled running shoes, viewed 5 July
2020, <https://www.engadget.com/2019-04-17-adidas-futurecraft-loop-recycled-
running-shoes-sustainability-speedfactory.html>.